<HTML>
<HEAD>
<TITLE>Form10K 1995</TITLE>
</HEAD>
<BODY LINK="#0000ff" VLINK="#800080">

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<P ALIGN="CENTER"><B>-----------------------</B></TD>
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<P> </TD>
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<B><P ALIGN="CENTER">UNITED STATES</B></TD>
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<B><P ALIGN="CENTER">SECURITIES AND EXCHANGE COMMISSION</B></TD>
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<B><P ALIGN="CENTER">Washington, D.C. 20549</B></TD>
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<P> </TD>
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<B><P ALIGN="CENTER">FORM 10-Q</B></TD>
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<P> </TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" COLSPAN=2>
<B><P>      [X]</B></TD>
<TD WIDTH="64%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="CENTER">QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) <FONT FACE="CG Times">OF THE SECURITIES EXCHANGE ACT OF 1934 <BR>
For the Quarterly Period Ended March 31, 2000</B></FONT></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
<TD WIDTH="64%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="CENTER">OR</B></TD>
</TR>
<TR><TD WIDTH="36%" VALIGN="TOP" COLSPAN=2>
<B><P>     [  ]</B></TD>
<TD WIDTH="64%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="CENTER">TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)<BR>
<FONT FACE="CG Times">OF THE SECURITIES EXCHANGE ACT OF 1934<BR>
</FONT>For the Transition Period from <U>          </U> to <U>          </B></U></TD>
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<P> </TD>
</TR>
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<B><FONT FACE="CG Times"><P ALIGN="CENTER">Commission File Number 1-1525</B></FONT></TD>
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<P> </TD>
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<B><P ALIGN="CENTER">GLADSTONE ENERGY, INC.</B></TD>
</TR>
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<B><P ALIGN="CENTER">(Exact name of Registrant as specified in its charter)</B></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP" COLSPAN=3>
<B><P ALIGN="CENTER">Delaware<BR>
(State of Incorporation)</B></TD>
<TD WIDTH="61%" VALIGN="TOP">
<B><P ALIGN="CENTER">91-0234563<BR>
(I.R.S. Employer Identification No.)</B></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP" COLSPAN=3>
<P> </TD>
<TD WIDTH="61%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP" COLSPAN=3>
<B><P ALIGN="CENTER">3500 Oak Lawn Avenue, Suite 590, LB 49, Dallas, TX<BR>
(Address of principal executive offices)</B></TD>
<TD WIDTH="61%" VALIGN="TOP">
<B><P ALIGN="CENTER">75219<BR>
(Zip Code)</B></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=4>
<P> </TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=4>
<B><P ALIGN="CENTER">(214) 528-9710</B></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=4>
<B><P ALIGN="CENTER">(Registrant's telephone number,</B></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=4>
<B><P ALIGN="CENTER">including area code)</B></TD>
</TR>
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<P> </TD>
</TR>
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<B><P ALIGN="CENTER">Securities registered pursuant to Section 12(b) of the Act:</B></TD>
</TR>
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<B><P ALIGN="CENTER">None</B></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=4>
<P> </TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=4>
<B><P ALIGN="CENTER">Securities registered pursuant to Section 12(g) of the Act:</B></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=4>
<B><P ALIGN="CENTER">Common Stock Par Value $.001 Per Share</B></TD>
</TR>
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<B><P ALIGN="CENTER">(Title of Class)</B></TD>
</TR>
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<B><P ALIGN="CENTER">______________________________</B></TD>
</TR>
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<P> </TD>
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<B><P ALIGN="JUSTIFY">Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve (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 ninety (90) days.</P>
<P ALIGN="CENTER">YES [X]     NO [   ]</P>
<FONT FACE="CG Times"><P ALIGN="CENTER">Indicate the number of shares outstanding of each of the issuer's classes</B><BR>
</FONT><B>of common stock at March 31, 2000.</B></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="68%" VALIGN="TOP" COLSPAN=3>
<P> </TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="TOP">
<B><P ALIGN="RIGHT">Class: </B></TD>
<TD WIDTH="68%" VALIGN="TOP" COLSPAN=3>
<B><P>Common Stock, $.001 par value per share</B></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="68%" VALIGN="TOP" COLSPAN=3>
<B><P ALIGN="JUSTIFY">Outstanding at March 31, 2000: 848,991 shares</B></TD>
</TR>
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<B><U><P ALIGN="CENTER">                                  </B></U></TD>
</TR>
</TABLE>

<FONT FACE="CG Times"><P> </P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=637>
<TR><TD VALIGN="TOP" COLSPAN=3>
<P><B> </P>
<P ALIGN="CENTER">GLADSTONE ENERGY, INC.</B></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=3>
<P> </TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=3>
<B><P ALIGN="CENTER">INDEX</B></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=3>
<P> </TD>
</TR>
<TR><TD WIDTH="14%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="74%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="12%" VALIGN="TOP">
<B><P ALIGN="CENTER">Page</B></TD>
</TR>
<TR><TD WIDTH="14%" VALIGN="TOP">
<B><U><P ALIGN="JUSTIFY">Part 1. </B></U></TD>
<TD WIDTH="74%" VALIGN="TOP">
<B><U><P ALIGN="JUSTIFY">Financial Information:</B></U></TD>
<TD WIDTH="12%" VALIGN="TOP">
<B><U><P ALIGN="CENTER">Number</B></U></TD>
</TR>
<TR><TD WIDTH="14%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="74%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="12%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="14%" VALIGN="TOP">
<B><P ALIGN="JUSTIFY">Item 1.</B></TD>
<TD WIDTH="74%" VALIGN="TOP">
<B><P ALIGN="JUSTIFY">Financial Statements</B></TD>
<TD WIDTH="12%" VALIGN="TOP">
<B><P ALIGN="CENTER">2<BR>
</B></TD>
</TR>
<TR><TD WIDTH="14%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="74%" VALIGN="TOP">
<B><P>Accountant's Review Report</B></TD>
<TD WIDTH="12%" VALIGN="TOP">
<B><P ALIGN="CENTER">3<BR>
</B></TD>
</TR>
<TR><TD WIDTH="14%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="74%" VALIGN="TOP">
<B><P>Balance Sheets - <BR>
March 31, 2000 (Unaudited) and December 31, 1999 (Audited)</B></TD>
<TD WIDTH="12%" VALIGN="TOP">
<B><P ALIGN="CENTER">4<BR>
<BR>
</B></TD>
</TR>
<TR><TD WIDTH="14%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="74%" VALIGN="TOP">
<B><P>Statements of Operations -<BR>
For the Three Months Ended March 31, 2000 and 1999 (Unaudited)</B></TD>
<TD WIDTH="12%" VALIGN="TOP">
<B><P ALIGN="CENTER">5<BR>
<BR>
</B></TD>
</TR>
<TR><TD WIDTH="14%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="74%" VALIGN="TOP">
<B><P>Statements of Stockholders' Equity - <BR>
For the Three Months Ended March 31, 2000 (Unaudited) and<BR>
for the Year Ended December 31, 1999 (Audited)</B></TD>
<TD WIDTH="12%" VALIGN="TOP">
<B><P ALIGN="CENTER">6<BR>
<BR>
<BR>
</B></TD>
</TR>
<TR><TD WIDTH="14%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="74%" VALIGN="TOP">
<B><P>Statements of Cash Flows - <BR>
For the Three Months Ended March 31, 2000 and 1999 (Unaudited) <BR>
</B></TD>
<TD WIDTH="12%" VALIGN="TOP">
<B><P ALIGN="CENTER">7<BR>
<BR>
<BR>
</B></TD>
</TR>
<TR><TD WIDTH="14%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="74%" VALIGN="TOP">
<B><P>Notes to Financial Statements</B></TD>
<TD WIDTH="12%" VALIGN="TOP">
<B><P ALIGN="CENTER">8</B></TD>
</TR>
<TR><TD WIDTH="14%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="74%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="12%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="14%" VALIGN="TOP">
<B><P ALIGN="JUSTIFY">Item 2.</B></TD>
<TD WIDTH="74%" VALIGN="TOP">
<B><P ALIGN="JUSTIFY">Management's Discussion and Analysis of Financial Condition and Results of Operations</B></TD>
<TD WIDTH="12%" VALIGN="TOP">
<B><P ALIGN="CENTER">12</B></TD>
</TR>
<TR><TD WIDTH="14%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="74%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="12%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="14%" VALIGN="TOP">
<B><U><P ALIGN="JUSTIFY">Part II.</B></U></TD>
<TD WIDTH="74%" VALIGN="TOP">
<B><U><P ALIGN="JUSTIFY">Other Information:</B></U></TD>
<TD WIDTH="12%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="14%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="74%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="12%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="14%" VALIGN="TOP">
<B><P ALIGN="JUSTIFY">Item 4.</B></TD>
<TD WIDTH="74%" VALIGN="TOP">
<B><P ALIGN="JUSTIFY">Submission of Matters to a Vote of Security Holders</B></TD>
<TD WIDTH="12%" VALIGN="TOP">
<B><P ALIGN="CENTER">14</B></TD>
</TR>
<TR><TD WIDTH="14%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="74%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="12%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="14%" VALIGN="TOP">
<B><P ALIGN="JUSTIFY">Item 5.</B></TD>
<TD WIDTH="74%" VALIGN="TOP">
<B><P ALIGN="JUSTIFY">Other Information</B></TD>
<TD WIDTH="12%" VALIGN="TOP">
<B><P ALIGN="CENTER">14</B></TD>
</TR>
<TR><TD WIDTH="14%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="74%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="12%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="14%" VALIGN="TOP">
<B><P ALIGN="JUSTIFY">Item 6.</B></TD>
<TD WIDTH="74%" VALIGN="TOP">
<B><P ALIGN="JUSTIFY">Exhibits and Reports on Form 8-K</B></TD>
<TD WIDTH="12%" VALIGN="TOP">
<B><P ALIGN="CENTER">14</B></TD>
</TR>
<TR><TD WIDTH="14%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="74%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="12%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="88%" VALIGN="TOP" COLSPAN=2>
<B><P ALIGN="JUSTIFY">Signatures</B></TD>
<TD WIDTH="12%" VALIGN="TOP">
<B><P ALIGN="CENTER">15</B></TD>
</TR>
<TR><TD WIDTH="88%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
<TD WIDTH="12%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="88%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
<TD WIDTH="12%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="88%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
<TD WIDTH="12%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="88%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
<TD WIDTH="12%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="88%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
<TD WIDTH="12%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="88%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
<TD WIDTH="12%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="88%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
<TD WIDTH="12%" VALIGN="TOP">
<P> </TD>
</TR>
</TABLE>

<B><FONT FACE="Arial"><P>                                      
                     H</FONT><FONT FACE="Arial" SIZE=2>AROLD</FONT><FONT FACE="Arial"> L. R</FONT><FONT FACE="Arial" SIZE=2>ATCLIFF</P>
</B><P>                                         
              C</FONT><FONT FACE="Arial" SIZE=1>ERTIFIED </FONT><FONT FACE="Arial" SIZE=2>P</FONT><FONT FACE="Arial" SIZE=1>UBLIC </FONT><FONT FACE="Arial" SIZE=2>A</FONT><FONT FACE="Arial" SIZE=1>CCOUNTANT</P>
<P>                                          
                                      4514 COLE AVENUE - LB26</P>
<P>                                          
                                          
          SUITE 1010</P>
<P>                                          
                                          
DALLAS, TEXAS 75205</P>
<P>                                          
                                          
                                          
                                          
   MEMBER</P>
<P>(214) 526-5555                                       
                                          
                                          
             AMERICAN INSTITUTE</P>
<P>(214) 521-9055 - FAX                                      
                                          
                                  CERTIFIED PUBLIC ACCOUNTANTS</P>
</FONT><FONT FACE="Arial"><P> </P>
</FONT><P ALIGN="JUSTIFY">                                      
       <U>ACCOUNTANT'S REVIEW REPORT</P>
</U><P ALIGN="JUSTIFY"> </P>
<P ALIGN="JUSTIFY"> </P><DIR>
<DIR>
<DIR>

<P ALIGN="JUSTIFY">Board of Directors</P>
<P ALIGN="JUSTIFY">Gladstone Energy, Inc.</P>
<P ALIGN="JUSTIFY">Dallas, Texas</P>
<P>I have reviewed the accompanying balance sheet of Gladstone Energy, Inc.,<BR>
as  of    March  31,  2000,    and   the   related   statements  of   operation, <BR>
stockholders' equity and changes in cash flows for  the  three  months  then<BR>
ended and statements of operation and changes in  cash flows for the three<BR>
months  ended   March 31, 1999.    In accordance with the Statements on<BR>
Standards for  Accounting and Review Services by the American  Institute<BR>
of   Certified   Public  Accountants.   All   information   included   in  these <BR>
statements is the representation of  the management of Gladstone Energy, <BR>
Inc.</P>
<P>A   review  consists   principally  of   inquiries of   Company  personnel and<BR>
analytical   procedures  applied to  financial data.   It  is substantially less in<BR>
scope  than  an  audit  in   accordance  with   generally    accepted  auditing<BR>
standards,  the objective of which is the expression of an opinion regarding<BR>
the financial statements as a whole.   Accordingly, I do not express such an<BR>
opinion.</P>
<P>Based  on  my  review,  I  am  not aware of  any material modifications that<BR>
should  be made to the accompanying financial statements in order for them<BR>
to be in conformity with generally accepted accounting principles.</P>
<P>The  financial  statements  for  the  year  ended  December  31,  1999, were<BR>
audited by me and I expressed an unqualified opinion on them in my  report<BR>
dated  February 4, 2000, but I have not performed any auditing procedures<BR>
since that date.</P>
<P ALIGN="JUSTIFY">                                       
                               /s/ Harold L. Ratcliff </P>
<P ALIGN="JUSTIFY">                                       
                               Certified Public Accountant</P>
<P ALIGN="JUSTIFY">Dallas, Texas</P>
<P ALIGN="JUSTIFY">May 4, 2000</P>
<FONT FACE="CG Times" SIZE=1><P> </P></DIR>
</DIR>
</DIR>
</FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=637>
<TR><TD VALIGN="TOP" COLSPAN=4 HEIGHT=38>
<P ALIGN="CENTER"><B> </P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER">Part I. Financial Information<BR>
Item 1. Financial Statements</B></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=4>
<P> </TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=4 HEIGHT=49>
<B><FONT SIZE=2><P ALIGN="CENTER">GLADSTONE ENERGY, INC.<BR>
BALANCE SHEETS<BR>
At March 31, 2000 (Unaudited) and December 31, 1999 (Audited)</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=4>
<P> </TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=4>
<B><FONT SIZE=2><P ALIGN="CENTER">ASSETS</B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">March 31, <BR>
<U>      2000      </B></U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">December 31,<BR>
<U>      1999     </B></U></FONT></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="TOP" COLSPAN=2 HEIGHT=24>
<B><FONT SIZE=2><P>Current assets:</B></FONT></TD>
<TD WIDTH="35%" VALIGN="TOP" COLSPAN=2 HEIGHT=24><P></P></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<B><FONT SIZE=2><P>Cash</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">$        49,769 </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">$     134,342 </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<B><FONT SIZE=2><P>Accounts receivable</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">        63,315</U> </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">          40,821</U> </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<B><FONT SIZE=2><P>Total current assets</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">      113,084</U> </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">       175,163 </B></U></FONT></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="TOP" COLSPAN=2 HEIGHT=24>
<B><FONT SIZE=2><P>Property and equipment:</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=24><P></P></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<B><FONT SIZE=2><P>Gas and oil properties (successful efforts method)</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">929,476 </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">991,709 </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<B><FONT SIZE=2><P>Field equipment</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">         17,128</U> </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">         17,128 </B></U></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">946,604 </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">1,008,837</B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<B><FONT SIZE=2><P>Less accumulated depletion and depreciation</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">     (485,213</U>)</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">   (464,044</U>)</B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<B><FONT SIZE=2><P>Total property and equipment</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT FACE="CG Times" SIZE=2><P ALIGN="RIGHT">     461,391</U> </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT FACE="CG Times" SIZE=2><P ALIGN="RIGHT">      544,793</U> </B></FONT></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="TOP" COLSPAN=2 HEIGHT=24>
<B><FONT SIZE=2><P>Other assets:</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=24><P></P></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<B><FONT SIZE=2><P>Cost in excess of amount assigned to net assets in <BR>
New Mexico at date of acquisition</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">337,000 </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">337,000 </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<B><FONT SIZE=2><P>Less accumulated amortization</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">      (301,674)</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">   (300,121)</B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<B><FONT SIZE=2><P>Loan origination fees, net of amortization</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">            5,963</U> </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">   <U>           7,156 </U> </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">          41,289</U> </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">          44,035</U> </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$ 615,764</U> </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$ 763,991</U> </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=4>
<B><FONT SIZE=2><P ALIGN="CENTER">LIABILITIES AND STOCKHOLDERS' EQUITY</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=4>
<P> </TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="TOP" COLSPAN=2 HEIGHT=24>
<B><FONT SIZE=2><P>Current liabilities: </B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=24><P></P></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<B><FONT SIZE=2><P>Accounts payable</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">$ 94,455 </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">$ 137,458 </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<B><FONT SIZE=2><P>Installment note payable to bank</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">55,000 </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">55,000</B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<B><FONT SIZE=2><P>Accrued interest on note </B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">            1,799</U> </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">           1,878 </B></U></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<B><FONT SIZE=2><P>Total current liabilities</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">       151,254</U> </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">        194,336</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P>Long-term portion of note payable</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<B><FONT SIZE=2><P>Installment note payable to bank</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">160,000 </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">175,000</B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P>Deferred income taxes</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">-     </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">-     </B></FONT></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P>Stockholders' equity:</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<B><FONT SIZE=2><P>Common stock</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">849 </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">849 </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<B><FONT SIZE=2><P>Capital in excess of stated value</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">1,379,284 </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">1,379,284 </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<B><FONT SIZE=2><P>Retained earning (deficit)</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">     (1,075,623</U>)</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">       (985,479</U>)</B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">         304,510</U> </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">         394,655</U> </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$    615,764</U> </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$      763,991</U> </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=4>
<B><FONT SIZE=2><P ALIGN="CENTER">See accompanying notes</B></FONT></TD>
</TR>
</TABLE>

<B><FONT SIZE=2><P ALIGN="CENTER"> </P></B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=637>
<TR><TD VALIGN="TOP" COLSPAN=4 HEIGHT=66>
<P ALIGN="CENTER"><B><FONT SIZE=2>GLADSTONE ENERGY, INC. <BR>
STATEMENTS OF OPERATIONS<BR>
For the three months ended March 31, 2000 and 1999</B><BR>
</FONT><B><FONT SIZE=1>(Unaudited)</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=4>
<P> </TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=4>
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="52%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="40%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P ALIGN="CENTER">              For the three months ended</P>
<P ALIGN="CENTER">                 <U>                 March 31,   
             </B></U></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P> </B></FONT></TD>
<TD WIDTH="52%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">              <U>      2000    </B></U></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">              <U>      1999    </B></U></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>Sales:</B></FONT></TD>
<TD WIDTH="52%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="20%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="20%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="52%" VALIGN="TOP">
<B><FONT SIZE=2><P>Gas and oil</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">$ 82,564 </B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">$      8,139 </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="52%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="20%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="20%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P>Cost of sales:</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="20%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="52%" VALIGN="TOP">
<B><FONT SIZE=2><P>Production taxes</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">9,083 </B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">624 </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="52%" VALIGN="TOP">
<B><FONT SIZE=2><P>Well operating expense</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">         10,654</U> </B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">         3,688</U> </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="52%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">         19,737 </B></U></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">         4,312</U> </B></FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P>Gross profit on sales</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">         62,827</U> </B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">        3,827</U> </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="52%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="20%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="20%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P>Expenses:</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="20%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="52%" VALIGN="TOP">
<B><FONT SIZE=2><P>Dry hole and abandonment loss (recovery)</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">87,475 </B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">(3,347)</B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="52%" VALIGN="TOP">
<B><FONT SIZE=2><P>Depletion</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">20,071 </B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">6,138 </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="52%" VALIGN="TOP">
<B><FONT SIZE=2><P>Prospect expenses</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">-     </B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">-     </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="52%" VALIGN="TOP">
<B><FONT SIZE=2><P>Depreciation and amortization</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">3,844 </B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">1,852 </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="52%" VALIGN="TOP">
<B><FONT SIZE=2><P>General and administrative</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">21,508 </B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">7,719 </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="52%" VALIGN="TOP">
<B><FONT SIZE=2><P>Interest</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">7,243 </B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">-     </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="52%" VALIGN="TOP">
<B><FONT SIZE=2><P>Taxes</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">2,070 </B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">-     </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="52%" VALIGN="TOP">
<B><FONT SIZE=2><P>Legal, auditing and accounting</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">        10,776</U> </B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">         18,192</U> </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="52%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">      152,987</U> </B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">        30,554</U> </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="52%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">( 90,160)</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">( 26,727)</B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="52%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="20%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="20%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P>Other income:</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="20%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="52%" VALIGN="TOP">
<B><FONT SIZE=2><P>Interest and dividend income</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">                16</U> </B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">            538</U> </B></FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P>Income (loss) before taxes</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">(90,144)</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">( 26,189)</B></FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
<TD WIDTH="20%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="20%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P>Income taxes</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">               -   </U> </B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">               -   </U> </B></FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P>NET INCOME (LOSS)</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$     (90,144</U>)<U> </B></U></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$     (26,189</U>)<U> </B></U></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="52%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="20%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="20%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P>Earnings per share:</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="20%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="52%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="20%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="20%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="52%" VALIGN="TOP">
<B><FONT SIZE=2><P>Basic earnings per share <SUP>(1)</SUP>  (See Note 8)</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$       (.11</U>)</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$           (.03</U>)<U> </B></U></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="52%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="20%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="20%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="52%" VALIGN="TOP">
<B><FONT SIZE=2><P>Diluted earnings per share<SUP> (1)</SUP> (See Note 8)</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$        (.11</U>)</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$           (.03</U>)<U> </B></U></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=4>
<P> </TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=4>
<P> </TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=4>
<B><SUP><FONT SIZE=2><P>(1)</SUP> The earning per share have been adjusted to the current number of shares outstanding (848,991 shares).</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=4>
<P> </TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=4>
<P> </TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=4>
<P> </TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=4>
<P> </TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=4>
<P> </TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=4>
<B><FONT SIZE=2><P ALIGN="CENTER">See accompanying notes</B></FONT></TD>
</TR>
</TABLE>

<B><FONT SIZE=2><P ALIGN="CENTER"> </P></B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=637>
<TR><TD VALIGN="TOP" COLSPAN=6>
<P ALIGN="CENTER"><B><FONT SIZE=2>GLADSTONE ENERGY, INC. </P>
<P ALIGN="CENTER">STATEMENTS OF STOCKHOLDERS' EQUITY</P>
<P ALIGN="CENTER">For the three months ended March 31, 2000 (Unaudited)</P>
<P ALIGN="CENTER">and the year ended December 31, 1999 (Audited)</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=6>
<P> </TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=6>
<P> </TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><FONT SIZE=2><P ALIGN="CENTER">Capital in</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><FONT SIZE=2><P ALIGN="CENTER">Excess of</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><FONT SIZE=2><P ALIGN="CENTER">Retained</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><FONT SIZE=2><P ALIGN="CENTER">Common</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><FONT SIZE=2><P ALIGN="CENTER">Stated</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><FONT SIZE=2><P ALIGN="CENTER">Earnings</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><U><FONT SIZE=2><P ALIGN="CENTER">     Stock (A)   </B></U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><U><FONT SIZE=2><P ALIGN="CENTER">       Value       </B></U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><U><FONT SIZE=2><P ALIGN="CENTER">     (Deficit)     </B></U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><U><FONT SIZE=2><P ALIGN="CENTER">         Total        </B></U></FONT></TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<B><FONT SIZE=2><P>Balance at December 31, 1998</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><FONT SIZE=2><P ALIGN="RIGHT">150,000 </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><FONT SIZE=2><P ALIGN="RIGHT">1,230,134 </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><FONT SIZE=2><P ALIGN="RIGHT">(781,413)</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><FONT SIZE=2><P ALIGN="RIGHT">598,721 </B></FONT></TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<B><FONT SIZE=2><P>Net loss for the year 1999</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><FONT SIZE=2><P ALIGN="RIGHT">                -     </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><FONT SIZE=2><P ALIGN="RIGHT">                -     </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><FONT SIZE=2><P ALIGN="RIGHT">      (204,066)</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><FONT SIZE=2><P ALIGN="RIGHT">     (204,066)</B></FONT></TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<B><FONT SIZE=2><P>Net change for the period (A)</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><U><FONT SIZE=2><P ALIGN="RIGHT">     (149,151)</B></U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><U><FONT SIZE=2><P ALIGN="RIGHT">       149,151 </B></U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><U><FONT SIZE=2><P ALIGN="RIGHT">                -    </U> </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><U><FONT SIZE=2><P ALIGN="RIGHT">                -    </U> </B></FONT></TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<B><FONT SIZE=2><P>Balance at December 31, 1999</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><FONT SIZE=2><P ALIGN="RIGHT">849 </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><FONT SIZE=2><P ALIGN="RIGHT">1,379,285 </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><FONT SIZE=2><P ALIGN="RIGHT">(985,479)</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><FONT SIZE=2><P ALIGN="RIGHT">394,655 </B></FONT></TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<B><FONT SIZE=2><P>Net loss for the period</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><U><FONT SIZE=2><P ALIGN="RIGHT">                -    </U> </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><U><FONT SIZE=2><P ALIGN="RIGHT">                -    </U> </B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><U><FONT SIZE=2><P ALIGN="RIGHT">        (90,144</U>)</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><U><FONT SIZE=2><P ALIGN="RIGHT">        (90,144</U>)</B></FONT></TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP" COLSPAN=2 HEIGHT=16>
<B><FONT SIZE=2><P>Balance at March 31, 2000</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$ 849 </B></U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$ 1,379,285 </B></U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$(1,075,623)</B></U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16>
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$     304,511 </B></U></FONT></TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP" COLSPAN=2 HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=16><P></P></TD>
</TR>
<TR><TD WIDTH="13%" VALIGN="TOP">
<B><FONT SIZE=2><P>   (A)</B></FONT></TD>
<TD WIDTH="87%" VALIGN="TOP" COLSPAN=5>
<B><FONT SIZE=1><P ALIGN="JUSTIFY">Common Stock consisted of no par value shares only until August 10, 1999. There were 6,000,000 shares authorized and 4,244,060 shares issued and outstanding, The stated value for all outstanding shares was $150,000. On
August 10, 1999, the Company effected a 1 for 5 reverse stock split. On August 13, 1999, the Company reincorporated as a Delaware corporation with authorized capital inventory of 10,000,000 shares of Common Stock with par value of $.001 per share and
5,000,000 shares of Preferred Stock with a par value of $.001 per share. At March 31, 2000, there were 848,991 shares of Common Stock outstanding. See NOTE 1 - ORGANIZATION</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=6>
<P> </TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=6>
<P> </TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=6>
<P> </TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=6>
<P> </TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=6>
<B><FONT SIZE=2><P ALIGN="CENTER">See accompanying notes</B></FONT></TD>
</TR>
</TABLE>

<B><FONT SIZE=2><P ALIGN="CENTER"> </P></B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=636>
<TR><TD VALIGN="TOP" COLSPAN=7>
<P ALIGN="CENTER"><B><FONT SIZE=2>GLADSTONE ENERGY, INC. </B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=7>
<B><FONT SIZE=2><P ALIGN="CENTER">STATEMENTS OF CASH FLOWS</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=7>
<B><FONT SIZE=2><P ALIGN="CENTER">For the three months ended March 31, 2000 and 1999</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=7>
<B><FONT SIZE=1><P ALIGN="CENTER">(Unaudited)</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=7>
<P> </TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=7>
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4>
<P> </TD>
<TD WIDTH="35%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P> </B></FONT></TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4>
<P> </TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="CENTER">      2000      </B></U></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="CENTER">      1999      </B></U></FONT></TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="TOP" COLSPAN=5>
<B><FONT SIZE=2><P>Cash flows (to) operating activities:</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4>
<B><FONT SIZE=2><P>Net earnings (loss)</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">$       (90,144)</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">$    (26,189)</B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="2%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="54%" VALIGN="TOP" COLSPAN=3>
<B><FONT SIZE=2><P>Adjustments to reconcile net earnings to net</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="3%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
<TD WIDTH="53%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P>Cash provided by (to) operating activities:</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="3%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
<TD WIDTH="6%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="47%" VALIGN="TOP">
<B><FONT SIZE=2><P>Depreciation, depletion and amortization</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">23,915 </B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">7,990 </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="3%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
<TD WIDTH="6%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="47%" VALIGN="TOP">
<B><FONT SIZE=2><P>(Increase) decrease in accounts receivable</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">(22,494)</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">38 </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="3%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
<TD WIDTH="6%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="47%" VALIGN="TOP">
<B><FONT SIZE=2><P>Decrease in oil and gas properties</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">63,186 </B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">-      </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="3%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
<TD WIDTH="6%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="47%" VALIGN="TOP">
<B><FONT SIZE=2><P>(Decrease) in accounts payable</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">        (43,082</U>)</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">         (16,397</U>)</B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="3%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
<TD WIDTH="6%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="47%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="3%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
<TD WIDTH="6%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="47%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4>
<B><FONT SIZE=2><P>Net cash (to) operating activities</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">         (68,619</U>)</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">        (34,558</U>)</B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="3%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
<TD WIDTH="6%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="47%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="TOP" COLSPAN=5>
<B><FONT SIZE=2><P>Cash flows from (to) investing activities:</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4>
<B><FONT SIZE=2><P>Sale of oil and gas properties</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">-      </B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">315,000 </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4>
<B><FONT SIZE=2><P>Investment in oil and gas properties</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">               (954</U>)</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">                -     </U> </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4>
<P> </TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4>
<B><FONT SIZE=2><P>Net cash from (to) investing activities</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">               (954</U>)</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">        315,000</U> </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4>
<P> </TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="TOP" COLSPAN=5>
<B><FONT SIZE=2><P>Cash flows (to) financing activities:</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4>
<B><FONT SIZE=2><P>Payments on bank loan</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">        (15,000</U>)</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">                -     </U> </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4>
<P> </TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4>
<B><FONT SIZE=2><P>Net cash (to) financing activities</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">        (15,000</U>)</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">                -     </U> </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4>
<P> </TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="TOP" COLSPAN=5>
<B><FONT SIZE=2><P>Net increase (decrease) in cash</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">(84,573<U>)</B></U></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">280,442 </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4>
<P> </TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="TOP" COLSPAN=5>
<B><FONT SIZE=2><P>Cash beginning of period</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">       134,342</U> </B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">           23,372</U> </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4>
<P> </TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="TOP" COLSPAN=5>
<B><FONT SIZE=2><P>Cash at end of period</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$       49,769 </B></U></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$       303,814 </B></U></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4>
<P> </TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4>
<P> </TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="65%" VALIGN="TOP" COLSPAN=5>
<B><FONT SIZE=2><P>Supplemental disclosure of cash flow information:</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=4>
<B><FONT SIZE=2><P>Cash paid during the period for:</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="3%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
<TD WIDTH="53%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P>Interest</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$           7,243</U> </B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$              -     </U> </B></FONT></TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="3%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
<TD WIDTH="53%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
<TD WIDTH="18%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="17%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="3%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
<TD WIDTH="53%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P>Federal income taxes</B></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$               -     </U> </B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$              -     </U> </B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=7>
<P> </TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=7>
<P> </TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=7>
<P> </TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=7>
<B><FONT SIZE=2><P ALIGN="CENTER">See accompanying notes</B></FONT></TD>
</TR>
</TABLE>

<P ALIGN="CENTER"> </P>
<B><FONT SIZE=2><P ALIGN="CENTER">GLADSTONE ENERGY, INC.</P>
<P ALIGN="CENTER">NOTES TO FINANCIAL STATEMENTS (Unaudited)</P>
<P ALIGN="CENTER">March 31, 2000</P>
<P ALIGN="CENTER"> </P>
<P>NOTE 1 - ORGANIZATION</P>
</FONT><FONT FACE="CG Times" SIZE=2><P ALIGN="JUSTIFY">Gladstone Energy, Inc. (f/k/a Gladstone Resources, Inc.) (the "Company") was incorporated in the State of Washington on July 19, 1916. The Company sells oil and gas in Louisiana, Texas and New Mexico.
The sales to the customers are on open accounts receivable, which are unsecured. As of </FONT><FONT SIZE=2>August 10, 1999, the Company merged its wholly owned subsidiary into the parent company. As of August 12, 1999, the Company reorganized under Code Section 368 of the Internal Revenue Code of 1986 changing its jurisdiction of
incorporation from Washington to Delaware and changing its name to Gladstone Energy, Inc.</P>
<P ALIGN="JUSTIFY"> </P><DIR>

<P ALIGN="JUSTIFY">NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</P></DIR>

<P ALIGN="JUSTIFY">On an accrual basis, the Company uses the successful efforts method of accounting. This method follows the premise that an enterprise is to capitalize only those costs it incurs that directly result in an asset that has future benefits
measured in terms of future cash flows.</P>
<P ALIGN="JUSTIFY">For purposes of the statements of cash flows, the Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. There were no cash equivalents at March 31, 2000, or December
31, 1999. There were no significant non-cash investing or financing activities during the periods ended March 31, 2000 and December 31, 1999.</P>
<P ALIGN="JUSTIFY">Depreciation, depletion and amortization are calculated using the straight-line and unit of production method over the estimated useful lives of the assets or production of the estimated recoverable oil and gas reserves.</P>
<P ALIGN="JUSTIFY">For income tax reporting, the Company uses accounting methods that recognize depreciation sooner than for financial statement reporting As a result, the basis of property and equipment for financial reporting exceeds its tax basis by
the cumulative amount that accelerated depreciation exceeds straight-line depreciation. Also, for tax purposes the Company deducts intangible drilling costs and capitalizes them on the successful efforts accounting method. Deferred income taxes had been
recorded in prior years for the excess deductions, which will be taxable in future periods through reduced depreciation and cost depletion deductions for tax purposes. Currently the Company has not assigned any future tax benefits to the accumulated losses.</P>
<P ALIGN="JUSTIFY">Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were used.</P>
<P ALIGN="CENTER">NOTE 3 - ACCOUNTS RECEIVABLE</P>
<P ALIGN="JUSTIFY">Of the net revenue interest amount of $63,315 due from oil and gas sales and joint interest billings as of March 31, 2000, $53,652 has been received from the operators and participants as of the date of this report. The sales to the
customers are on open accounts receivable, which are unsecured, and generally are received within 60 days.</P>
<P>NOTE 4 - PROPERTY AND EQUIPMENT</P>
<U><P>Gas and oil properties</P>
</U></FONT><FONT FACE="CG Times" SIZE=2><P>Currently, the Company has producing wells in Pecos County in Texas, San Juan County in New Mexico, and in Beauregard and Allen Parishes of Louisiana.</P>
</FONT><FONT SIZE=2><P ALIGN="JUSTIFY">The Company owns a 28.125% net revenue interest in 5 producing gas wells in San Juan County, New Mexico. </P>
<P ALIGN="CENTER">GLADSTONE ENERGY, INC.</P>
<P ALIGN="CENTER">NOTES TO FINANCIAL STATEMENTS (Unaudited)</P>
<P ALIGN="CENTER">March 31, 2000</P>
<P> </P>
<P ALIGN="JUSTIFY">The Company closed, on July 15, 1999, an acquisition of 12.25% working interest in the Righthand Creek Field located in Beauregard and Allen Parishes of Louisiana. The effective date of the acquisition was May 1, 1999. The interest
consists of 6 producing wells (.735 net productive wells) with current net production of approximately 47.5 barrels of oil per day, 1 injection well, and 2 gross (.245 net) non-producing wells.</P>
<P ALIGN="JUSTIFY">A summary of changes in the Company's gas reserves (in MCF's) is as follows (oil reserves have been included as MCF's by multiplying barrels by 6). ALL RESERVE AMOUNTS, INCLUDING THE REVISIONS, HAVE BEEN FURNISHED BY THE COMPANY
MANAGEMENT AND HAVE NOT BEEN VERIFIED BY ANY INDEPENDENT PETROLEUM ENGINEERS. The Company believes there are no "proved undeveloped reserves" at March 31, 2000.</P></B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=636>
<TR><TD WIDTH="38%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
<TD WIDTH="62%" VALIGN="TOP" COLSPAN=2>
<B><U><FONT SIZE=2><P ALIGN="CENTER">Total for United States in MCF's</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="38%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
<TD WIDTH="31%" VALIGN="TOP">
<B><FONT SIZE=2><P>                                  March 31,<BR>
                                <U>       2000  
     </B></U></FONT></TD>
<TD WIDTH="31%" VALIGN="TOP">
<B><FONT SIZE=2><P>                                  December 31,<BR>
                                   <U>       
1999       </B></U></FONT></TD>
</TR>
<TR><TD WIDTH="38%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P>Beginning of period (January 1)</B></FONT></TD>
<TD WIDTH="31%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">644,895       </B></FONT></TD>
<TD WIDTH="31%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">1,160,243        </B></FONT></TD>
</TR>
<TR><TD WIDTH="38%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P>Purchase of reserves</B></FONT></TD>
<TD WIDTH="31%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">-            </B></FONT></TD>
<TD WIDTH="31%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">464,899        </B></FONT></TD>
</TR>
<TR><TD WIDTH="38%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P>Deduction for sale of leases</B></FONT></TD>
<TD WIDTH="31%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">-            </B></FONT></TD>
<TD WIDTH="31%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">(976,459)       </B></FONT></TD>
</TR>
<TR><TD WIDTH="38%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P>Adjustment to reserves (1)</B></FONT></TD>
<TD WIDTH="31%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">-            </B></FONT></TD>
<TD WIDTH="31%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">83,055        </B></FONT></TD>
</TR>
<TR><TD WIDTH="38%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P>Production (total to date)</B></FONT></TD>
<TD WIDTH="31%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">        (29,166</U>)     </B></FONT></TD>
<TD WIDTH="31%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">        (86,843</U>)       </B></FONT></TD>
</TR>
<TR><TD WIDTH="38%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P>Balance at end of period</B></FONT></TD>
<TD WIDTH="31%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">       615,729</U>      </B></FONT></TD>
<TD WIDTH="31%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">      644,895</U>         </B></FONT></TD>
</TR>
<TR><TD WIDTH="38%" VALIGN="TOP" COLSPAN=2>
<P> </TD>
<TD WIDTH="31%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="31%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<B><FONT SIZE=2><P>  (1)</B></FONT></TD>
<TD WIDTH="84%" VALIGN="TOP" COLSPAN=3>
<B><FONT SIZE=2><P>Based on reevaluation of estimated reserves by the Company. The estimates were based on current production levels of all properties.</B></FONT></TD>
</TR>
</TABLE>

<B><FONT SIZE=2><P ALIGN="JUSTIFY"> </P>
<P>NOTE 5 - FEDERAL AND STATE INCOME TAXES</P></B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=636>
<TR><TD VALIGN="TOP" COLSPAN=3>
<P ALIGN="JUSTIFY"><B><FONT SIZE=2>As noted in Note 2, due to the amount of losses that are currently being carried forward, along with the carryover percentage depletion, the Company has not assigned any future tax benefits to the accumulated losses.<BR>
</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP" COLSPAN=3>
<B><FONT SIZE=2><P>Net operating loss deductions and credits carryforward consists of the following:</B></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">From year</B></FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">Year</B></FONT></TD>
<TD WIDTH="34%" VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="CENTER">               Ended               </B></U></FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="CENTER">              Expires              </B></U></FONT></TD>
<TD WIDTH="34%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">                   <U>          Losses      
        </B></U></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">12-31-94</B></FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">12-31-09</B></FONT></TD>
<TD WIDTH="34%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">$              100,759          </B></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">12-31-97</B></FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">12-31-12</B></FONT></TD>
<TD WIDTH="34%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">57,877          </B></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">12-31-98</B></FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">12-31-13</B></FONT></TD>
<TD WIDTH="34%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">129,028          </B></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">12-31-99</B></FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">12-31-14</B></FONT></TD>
<TD WIDTH="34%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">              118,486</U>          </B></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="32%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="34%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="RIGHT">$              406,150</U>          </B></FONT></TD>
</TR>
</TABLE>

<B><FONT SIZE=2><P>There are limitations on the use of the losses due to change of control which occurred in 1999.</P>
<P>At December 31 1999, there was $298,732 of statutory depletion carryover to 2000.</P>
<P>At December 31 1999, there was 	$10,000 of Section 179 depreciation carryover to 2000.</P>
<P>At December 31, 1999, there was $109,071 in capital loss carryover to 2000.</P>
<P ALIGN="CENTER"> </P>
<P>NOTE 6 - COMMITMENT AND CONTINGENCY</P>
<P>At March 31, 2000, the Company had no material commitments.</P>
<P ALIGN="CENTER">GLADSTONE ENERGY, INC.</P>
<P ALIGN="CENTER">NOTES TO FINANCIAL STATEMENTS (Unaudited)</P>
<P ALIGN="CENTER">March 31, 2000</P>
<P> </P>
<P>NOTE 7 - COMMON STOCK</P>
<P>Currently the Company's common stock is not traded on any exchange or automated quotation system.</P>
<P>At March 31, 2000, there were no outstanding stock options issued by the Company.</P>
<P>The following shares of common stock were outstanding for the periods under report.</P></B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=638>
<TR><TD WIDTH="61%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="19%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">March 31,<BR>
<U>         2000        </B></U></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">December 31,<BR>
<U>         1999         </B></U></FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP">
<B><FONT SIZE=2><P>Common stock, $.001 par value</B></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">848,991       </B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="RIGHT">848,991       </B></FONT></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="19%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="20%" VALIGN="TOP">
<P> </TD>
</TR>
</TABLE>

<B><FONT SIZE=2><P>At the Annual Shareholders' Meeting, held on July 15, 1999, a one for five reverse split was approved, which was effected August 10, 1999. All share and per share numbers have been adjusted retroactively to record the effects of the
reverse split.</P>
<P>With the reincorporation to Delaware, 10,000,000 shares of common stock, par value $.001 per share were authorized and 5,000,000 shares of preferred stock, par value $.001, were authorized.</P>
<P> </P>
<P>NOTE 8 - SIGNIFICANT ESTIMATES AND CONCENTRATIONS</P>
<P ALIGN="JUSTIFY">Generally accepted accounting principles require disclosure of certain significant estimates and current vulnerabilities due to certain concentrations. Those matters included the following:</P>
<P ALIGN="JUSTIFY"> </P>
<P ALIGN="JUSTIFY">1. <U>Major Customers</P><DIR>

</U><P ALIGN="JUSTIFY">In 1999, the Company had two customers which represented 72% and 19% of their total revenue.</P>
<P ALIGN="JUSTIFY"> </P></DIR>

<P ALIGN="JUSTIFY">NOTE 9 - RENT EXPENSE</P>
<P ALIGN="JUSTIFY">The Company currently pays rent of $500.00 per month to Humphrey Oil Corporation, inclusive of phone service. Rent expense through March 31, 2000 was $1,500. The Company does not have a commitment on a lease contract. Rent expense for
1999 was $6,088.</P>
<P ALIGN="JUSTIFY"> </P>
<P ALIGN="JUSTIFY">NOTE 10 - ACQUISITION OF PROPERTIES</P>
<P ALIGN="JUSTIFY">The Company closed, on July 15, 1999, with an effective date of May 1, 1999, an acquisition of 12.25% working interest in the Right Hand Creek Field located in Beauregard and Allen Parishes of Louisiana (collectively, the "Right Hand
Creek Properties") from Humphrey Oil Interests, L.P., a Texas limited partnership ("Humphrey") (Charles B. Humphrey, a Director of the Company, is the limited partner in Humphrey and President of Humphrey Oil Corporation, its general partner) being 50% of
the interest acquired by Humphrey from EXCO Resources, Inc. effective May 1, 1999. The Right Hand Creek Properties include 6 gross productive wells (.735 net productive wells) with current net production of approximately 55 barrels of oil and 2 gross
(.245 net) non-producing wells that will require recompletions and/or workovers. The Right Hand Creek Properties include 725.3 gross (88.85 net) developed acres and 234.22 gross (28.69 net) undeveloped acres. Based on independent engineering estimates as
of June 1, 1999, the Right Hand Creek Properties are estimated to contain 956,097 gross (85,396 net) barrels of oil and no gross or net million cubic feet of natural gas or proved reserves. The aggregate purchase price paid for the Right Hand Creek
Properties was $349,125. The Company borrowed $230,000 of the purchase price under a new credit facility and the balance of the purchase price was paid out of working capital. </P>
<P ALIGN="CENTER">GLADSTONE ENERGY, INC</B></FONT><FONT FACE="CG Times">.</P>
</FONT><B><FONT SIZE=2><P ALIGN="CENTER">NOTES TO FINANCIAL STATEMENTS (Unaudited)</P>
</FONT><FONT FACE="CG Times" SIZE=2><P ALIGN="CENTER">March 31, 2000</P>
</FONT><FONT SIZE=2><P ALIGN="JUSTIFY">NOTE 11 - CREDIT AGREEMENT </P>
<P ALIGN="JUSTIFY">On July 15, 1999, the Company entered into a credit facility (the "Credit Facility") with Compass Bank (the "Lender"). The Credit Facility provides for borrowings up to $15 million, subject to borrowing base limitations. </P>
<P ALIGN="JUSTIFY">The Credit Facility consists of a regular revolver which at April 1, 2000, had a borrowing base of $215,000. A portion of the borrowing base is available for the issuance of letters of credit. All borrowings under the Credit Facility
are secured by a first lien deed of trust providing a security interest in certain oil and natural gas working interests in the Right Hand Creek Properties. </P>
<P ALIGN="JUSTIFY">The Credit Facility provides that the unpaid principal balance of the loans shall bear interest, payable as it accrues on the 1st day of each month, commencing September 1, 1999, and at maturity (stated or by acceleration), at a rate
per annum equal to the lesser of the (i) Highest Lawful Rate or (ii) 1% over the CBIR rate from time to time in effect, as therein defined. The Credit Facility also permits the Company to repay and reborrow amounts under the Credit Facility without any
penalty, thereby, allowing the Company the flexibility to utilize any available cash to reduce its outstanding indebtedness and thus, its cost of borrowed funds. </P>
<P ALIGN="JUSTIFY">Under the terms of the Credit Facility, the Company must not permit its Current Ratio (as defined) of Current Assets (as defined) to its Current Liabilities (as defined) to be less than 1.25 to 1.0 at any time. Furthermore, the Company
must not permit its Tangible Net Worth (as defined) to be less at any time than $1.00 plus (i) 50% of positive Net Income (as defined) for all quarterly periods ending subsequent to December 31, 1998, plus (ii) 100% of any Equity Infusions (as defined) to
Debt Service (as defined) to be less than 1.25 for 1.0, determined as of the end of each fiscal quarter of the Company on or after September 30, 1999. </P>
<P ALIGN="JUSTIFY">A new Borrowing Base shall be determined as of each April 1 and October 1 during the Revolving Credit Period (the "semi-annual determinations"), or at such other or additional times during the Revolving Credit Period as the Lender in
its reasonable discretion and at its sole cost may elect ("discretionary determinations"), and the Lender shall determine a new Borrowing Base at such additional times, but no more often than one (1) time in any 12-month period without Lender's consent,
as the Company may request ("Borrower requested determinations"). </P>
<P ALIGN="JUSTIFY">The Borrowing Base shall be automatically reduced as of the 1st day of each month commencing February 1, 2000, and continuing through the Revolving Credit Period. The initial monthly reduction shall be in the amount of $5,000 per month.
At the time of each new semi-annual determination, the Lender, in its sole discretion may increase or decrease the amount of such monthly reduction. If a Borrowing Base Deficiency (as defined) exists after giving effect to a redetermination, then the
Company must either (i) prepay the principal of the outstanding Loans or (ii) cause to be created first and prior perfected Liens (subject only to Permitted Liens, as defined) in favor of the Lender, by instruments satisfactory to the Lender, on producing
oil and gas properties, which in the opinion of the Lender would increase the Borrowing Base by an amount sufficient, in combination with clause (i) preceding, to eliminate such Borrowing Base deficiency. </P>
<P ALIGN="JUSTIFY">The Credit Facility contains a number of covenant affecting the Company's liquidity and capital resources, including restrictions a the Company's ability (i) to incur indebtedness other than (a) under the Credit Facility or (b)
Permitted Indebtedness, as defined, or (ii) to pledge assets outside of the Credit Facility, other than Permitted Liens, and with respect to the Company's maintenance of a minimum net worth. </P>
<P ALIGN="CENTER"> </P>
</FONT><P ALIGN="CENTER"> </P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER">Item 2.</P>
<P ALIGN="CENTER">Gladstone Energy, Inc.</P>
<P ALIGN="CENTER">MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL </P>
<P ALIGN="CENTER">CONDITION AND RESULTS OF OPERATIONS</P>
</B><I><P ALIGN="JUSTIFY">This <FONT FACE="CG Times">quarterly report on form 10-Q of the Company contains "forwarding-looking statements" within the meaning of, Section 27a of the Securities Act of 1933, as amended (the "Securities Act"), and section 21e
of the Securities Exchange Act of 1934, as amended (the "exchange act"). Specifically, all statements other than statements of historical facts included in this report regarding the Company's financial position, business strategy and plans and objectives
of management of the Company for future operations are forward- looking statements. These forward-looking statements are based on the beliefs of the Company's management as well as assumptions made by and information currently available to the Company's
management. When used in this report, the words "anticipate," "believe," "estimate," "expect" and "intend" and words or phrases of similar import, as they relate to the Company or Company management, are intended to identify forward-looking statements.
Such statements reflect the current view of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions related to certain factors including, without limitation, price levels for oil and natural gas,
concentration of oil and natural gas reserves and production, drilling risks, uncertainty of oil and gas reserves, risks associated with the development of additional revenues and with the acquisition of oil and gas properties and other energy assets,
operating hazards and uninsured risks, general economic conditions, governmental regulation, changes in industry practices, marketing risks, one time events and other factors described herein ("cautionary statements"). Although the Company believes that
the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Based upon changing conditions, should any one or more of these risks or uncertainties
materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. The Company does not intend to update these forward- looking
statements. All subsequent written and oral forward- looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the applicable cautionary statements. Reference is made to "Management's
Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Information - Cautionary Statements" included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999, which is incorporated herein by
reference.</P>
</I></FONT><B><FONT SIZE=2><P ALIGN="JUSTIFY"> </P>
<U><P ALIGN="JUSTIFY">Results of Operations - Comparison of Three Month Periods Ended March 31, 2000 and 1999</P>
</U><P ALIGN="JUSTIFY"> </P>
<U><P ALIGN="JUSTIFY">Net Income (Loss)</U>. The Company had a net loss for the three month period ended March 31, 2000 of ($90,144) compared to the net loss of ($26,189) for the corresponding period of 1999, representing ($.11) per share for the period
in 2000 and ($.03) per share for the same period in 1999. </P>
<U><P ALIGN="JUSTIFY">Revenues</U>. Revenues for the three month period ended March 31, 2000 were $82,564 compared with $8,139 for the corresponding period in 1999, a 914% increase. These increases in revenues were primarily a result of the acquisition of
the Right Hand Creek Properties, which was effective as of May 1, 1999. </P>
<U><P ALIGN="JUSTIFY">Costs and Expenses</U>. Costs and expenses for the three month period ended March 31, 2000 increased $137,858, or 395%, to $172,724 versus $34,866 for the corresponding period of 1999. General and administrative expenses increased
due to the abandonment of dry holes and the associated acreage, and an officers and directors insurance policy that had not previously been carried. Legal, auditing, and accounting fees decreased $7,416, or 41%, from $18,192 for the three month period
ended March 31, 1999 to $10,776 for the same period in 2000 because improved reporting procedures have been implemented.</P>
<P ALIGN="JUSTIFY"> </P>
<U><P ALIGN="JUSTIFY">Liquidity and Capital Resources</P>
</U><P ALIGN="JUSTIFY">Cash decreased $84,573 to $49,769 at March 31, 2000, from $134,342 at December 31, 1999, as a result of the cost of dry holes drilled and payments on bank loans. Accounts receivable increased $22,494 to $63,315 from $40,821 during
the three months ended March 31, 2000 and accounts payable decreased $43,003 to $94,455 from $137,458 during the three months ended March 31, 2000. The increase in accounts receivable is primarily related to increased revenue from the Right Hand Creek
Properties which has been accrued but not received as well as higher oil prices for the period, while the decrease in accounts payable is primarily due to paying invoices due on the drilling of a dry hole and an unsuccessful recompletion of a shut-in well
related to the Right Hand Creek Properties, as well as to final payments on the drilling of the Cache Creek #1 dry hole in 1999. </P>
<P ALIGN="JUSTIFY">Earnings (loss) before interest, taxes, depreciation, depletion and amortization ("EBITDA") for the three month period ended March 31, 2000 was ($56,932) or (.07) per share for the three month period in 2000 compared to ($18,737), or
($.02) per share for the same period in 1998. (Per share figures have been adjusted retroactively to record the effects of the reverse split.) Management is of the opinion that any significant acquisitions, projects or drilling and/or recompletion work
will require debt and/or equity financing. There is no assurance that the Company will be able to borrow additional amounts under the Credit Facility or obtain other debt and/or equity financing for any significant activities. </P>
<P ALIGN="JUSTIFY">For the three months ended March 31, 2000, net cash used in operating activities was $68,619 compared to $34,558 for the three months ended March 31, 1999. Significant uses of cash in operations for the three months ended March 31,
2000, in addition to our net loss, was cash used to reduce payable. Additionally, accounts receivable increased.</P>
<P ALIGN="JUSTIFY">The Company maintains a $15 million credit facility (the "Credit Facility") with Compass Bank, which is secured by a first lien deed of trust providing a security interest in the Right Hand Creek Properties. This facility expires on
August 1, 2001. At April 1, 2000, the outstanding balance under the line of credit was $215,000 and the borrowing base was $215,000. Interest on the outstanding balance accrues on the first of each month at a rate per annum equal to the lesser of the (i)
Highest Lawful Rate or (ii) 1% over the CBIR rate from time to time in effect, as therein defined. At April 1, 2000, this rate was 10%. </P>
<P ALIGN="JUSTIFY">The Credit Facility requires the Company to comply with certain financial covenants such as a minimal current ratio, a minimal amount of tangible net worth, a minimal quick ratio and a maximum amount of debt to cash flow. The Credit
Facility also contains a number of covenants affecting the Company's liquidity and capital resources, including restrictions on the Company's ability(i) to incur indebtedness other than (a) under the Credit Facility or (b) certain permitted indebtedness,
or (ii) to pledge assets outside of the Credit Facility, other than certain permitted liens.</P>
<U><P ALIGN="JUSTIFY">Inflation and Changing Prices</P>
</U><P ALIGN="JUSTIFY">The impact of inflation, as always, is difficult to assess. During 1997 and 1998, the oil and gas industry remained depressed; however as of December 31, 1999, oil prices had made a rebound and were consistently improving. This
improvement has continued and actually increased in the first quarter of 2000. The general softening of the market prior to and into 1999 had reduced the cost of labor, materials, contract services, and other operating costs; therefore, the increase in
oil prices could cause an increase in operating costs. The Company cannot anticipate where cost and revenue trends will head; however, a sudden increase in inflation and/or an increase in operating costs coupled with a cessation of the current improved
trend of oil prices could have an adverse effect on the operations of the Company.</P>
</FONT><P ALIGN="CENTER"> </P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER">Part II. Other Information</P>
<P ALIGN="JUSTIFY"> </P>
<U><FONT SIZE=2><P ALIGN="JUSTIFY">Item 4. Submission of Matters to a Vote of Security Holders</P>
</U><P>During the first quarter of the fiscal year, no matter was submitted by the Company to a vote of its shareholders<BR>
through the solicitation of proxies or otherwise.</P>
<U><P ALIGN="JUSTIFY">Item 5. Other Information</P>
</U><P>During the first quarter of the fiscal year, there is no Other Information to disclose.</P>
<U><P ALIGN="JUSTIFY">Item 6. Exhibits and Reports on Form 8-K</P></B></U></FONT>
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<P ALIGN="RIGHT"><B><FONT SIZE=2>(a)    </B></FONT></TD>
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<B><FONT SIZE=2><P ALIGN="JUSTIFY">Exhibits - Not applicable.</B></FONT></TD>
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<B><FONT SIZE=2><P ALIGN="RIGHT">(b)    </B></FONT></TD>
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<B><FONT SIZE=2><P ALIGN="JUSTIFY">Reports on Form 8-K - No Reports on Form 8-K were filed during the last quarter of the period covered by this report.</B></FONT></TD>
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<P><B><FONT SIZE=2>                                       
                                          
         SIGNATURES</B></FONT></TD>
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<B><FONT SIZE=2><P ALIGN="JUSTIFY">Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.</B></FONT></TD>
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<B><FONT SIZE=2><P ALIGN="JUSTIFY">GLADSTONE ENERGY, INC.</B></FONT></TD>
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<B><FONT SIZE=2><P ALIGN="JUSTIFY">Date: May 12, 2000<U> </B></U></FONT></TD>
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<B><FONT SIZE=2><P ALIGN="JUSTIFY">By:<BR>
<BR>
<BR>
<U>                                          
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<B><FONT SIZE=2><P ALIGN="JUSTIFY">Katherine R. Murphy, Treasurer</B></FONT></TD>
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