UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549

FORM 10-KSB

|[X} | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
 EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2002
|--- | -----------------------------------------------------------------------------------------------------------------------------

|[   ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
          SECURITIES EXCHANGE ACT OF 1934
          For the transition period from  to
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------

Commission File Number 0-27849

| | BASIC ENERGY, INC.                             | 
| | ---------------------------------------------- | 
| | (Name of small business issuer in its chapter) | 

|Utah                                                            |  | 00001748413               
|--------------------------------------------------------------- |  | --------------------------
|(State or other jurisdiction of
 incorporation or organization) |  | (I.R.S. Employer I.D. No.)

|3771 South State Street, Salt Lake City, Utah |  | 84115     
|--------------------------------------------- |  | ----------
|(Address of principal executive offices)      |  | (Zip Code)

| | Issuer's telephone number, including area code
                    (801)  262-8429 | 
| | ---------------------------------------------------------------------------------- | 

| | Securities registered pursuant to section 12(b) of the Exchange
          Act: | 
| | ------------------------------------------------------------------------------ | 

| | None | 
| | ---- | 

| | Securities registered under Section 12(g) of the Exchange Act: | 
| | -------------------------------------------------------------- | 

| | $0.10 par value, common voting shares
                              (Title of class) | 
| | ------------------------------------------------------------------------------------ | 

Check whether the Issuer (1) filed all reports required to be filed by
section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such
report(s), and (2) has been subject to such filing requirements for the
past 90 days.     (1)   Yes  [X]     No  [   ]

Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure
will be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of
this form 10-KSB or any amendment to this Form 10-KSB.   [   ]

The issuer's revenue for its most recent fiscal year was $ 0.

The aggregate market value of the issuer's voting stock held as of
September 20, 2002, by non-affiliates of the issuer was $388,504.  As of
September 20, 2002, issuer
had 8,131,226 shares of its $0.10 par value common stock outstanding.

BASIC ENERGY, INC.
    Annual Report on Form 10-KSB for the Fiscal Year ended June 30, 2002

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INDEX TO FORM 10-KSB

---

| | PART I |                                                       |   | 
| | ------ | ----------------------------------------------------- | - | 
| | ITEM 1 | DESCRIPTION OF BUSINESS                               | 1 | 
| | ITEM 2 | DESCRIPTION OF PROPERTY                               | 3 | 
| | ITEM 3 | LEGAL PROCEEDINGS                                     | 4 | 
| | ITEM 4 | SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS | 4 | 

| | PART II |                                                                                      |    | 
| | ------- | ------------------------------------------------------------------------------------ | -- | 
| | ITEM 5  | MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                             | 4  | 
| | ITEM 6  | MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION                            | 5  | 
| | ITEM 7  | FINANCIAL STATEMENTS                                                                 | 5  | 
| | ITEM 8  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE | 12 | 

| | PART III                                                                                                                    |                                                                                                                                          |    | 
| | --------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------- | -- | 
| | ITEM 9                                                                                                                      | DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
                     COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT | 12 | 
| | ITEM 10                                                                                                                     | EXECUTIVE COMPENSATION                                                                                                                   | 15 | 
| | ITEM 11                                                                                                                     | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                                                                           | 17 | 
| | ITEM 12                                                                                                                     | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                                                           | 18 | 
| | ITEM 13                                                                                                                     | EXHIBITS AND REPORTS ON FORM 8-K                                                                                                         | 18 | 
| | SIGNATURES                                                                                                                  | 19                                                                                                                                       |   
| | CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
     SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 | 20                                                                                                                                       |   
| | CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
     SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 | 21                                                                                                                                       |   

|FORWARD LOOKING STATEMENTS
|--------------------------

This Form 10-KSB contains certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.  For
this purpose any statements contained in this Form 10-KSB that are not
statements of historical fact may be deemed to be forward-looking
statements.  Without limiting the foregoing, words such as "may," "will,"
"expect," "believe," "anticipate," "estimate," "continue" or comparable
terminology are intended to identify forward-looking statements.  These
statements by their nature involve substantial risks and uncertainties, and
actual results may differ materially depending on a variety of factors,
many of which are not within the Company's control.  These factors include
but are not limited to economic conditions generally in the industries
in which the Company, through the acquisition of a business opportunity, may
participate; competition within the industry in which the Company may
enter, including competition from much larger competitors; technological
advances which could render the Company's future products or services less
competitive or obsolete; failure by the Company, once it has acquired a
business, to successfully develop new products or to anticipate current or
prospective customers' product needs; price increase or supply limitations
for components purchased by the Company for use in future products; and
delays, reductions, or cancellations of orders placed with the Company if
and when it acquires a business opportunity.

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|PART I                          
|--------------------------------
|ITEM 1.  DESCRIPTION OF BUSINESS

Basic Energy, Inc. was originally organized on June 4, 1926 in the
State of Utah under the name The M.M. Lead Company.  The Company was
established to pursue and develop mining operations.  On February 28, 1979,
the Company changed its name to M.M. Lead Company and again changed its
name to Basic Energy, Inc., on February 22, 1980.

The Company was unsuccessful in its pursuit of mining ventures and has
been dormant.  The Company has focused its efforts on seeking,
investigating, and if warranted, acquiring an interest in a business
opportunity.  The Company does not propose to restrict its search for a
business opportunity to any particular industry or geographical area and
therefore, may engage in essentially any business in any industry. The
Company has unrestricted discretion in seeking and participating in a
business opportunity, subject to the availability of such opportunities,
economic conditions and other factors.

The selection of a business opportunity in which to participate is
complex and extremely risky and will be made by management in the exercise
of its best judgment.  There is no assurance that the Company will be able
to identify and acquire any business opportunity which will ultimately
prove to be beneficial to the Company and its shareholders.

The activities of the Company are subject to several significant risks
which arise primarily as a result of the fact that the Company has no
specific business. The risks faced by the Company are further increased as a result of its lack of resources and
its inability to provide a prospective business opportunity with capital.

1

Sources of Opportunities

It is anticipated that business opportunities may be available to the
Company from various sources, including its officers and directors,
professional advisers, securities broker-dealers, venture capitalists,
members of the financial community, and others who may present unsolicited
proposals.

The Company will seek a potential business opportunity from all known
sources, but will rely principally on personal contacts of its officers and
directors as well as indirect associations among them and other
businesses and professional people.  Although the Company does not
anticipate engaging  professional firms specializing in business
acquisitions or reorganizations, if management deems it in the best
interest of the Company, such firms may be retained.  In some instances,
the Company may publish notices or advertisements seeking a potential
business opportunity in financial or trade publications.

Criteria

The Company will not restrict its search to any particular business,
industry or geographical location. The Company may acquire a business
opportunity or enter into a business in any industry and in any stage of
development. The Company may enter into a business or opportunity involving
a "start up" or new company.  The Company may acquire a business
opportunity in various stages of its operation.

In seeking a business venture, the decision of management of the
Company will not be controlled by an attempt to take advantage of an
anticipated or perceived appeal of a specific industry, management group,
or product or industry, but will be based upon the business objective of
seeking long-term capital appreciation in the real value of the Company.

In analyzing prospective business opportunities, management will
consider such matters as the available technical, financial and managerial
resources; working capital and other financial requirements; the history of
operations; prospects for the future; the nature of present and expected
competition; the quality and experience of management services which may be
available and the depth of the management; the potential for further
research, development or exploration; the potential for growth and
expansion; the potential for profit; the perceived public recognition or
acceptance of products, services, trade or service marks, name
identification; and other relevant factors.

To a large extent, a decision to participate in a specific business
opportunity may be made upon management's analysis of the quality of the
other firm's management and personnel, the ability to market products and
numerous other factors which are difficult if not impossible to analyze
through the application of any objective criteria.  In many instances, it
is anticipated that the results of operations of a specific firm may not
necessarily be indicative of the potential for the future because of the
requirement to substantially augment management, or other factors.

Generally, the Company will analyze all factors in the circumstances
and make a determination based upon a composite of available facts, without
reliance upon any single fact as controlling.

2

Methods of Participation of Acquisition

Specific business opportunities will be reviewed and, on the basis of
that review, the legal structure or method of participation deemed by
management to be suitable will be selected. The Company may consider
structures and methods such as leases, purchase and sale agreements,
licenses, joint ventures, or other contractual arrangements and may involve
a reorganization, merger or consolidation transaction.  The Company may act
directly or indirectly through an interest in a partnership, corporation,
or other form of organization.

Procedures

As part of the Company's investigation of business opportunities,
officers and directors may meet personally with management and key
personnel of the firm sponsoring the business opportunity, visit and
inspect material facilities, obtain independent analysis or verification of
certain information provided, check references of management and key
personnel, and conduct other reasonable measures.

The Company will generally request that it be provided with written
materials regarding the business opportunity containing such items as: a
description of products, services and company history;  management resumes;
financial information; available projections with related assumptions upon
which they are based; an explanation of proprietary products and services;
present and proposed forms of compensation to management; a description of
transactions between the prospective entity and its affiliates; relevant
analysis of risks and competitive conditions; a financial plan of operation
and estimated capital requirements; and other information deemed relevant.

Competition

The Company expects to encounter substantial competition in its
efforts to acquire a business opportunity.  The primary competition is from
other companies, organized and funded for similar purposes, small venture
capital partnerships and corporations, small business investment companies
and wealthy individuals who are interested in a business opportunity.  Many
of these companies and groups have substantial financial and personal
resources which give such companies considerable advantage over the
Company.

Employees

The Company does not currently have any employees but relies upon the
efforts of its officers and directors to conduct the business of the
Company.

---

|ITEM 2.  DESCRIPTION OF PROPERTY
|--------------------------------

The Company leases 600 square feet of office space at 3771 South State
Street, Salt Lake City, Utah.  The lease terms are $50.00 per month,
renewable at the same rate every twelve months.

3

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|ITEM 3.  LEGAL PROCEEDINGS
|--------------------------

No legal proceedings are threatened or pending against the Company or
any of its officers or directors.  Further, none of the Company's officers
or directors or affiliates of the Company are parties against the Company
or have any material interests that are adverse to the Company's
interests.

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|ITEM 4.  SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
|-----------------------------------------------------------

No matters were submitted to a vote of the security holders during the
fourth quarter of the fiscal year ended June 30, 2002.

---

|PART II
|-------

|ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY
                      AND RELATED STOCKHOLDER MATTERS
|----------------------------------------------------------------------------------------------------

On September 24, 2001 the NASD approved the Company for listing on the
NASD Over-the-Counter Bulletin Board.  The Company's shares are listed under the
symbol "BEGI."  There is no established trading market for the Company's shares and there is no assurance that a
trading market will develop for the Company's shares, or if developed, that it can be sustained.  The following
table sets forth for the period of July 1, 2000 through June 30, 2002, the range of the high and low sales prices
of the Company's common stock as quoted by various market makers.

| | July 1, 2000 to June 30, 2001: | High*          |    | Low* |   
| | ------------------------------ | -------------- | -- | ---- | --
| |                                | First Quarter  | $0 |      | $0
| |                                | Second Quarter | $0 |      | $0
| |                                | Third Quarter  | $0 |      | $0
| |                                | Fourth Quarter | $0 |      | $0

| | July 1, 2001 to June 30, 2002: | High*          |        | Low* |      
| | ------------------------------ | -------------- | ------ | ---- | -----
| |                                | First Quarter  | $0     |      | $0   
| |                                | Second Quarter | $0     |      | $0   
| |                                | Third Quarter  | $0     |      | $0   
| |                                | Fourth Quarter | $11.00 |      | $1.00

4

* The source of the high
and low closing sales price information is Big Charts and can be
found at http://bigcharts.com.

As of October 11, 2002 the Company had 182 holders of record of its common shares.  The Company has never
paid, nor declared a dividend on its common shares since its inception and does not intend to declare any such
dividend in the foreseeable future.  The Company's ability to pay dividends is subject to limitations imposed by
Utah law.

The Company does not have any equity compensation plans.

---

|ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS
                           OR PLAN OF OPERATIONS
|----------------------------------------------------------------------------------------------

The Company has little cash and has experienced losses.  As of June
30, 2002 the Company  has $894 of cash on hand.  As of that date, the Company
had $36,698 of outstanding liabilities.  The Company has no material commitments
for capital expenditures for the next twelve months.

As of the date of this Form 10-KSB, the Company has yet to generate
positive cash flow.  The Company has financed its operations primarily
through the sale of its common stock.

The Company believes that its current cash needs can be met either
through the sale of
additional common stock of the Company or through loans. However, should the
Company obtain a business opportunity, it may be necessary to raise additional
capital. This may be accomplished by selling common stock of the Company.

Management of the Company intends to actively seek business
opportunities for the Company.

---

|ITEM 7.  FINANCIAL STATEMENTS
|-----------------------------

Basic Energy, Inc.
                       (A Development Stage Company)

Financial Statements

June 30, 2002 and 2001

5

/Letterhead/

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|A PARTNERSHIPOF PROFESSIONALCORPORATIONS | BIERWOLF NILSON & ASSOCIATES
CERTIFIED PUBLIC ACCOUNTANTS1453 SOUTH MAJOR STREETSALT LAKE CITY, UTAH 84115 | NEPHI J. BIERWOLF, CPATROY NILSON, CPA
|---------------------------------------- | ---------------------------------------------------------------------------------------------------------- | --------------------------------------

Independent Auditor's Report

To the Board of Directors & Stockholders
of Basic Energy, Inc.

We have audited the accompanying balance sheets of Basic Energy, Inc., (a
development stage company)
as of June 30, 2002 and 2001, and the related statements of operations,
stockholders equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Companys management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

We conducted our audit in
accordance with generally accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatements. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and the significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the June
30, 2002 financial statements referred to above present fairly, in all material
respects, the financial position of Basic Energy, Inc., as of June 30, 2002 and
2001, and the results of its operations and its cash flows for the year then
ended, in conformity with generally accepted accounting principles.

The accompanying financial
statements have been prepared assuming the Company will continue as a going
concern. As discussed in Note #4 to the financial statements, the Company has an
accumulated deficit and a negative net worth at June 30, 2002. Those conditions
raise substantial doubt about its ability to continue as a going concern.
Managements plans regarding those matters are also discussed in Note #4.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.

/s/ Bierwolf Nilson & Associates
Salt Lake City, Utah
July 29, 2002

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MEMBERS OF AMERICAN INSTITUTE OF CPAS, SEC PRACTICE SECTION
                        AND UTAH ASSOCIATES OF CPAS

6

Basic Energy, Inc.
                       (A Development Stage Company)
                               Balance Sheets
                                  June 30

|               | 2002         |  | 2001           | 
|-------------- | ------------ |  | -------------- | 
|Assets         |             
|Current Assets |              |  |                | 
|Cash           | $        894 |  | $        1,694 | 
|Total Assets   | $        894 |  | $        1,694 | 

|Liabilities & Stockholders' Equity |            
|---------------------------------- | -----------
|Current Liabilities                |            
|Accounts Payable                   | $    35,898
|Due to Officers                    | 800        
|Total Current Liabilities          | 36,698     

|Stockholders' Equity                                                                                                                                            |              |  |                | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------ |  | -------------- | 
|Common Stock, 20,000,000 Shares
          Authorized at $0.10 Par Value;
          8,131,226 and 7,339,030 Shares Issued
          and Outstanding Respectively | 813,122      |  | 733,903        | 
|Paid In Capital                                                                                                                                                 | 42,741       |  | 42,741         | 
|Deficit Accumulated During the Development Stage                                                                                                                | (891,667)    |  | (811,726)      | 
|Total Stockholders' Equity                                                                                                                                      | (35,804)     |  | (35,082)       | 
|Total Liabilities & Stockholders' Equity                                                                                                                        | $        894 |  | $        1,694 | 

The accompanying notes are an integral part of these financial statements

7

Basic Energy, Inc.
                       (A Development Stage Company)
                          Statement of Operations
                      For the Years Ended June 30 and
   Accumulated from the Period June 4, 1926 (Inception) to June 30, 2002

|                                             | 2002              |  | 2001              |  | Accumulated     | 
|-------------------------------------------- | ----------------- |  | ----------------- |  | --------------- | 
|Revenues                                     | $                |  | $                |  | $              | 
|Expenses                                     |                   |  |                   |  |                 | 
|General & Administrative Expenses            | 79,941            |  | 86,054            |  | 831,667         | 
|Loss on Mining Claims                        |                  |  |                  |  | 60,000          | 
|Total Expenses                               | 79,941            |  | 86,054            |  | 891,667         | 
|Net Loss                                     | $      (79,941)   |  | $      (86,054)   |  | $     (891,667) | 
|Loss Per Share                               | $          (0.01) |  | $          (0.01) |  |                 | 
|Weighted Average Shares          Outstanding | 7,542,104         |  | 6,769,686         |  |                 | 
|                                             |                   |  |                   |  |                 | 

The accompanying notes are an integral part of these financial statements

8

Basic Energy, Inc.
                       (A Development Stage Company)
                     Statement of Stockholders' Equity
                       June 30, 1998 to June 30, 2002

|                                      | Common Stock |  | Paid In     |  | Accumulated 
|------------------------------------- | ------------ |  | ----------- |  | ------------
|                                      | Shares       |  | Amount      |  | Capital     
|Balance, June 30, 1998                | 5,545,203    |  | $   554,520 |  | $     42,741
|Shares Issued forCost & Services      | 899,490      |  | 89,949      |  |             
|Net Loss for Year
Ended June 30, 1999 |              |  |             |  |             
|Balance, June 30, 1999                | 6,444,693    |  | 644,469     |  | 42,741      
|Net Loss for Year
Ended June 30, 2000 |              |  |             |  |             
|Balance, June 30, 2000                | 6,444,693    |  | 644,469     |  | 42,741      
|Shares Issued for Services            | 894,337      |  | 89,434      |  |             
|Net Loss for Year
Ended June 30, 2001 |              |  |             |  |             
|Balance, June 30, 2001                | 7,339,030    |  | $   733,903 |  | $     42,741
|Shares Issued for Services            | 792,196      |  | 79,219      |  |             
|Net Loss for Year
Ended June 30, 2002 |              |  |             |  |             
|Balance, June 30, 2002                | 8,131,226    |  | $   813,122 |  | $     42,741

The accompanying notes are an integral part of these financial statements

9

Basic Energy, Inc.
                          (A Development Stage Company)
                            Statements of Cash Flows
For the Years Ended June 30, and Accumulated from June 4, 1926 (Inception) to June
30, 2002

|                                                                               | 2002           |  | 2001           |  | Accumulated     | 
|------------------------------------------------------------------------------ | -------------- |  | -------------- |  | --------------- | 
|Cash Flows from Operating Activities                                           |                |  |                |  |                 | 
|Net Loss                                                                       | $     (79,941) |  | $     (86,054) |  | $     (891,667) | 
|Adjustments to Reconcile Net Loss to
       Cash Used by Operating Activities; |                |  |                |  |                 | 
|Non Cash                                                                       | 79,219         |  | 89,434         |  | 808,499         | 
|Loss on Mining Claim                                                           |               |  |               |  | 60,000          | 
|Increase (Decrease) in
            Accounts Payable                            | 21,574         |  | 7,746          |  | 29,320          | 
|Increase (Decrease) Due to Officers                                            | (21,652)       |  | (9,432)        |  | (31,084)        | 
|Cash Used from Operating Activities                                            | (800)          |  | 1,694          |  | (24,932)        | 
|Cash Flows from Investing Activities                                           |               |  |               |  |                | 
|Cash Flows from Financial Activities                                           |                |  |                |  |                 | 
|Proceeds from Sale of Common Stock                                             |               |  |               |  | 25,826          | 
|Cash Provided from Financing
          Activities                              |               |  |               |  | 25,826          | 
|                                                                               |                |  |                |  |                 | 
|Increase (Decrease) in Cash                                                    | (800)          |  | 1,694          |  | 894             | 
|Cash at Beginning of Period                                                    | 1,694          |  |               |  |                | 
|Cash at End of Period                                                          | $          894 |  | $       1,694  |  | $          894  | 
|Disclosures for Operating Activities                                           |                |  |                |  |                 | 
|Interest                                                                       | $             |  | $             |  | $              | 
|Taxes                                                                          |               |  |               |  |                | 

The accompanying notes are an integral part of these financial statements

10

Basic Energy, Inc.
                       (A Development Stage Company)
                       Notes to Financial Statements
                               June 30, 2001

NOTE #1 - Organization

The Company was organized
on June 4, 1926 under the laws of the State of Utah, using the name of M.M. Lead
Company. On February 22, 1980 a Certificate of Amendment was filed with the
state of Utah changing the name to Basic Energy, Inc. The Company has been
dormant for many years and is considered to be a development stage company.

NOTE #2 - Significant Accounting Policies

|A. | The Company uses the accrual method of accounting.                                                                                                                                                                                                                                                                                    
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|B. | Revenues and directly related expenses are recognized in the period
     when the goods are shipped to the customer.                                                                                                                                                                                                                  
|C. | The Company considers all short term, highly liquid investments that are readily
convertible, within three months, to known amounts as cash equivalents. The
Company currently has no cash equivalents.                                                                                                                               
|D. | Primary Earnings Per Share amounts are based on the weighted average number of
shares outstanding at the dates of the financial statements. Fully Diluted
Earnings Per Shares shall be shown on stock options and other convertible issues
that may be exercised within ten years of the financial statement dates.                   
|E. | Estimates:   The preparation of the financial statements in conformity
     with generally accepted accounting principles requires management to
     make estimates and assumptions that affect the amounts reported in the
     financial statements and accompanying notes.  Actual results could
     differ from those estimates.

NOTE #3 - Stockholders' Equity

Common Stock

Upon incorporation the
Company had 1,000,000 shares of common stock authorized with a par value of
$0.10 per share. On February 28, 1979 the Articles of Incorporation were changed
authorizing 20,000,000 shares with a par value of $0.10 per share.

The Company issued 600,000 shares of its common stock to acquire mining
claims in 1926.  In 1937, the Company wrote the claims off as having no
value.

The shares issued in 1926
were assessable, and in 1937 the 600,000 shares were assessed at $.001 per
share, 423,780 shares did not pay the assessment and were canceled.

During the year ended June
30, 2002, the Company issued 792,196 shares to officers and directors for
services and out of pocket expenses. The shares were issued at $0.10 per share.

11

Basic Energy, Inc.
                       (A Development Stage Company)
                       Notes to Financial Statements
                               June 30, 2002

NOTE #4 - Going Concern

The Company has no assets
and no operations from which it can obtain working capital. The Company
recognizes that it must find a source of working capital or the Company may not
be able to continue its existence. These financial statements
do not include any adjustments relating to the recoverability and classification
of recorded assets, or the amounts and classifications of liabilities that might
be necessary in the event the Company cannot continue its existence. These
financial statements do not include any adjustments that might result from the
outcome of this uncertainty. It is the intent of the Company to find additional
capital funding and/or a profitable business venture to acquire or merge.

---

|ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH  ACCOUNTANTS
                   ON ACCOUNTING AND FINANCIAL DISCLOSURE
|-----------------------------------------------------------------------------------------------------------------

None.

---

|PART III
|--------

|ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS,
                    AND CONTROL PERSONS; COMPLIANCE WITH
                     SECTION 16(a) OF THE EXCHANGE ACT
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following table sets forth as of June 30, 2002 the name, age, and
position of each executive officer and director and the term of office of
each director of the Company.

|NAME | AGE | POSITION | DIRECTOR OR OFFICER SINCE | 
|---- | --- | -------- | ------------------------- | 

|Jay W. Gibson | 77 | President &Chairman of theBoard of Directors | June 25, 1980 | 
|------------- | -- | -------------------------------------------- | ------------- | 

|Ronald D. Burnett | 65 | Vice-President& Director | September 15, 1990 | 
|----------------- | -- | ------------------------ | ------------------ | 

|Karl Seljaas | 58 | Assistant Vice President &Director | March 7, 1999 | 
|------------ | -- | ---------------------------------- | ------------- | 

12

|Joyce Sigler | 57 | Secretary& Director | March 7, 1999 | 
|------------ | -- | ------------------- | ------------- | 

|Joseph M. Graubard | 79 | Treasurer& Director | February 5, 1997 | 
|------------------ | -- | ------------------- | ---------------- | 

Each Director serves for a period of one year or until his successor
is duly elected and qualified. Officers serve at the will of the Board of
Directors.

Jay W. Gibson, President and Chairman of the Board of Directors.  Mr.
Gibson attended Occidental College in Los Angeles, California.  While
serving in the United States Marine Corps Reserve, he attended Officer's
Candidate School and Officer's School.  In 1961, he accepted a general
management position with Continental Laboratories, Inc., in Denver,
Colorado.  After leaving Continental, he worked for the Adolf Coors
Corporation in Golden, Colorado, where he spent his tenure on the
development and marketing of the Golden Choice line of pet foods.  Mr.
Gibson left the Adolf Coors Corporation in 1968.  For the next three years
he served as President and Chairman of the Board of Southwestern
Diversified Investors, Inc., of Salt Lake City, Utah.  He then accepted a
position as the General Manager of Industrial Design for Polaris Battery
Company, Industrial Commercial Batteries, in Garden Grove, California.  He
held this position until 1977.  Mr. Gibson served as Vice President and
General Manager of United Energy for twelve years, he continued his tenure
when the company changed its name to Basic Energy, Inc., of California. In
1984, Mr. Gibson accepted the Presidency of Basic Energy, Inc., of Utah, he
also serves as Chairman of the Board of Directors.

Ronald D. Burnett, Vice President and Director.  Mr. Burnett began his
career in 1958 as a sales associate with Wood Motor Oldsmobile/Cadillac of
Ogden, Utah. In 1964, he accepted a management position with Burnett's
Furniture and Appliance located in Murray, Utah.  He left Burnett's and
became the owner and operator of Burnett's Furniture & Appliance.  In 1970,
he joined the management team of the Bountiful, Utah, location Menlove
Dodge Toyota as the used car manager.  Two years later he accepted the
same position with Bountiful Lincoln Mercury, where he was employed until
1978.  Since that time Mr. Burnett has been the owner/operator of Carriage
Motors & Trailer Sales.

Joseph M. Graubard, Secretary/Treasurer and Director.  Mr. Graubard is
a graduate of the University of Pittsburgh and is a Registered Professional
Engineer in the State of Florida and the Commonwealth of Pennsylvania.  His
40 year career in management, engineering, product management and
construction management has included comprehensive experience in industry
and management consulting in the United States and internationally.  During
his extensive consulting career Mr. Graubard has maintained a high
professional perspective, having prepared and presented seminars throughout
the world on the subject of project management and control, construction
management, claims avoidance and contract administration.  He has published
various articles on the subject and presented papers at international
professional conferences.

13

Mr. Graubard's corporate line management and consulting experience has
included the development of long range planning functions, corporate
organizations, maintenance and production management systems as well as
senior in line  management of a major steel corporation's engineering
function and vice president of a major United States consulting firm. In
addition to project and construction management and control experience, he
has carried out successful consulting assignments in strategic planning,
organization, production planning and control, material management,
manpower planning, inventory control, maintenance and work force reduction.
He has participated in over 100 assignments as a consultant, managing a
majority of them.  Mr. Graubard's experience covers both private and public
sectors and a variety of industries, including: utility, steel, mining,
paper, glass, petroleum, transportation, medical, educational, health
products, pharmaceutical and commercial building.  He has worked
domestically throughout the United States and has been a resident and
managed assignments in Italy, Zimbabwe, Venezuela and Brazil.  Other
assignments have been performed in Mexico, Argentina, Sweden, England,
Portugal, Switzerland, United Arab Emirates, France and Thailand.
Employers have included U.S. Steel Corporation, Booz Allen & Hamilton,
International Reliance Financial Group and O'Brien Kreitzberg & Associates,
Inc.

Joyce Sigler.  Secretary & Director.  Ms. Sigler has provided services for Basic Energy, Inc. of California
since 1992 as the office secretary. Ms. Sigler
acts as receptionist, secretary, record keeper, and does both  payroll and
accounts payable and receivable for the Company. Previous to working at
Basic Energy Ms. Sigler worked as General Office manager and in data
processing for two companies.

Karl Seljaas.  Assistant Vice President & Director.  Mr. Seljaas
brings vast experience in mining operations.  He served as a smelter worker
for Kennecott Copper and as Mine Superintendent for South Hecla Mining for
twelve years.  He was office manager for Shogun Oil for four years and most
recently was owner and operator of Quality Emission in Salt Lake City.

There are no family relationships between any of the Company's
officers and directors.  In addition, none of the officers and directors
has been involved in legal proceeding which require disclosure in this
annual report of the Company.

Section 16(a) Beneficial Ownership Reporting Compliance

Directors and executive officers are required to comply with Section
16(a) of the Securities Exchange Act of 1934, which requires generally that
such persons file reports regarding ownership of and transactions in
securities of the Company on Forms 3, 4, and 5.

Based solely on a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year, and Forms 5
and amendments thereto furnished to the Company with respect to the most
recent fiscal year, each of Jay W. Gibson, Ronald D. Burnett, Joseph M. Graubard, Joyce Sigler, and Karl Seljaas
did not file four Form 4s during the year ended June 30, 2002 and did not file Form 5s for the year ended June
30, 2002.

14

---

|ITEM 10.  EXECUTIVE COMPENSATION
|--------------------------------

The following table sets forth certain summary information concerning
the compensation paid or accrued over each of the Company's last three
completed fiscal years to the Company's Chief Executive Officer and the Company's four other most highly
compensated executive officers during such period (as determined at June 30, 2002).

SUMMARY COMPENSATION TABLE

|                          |      |        |        |                          | Long Term Compensation           |              |                  
|------------------------- | ---- | ------ | ------ | ------------------------ | -------------------------------- | ------------ | -----------------
|Name andPrincipalPosition | Year | Salary | Bonus$ | OtherAnnualCompen-sation | AwardsRestr-ictedStockAwards (1) | Options/SARs | PayoutsLTIPPayout

|Jay W. GibsonPresident& Chairmanof the Board | 200220012000 |  |  |  | $13,811 (2)$20,997 (2)$37,932 (2) |  |  | 
|-------------------------------------------- | ------------ | --- | --- | --- | --------------------------------- | --- | --- | ---

|Ronald D. BurnettVice President & Director | 200220012000 |  |  |  | $     944 (3)
$     931 (3)$  1,244 (3) |  |  | 
|------------------------------------------ | ------------ | --- | --- | --- | --------------------------------------- | --- | --- | ---

|Karl SeljaasAssistant VicePresident& Director | 200220012000 |  |  |  | $  1,207 (4)$     811 (4)$     454 (4) |  |  | 
|--------------------------------------------- | ------------ | --- | --- | --- | -------------------------------------- | --- | --- | ---

|Joseph M. GraubardTreasurer &Director | 200220012000 |  |  |  | $  2,982 (5)$  1,295 (5)$  2,138 (5) |  |  | 
|------------------------------------- | ------------ | --- | --- | --- | ------------------------------------ | --- | --- | ---

|Joyce SiglerSecretary &Director | 200220012000 |  |  |  | $     821 (6)$     329 (6)
$     165 (6) |  |  | 
|------------------------------- | ------------ | --- | --- | --- | ---------------------------------------- | --- | --- | ---

(1)      From June 30, 2000 to June 30, 2002 there was no established trading market for the Company's shares.
Therefore, an arbitrary value at $.10 per share, which is the par value of the Company's shares, was used to
determine compensation.

(2)      In January 2002, Mr. Gibson was awarded 138,115 restricted common shares. In January 2001, Mr. Gibson
was awarded 115,130 restricted common
shares for the period of October 2000 through December 2000.  In October
2000, Mr. Gibson was awarded 569,065 for the period of March 1999 to
September 2000.  2002, 2001, and 2000 compensation figures are based on a monthly average of these amounts.  All
shares awarded were issued as compensation for services rendered and to cover out of pocket expenses incurred on
behalf of the Company.

15

(3)     In January 2002, Mr. Burnett was awarded 9,948 restricted common shares. In January 2001, Mr. Burnett
was awarded 6,200 restricted common
shares for the period of October 2000 through December 2000.  In October
2000, Mr. Burnett was awarded 18,653 restricted common shares for the
period of March 1999 to September 2000.   2002, 2001, and 2000 compensation figures are based on a monthly
average of these amounts.  All shares awarded were issued as compensation for services rendered and to cover out
of pocket expenses incurred on behalf of the Company.

(4)     In January 2002, Mr. Seljass was awarded 12,076 restricted common shares. In January 2001, Mr. Seljass
was awarded 6,970 restricted common
shares for the period of October 2000 through December 2000.  In October
2000, Mr. Seljass was awarded 6,813 restricted common shares for the period
of March 1999 to September 2000.  2002, 2001, and 2000 compensation figures
are based on a monthly average of these amounts.  All shares awarded were
issued as compensation for services rendered and to cover out of pocket
expenses incurred on behalf of the Company.

(5)      In January 2002, Mr. Graubard was awarded 29,820 restricted common shares. In January 2001, Mr.
Graubard was awarded 7,600 restricted common
shares for the period of October 2000 through December 2000.  In October
2000, Mr. Graubard was awarded 32,074 restricted common shares for the
period of March 1999 to September 2000.  2002, 2001, and 2000 compensation figures are based on a monthly average
of these amounts.  All shares awarded were issued as compensation for services rendered and to cover out of
pocket expenses incurred on behalf of the Company.

(6)     In January 2002, Ms. Sigler was awarded 8,219 restricted common shares. In January 2001, Ms. Sigler was
awarded 2,880 restricted common
shares for the period of October 2000 through December 2000.  In October
2000, Ms. Sigler was awarded 2,472 restricted common shares for the period
of March 1999 to September 2000.  2002, 2001, and 2000 compensation figures
are based on a monthly average of these amounts.  All shares awarded were
issued as compensation for services rendered and to cover out of pocket
expenses incurred on behalf of the Company.

Compensation of Officers and Directors

Compensation of Directors, Officers, and other agents has been paid
by the issuance of shares of restricted common stock of the Company,
having a par value of $.10 per share.  All such stock is fully paid and
non-assessable.  The rate of compensation is $40.00 per hour for labor,
$.30 per mile for miles traveled while working for the Company, and
any out-of-pocket expenses are also compensated at the rate of $.30
per share.  All stock issued as compensation is approved by the Board of
Directors.

Employment Contracts and Termination of Employment and Change in Control
Arrangements

There are no employment contracts between the Company and any of its
officers or directors.

16

There are no compensatory plans or arrangements, including payments to
be received from the
Company, with respect to any of the Companys officers or directors which
would in any way result in payments to any such person because of his
resignation, retirement, or other termination of such persons employment
with the Company, or any change in control of the Company, or a change in the
persons responsibilities following a change in control of the Company.

---

|ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|------------------------------------------------------------------------

The following table sets forth as of September 20, 2002, the name and
the number of shares of the Company's Common Stock, par value $0.10 per
share, beneficially owned by each person who is known by the Company to own more than 5% of the 8,131,226
outstanding shares of the Company's Common Stock, and the name and number of shares beneficially owned by each
director of the Company and by each executive officer named in the Summary Compensation Table contained in
"Executive Compensation," and all of the officers and directors as a group.

|Title of Class |  | Name and Address ofBeneficial Owner |  | Amount and Nature ofBeneficial Ownership |  | Percentage of Class | 
|-------------- |  | ----------------------------------- |  | ---------------------------------------- |  | ------------------- | 

|Common |  | Ron Burnett  (1), (2)155 W. American AvenueMurray, Utah 84108 |  | 122,080 |  |  | .015% | 
|------ |  | ------------------------------------------------------------- |  | ------- |  |  | ----- | 

|Common |  | Joseph M. Graubard  (1)23886 Corte CajonMurrieta, CA 92562 |  | 169,381 |  |  | .021% | 
|------ |  | ---------------------------------------------------------- |  | ------- |  |  | ----- | 

|Common |  | Jay W. Gibson  (1), (3)23871 Corte CajonMurrietta, CA 92565 |  | 3,827,532 |  |  | 47.1% | 
|------ |  | ----------------------------------------------------------- |  | --------- |  |  | ----- | 

|Common |  | Karl Seljaas  (1)2179 Blaine AvenueSalt Lake City, UT 84108 |  | 101,378 |  |  | .012% | 
|------ |  | ----------------------------------------------------------- |  | ------- |  |  | ----- | 

|Common |  | Joyce Seigler  (1)1305 So. Shelly St.Santa Ana, CA 92704 |  | 32,111 |  |  | .004% | 
|------ |  | -------------------------------------------------------- |  | ------ |  |  | ----- | 

---

|Common |  | Officers and Directorsas a Group:   (5 persons) |  | 4,252,482 |  |  | 52.3% | 
|------ |  | ----------------------------------------------- |  | --------- |  |  | ----- | 

---

(1)      Director of the Company
and/or executive officer named in the Summary Compensation Table contained in
Executive Compensation. 

(2)     Includes 115,780 shares held of record by Ron Burnett and 6,300 shares
held of record by Carriage Motor Company.  Mr. Burnett is the owner of
Carriage Motor Company and may be deemed to be the beneficial owner of
those shares.

(3)      Includes 655,784 shares
held by Janet Gibson, his wife and 750,000 shares held by Jay and Janet Gibson
as joint tenants.

17

There are no contracts or other arrangements that may result in a change
of control of the Company.

---

|ITEM 12.  CERTAIN RELATIONSHIPS AND
                              RELATED TRANSACTIONS
|--------------------------------------------------------------------------------------

None.

---

|ITEM 13.  EXHIBITS, LIST AND REPORTS ON FORM 8-K
|------------------------------------------------

(a)   Exhibits.   The following exhibits are included as part of this report:

|ExhibitNumber | Title of Document
|------------- | -----------------

|3.1 | Articles of Incorporation of the Company.(*)
|--- | --------------------------------------------

|3.2 | Articles of Amendment to the Articles of Incorporation of the
Company.(*)
|--- | -------------------------------------------------------------------------

|3.3 | Bylaws of the Company.(*)
|--- | -------------------------

* Previously filed as an
exhibit to the Companys Registration Statement on Form 10-SB, as
amended (Commission File No. 33-59778), and incorporated herein by
reference.

(b)     Reports on Form 8-K.

None.

18

---

|SIGNATURES
|----------

In accordance with Section 13 or Section 15(d) of the Exchange Act, the registrant caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

| | Basic Energy, Inc.
| | ------------------

|October 13, 2002 | By: | /s/ Jay W. Gibson                               
|---------------- | --- | ------------------------------------------------
|                 |     | Jay W. GibsonChairman of the Board and President

In accordance with the Exchange Act, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.

|October 13, 2002 | /s/ Jay W. Gibson                                                             
|---------------- | ------------------------------------------------------------------------------
|                 | Jay W. GibsonChairman of the Board and President
(principal executive officer)

|October 13, 2002 | /s/ Joseph M. Graubard                                                             
|---------------- | -----------------------------------------------------------------------------------
|                 | Joseph M. GraubardTreasurer and Director(principal financial andaccounting officer)

|October 13, 2002 | /s/ Karl Seljaas                       
|---------------- | ---------------------------------------
|                 | Karl SeljaasVice President and Director

|October 13, 2002 | /s/ Joyce Sigler                  
|---------------- | ----------------------------------
|                 | Joyce SiglerSecretary and Director

19

CERTIFICATION PURSUANT TO
                                              18 U.S.C. SECTION 1350,
                                              AS ADOPTED PURSUANT TO
                                   SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jay W. Gibson, certify that:

|1. | I have reviewed this annual report on Form 10-KSB of Basic Energy, Inc.
|-- | -----------------------------------------------------------------------

|2. | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: October 13, 2002

| | /s/ Jay W. Gibson                                                             
| | ------------------------------------------------------------------------------
| | Jay W. GibsonPresident and Chairman of the Board
(principal executive officer)

20

CERTIFICATION PURSUANT TO
                                              18 U.S.C. SECTION 1350,
                                              AS ADOPTED PURSUANT TO
                                   SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph M. Graubard, certify that:

|1. | I have reviewed this annual report on Form 10-KSB of Basic Energy, Inc.
|-- | -----------------------------------------------------------------------

|2. | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: October 13, 2002

| | /s/ Joseph M. Graubard                                   
| | ---------------------------------------------------------
| | Joseph M. GraubardTreasurer
(principal financial officer)

21