U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-KSB


(Mark One)
[ X ]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934

        For the fiscal year ended December 31, 2000

[   ]   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 0-25579

                              HADRO RESOURCES, INC.
                              ---------------------
        (Exact name of small business issuer as specified in its charter)

         NEVADA                                                 87-0571853
         ------                                                 ----------
(State or other jurisdiction of                              (I.R.S. Employer
incorporation of organization)                              Identification No.)

                            50 West Liberty, Suite 880
                               Reno, Nevada 89501
                    -----------------------------------------
                    (Address of Principal Executive Offices)

                                 (702) 433-5250
                                 --------------
                           (Issuer's telephone number)


                            145 Tyee Drive, Suite 1526
                      Point Roberts, Washington 98281-9602
              (Former name, former address and former fiscal year,
                          if changed since last report)


     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 reports),  and (2)
has been subject to such filing requirements for the past 90 days.

                             Yes    X      No
                                 -------      -------

<PAGE>




     Check here if there is no disclosure  of  delinquent  filers in response to
Item 405 of  Regulation  S-B 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. [ X ]

     State the issuer's revenues for its more recent fiscal year (ending
December 31, 2000): $ -0-.

     State the aggregate market value of the voting and non-voting common equity
held by  non-affiliates  computed by  reference to the price at which the common
equity was sold, or the average bid and asked prices of such common  equity,  as
of January 31, 2001: $2,980,960.

     State the number of shares  outstanding of each of the issuer's  classes of
common equity, as of the most practicable date:

Class                                    Outstanding as of March 22, 2001

Common Stock, $.001 par value            13,054,200




                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

History of Business Development

         Hadro Resources, Inc. is a natural resource exploration company engaged
in  the  acquisition,  exploration  and  development  of  oil  and  natural  gas
properties.  Hadro  Resources,  Inc., which currently trades on the OTC Bulletin
Board under the symbol "HDRS"  (referred to in this Form 10-KSB as "HDRS")and on
the  Frankfurt  Stock  Exchange  (FWB) in  Germany  under the  symbol  HD1,  was
incorporated under the laws of the State of Nevada on December 3, 1997 under the
name "Hadrosaurus Resources, Inc.". On January 20, 1998, HDRS filed an amendment
to its articles of incorporation changing its name to "Hadro Resources, Inc." As
of the date of this Annual Report,  HDRS is primarily engaged in the business of
acquiring oil and natural gas properties for exploration  and production  within
the United States and internationally.

         HDRS entered into an assignment  agreement  with Ibis  Petroleum,  Inc.
("Ibis") pertaining to the sale,  assignment,  transfer and conveyance of all of
Ibis' right,  title and interest in and to a total of  thirty-five  (35) oil and
gas leases  located in the  Hadrosaurus  Area of Union  County,  New Mexico (the
"Leasehold Interests").

         HDRS recently entered into a letter of intent to purchase a one hundred
percent (100%) interest in Slovgold Deutschland GmbH, a Berlin based oil and gas
exploration  and  development  company  ("Slovgold  Germany"),  with oil and gas
interests  located in the Ukraine and Russia.  HDRS has,  after  conducting  due
diligence on Slovgold Germany, decided not to pursue the acquisition further.


<PAGE>

         HDRS also  recently  entered into  agreements  to acquire  majority net
revenue  interests in two separate oil and gas prospects  located in eastern New
Mexico  (the  "New  Mexico  Prospects").  HDRS has had  difficulty  in  reaching
agreements  with  the  parties  of  the  New  Mexico   Prospects,   from  verbal
modifications  obtained to agreements previously in place. As HDRS has potential
commercial disputes pending and under consideration relating to these interests,
HDRS has decided not to enter into any development of the New Mexico  Prospects,
and revised formal agreements for the New Mexico Prospects are not in place with
the parties of the New Mexico Prospects.

         HDRS recently entered into a memorandum of understanding with Clearview
Mineral  Resources Corp.  ("Clearview") to acquire a 70% net revenue interest in
approximately  224  acres of oil and gas  leases in the  Buttonwillow  gas field
located in the  southern  San Joaquin  Valley of Kern  County,  California  (the
"Buttonwillow Leases").

The Leasehold Interests

         During June 1999,  HDRS entered into an assignment  agreement with Ibis
Petroleum,  Inc. ("Ibis") whereby Ibis sold, assigned,  transferred and conveyed
all of its right,  title and interest in and to a total of thirty-five  (35) oil
and gas leases located in the  Hadrosaurus  Area of Union County,  New Mexico to
HDRS (the "Leasehold Interests"). The Leasehold Interests are as follows:

         1. Twenty-eight (28) State of New Mexico leases covering an approximate
            total of  6,174.23  acres,  with an annual  rental rate of $0.25 per
            acre until 2002, at which time the rate  increases to $0.50 per acre
            through expiration.  Twenty-two of the leases will expire on January
            31, 2007 and the  remaining  six will expire on March 31, 2007.  The
            State of New Mexico will receive a 12.5% royalty  payment on any oil
            or  gas  production  on  the  properties;  Ibis  will  receive  a 2%
            overriding  royalty;  and three other  unrelated  third parties will
            receive a total of 2% overriding royalties on any production.  HDRS'
            total  royalty  burden  for these  leases is  16.5%.  HDRS'  working
            interest in and to these leases is 100% and its net revenue interest
            (after royalty payments) is 83.5%.

         2. Two (2) Federal  leases  covering an  approximate  total of 2,323.33
            acres,  with an annual  rental  rate of $1.50  per  acre.  These two
            leases will expire on May 31,  2009.  The  federal  government  will
            receive a 12.5% royalty  payment on any oil or gas production on the
            properties.  HDRS's  total  royalty  burden  for these two leases is
            12.5%. HDRS' working interest in and to these leases is 100% and its
            net revenue interest (after royalty payments) is 87.5%.

         3. Five (5) State of New Mexico leases covering an approximate total of
            1,252.04  acres,  with an annual rental rate of $0.25 per acre until
            2004,  at which time the rate  increases  to $0.50 per acre  through
            expiration.  The leases will expire on July 31,  2009.  The State of
            New Mexico will  receive a 12.5%  royalty  payment on any oil or gas
            production on the  properties.  HDRS' total royalty burden for these
            five leases is 12.5%.  HDRS' working interest in and to these leases
            is 100% and its net revenue  interest  (after  royalty  payments) is
            87.5%.

Slovgold Germany

On December  13,  2000,  HDRS  entered into a letter of intent to purchase a one
hundred  percent (100%) equity interest in Slovgold  Deutschland  GmbH, a Berlin


<PAGE>

based oil and gas  exploration  and development  company  ("Slovgold  Germany").
According  to  the  terms  of  the  originally  proposed  agreement,  management
anticipated that in exchange for the equity interest in Slovgold  Germany,  HDRS
would  provide  funding to  Slovgold  Germany in amounts  deemed  necessary  for
continued  operations and issue shares of its restricted Common Stock. HDRS has,
after  conducting due diligence on Slovgold  Germany,  decided not to pursue the
acquisition further.

         HDRS formed Eiger Properties, Inc.,a Belize corporation and the wholly-
owned subsidiary of HDRS, to purchase the equity interest of Slovgold Germany.

The New Mexico Prospects

         On October 25, 2000 (the  "Chaparral  Agreement") and December 15, 2000
(the "Del Valle Agreement"),  respectively,  HDRS entered into two agreements to
acquire  majority net revenue  interests  in two separate oil and gas  prospects
located in eastern New Mexico (collectively,  the "New Mexico Prospects"). As of
the date of this  Annual  Report,  work  conducted  on the New Mexico  Prospects
include 100-plus lineal miles of seismic studies,  remote sensing studies, Kelsh
plotter  photogrammetric  surveys,  surface and  subsurface  mapping and various
geological  field work and geological  studies.  The New Mexico Prospects are as
follows:

         1. Del Valle Prospect: The prospect is comprised of approximately sixty
            square miles (38,400 acres).

         HDRS has had difficulty in reaching  revised terms and conditions  with
the parties to the Del Valle Agreement,  from verbal modifications obtained from
the  parties  to the Del  Valle  Agreement  previously  in  place.  As HDRS  has
potential  commercial disputes pending and under  consideration  relating to the
Del Valle Agreement and vendors thereto,  HDRS has decided to not enter into any
development of the Del Valle Prospect,  and a revised formal agreement necessary
to the development of the Del Valle Prospect is not in place with the parties of
the Del Valle Prospect.

         As of the date of this Annual  Report,  based upon recent  discussions,
management  of HDRS  believes a  possibility  exists that the parties to the Del
Valle Agreement may have breached their respective contractual  obligations.  In
the  event  that  the  Del  Valle   Agreement  was  breached  by  such  parties,
respectively,  management  believes that such breaches  could result in possible
legal  remedies  being  sought  by  HDRS.  Management  of HDRS  may,  if  deemed
necessary,  consider and pursue any and all available legal remedies and related
causes of action.

         2. Prospect 2: The prospect is comprised of approximately  fifty square
            miles (32,000 acres).

         HDRS has had difficulty in reaching  revised terms and conditions  with
the parties to the Chaparral  Agreement.  HDRS has decided to not enter into any
development  of the Chaparral  Prospect at the current  date, as revised  formal
agreements to the  Chaparral  Agreement are not in place with the parties to the
Chaparral Agreement. HDRS may or may not reach formal agreement on revised terms
and  conditions  to the  original  Chaparral  Agreement.  See "Item 12.  Certain
Relationships and Related Transactions".


<PAGE>

The Buttonwillow Leases

         On March 26,  2001,  HDRS and  Clearview  Mineral  Resources  Corp.,  a
British  Columbia  public  company  ("Clearview")  entered into a memorandum  of
understanding pursuant to which HDRS will acquire an approximate 70% net revenue
interest in  approximately  224 acres of oil and gas leases in the  Buttonwillow
gas  field  located  in  the  southern  San  Joaquin  Valley,   California  (the
"Buttonwillow  Leases").  The Buttonwillow Leases are located in close proximity
to the Berkley gas prospect (within 1.5 to 9 miles depending on the lease),  and
are  approximately 32 miles northwest of the City of Bakersfield.  Management of
HDRS believes that the Buttonwillow Leases are host to a gas pipeline, have good
infrastructure and road access.

         Management  of HDRS  believes  that  the  Buttonwillow  gas  field  was
discovered in 1927 and reached production in 1935 with approximately 4.3 billion
cubic  feet  from the  upper  portion  of the  shallow  San  Joaquin  formation.
Subsequent  production  from the  Buttonwillow  gas field was  limited  to sands
within the San Joaquin Formation.  Recently,  several more wells were drilled to
deeper depths which,  management believes,  evidence potential excellent gas and
high gravity shows from the deeper San Joaquin sands.

         Based upon seismic data  processed  on the  Buttonwillow  gas field and
from other  wells  located in close  proximity  which were  drilled in the past,
management of HDRS has located and  identified  the first well for drilling to a
depth of approximately  6,650 feet.  Management of HDRS anticipates that it will
raise necessary  capital  internally and via partnership  drilling  arrangements
under  negotiation to drill gas and oil wells on the Buttonwillow  Leases during
the second and third quarters of 2001.

         As of the  date of this  Annual  Report,  HDRS  is  conducting  its due
diligence and final negotiations for execution of a definitive  agreement.  Upon
execution  of a  definitive  agreement,  HDRS  anticipates  that it  will  issue
2,000,000 shares of its restricted Common Stock to Clearview.

Investment in Other Oil and Gas Prospects

         As of the date of this  Annual  Report,  management  is  developing  an
international  oil and gas  exploration,  development  and  production  program.
Management  intends to focus HDRS' business  activities on the  operational  and
production  aspects of oil and gas projects through its Leasehold  Interests and
further proposed acquisitions currently under review.

Risk Factors

         Risks Pertaining to HDRS

         LACK OF  SUBSTANTIAL  OPERATING  HISTORY AND  REVENUES.  HDRS is in the
exploration stage, and has no substantial history of operations. Therefore, HDRS
does not have any prior  financial  results  upon which an  assessment  of HDRS'
potential  for  success  may be  based.  Accordingly,  the  success  of  HDRS is
dependent, in part, on management's ability to finance, develop and successfully
manage  the  various  oil and gas  exploration  and  development  projects  in a
cost-effective  manner. HDRS faces all of the risks specifically inherent in the
type of business in which HDRS engages. There can be no assurance that HDRS will
be successful at identifying  and  developing  major oil and gas projects in the
future,  including the certain projects  identified herein, or that HDRS will be
able  to  operate  successfully  or  profitably.  In  addition,  HDRS  may  face


<PAGE>

substantial uncertainties related to remote locations of oil and gas exploration
and development in foreign countries.

         HIGHLY SPECULATIVE NATURE OF MINERAL ACQUISITION AND EXPLORATION. HDRS'
revenues,  profitability  and future rate of growth,  if any, are  substantially
dependent upon prevailing prices for oil and natural gas and the ability of HDRS
to acquire  proved  reserves.  Historically,  the prices for oil and natural gas
have been  quite  volatile.  HDRS may be  impacted  more by oil  prices  than by
natural gas prices, because the majority of its production may be from oil. HDRS
may have the  opportunity to enter into  volumetric  production  payments and/or
energy  swap  agreements  with  respect  to a  portion  of its  proposed  future
production,  which may reduce HDRS' exposure to commodity price risk. However, a
significant  portion  of HDRS' oil and gas  production  may be  subject  to spot
market prices, which have historically been volatile. The volatility of the spot
market for oil and natural gas is due to factors beyond HDRS' control, including
seasonality  of demand.  Prices are also  affected by actions of state and local
agencies, the United States and foreign governments,  and international cartels.
These  external  factors and the volatile  nature of the energy  markets make it
difficult to estimate  future prices of oil and natural gas. Any  substantial or
extended  decline  in the  price of oil or  natural  gas would  have a  material
adverse effect on HDRS' financial condition and results of operations. Moreover,
Federal  and state  regulation  of oil and gas  production  and  transportation,
general  economic  conditions,  and  changes  in  supply  and  demand  all could
adversely affect HDRS' ability to produce and market its oil and natural gas. If
market factors were to change  dramatically,  the financial impact on HDRS could
be  substantial.  The  availability of markets is beyond the control of HDRS and
thus represents a significant risk.

         REQUIRED LEASES AND PERMITS. HDRS will be required to obtain all of the
necessary permits and licenses for the production and  transportation of any oil
and gas  found  on HDRS'  properties  and for any  remedial  work  that  will be
required. The following  permits/licenses may be required. (1) Bonding.  Federal
lease bonding is required for oil and gas lease  operations on federal  property
in order to indemnify the U.S.  government  against any losses  associated  with
failure to meet royalty obligations,  plugging wells not property abandoned on a
lease,  and/or surface restoration and cleanup of abandoned  operations.  A bond
must be obtained before any drilling activity commences and may be obtained from
the Bureau of Land  Management  (BLM) or other  surface  management  agencies by
completing  the  appropriate  forms and posting a bond in the minimum  amount of
$10,000  up to a maximum  amount of  $150,000.  The may be a surety or  personal
bond, backed by cash, negotiable securities,  certificates of deposit or letters
of credit.  HDRS intends to establish a certificate  of deposit  ("CD") in a New
Mexico bank,  thereby  receiving  all interest  payments on the CD and retaining
ownership  of the CD as an asset.  The bond will be released  when all  required
work is completed on the properties.  (2) State and/or private leases. According
to the rules and  regulations  of the Energy and Mineral  Department  of the Oil
Conservation  Division of the State of New Mexico, on state or private leases, a
plugging  bond  must be  obtained  from  the  New  Mexico  Oil and  Conservation
Division.  A state-wide blanket plugging bond can be obtained in the appropriate
amount of $50,000.  Single well bonds are dependent on the depth of the proposed
well.  (3) Drilling  permits.  A proposed drill site must be staked and properly
surveyed by a  registered  Surveyor  and then a notice of staking  must be filed
with the BLM to give the BLM time to advertise the notice to the general public.
Assuming  there is no public or other  conflict,  the BLM then schedules a field
meeting  at the  proposed  site by members or  representatives  of the BLM,  the
operator,  an  archeologist,  the  driller,  the dirt  contractor  and any other
interest party to inspect the proposed site. Thereafter,  HDRS must complete and


<PAGE>

file an application for permission to drill,  according to the guidelines of the
Oil  and  Surface  Operating  Standards,  prepared  by the  U.S.  Department  of
Interior,  Bureau of Land Management and the U.S.  Forest Service.  The approval
for an application for permission to drill is generally  completed  within 30-45
days and remains valid for one year after  approval.  Prior to  commencement  of
operations,  notice must be  delivered to the Oil  Conservation  Division of the
intention  to drill any well for oil or gas and  approval  must be obtained on a
Form C-101  application.  A copy of the approved  Form C-101 must be kept at the
well site during any drilling  operations.  Approval is normally obtained within
24 hours and drilling  can  commence  immediately  after  approval.  There is no
assurance, however, that HDRS can financially and successfully obtain such bonds
and permits.

         FOREIGN  OPERATIONS.  A portion  of HDRS'  business  operations  may be
located in foreign countries.  Foreign operations and investments are subject to
the risks normally  associated  with conducting  business in foreign  countries,
including foreign exchange  controls and currency  fluctuations in the event the
foreign currency becomes more valuable than the U.S. currency,  potential future
limitations on repatriation  of earnings if current  policies are changed by the
foreign government, foreign investment taxation, changes in the current policies
for joint venture investments, uncertainty in the current or future legal system
and policies of the foreign country,  including  negotiation or nullification of
existing  licenses,  permits,  joint  venture  administration  rules,  or  other
contracts,  labor disputes and uncertain political and economic  environments as
well as risks of war or other  civil  disturbances,  or other  risks which could
cause  business  interruptions,  restrict the movement of funds or result in the
deprivation or loss of contract rights.  Certain risks of foreign operations can
be offset by insurance coverage.  HDRS has not obtained political risk insurance
coverage for its proposed oil and gas exploration  and  development  projects in
foreign countries.

         COMPETITION.  The oil and gas  exploration  and production  industry is
highly competitive. HDRS expects to encounter competition from other oil and gas
companies in all areas of its  operations,  including the  acquisition of leases
and  properties.  Competitors  include  major  integrated  oil and  natural  gas
companies, natural gas pipeline companies,  numerous independent oil and natural
gas  companies,  individuals  and  drilling and income  programs.  Many of HDRS'
competitors  are large,  well-established  companies with  substantially  larger
operating staffs and greater capital  resources than HDRS has and which, in many
instances,  have been engaged in the energy and/or natural  resource  production
and development  business for a much longer time than HDRS.  These companies may
be able to offer more attractive rates for natural gas gathering commitments and
to pay more for  productive  oil and  natural  gas  properties  and  exploratory
prospects than HDRS' financial or human resources would permit. HDRS' ability to
acquire additional  properties,  discover reserves and attract experienced joint
venture  partners in the future will be dependent on its ability to evaluate and
select  suitable  properties  and to  consummate  transactions  in  this  highly
competitive  environment.  In  addition,  joint  venture  partners  may  not  be
available to HDRS on terms or at prices which HDRS can afford.

         NEED  FOR  ADDITIONAL  FINANCING.  HDRS'  business  activities  will be
designed to manage the oil and gas exploration and development  projects. In the
event  certain  of  the  oil  and  gas  projects  are  consummated,  substantial
additional financing may be needed to fund work and drilling processes and HDRS'
financial  commitments  pursuant  to  contractual  terms  relating  to any  such
acquisitions.  HDRS may not have  sufficient  funds to cover such  expenses and,
therefore,  substantial additional funds will be required.  HDRS will attempt to
raise such


<PAGE>

funds from future advances and additional offerings of shares of stock, however,
there can be no assurance  that HDRS will be  successful  in raising  additional
capital.

         Risks Pertaining to Oil and Gas Exploration and Development

         The  nature of the oil and gas  business  involves  a variety of risks,
including,  but not limited to, the risks of  operating  hazards  such as fires,
explosions,  cratering,  blow-outs,  adverse weather  conditions,  pollution and
environmental risks,  encountering  formations with abnormal pressures,  and, in
horizontal  wellbores,  the increased  risk of mechanical  failure and collapsed
holes,  the  occurrence  of any of which could result in  substantial  losses to
HDRS. HDRS may conduct a portion of its operations offshore. Such operations are
subject to certain risks including,  but not limited to, collision,  sinking and
grounding of rigs and vessels. These risks could result in substantial losses to
HDRS due to personal  injury,  severe  damage or  destruction  of  property  and
equipment,  environmental clean-up costs and the suspension of operations.  HDRS
does not currently maintain insurance against any of these risks. Management may
procure such  insurance in amounts  reasonable in accordance  with customary oil
and gas industry practices. The occurrence of a significant event, however, that
is not insured could have a material adverse effect on HDRS' financial condition
and results of operation.

         GAS  MARKETING/PROCESSING.  HDRS' operations may include gas marketing.
Such operations are subject to significant  price risk,  particularly  where the
index or market for determining the purchase price under a contract is different
from the index or market for determining the sales price under the corresponding
contract.  Although longer-term marketing contracts may permit some variation in
the amount the producer is obligated to purchase,  matched  contracts may result
in an imbalance of the natural gas volumes HDRS may be obligated to purchase and
sell.  HDRS  will  attempt  to match any  long-term  purchase  obligations  with
long-term sales obligations, however, price risk and exposure resulting from gas
imbalances  will  not  be  eliminated  in  connection  with  the  gas  marketing
operations.  The  profitability  of such natural gas marketing  operations  will
depend in large part on the  ability of HDRS to assess and  respond to  changing
market conditions in negotiating  natural gas purchase and sale agreements.  The
inability of HDRS to respond appropriately to changing market conditions,  price
risk and gas  imbalances  could  materially  adversely  affect HDRS'  results of
operations.

         HDRS'  operations  may also  include  processing  of  natural  gas into
various  natural  gas  liquids.  In order to obtain from  natural gas  suppliers
volumes of committed natural gas reserves to maintain natural gas throughput and
committed  reserve levels for the plant, the plant must continually  contract to
process  additional  natural gas provided from new or existing  sources.  Future
natural gas supplies available for processing at the plant will be affected by a
number of factors that are not within the plant owners'  control,  including the
depletion  rate of natural gas reserves  currently  connected  and the extent of
exploration  for,  production and development of, and demand for, natural gas in
the areas in which the plant currently operates.

         REPLACEMENT OF RESERVES. In the event HDRS in the future should acquire
properties  containing  proved reserves or conducts  successful  development and
exploration activities,  there are certain risks relating to proved reserves. In
general,  the  volume of  production  from oil and gas  properties  declines  as
reserves are depleted. The decline rates depend on reservoir characteristics and
vary from the steep decline rates characteristic of Gulf of Mexico reservoirs to


<PAGE>

the relatively slow decline rates  characteristic  of long-lived fields in other
regions.  Except  to the  extent  HDRS  acquires  properties  containing  proved
reserves or conducts successful development and exploration activities, or both,
the proved reserves of HDRS will decline as reserves are produced.  HDRS' future
natural gas and oil  production  may,  therefore,  be highly  dependent upon its
level of success in finding or acquiring  additional  reserves.  The business of
exploring for,  developing or acquiring  reserves is capital  intensive.  To the
extent  cash flow from  operations  is reduced and  external  sources of capital
become  limited or  unavailable,  HDRS'  ability to make the  necessary  capital
investment to maintain or expand its asset base of oil and gas reserves would be
impaired. In addition,  there can be no assurance that HDRS' future development,
acquisition  and  exploration  activities  will result in any proved reserves or
that HDRS will be able to drill productive wells at acceptable costs.

         ACQUISITION  RISKS.  Management  believes  that  HDRS'  growth  will be
primarily  attributable to  acquisitions of drilling and exploration  properties
and  producing  properties.  HDRS  expects to continue  to  evaluate  and pursue
acquisition  opportunities on terms management  considers favorable to HDRS. The
successful  acquisition  of drilling and  exploration  properties  and producing
properties  requires an assessment of recoverable  reserves,  future oil and gas
prices, operating costs, potential environmental and other liabilities and other
factors beyond HDRS' control. Such assessments are necessarily inexact and their
accuracy  inherently  uncertain.  In connection  with such an  assessment,  HDRS
performs a review of the subject  properties  that it  believes to be  generally
consistent with industry practices.  Such a review, however, will not reveal all
existing or potential problems nor will it permit a buyer to become sufficiently
familiar   with  the   properties  to  fully  assess  their   deficiencies   and
capabilities. Inspections may not always be performed on every platform or well,
and structural and  environmental  problems are not necessarily  observable even
when an  inspection  is  undertaken.  HDRS  may not  generally  be  entitled  to
contractual indemnification for pre-closing liabilities, including environmental
liabilities,  and will generally  acquire  interests in the properties on an "as
is" basis.

         RELIANCE  ON  RESERVE  ESTIMATES.  Information  relating  to any future
estimates  of proven  reserves of oil and natural gas is based upon  engineering
estimates.   Petroleum  engineering  is  not  an  exact  science.  Estimates  of
commercially  recoverable  oil and gas reserves and of the future net cash flows
therefrom are based upon a number of variable factors and  assumptions,  such as
historical  production  from  the  subject  properties,  comparison  with  other
producing properties, the assumed effects of regulation by governmental agencies
and assumptions concerning future oil and gas prices and future operating costs,
severance and excise taxes,  abandonment  costs,  development costs and workover
and  remedial  costs,  all of which may in fact vary  considerably  from  actual
results.  All  such  estimates  are to  some  degree  speculative,  and  various
classifications   of  reserves  are  only  attempts  to  define  the  degree  of
speculation  involved.   For  these  reasons,   estimates  of  the  commercially
recoverable  reserves  of oil and  natural gas  attributable  to any  particular
property or group of properties, the classification, cost and risk of recovering
such  reserves and  estimates of the future net cash flows  expected  therefrom,
prepared by different engineers or by the same engineers at different times, may
vary  substantially.  HDRS  therefore  emphasizes  that the  actual  production,
revenues,  severance and excise taxes,  development  expenditures,  workover and
remedial expenditures,  abandonment expenditures and operating expenditures with
respect to its reserves will likely vary from such estimates, and such variances
may be material.


<PAGE>

         In addition,  actual  future net cash flows will be affected by factors
such as price,  actual  production,  supply and demand for oil and natural  gas,
curtailments or increases in consumption by natural gas  purchasers,  changes in
governmental  regulations or taxation and the impact of inflation on costs.  The
timing of actual future net revenue from proved reserves,  and thus their actual
present value,  can be affected by the timing of the incurrence of  expenditures
in  connection  with  development  of oil and gas  properties.  The 10% discount
factor,  which is  required  by the  Securities  and  Exchange  Commission  (the
"Commission") to be used to calculate present value for reporting  purposes,  is
not necessarily the most appropriate  discount factor based on interest rates in
effect  from time to time and risks  associated  with the oil and gas  industry.
Discounted  present  value,  no matter what discount rate is used, is materially
affected by assumptions as to the amount and timing of future production,  which
may and often do prove to be inaccurate.

         GOVERNMENT   REGULATION.   Various  aspects  of  oil  and  natural  gas
operations are regulated by administrative  agencies under statutory  provisions
of the states and countries  where such  operations are conducted and by certain
agencies of the Federal  government  for  operations on Federal  leases.  In the
past,  the Federal  government has regulated the prices at which oil and natural
gas could be sold.  While sales by  producers  of natural  gas, and all sales of
crude  oil,  condensate  and  natural  gas  liquids  can  currently  be  made at
uncontrolled market prices, Congress could reenact price controls in the future.

         Certain  operations  of HDRS may be  conducted  on federal  oil and gas
leases,  which the Minerals Management Service (the "MMS") administers.  The MMS
issues such leases through competitive bidding.  These leases contain relatively
standardized  terms and require  compliance  with detailed MMS  regulations  and
orders.  For  offshore   operations,   lessees  must  obtain  MMS  approval  for
exploration plans and development and production plans prior to the commencement
of such operations. In addition to permits required from other agencies, lessees
must obtain a permit from the MMS prior to the commencement of drilling. The MMS
has promulgated  regulations  requiring offshore  production  facilities to meet
stringent  engineering  and  construction  specifications.   The  MMS  also  has
regulations  restricting the flaring or venting of natural gas.  Similarly,  the
MMS has promulgated other regulations  governing the plugging and abandonment of
wells located  offshore and the removal of all production  facilities.  To cover
the various obligations of lessees, the MMS generally requires that lessees post
substantial  bonds or other acceptable  assurances that such obligations will be
met. The cost of such bonds or other surety can be  substantial  and there is no
assurance that HDRS can obtain such bonds or other surety in all cases.

         Additional  proposals and proceedings that might affect the oil and gas
industry are pending before the courts.  HDRS cannot predict when or whether any
such proposals may become  effective.  In the past, the natural gas industry has
been heavily  regulated.  There is no  assurance  that the  regulatory  approach
currently  pursued will continue  indefinitely.  Notwithstanding  the foregoing,
HDRS cannot determine whether compliance with existing federal,  state and local
laws, rules and regulations will have a material or significantly adverse effect
upon the capital expenditures, earnings or competitive position of HDRS.

         ENVIRONMENTAL  MATTERS AND OPERATING HAZARDS.  Extensive United States,
state and local laws govern oil and gas  operations  regulating the discharge of
materials into the  environment  or otherwise  relating to the protection of the
environment.  Numerous  governmental  departments issue rules and regulations to
implement  and enforce such laws which are often  difficult and costly to comply
with and which carry  substantial  penalties for failure to comply.  These laws,
rules and regulations may restrict the rate of oil and gas production  below the
rate  that  would  otherwise  exist.  The  regulatory  burden on the oil and gas
industry  increases  its cost of doing  business  and  consequently  affects its
profitability.  These laws,


<PAGE>

rules and  regulations  may  affect  the  operations  of HDRS.  Compliance  with
environmental  requirements  generally could have a material adverse effect upon
the capital expenditures, earnings or competitive position of HDRS.

         Oil Spill  Responsibility.  Rules and regulations adopted under the Oil
Pollution  Act of 1990 (the "OPA")  require  owners and operators of oil and gas
facilities  located on or adjacent to waters of the United  States to  establish
$35,000,000 in financial  responsibility to cover oil spill related liabilities.
Compliance  with the rule, if necessary,  could be  financially  burdensome  for
HDRS.  Such rule has the potential to result in the  imposition  of  substantial
annual costs and could materially  adversely affect HDRS. The impact of the rule
should  not be any more  adverse  to HDRS  than it  would be to other  similarly
situated or less capitalized owners or operators in the affected regions.

         Operating Hazards and Environmental  Matters.  The oil and gas business
involves a variety of operating risks,  including the risk of fire,  explosions,
blow-outs,  pipe failure,  casing collapse,  abnormally pressured formations and
environmental  hazards such as oil spills, gas leaks, ruptures and discharges of
toxic gases,  the occurrence of any of which could result in substantial  losses
to HDRS due to  injury  or loss of life,  severe  damage  to or  destruction  of
property,  natural  resources and  equipment,  pollution or other  environmental
damage, clean-up  responsibilities,  regulatory  investigation and penalties and
suspension of operations. In addition, in the event HDRS operates offshore, HDRS
may be  subject  to  the  additional  hazards  of  marine  operations,  such  as
capsizing,  collision and adverse weather and sea  conditions.  Such hazards may
hinder or delay drilling, development and on-line production operations.

         Extensive  federal,  state and local laws  govern oil and  natural  gas
operations  regulating  the  discharge  of  materials  into the  environment  or
otherwise relating to the protection of the environment.  Numerous  governmental
departments  issue rules and  regulations  to  implement  and enforce such laws,
which are often difficult and costly to comply with and which carry  substantial
penalties for failure to comply.  Some laws,  rules and regulations  relating to
protection of the  environment  may, in certain  circumstances,  impose  "strict
liability"  for  environmental  contamination,  rendering  a person  liable  for
environmental damages and cleanup costs without regard to negligence or fault on
the part of such person. Other laws, rules and regulations may restrict the rate
of oil and natural gas production below the rate that would otherwise exist. The
regulatory  burden on the oil and natural  gas  industry  increases  its cost of
doing business and consequently affects its profitability. These laws, rules and
regulations  affect  the  operations  of  HDRS.  Compliance  with  environmental
requirements  generally  could have a material  adverse  effect upon the capital
expenditures, earnings or competitive position of HDRS.

         HDRS  believes  that  it  is in  substantial  compliance  with  current
applicable environmental laws and regulations and that continued compliance with
existing  requirements  will  not  have  a  material  adverse  impact  on  HDRS.
Nevertheless,  changes in  environmental  law have the  potential  to  adversely
affect  HDRS'  operations.  For  instance,  at least two  separate  courts  have
recently ruled that certain wastes  associated  with the production of crude oil
may be classified as hazardous substances under the Comprehensive  Environmental
Response,  Compensation and Liability Act (commonly called "Superfund") and thus
HDRS could

<PAGE>

become subject to the  burdensome  cleanup and liability  standards  established
under the federal Superfund program if significant concentrations of such wastes
were determined to be produced as a result of HDRS' operations.

         HDRS does not  maintain  insurance  against any of the risks  described
above, including insuring the costs of clean-up operations, public liability and
physical  damage.  There is no  assurance  that HDRS will obtain such  insurance
adequate  to cover all such costs or that such  insurance  will  continue  to be
available  in the future or that such  insurance  will be  available  at premium
levels that justify its purchase.  The  occurrence  of a  significant  event not
insured or  indemnified  against could have a material  adverse  effect on HDRS'
financial condition and operations.

ITEM 2. PROPERTIES

         Except as described  above,  HDRS does not own any real estate or other
properties.  HDRS  leases  office  space and its  offices are located at 50 West
Liberty, Suite 880, Reno, Nevada 89501.

ITEM 3. LEGAL PROCEEDINGS

         Except  as  described  above,  management  is not  aware  of any  legal
proceedings  contemplated  by any  governmental  authority  or any  other  party
involving HDRS or its properties.  No director,  officer or affiliate of HDRS is
(i) a party  adverse  to HDRS in any legal  proceedings,  or (ii) has an adverse
interest to HDRS in any legal proceedings.  Management is not aware of any other
legal  proceedings  pending  or that have been  threatened  against  HDRS or its
properties.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to a vote of HDRS' shareholders  through  the
solicitation of proxies or otherwise during fiscal year ended December 31, 2000.

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

Market Information

         Hadro  Resources,  Inc.'s  common  stock is traded on the OTC  Bulletin
Board under the symbol  "HDRS".  The market for HDRS'  common  stock is limited,
volatile and  sporadic.  The  following  table sets forth the high and low sales
prices  relating to HDRS' common stock for the last fiscal year  commencing with
the second quarter.  These quotations reflect inter-dealer prices without retail
mark-up, mark-down, or commissions, and may not reflect actual transactions.

                            FISCAL YEAR ENDED
                      -----------------------------
                               DECEMBER 31, 2000
                      -----------------------------
                                                     HIGH BID          LOW BID
                                                     -------------------------

         Second Quarter                              $ 0.62            $ 0.12
         Third Quarter                               $ 1.37            $ 0.25
         Fourth Quarter                              $ 1.68            $ 0.28


<PAGE>

Holders

     As of January 31, 2001, HDRS had approximately 43 shareholders of record.

Dividends

     No dividends have ever been declared by the board of directors of HDRS on
its common stock.  HDRS' losses do not currently indicate the ability to pay any
cash  dividends,  and HDRS  does not  indicate  the  intention  of  paying  cash
dividends on its common stock in the foreseeable future.

Recent Sales of Unregistered Securities and Changes in Control of HDRS

         (a) On December  20,  2000,  January 30,  2001,  and January 31,  2001,
Alexander W. Cox, an individual  ("Cox")  purchased  100,000 shares,  1,1750,000
shares  and  400,000  shares,  respectively,  of the Common  Stock of HDRS.  The
purchases by Cox resulted in an acquisition of an aggregate  2,250,000 shares of
Common  Stock,  which  represented   approximately   17.2%  of  the  issued  and
outstanding  shares of Common Stock and resulted in a change in control of HDRS.
The transactions are as follows:

              (i)  On December 20, 2000,  Sparten Asset Group  ("Sparten")  sold
                   100,000  shares of Common Stock to Cox at $0.30 per share for
                   an aggregate  consideration of approximately  $30,000.  There
                   was no written  documentation  between the parties  involving
                   the sale and  purchase of the  securities.  On  December  20,
                   2000,  Sparten held of record  190,000 shares of free trading
                   Common Stock and,  therefore,  was not deemed an affiliate of
                   HDRS. The 100,000 shares acquired by Cox are free trading.

              (ii) On January 30, 2001,  pursuant to a private  transaction  not
                   involving a public offering,  Tri Star Financial Group,  Inc.
                   ("Tri Star") sold 1,750,000 shares of restricted Common Stock
                   to Cox at a  price  of  $0.001  per  share  for an  aggregate
                   consideration of approximately  $1,750.  On January 30, 2001,
                   Tri Star held of record 7,000,000 shares of restricted Common
                   Stock and,  therefore,  was deemed an affiliate of HDRS.  The
                   1,750,000   shares  of  Common  Stock  acquired  by  Cox  are
                   restricted  securities.  Cox  executed a purchase and sale of
                   securities  agreement  in  which  Cox  acknowledged  that the
                   securities had not been  registered  under the Securities Act
                   of 1933, as amended,  that he understood the economic risk of
                   an  investment  in  the  securities,  and  that  he  had  the
                   opportunity  to ask  questions  of and receive  answers  from
                   HDRS'  management  concerning any and all matters  related to
                   the acquisition of securities. No underwriter was involved in
                   the  transaction,  and no commissions  or other  remuneration
                   were paid in  connection  with the sale and  purchase  of the
                   securities.

              (iii)On January 31, 2001, Rising Sun Capital Corp.  ("Rising Sun")
                   sold 400,000 shares of Common Stock to Cox at $0.30 per share
                   for an aggregate  consideration  of  approximately  $120,000.
                   There  was  no  written  documentation  between  the  parties
                   involving the sale and purchase of the securities. On January
                   31, 2001,  Rising Sun held of record  490,000  shares of free
                   trading  Common  Stock  and,  therefore,  was not  deemed  an
                   affiliate  of  HDRS.  The  400,000  shares  of  Common  Stock
                   acquired by Cox are free trading.

<PAGE>


         (b) As a result of the  acquisition  by Cox of the 2,250,000  shares of
Common  Stock,  which  represented   approximately   17.2%  of  the  issued  and
outstanding  shares of Common Stock,  there was a change in control of HDRS. See
"Item 11. Security Ownership of Certain Beneficial Owners and Management".

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
        RESULTS OF OPERATIONS

         The following  discussions  of the results of operations  and financial
position of HDRS should be read in conjunction with the financial statements and
notes pertaining to them that appear elsewhere in this Form 10-KSB.

For Fiscal Year Ended December 31, 2000 compared with Fiscal Year Ended
December 31, 1999

General

         As of the date of this Annual Report,  HDRS has not generated  revenues
from operations.  During the prior fiscal years,  HDRS focused  primarily on the
exploration of potential oil and gas projects and generated no revenues.  During
those  prior  fiscal  years,  HDRS relied upon  internally  generated  funds and
advances, funds from the sale of shares of stock and loans from its shareholders
and private  investors to finance its operations  and growth.  As of the date of
this Annual Report, management is in the process of identifying certain business
opportunities  that it plans to pursue pertaining to oil and gas exploration and
development.  Management  intends to  continue  its  search  for other  business
opportunities  in any  geographical  area involving oil and gas  exploration and
development. See "Item 1. Description of Business".

Results of Operation

         HDRS'  net  losses  for  fiscal  year  ended  December  31,  2000  were
approximately  $111,428  compared to a net loss of  approximately  $105,362  for
fiscal year ended 1999.

         During  fiscal year ended 2000,  HDRS  recorded  operating  expenses of
approximately $111,428 as compared to $105,362 of operating expenses recorded in
the same period for fiscal year ended 1999. Oil and gas lease costs decreased by
approximately $18,191 during fiscal year ended 2000 from $36,076 incurred during
fiscal year ended 1999  compared to $17,885  incurred  during  fiscal year ended
2000.  This  decrease in oil and gas lease  costs  resulted  primarily  from the
decreased  obligations  and payment terms and  conditions of existing  leases in
place.

         General and administrative  expenses increased by approximately $24,257
during  fiscal year ended 2000 from $69,286  incurred  during  fiscal year ended
1999 compared to $93,543  incurred  during fiscal year ended 2000. This increase
in general  and  administrative  expenses  was due  primarily  to an increase in
overhead and  administrative  expenses  resulting from the increasing  scale and
scope of overall corporate activity  pertaining to the acquisition,  exploration
and development of oil and natural gas properties.

         The increase in net loss during fiscal year ended  December 31, 2000 as
compared to fiscal year ended December 31, 1999 is attributable primarily to the
increase in general and  administrative  expenses.  HDRS' net earnings  (losses)
during fiscal year ended 2000 were ($111,428) or ($0.0085) per share compared to
a net loss of approximately ($105,362) or ($0.0081) per share during fiscal year


<PAGE>

ended December 31, 1999. The weighted  average number of shares  outstanding was
13,054,200 for fiscal years ended December 31, 2000 and 1999, respectively.

Liquidity and Capital Resources

         HDRS'  financial  statements  have been prepared  assuming that it will
continue  as a  going  concern  and,  accordingly,  do not  include  adjustments
relating to the  recoverability  and realization of assets and classification of
liabilities  that  might be  necessary  should  HDRS be  unable to  continue  in
operation.

         As of fiscal year ended  December  31,  2000,  HDRS' total  assets were
$26,070  compared to total  assets of $9,179 for fiscal  year ended  1999.  This
increase in total  assets from  fiscal year ended 1999 was due  primarily  to an
increase in cash and cash  equivalents  resulting  from advances made by related
parties to HDRS.

         As of fiscal year ended December 31, 2000, HDRS' total liabilities were
$134,049  compared  to total  liabilities  of $5,748 for fiscal year ended 1999.
This  increase in  liabilities  from fiscal year ended 1999 was due primarily to
(i) cash advances in the approximate  amount of $35,029 made to HDRS plus $1,192
of  accrued  interest,  (ii) a debt  of  $45,000  due  and  owing  by  HDRS  for
managerial, administrative and investor relations services provided to HDRS; and
(iii) accounts payable and accrued liabilities in the amount of $52,808.

         Stockholders'  equity  (deficit)  decreased from $3,449 for fiscal year
ended December 31, 1999 to ($107,979) for fiscal year ended December 31, 2000.

Audit Committee

         As of the date of this Annual Report, HDRS has not appointed members to
an audit committee and, therefore, the respective role of an audit committee has
been conducted by the board of directors of HDRS.  When  established,  the audit
committee's  primary  function  will be to provide  advice with respect to HDRS'
financial  matters  and to  assist  the board of  directors  in  fulfilling  its
oversight  responsibilities   regarding  finance,   accounting,  tax  and  legal
compliance.  The audit committee's primary duties and  responsibilities  will be
to: (i) serve as an independent  and objective  party to monitor HDRS' financial
reporting  process and  internal  control  system;  (ii) review and appraise the
audit efforts of HDRS' independent  accountants;  (iii) evaluate HDRS' quarterly
financial performance as well as its compliance with laws and regulations;  (iv)
oversee  management's  establishment  and enforcement of financial  policies and
business  practices;  and (v) provide an open avenue of communication  among the
independent accountants, management and the board of directors.

         The board of directors has considered whether the regulatory  provision
of non-audit  services is compatible with maintaining the principal  independent
accountant's independence.

         Audit Fees

         As of the date of this Annual Report,  HDRS has incurred  approximately
$3,000 as fees billed by its principal  independent  accountant for professional
services  rendered in connection  with  preparation  of HDRS' audited  financial
statements  for fiscal  year ended  December  31,  2000.  For fiscal  year ended
December  31, 2000,  HDRS  incurred  approximately  $2,850 as fees billed by its


<PAGE>

principal  independent  accountant for all other non-audit  services  (including
reviews of HDRS' quarterly financial statements).

ITEM 7. FINANCIAL STATEMENTS

         The  information  required  under  Item  310(a)  of  Regulation  S-B is
included in this report as set forth in the "Index to Financial Statement".

Index to Financial Statements

         Report of Independent Public Accountants
         Balance Sheets
         Statements of Operations
         Statements of Stockholders' Equity
         Statements of Cash Flow
         Notes to Financial Statements


<PAGE>


                              HADRO RESOURCES, INC.

                         (AN EXPLORATION STAGE COMPANY)

                              FINANCIAL STATEMENTS

                                DECEMBER 31, 2000





















AUDITORS' REPORT

BALANCE SHEETS

STATEMENTS OF OPERATIONS

STATEMENT OF STOCKHOLDERS' EQUITY

STATEMENTS OF CASH FLOWS

NOTES TO FINANCIAL STATEMENTS

                                        1

<PAGE>

LABONTE & CO.                                     1205 - 1095 WEST PENDER STREET
-----------------------------------------         VANCOUVER, BC  CANADA
C H A R T E R E D A C C O U N T A N T S           V6E 2M6
-----------------------------------------         TELEPHONE      (604) 682-2778
                                                  FACSIMILE      (604) 689-2778
                                                  EMAIL        RJL@LABONTECO.COM



                                AUDITORS' REPORT
--------------------------------------------------------------------------------


To the Stockholders and Board of Directors of Hadro Resources, Inc.

We have audited the balance sheet of Hadro Resources, Inc. (an exploration stage
company) as at December 31, 2000 and the 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 Canadian and United States  generally
accepted auditing standards. Those standards require that we plan and perform an
audit to obtain reasonable  assurance whether the financial  statements are free
of material misstatement. 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 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,  these  financial  statements  present  fairly,  in all material
respects,  the financial position of the Company as at December 31, 2000 and the
results of its  operations  and its cash flows and the changes in  stockholders'
equity  for the year then  ended in  accordance  with  United  States  generally
accepted accounting principles.

The  financial  statements  as at December  31, 1999 and for the year then ended
were audited by other auditors who expressed an opinion  without  reservation in
their report dated April 24, 2000.

                                                                 "LABONTE & CO."

                                                           CHARTERED ACCOUNTANTS
Vancouver, B.C.
March 26, 2001


COMMENTS  BY  AUDITORS  FOR  U.S.  READERS  ON  CANADA-UNITED  STATES  REPORTING
DIFFERENCES
--------------------------------------------------------------------------------

In the United  States,  reporting  standards  for  auditors  would  require  the
addition of an explanatory  paragraph  following the opinion  paragraph when the
financial statements are affected by conditions and events that cast substantial
doubt on the  Company's  ability to continue as a going  concern,  such as those
described in Note 1. Our report to the stockholders and Board of Directors dated
March 26, 2001 is expressed in  accordance  with  Canadian  reporting  standards
which do not permit a reference to such  conditions  and events in the auditors'
report when these are adequately disclosed in the financial statements.


                                                                 "LABONTE & CO."

                                                           CHARTERED ACCOUNTANTS
Vancouver, B.C.
March 26, 2001

                                        2


<PAGE>

<TABLE>
<CAPTION>

                              HADRO RESOURCES, INC.

                         (AN EXPLORATION STAGE COMPANY)

                                 BALANCE SHEETS


                                                                           December 31,      December 31,
                                                                                   2000              1999
---------------------------------------------------------------------------------------- -----------------

                                     ASSETS

<S>                                                                           <C>               <C>
CURRENT ASSETS
   Cash                                                                       $  26,070         $   9,197
---------------------------------------------------------------------------------------- -----------------

                                                                              $  26,070         $   9,197
======================================================================================== =================


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable and accrued liabilities                                   $  52,808         $   4,097
   Due to related parties (Note 5)                                               81,241             1,651
---------------------------------------------------------------------------------------- -----------------

                                                                                134,049             5,748
---------------------------------------------------------------------------------------- -----------------

STOCKHOLDERS' EQUITY (DEFICIT)
   Common stock, $.001 par value, 100,000,000 shares authorized
      13,054,200 shares issued and outstanding                                   13,054            13,054
   Additional paid-in capital                                                   126,795           126,795
   Deficit accumulated during the exploration stage                            (247,828)         (136,400)
---------------------------------------------------------------------------------------- -----------------

                                                                               (107,979)             3,449
---------------------------------------------------------------------------------------- -----------------

                                                                              $  26,070         $   9,197
======================================================================================== =================

</TABLE>




   The accompanying notes are an integral part of these financial statements


                                        3


<PAGE>

<TABLE>
<CAPTION>

                              HADRO RESOURCES, INC.

                         (AN EXPLORATION STAGE COMPANY)

                            STATEMENTS OF OPERATIONS



                                                                                                      December 3,
                                                                    Year ended       Year ended  1997 (inception)
                                                                  December 31,     December 31,   to December 31,
                                                                          2000             1999              2000
------------------------------------------------------------------------------- ----------------------------------

<S>                                                                 <C>              <C>                <C>
GENERAL AND ADMINISTRATIVE EXPENSES                                   $ 93,543         $ 69,286          $193,867

OIL AND GAS LEASE COSTS                                                 17,885           36,076            53,961
------------------------------------------------------------------------------- ----------------------------------

NET LOSS FOR THE PERIOD                                              $ 111,428        $ 105,362         $ 247,828
=============================================================================== ==================================




BASIC NET LOSS PER SHARE                                              $ 0.0085         $ 0.0081
=============================================================================== ===================================

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                          13,054,200       13,054,200
=============================================================================== ===================================

</TABLE>









   The accompanying notes are an integral part of these financial statements


                                        4


<PAGE>

<TABLE>
<CAPTION>

                              HADRO RESOURCES, INC.

                         (AN EXPLORATION STAGE COMPANY)

                        STATEMENT OF STOCKHOLDERS' EQUITY

      FOR THE PERIOD FROM DECEMBER 3, 1997 (INCEPTION) TO DECEMBER 31, 2000

                                                                                                  Deficit
                                                                                                accumulated
                                                                                  Additional     during the
                                                           Number of                Paid In     exploration
                                                            shares      Amount      Capital        stage         Total
---------------------------------------------------------------------------------------------------------------------------

<S>                                                        <C>           <C>         <C>           <C>          <C>
Balance, December 3, 1997 (inception)                               -    $     -     $       -     $       -    $        -

Issuance of common stock for cash at $.001 per share       12,350,000     12,350             -             -        12,350
 - February through July, 1998

Issuance of common stock for cash at $.01 per share           560,000        560         5,040             -         5,600
 - July, 1998

Issuance of common stock for cash at $.50 per share           114,000        114        56,886             -        57,000
 - July, 1998

Issuance of common stock for cash at $.50 per share            30,200         30        15,069             -        15,099
 - August, 1998

Net loss for the year ended December 31, 1998                       -          -             -       (31,038)      (31,038)
---------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1998                                 13,054,200     13,054        76,995       (31,038)       59,011

Contributions to capital by related parties - expenses              -          -        49,800             -        49,800

Net loss for the year ended December 31, 1999                       -          -             -      (105,362)     (105,362)
---------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1999                                 13,054,200     13,054       126,795      (136,400)        3,449

Net loss for the year ended December 31, 2000                       -          -             -      (111,428)     (111,428)
---------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2000                                 13,054,200    $13,054     $ 126,795     $(247,828)   $ (107,979)
===========================================================================================================================
</TABLE>





    The accompanying notes are an integral part of these financial statements


                                        5

<PAGE>

<TABLE>
<CAPTION>

                              HADRO RESOURCES, INC.

                         (AN EXPLORATION STAGE COMPANY)

                            STATEMENTS OF CASH FLOWS

                                                                                                               December 3,
                                                                                                                      1997
                                                                              Year ended       Year ended   (inception) to
                                                                            December 31,     December 31,     December 31,
                                                                                   2000             1999             2000
---------------------------------------------------------------------------------------------------------------------------

<S>                                                                          <C>                <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss for the period                                                    $  (111,428)       $(105,362)      $ (247,828)
  Adjustments to reconcile net loss to net cash from operating activities:
  - non-cash expenses                                                                  -           49,800           49,800
---------------------------------------------------------------------------------------------------------------------------

                                                                                (111,498)         (55,562)        (198,028)
  - net changes in working capital items                                          93,272            5,620           99,019
---------------------------------------------------------------------------------------------------------------------------

CASH USED IN OPERATING ACTIVITIES                                                (18,156)         (49,942)         (99,009)
---------------------------------------------------------------------------------------------------------------------------


CASH FLOWS FROM FINANCING ACTIVITIES
  Advances from related party                                                     35,029                -           35,029
  Net proceeds on sale of common stock                                                 -                -           90,050
---------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES                                              35,029                -          125,079
---------------------------------------------------------------------------------------------------------------------------

INCREASE (DECREASE) IN CASH                                                       16,873          (49,942)          26,070

CASH, BEGINNING OF PERIOD                                                          9,197           59,139                -
---------------------------------------------------------------------------------------------------------------------------

CASH, END OF PERIOD                                                          $    26,070        $   9,197        $  26,070
===========================================================================================================================
</TABLE>


Other non-cash transactions:
         In 1999 the  Company  received  contributions  to capital of $49,800 by
officers for services provided.






   The accompanying notes are an integral part of these financial statements

                                        6



<PAGE>

                              HADRO RESOURCES, INC.

                         (AN EXPLORATION STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000
--------------------------------------------------------------------------------


NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION
--------------------------------------------------------------------------------

The company was  incorporated as Hadrosaurus  Resourcse,  Inc. under the Laws of
the State of Nevada on December 2, 1997. The company  underwent a name change to
Hadro Resources, Inc. on January 12, 1998. No revenues have been generated since
inception and at December 31, 2000, the Company had a working capital deficiency
of $107,979.  The  Company's  continuance  of  operations  and movement  into an
operating basis are contingent on raising additional  working capital,  settling
its outstanding debts and on the future development of the Company's oil and gas
properties  or  a  new  business  venture.  Accordingly,   these  factors  raise
substantial  doubt about the Company's  ability to continue as a going  concern.
Advances from certain  significant  shareholders will form the primary source of
short-term funding for the Company during the next twelve months.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
-------------------------------------------------------------------------------

USE OF ESTIMATES AND ASSUMPTIONS
Preparation of the Company's  financial  statements in conformity with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions that affect certain  reported amounts and disclosures.  Accordingly,
actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS
The Company considers all liquid investments, with an original maturity of three
months or less when purchased, to be cash equivalents.

FOREIGN CURRENCY TRANSLATION
The financial  statements are presented in United States dollars.  In accordance
with  Statement of Financial  Accounting  Standards  No. 52,  "Foreign  Currency
Translation", foreign denominated monetary assets and liabilities are translated
to their United States dollar  equivalents  using foreign  exchange  rates which
prevailed at the balance  sheet date.  Revenue and expenses  are  translated  at
average rates of exchange during the year. Related  translation  adjustments are
reported as a separate  component  of  stockholders'  equity,  whereas  gains or
losses resulting from foreign  currency  transactions are included in results of
operations.

NET LOSS PER COMMON SHARE
Basic  earnings  per share  includes no dilution and is computed by dividing net
loss by the weighted average number of common shares outstanding for the period.
There are no dilutive securities outstanding.

STOCK-BASED COMPENSATION
The Company  accounts for  stock-based  compensation in respect to stock options
granted to employees  and  officers  using the  intrinsic  value based method in
accordance with APB 25. Stock options granted to non-employees are accounted for
using the fair value method in accordance  with SFAS No. 123. In addition,  with
respect to stock options granted to employees,  the Company  provides  pro-forma
information as required by SFAS No. 123 showing the results of applying the fair
value method using the Black-Scholes option pricing model.

The Company accounts for equity  instruments  issued in exchange for the receipt
of goods or services from other than  employees in accordance  with SFAS No. 123
and the  conclusions  reached  by the  Emerging  Issues  Task Force in Issue No.
96-18.   Costs  are  measured  at  the  estimated   fair  market  value  of  the
consideration  received or the  estimated  fair value of the equity  instruments
issued,  whichever is more reliably measurable.  The value of equity instruments
issued for  consideration  other than  employee  services is  determined  on the
earliest  of a  performance  commitment  or  completion  of  performance  by the
provider of goods or services as defined by EITF 96-18.


                                       7

<PAGE>

HADRO RESOURCES, INC.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000
--------------------------------------------------------------------------------


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CON'T)
--------------------------------------------------------------------------------

OIL AND GAS PROPERTIES
The  Company  follows  the full cost  method of  accounting  for its oil and gas
operations  whereby all cost related to the acquisition of petroleum and natural
gas interests  are  capitalized.  Such costs include land and lease  acquisition
costs,  annual  carrying  charges of  non-producing  properties,  geological and
geophysical costs, costs of drilling and equipping productive and non-productive
wells, and direct exploration  salaries and related benefits.  Proceeds from the
disposal  of  capital  assets  are  recorded  as  a  reduction  of  the  related
expenditures  without  recognition  of a gain or loss unless the disposal  would
result in a change of 20 percent or more in the depletion rate.

Depletion and  depreciation of the capitalized  costs will be computed using the
unit-of-production  method based on the estimated proven reserves of oil and gas
determined by independent consultants.

The  Company  applies a ceiling  test to  capitalized  costs to ensure that such
costs do not exceed  estimated  future net revenues  from  production  of proven
reserves  at year end market  prices  less  future  production,  administrative,
financing,  site  restoration,  and  income  tax costs plus the lower of cost or
estimated  market  value  of  unproved  properties.   As  the  Company  has  not
established  proven  recoverable  reserves on properties  held,  the Company has
provided an impairment provision for lease costs incurred to date.

INCOME TAXES
The Company follows the liability  method of accounting for income taxes.  Under
this method,  deferred  income tax assets and liabilities are recognized for the
estimated tax  consequences  attributable  to differences  between the financial
statement  carrying  values and their  respective  income  tax basis  (temporary
differences).  The effect on  deferred  income tax assets and  liabilities  of a
change in tax rates is  recognized  in income in the period  that  includes  the
enactment date.

RECENT ACCOUNTING PRONOUNCEMENTS
On March 31, 2000, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation  No.44,  Accounting  for  Certain  Transactions  Involving  Stock
Compensation  - An  Interpretation  of APB  Opinion  No.  25 ("FIN  44"),  which
provides  guidance  as to certain  applications  of APB 25. FIN 44 is  generally
effective  July 1, 2000 with the  exception of certain  events  occurring  after
December 15, 1998. The Company has determined  that the  implementation  of this
standard does not have a material impact on its financial statements.

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
No. 133,  Accounting for Derivative  Instruments and Hedging  Activities  ("SFAS
133"),  which  establishes  accounting  and reporting  standards for  derivative
instruments,  including  instruments  embedded in other  contracts,  and hedging
activities.  It requires  that an entity  recognize all  derivatives;  as either
assets or liabilities and measure those  instruments at fair value.  SFAS 133 is
effective for financial  statements  for fiscal years  beginning  after June 15,
1999. The Company  determined that the  implementation of this standard does not
have a material impact on its financial statements.


NOTE 3 - OIL AND GAS PROPERTIES
--------------------------------------------------------------------------------

In June,  1999 the  Company  entered  into an  Assignment  Agreement  with  Ibis
Petroleum, Inc. ("Ibis"), whereby Ibis sold, assigned,  transferred and conveyed
all of its right,  title and interest in and to a total of 35 oil and gas leases
located in the  Hadrosaurus  Area of Union  County,  New Mexico.  The  leasehold
interests are as follows:

1.   Twenty-eight  State of New Mexico  Leases,  covering a total of 6174 acres,
     with an annual  rental rate of $0.25 per acre until 2002, at which time the
     rate  increases to $0.50 per acre  through  expiration.  Twenty-two  of the
     leases will expire on January 31, 2007 and the remaining six will expire on
     March 31, 2007.  The  Company's  total  royalty  burden for these leases is
     16.5%.

2.   Two federal leases,  covering a total of 2323 acres,  with an annual rental
     rate of $1.50 per acre.  These  leases  will  expire on May 31,  2009.  The
     Company's total royalty burden for these leases if 12.5%.


                                       8

<PAGE>

HADRO RESOURCES, INC.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000
--------------------------------------------------------------------------------


NOTE 3 - OIL AND GAS PROPERTIES (CON'T)
--------------------------------------------------------------------------------

3.   Five State of New Mexico  Leases,  covering a total of 1252 acres,  with an
     annual  rental  rate of $0.25 per acre until  2004,  at which time the rate
     increases to $0.50 per acre through  expiration.  The leases will expire on
     July 31,  2009.  The  Company's  total  royalty  burden for these leases is
     12.5%.

The Company has not carried out any exploration  activities on these  properties
and has recorded a full impairment provision for lease costs incurred to date.

On October 25, 2000 the Company  entered into an oil and gas  prospect  purchase
agreement  with Gene  Wilson,  a former  director  of the  Company,  whereby the
Company can purchase certain geological,  seismic and other knowledge,  research
and  documentation,  of specifics relating to the Chaparral Oil and Gas Prospect
located in New Mexico in  consideration  for $60,000 and the  assumption  of all
future  lease  costs.  Mr.  Wilson  has also  agreed to assist  the  Company  in
obtaining  leases for all necessary lease lands located on the Chaparral Oil and
Gas  Prospect  and to act  as a  consultant  to the  Company  to  assist  in the
exploration and potential development of the Prospect.

On December 15, 2000 the Company  entered into an oil and gas prospect  purchase
agreement  with Ace USA  Corporation  and Newmex  Oil  Corporation  whereby  the
Company can purchase certain geological,  seismic and other knowledge,  research
and  documentation,  of specifics relating to the Del Valle Oil and Gas Prospect
as well as  certain  oil and gas  exploration  leases in the Quay  County of New
Mexico for $469,000, to be paid in instalments commencing February 15, 2001, and
the  assumption  of all  future  lease  costs.  In  addition,  Mr.  Wilson  is a
beneficial third party to obtain overriding  royalties from production under the
Del Valle Agreement.

Due to the inability to reach  acceptable terms and conditions with the vendors,
the Company has elected not to proceed with these acquisitions.


NOTE 4 - CAPITAL STOCK
--------------------------------------------------------------------------------

The Company's  capitalization  is 100,000,000  common shares with a par value of
$0.001 per share.

To December 31, 2000, the Company has not granted any stock options.


NOTE 5 - RELATED PARTY TRANSACTIONS
--------------------------------------------------------------------------------

One  of  the   directors   of  the  Company   has  been   employed  by  Investor
Communications,  Inc.  and is part of the  management  team  provided  to  Hadro
Resources,  Inc.  During the year ended December 31, 2000 a total of $45,000 was
incurred to this private  company for  managerial,  administrative  and investor
relations services provided to the Company.

During  the year ended  December  31,  2000 net cash  advances  of $35,029  were
received from a director,  Investor  Communications,  Inc., and another  company
which is a  significant  shareholder.  Interest  of $1,192 was accrued on theses
advances. At December 31, 2000 $81,241 is owing to these parties.

During the year ended December 31, 2000 the Company  incurred $21,050 in fees to
a former director. At December 31, 2000 $20,000 is owing to this party.


                                       9

<PAGE>

HADRO RESOURCES, INC.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000
--------------------------------------------------------------------------------


NOTE 6 - INCOME TAXES
--------------------------------------------------------------------------------

There were no temporary  differences  between the  Company's  tax and  financial
bases,  except for the Company's net operating loss  carryforwards  amounting to
approximately $194,000 at December 31, 2000. These carryforwards will expire, if
not utilized,  beginning in 2014.  The potential tax benefit of these losses has
not been  recorded as a full  deferred tax asset  valuation  allowance  has been
provided due to the uncertainty regarding the realization of these losses.


NOTE 7 - COMMITMENTS AND CONTINGENCIES
--------------------------------------------------------------------------------

FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of financial instruments is
made in accordance with the requirements of SFAS No. 107. Disclosures about Fair
Value of  Financial  Instruments.  The  estimated  fair value  amounts have been
determined by the Company,  using available  market  information and appropriate
valuation  methodologies.  The fair value of financial instruments classified as
current assets or liabilities  including cash and cash equivalents and notes and
accounts payable  approximate  carrying value due to the short-term  maturity of
the instruments.

CONCENTRATION OF CREDIT RISK
The Company invests its cash and  certificates of deposit  primarily in deposits
with major banks. Certain deposits, at times, are in excess of federally insured
limits. The Company has not incurred losses related to its cash.


NOTE 8 - SUBSEQUENT EVENT
--------------------------------------------------------------------------------

By letter of intent  dated  March 26, 2001  between  the  Company and  Clearview
Mineral  Resources  Corp.  ("Clearview"),  the  Company  agreed to acquire a 70%
percent net royalty  interest in certain oil and gas leases (the "Button  Willow
Leases") from Clearview.  The Company has agreed to issue  2,200,000  restricted
common shares and will be assigned the rights to two drilling options from third
parties to provide  $750,000  towards the drilling of the first well in exchange
for a 52.5% net royalty interest.  The agreement is subject to due diligence and
the signing of a definitive agreement.


                                       10

<PAGE>



ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS OF ACCOUNTING AND
        FINANCIAL DISCLOSURE

         Since  inception  (December 3, 1997) to February  17, 2001,  HDRS had a
former accountant.  Since February 18, 2001 and to date, HDRS' current principal
independent  accountants  have not resigned or declined to stand for re-election
or were  dismissed.  HDRS' former  principal  independent  accountant,  Andersen
Andersen  & Strong  L.C.  ("AAS"),  resigned  resulting  from a mutual  business
decision made by the  respective  management of AAS and HDRS that it would be in
the best  interest of HDRS to engage the services of an  independent  accountant
which has a current  relationship  with other  companies  associated  with HDRS'
management. Subsequently, management of HDRS determined that the accounting firm
of  Labonte & Co. be  engaged  to  provide  services.  Such  decision  to change
accountants was approved by the Board of Directors. During HDRS' two most recent
fiscal years and any subsequent interim period preceding the resignation of AAS,
there were no  disagreements  with AAS,  whether or not resolved,  on any matter
concerning accounting  principles or practices,  financial statement disclosure,
or auditing  scope or  procedure,  which  disagreements,  if not resolved to the


<PAGE>

satisfaction  of AAS,  would have  caused AAS to make  reference  to the subject
matter of the disagreements in its reports.

         Moreover, there have been no disagreements with HDRS' current principal
independent  accountant  which  were  not  resolved  on  any  matter  concerning
accounting principles or practices,  financial statement disclosure, or auditing
scope or procedures.

         Neither HDRS' current principal independent  accountants nor its former
principal independent  accountant have provided an adverse opinion or disclaimer
of opinion to HDRS' financial statements,  nor modified their respective opinion
as to uncertainty, audit scope or accounting principles.  However, the auditor's
report to the financial  statements  for fiscal year ended  December 31, 1999 is
qualified as to HDRS' ability to continue as a going concern.

         HDRS'  principal  independent  accountant  from inception  (December 3,
1997) to February 17, 2001 was Andersen  Andersen & Strong L.C. of 941 East 3300
South,  Suite 202,  Salt Lake City,  Utah  84106.  HDRS'  principal  independent
accountant  from  February 18, 2001 to the current date is Labonte & Co., 1205 -
1095 West Pender Street, Vancouver, British Columbia, Canada V6E 2M6.


                                    PART III

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

Identification of Directors and Executive Officers

     The directors and executive officers of HDRS are as follows:

Name                      Age                 Position with HDRS
----                      ---                 ------------------

Grant Atkins              40                  Director and President/Secretary
                                              and Treasurer

         GRANT  ATKINS  has been a  Director  and the  President  of HDRS  since
September 15, 2000 and the  Secretary  and Treasurer of HDRS since  December 14,
2000. For the past five years, Mr. Atkins has been  self-employed  and has acted
as a financial and project coordination  consultant to clients in government and
private industry.  He has extensive  multi-industry  experience in the fields of
finance,  administration  and business  development.  During 1998 and 1999,  Mr.
Atkins was a consultant through the private management  consulting  companies of
Tristar Financial Services, Inc. and Investor Communications International, Inc.
Mr. Atkins is also a member of the board of directors of Intergold  Corporation,
a publicly traded corporation engaged in the exploration of gold and silver, and
a  member  of  the  board  of  directors  and  the  president  of  Vega-Atlantic
Corporation,  a publicly traded corporation engaged in the worldwide exploration
of gold, silver and other precious metals.

         The  board  of  directors  accepted  the  resignation  of  one  of  its
directors,  Gene  D.  Wilson,  effective  March  6,  2001.  The  reason  for the
resignation of Mr. Wilson is due to potential  conflicts of interest relating to
the Del Valle  Agreement  and the  Chaparral  Agreement.  As of the date of this
Annual  Report,  the board of directors has not appointed a director to fill the
vacancy  resulting


<PAGE>

from Mr. Wilson's  resignation.  See "Item 12. Certain Relationships and Related
Transactions".

         The  directors  of HDRS serve until their  respective  successor  takes
office or until death,  resignation or removal.  The executive officers serve at
the pleasure of the Board of Directors of HDRS.

Compliance with Section 16(a) of the Exchange Act

         Section  16(a)  of  the  Exchange  Act  requires  HDRS'  directors  and
officers,  and the  persons  who  beneficially  own more than ten percent of the
common stock of HDRS, to file reports of ownership and changes in ownership with
the Securities and Exchange Commission. Copies of all filed reports are required
to be furnished to HDRS  pursuant to Rule 16a-3  promulgated  under the Exchange
Act. Based solely on the reports received by HDRS and on the  representations of
the reporting  persons,  HDRS believes that these persons have complied with all
applicable filing requirements during the fiscal year ended December 31, 2000.

ITEM 10. EXECUTIVE COMPENSATION

Compensation of Officers and Directors

         As of the date of this Annual Report, none of the directors or officers
of HDRS are  compensated  for their roles as directors or executive  officers as
HDRS is only in the exploration  stage and has not yet fully commenced  business
operations.  Officers and directors of HDRS,  however,  are  reimbursed  for any
out-of-pocket  expenses  incurred  by them on  behalf  of  HDRS.  None of  HDRS'
directors  or  officers  are party to  employment  agreements  with  HDRS.  HDRS
presently has no pension,  health,  annuity,  insurance,  stock options,  profit
sharing or similar benefit plans.

         Grant Atkins,  the President of HDRS,  derives  remuneration  from HDRS
indirectly through Investor  Communications  International,  Inc. ("ICI"), which
provides a wide range of management,  financial,  consulting and  administrative
services to HDRS on a  month-to-month  basis as needed.  As of fiscal year ended
December 31, 2000, HDRS accrued approximately $45,000 and paid approximately $ 0
to ICI for services  rendered.  Of the amounts accrued to ICI during fiscal year
2000, Grant Atkins received approximately $0.

         Gene Wilson, a prior director of HDRS,  derives  remuneration from HDRS
pursuant  to  consulting  services  provided  to HDRS.  As of fiscal  year ended
December 31, 2000,  HDRS accrued  approximately  $21,050 and paid  approximately
$1,050 to Mr. Wilson for services  rendered.  See "Summary  Compensation  Table"
below.

Summary Compensation Table
--------------------------

                               Annual Compensation           Awards    Payouts
                              ---------------------        ----------  -------
                                 $      $       $          $       #       $
Name and Position             Salary  Bonus   Other       RSA   Options  LTIP
Other
--------------                ------  -----   -----       ---   -------  ------

Frank W. Donis          1998     0      0       0          0       0       0
Pres./Director          1999     0      0       0          0       0       0
                        2000     0      0       0          0       0       0


<PAGE>

Marilyn Rafter          1998     0      0       0          0       0       0
Secretary/Director      1999     0      0       0          0       0       0
                        2000     0      0       0          0       0       0
                                                 (1)
Gene D. Wilson          1998     0      0       0          0       0       0
Director                1999     0      0       0          0       0       0
                        2000     0      0     $1,050       0       0       0

Grant Atkins            2000     0      0       0          0       0       0
Director/President

         (1)Received pursuant to contractual  arrangement  between HDRS and Gene
            D. Wilson regarding the New Mexico Prospects.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth the name and address,  as of the date of
this Annual Report, and the approximate number of shares of Common Stock of IGCO
owned of record or beneficially by each person who owned of record, or was known
by HDRS to own beneficially,  more than five percent (5%) of HDRS' Common Stock,
and the name and  shareholdings  of each officer and director,  and all officers
and directors as a group as of the date of this Annual Report.

<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------
Title of Class             Name and Address                    Amount and Nature        Percent
                           of Beneficial Owner                 of Beneficial Owner      of Class
--------------------------------------------------------------------------------------------------
                                                                        (1)
<S>                        <C>                                   <C>                      <C>
Common Stock               Alexander Cox                         2,250,000                17.2%
                           428 - 755 Burrard Street
                           Vancouver, British Columbia
                           Canada V6Z 1X6
                                                                        (2)
Common Stock               Tri Star Financial Group, Inc.        5,250,000                40.2%
                           435 Martin Street
                           Suite 2000
                           Blaine, Washington 98320                                            (2)

Common Stock               All officers and directors as a         250,000                 .02%
                           Group (2 persons)

 -------------------------------------------------------------------------------------------------
<FN>
(1)
  Of the 2,250,000  shares of Common Stock held of record by Mr.  Alexander Cox,
1,750,000  are  restricted  shares of Common Stock and 500,000 are  free-trading
shares of Common Stock.

(2)
  These are restricted shares of Common Stock.
</FN>
</TABLE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         On October 25, 2000 (the  "Chaparral  Agreement") and December 15, 2000
(the "Del Valle Agreement"),  respectively,  HDRS entered into two agreements to
acquire  majority net revenue  interests  in two separate oil and gas  prospects
located in eastern New Mexico (the "New Mexico Prospects").

         According to the terms of the original Del Valle Agreement,  HDRS would
(i) be required to pay approximately  $469,000 during fiscal year 2001, of which
Mr.

<PAGE>

Wilson,  a prior  director  of HDRS,  is to receive  $34,500;  (ii)  receive all
rights, work product,  documentation seismic information,  and other information
relating to the New Mexico  Prospect;  and (iii) be entitled to receive the best
efforts  of the  parties  to the Del Valle  Agreement  to obtain  leases for all
necessary lease lands.  According to the terms of the Del Valle  Agreement,  (i)
HDRS would be expected to pay approximately $203,000 for lease costs relating to
the areas of interest.

         HDRS has had difficulty in reaching  revised terms and conditions  with
the parties to the Del Valle Agreement,  from verbal modifications obtained from
the  parties  to the Del  Valle  Agreement  previously  in  place.  As HDRS  has
potential  commercial disputes pending and under  consideration  relating to the
Del Valle Agreement and vendors thereto,  HDRS has decided to not enter into any
development of the Del Valle Prospect,  and a revised formal agreement necessary
to the development of the Del Valle Prospect is not in place with the vendors of
the Del Valle Prospect.

         As of the date of this Annual  Report,  based upon recent  discussions,
management  of HDRS  believes a  possibility  exists that the parties to the Del
Valle Agreement may have breached their respective contractual  obligations.  In
the  event  that  the  Del  Valle   Agreement  was  breached  by  such  parties,
respectively,  management  believes that such breaches  could result in possible
legal  remedies  being  sought  by  HDRS.  Management  of HDRS  may,  if  deemed
necessary,  consider and pursue any and all available legal remedies and related
causes of action.

         According to the terms of the  Chaparral  Agreement,  (i) HDRS would be
required  to pay  approximately  $60,000,  of which  Mr.  Wilson  is to  receive
$30,000;  (ii) Mr.  Wilson  would be required  to sell to HDRS all rights,  work
product,  documentation  seismic information,  and other information relating to
the New Mexico Prospect;  and (iii) Mr. Wilson would be required to use his best
efforts to obtain  leases for all  necessary  lease lands,  with  leasing  costs
expected to total approximately $590,000.

         HDRS has had difficulty in reaching  revised terms and conditions  with
the parties to the Chaparral  Agreement.  HDRS has decided to not enter into any
development  of the Chaparral  Prospect at the current  date, as revised  formal
agreements to the  Chaparral  Agreement are not in place with the parties to the
Chaparral Agreement. HDRS may or may not reach formal agreement on revised terms
and conditions to the original Chaparral Agreement.

         Moreover,   Gene  Wilson  was  a  beneficial  third  party  to  receive
overriding  royalties  pursuant  to the  terms of the Del Valle  Agreement.  Mr.
Wilson was also a 50% vendor and a beneficial third party to receive  overriding
royalties  pursuant  to the terms of the  Chaparral  Agreement.  Pursuant to the
respective terms, Mr. Wilson was also to provide  consulting  geologist services
to HDRS and further leasing work. In the event that HDRS does not reach a formal
agreement on revised terms and  conditions of either the Del Valle  Agreement or
the  Chaparral  Agreement,   management  of  HDRS  does  not  believe  that  the
resignation  of Mr.  Wilson as a  director  of HDRS will  adversely  affect  the
business operations of HDRS. As of the date of this Annual Report, management is
currently seeking other oil and natural gas prospects.

         The  officers and  directors  of HDRS are engaged in other  businesses,
either  individually or through  partnerships and corporations in which they may
have an  interest,  hold an office  or serve on the  boards  of  directors.  The
directors of HDRS may have other  business  interests to which they may devote a
major or


<PAGE>

significant portion of their time. Certain conflicts of interest, therefore, may
arise between HDRS and its directors. Such conflicts can be resolved through the
exercise by the directors of judgment  consistent with their fiduciary duties to
HDRS. The officers and directors of HDRS intend to resolve such conflicts in the
best interests of HDRS. The officers and directors will devote their time to the
affairs of HDRS as necessary.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

              (a)  The  following  exhibits  are  filed  as part of this  Annual
                   Report: None.

              (b)  Reports on Form 8-K: Filed on April 11, 2001;  Filed on March
                   11, 2001;  Filed on March 8, 2001; Filed on January 31, 2001;
                   and Filed on December 15, 2000.


<PAGE>

SIGNATURES

     In accordance  with the  requirements  of the Exchange Act, the  registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                          HADRO RESOURCES, INC.

Dated: April 12, 2001                     By: /s/GRANT ATKINS
                                              ----------------------------------
                                              Grant Atkins, President