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                                 **UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-QSB**
(Mark One)

[x]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934

                  For the quarterly period ended June 30, 2003

[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

                For the transition period from _______ to _______

                        Commission file number **333-52812****American Energy Production Inc.**
        (Exact name of small business issuer as specified in its charter)

              **Delaware                               74-2945581**
   (State or other jurisdiction of                  (IRS Employer
    Incorporation or organization)               (Identification No.)

                                  **P.O. Box 1406
                           Mineral Wells, Texas 76068**
                    (Address of principal executive offices)

                                  **210-410-8158**
                           (Issuer's telephone number)

                        **American Energy Production Inc.
                               310 Kitty Hawk Road
                           Universal City, Texas 78148**
(Former name, former address and former fiscal year, if changed since last report)

**APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS**

Check whether the registrant filed all documents and reports required to be
filed by Section l2, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [x] No [ ]

**APPLICABLE ONLY TO CORPORATE ISSUERS**

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:  common shares as of June 30, 2003.
                                  65,286,092

Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ ]

                                       1

**American Energy Production Inc.
                                   FORM 10-QSB

                        Three months ending June 30. 2003

                                TABLE OF CONTENTS**

PART I            FINANCIAL INFORMATION

ITEM 1   Financial Statements (Unaudited)
         Balance Sheets......................................................F-1
         Statements of Operations............................................F-2
         Statements of Cash Flows............................................F-3
         Notes to Financial Statements..................................F-4-F-10

ITEM 2   Management's Discussion and Analysis of Financial
         Condition And Results of Operations...................................4

PART II           OTHER INFORMATION

Item 1   Legal Proceedings.....................................................6

Item 2   Changes in Securities and use of Proceeds.............................6

Item 3   Defaults upon Senior Securities.......................................6

Item 4   Submission of Matters to a vote of Security Holders...................6

Item 5   Other Information.....................................................6

Item 6   Exhibits and Reports on Form 8-K......................................6

         Signatures............................................................7

                                       2
**PART I   FINANCIAL INFORMATION

                        American Energy Production, Inc.
                          (A Development Stage Company)

                              Financial Statements
                                   (Unaudited)

                                  June 30, 2003**

                        American Energy Production, Inc.
                          (A Development Stage Company)

                                    Contents

                                                                       Page(s)
                                                                     -----------
Balance Sheet................................................................F-1

Statements of Operations.....................................................F-2

Statements of Cash Flows.....................................................F-3

Notes to Financial Statements...........................................F-4-F-10

                                       3

**American Energy Production, Inc.
                                  Balance Sheet
                                  June 30, 2003
                                   (Unaudited)

                                     ASSETS**

Property and Equipment, net                                       $   2,000,000
                                                                  --------------
Total Assets                                                      $   2,000,000
                                                                  ==============

                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current Liabilities
Cash overdraft                                                    $       6,726
Accounts payable                                                        244,570
Accrued interest payable - current                                       61,998
Accrued payroll taxes and penalties                                      47,786
Lease payable                                                            18,153
Notes payable - banks                                                    61,357
Loan payable - officer                                                   30,728
Note payable - related party                                            411,495
                                                                  --------------
Total Current Liabilities                                               882,813
                                                                  --------------

Convertible note payable                                              2,000,000
Accrued interest payable - long term                                     42,741
                                                                  --------------
Total Long Term Liabilities                                           2,042,741
                                                                  --------------
Total Liabilities                                                     2,925,554

Stockholders' Deficiency
  Common stock, $0.0001 par value, 100,000,000 shares authorized
     65,286,092 shares issued and outstanding                             6,529
  Additional paid in capital                                          9,496,565
  Accumulated deficit                                                (9,360,491)
  Deficit accumulated during development stage                         (701,874)
                                                                  --------------
                                                                       (559,271)                                                                                                                                                  (559,271)
  Less:  Deferred stock based expenses                                 (366,283)
                                                                  --------------
Total Stockholders' Deficiency                                         (925,554)
                                                                  --------------
Total Liabilities and Stockholders' Deficiency                    $   2,000,000
                                                                  ==============

                                      F-1
**American Energy Production, inc.
                            Statements of Operations
                                   (Unaudited)

                                                                                                           From February 20, 2003
                                                Three Months Ended June 30,   Six Months Ended June 30,  (Inception of Development
                                                   2003             2002         2003           2002      Stage) to June 30, 2003**
                                                ------------  --------------- ------------  ----------- --------------------------

Revenues                                        $        -    $           -   $        -    $       -    $                    -
                                                ------------  --------------- ------------  ----------- --------------------------
Operating Expenses
Consulting                                          354,275          482,813      649,796      482,813                   482,334
Compensation                                             -           250,000           -       250,000                        -
General and Administrative                               -               224           -           366                        -
Professional Fees                                    13,781           13,848       13,781       13,848                     3,781
Legal Fees                                           14,583           17,560       39,583       17,560                    25,416
Website                                              89,250               -       148,750           -                    115,033
                                                ------------  --------------- ------------  ----------- --------------------------
Total Operating Expenses                            471,889          764,445      851,910      764,587                   626,564
                                                ------------  --------------- ------------  ----------- --------------------------
Loss from Operations                               (471,889)        (764,445)    (851,910)    (764,587)                 (626,564)
                                                ------------  --------------- ------------  ----------- --------------------------
Other Income (Expense)
Other income                                             -                 -           -         4,000                        -
Interest expense                                    (39,057)         (11,047)     (61,019)     (19,407)                  (49,226)
Payroll tax interest and penalties                   (1,501)          (1,501)      (3,002)      (2,948)                   (1,501)
Settlement expense                                  (14,583)              -       (14,583)          -                    (14,583)
Loss on settlement                                       -                -            -        (4,000)                       -
                                                ------------  --------------- ------------  -----------  -------------------------
Total Other Income (Expense)                        (55,141)         (12,548)     (78,604)     (22,355)                  (65,310)
                                                ------------  --------------- ------------  -----------  -------------------------
Net Loss                                        $  (527,030)  $     (776,993) $  (930,514)  $ (786,942)   $             (691,874)
                                                ============  =============== ============  ============ =========================
Net Loss Per Share - Basic and Diluted          $     (0.01)  $        (0.02) $     (0.01)  $    (0.02)   $                (0.01)
                                                ============  =============== ============  ============ =========================
Weighted average number of shares outstanding
   during the period - basic and diluted         65,383,207       34,522,485   64,179,738   32,384,910                64,179,746
                                                ============  =============== ============ ============= =========================

                                      F-2
**American Energy Production, Inc.
                            Statements of Cash Flows
                                   (Unaudited)
                                                                                                  From February 20, 2003
                                                                  Six months ended June 30,     (Inception of Development
                                                                   2003              2002       Stage) to June 30, 2003**
                                                                 ------------ --------------- ----------------------------
Cash Flows from Operating Activities:
Net loss                                                        $ (930,514)    $   (786,942)   $               (701,874)
Adjustments to reconcile net loss to net cash provided by
                operating activities:
Stock issued for services                                          838,138          750,373                     622,793
Stock issued in settlement                                          14,583               -                       14,583
Changes in operating assets and liabilities:
Increase (decrease) in:
  Accounts payable                                                   3,782            4,574                       3,781
  Accrued interest payable                                          60,809           18,128                      48,480
  Accrued Payroll taxes payable                                      3,002            2,948                       2,151
                                                                 ------------ --------------- ----------------------------
Net Cash Used in Operating Activities                              (10,200)         (10,919)                    (10,086)
                                                                 ------------ --------------- ----------------------------
Cash Flows from Financing Activities:
  Cash overdraft                                                        -               526                          -
  Proceeds from loan payable - officer                              10,400           10,353                      10,173
  Repayment on lease payable                                          (200)              -                          (87)
                                                                 ------------ --------------- ----------------------------
Net Cash Provided by Financing Activities                           10,200           10,879                      10,086
                                                                 ------------ --------------- ----------------------------
Net Decrease in Cash                                            $       -      $        (40)   $                     -

Cash at Beginning of Period                                             -                40                          -
                                                                 ------------ --------------- ----------------------------
Cash at End of Period                                           $       -      $         -     $                     -
                                                                 ============ =============== ============================
Supplemental disclosure of cash flow information:

                Assets acquisition for note payable             $ 2,000,000    $         -     $              2,000,000
                                                                 ============ =============== ============================

                                      F-3
**American Energy Production, Inc.
                          (A Development Stage Company)
                          Notes to Financial Statements
                                  June 30, 2003**
                                   (Unaudited)

**Note 1  Basis of Presentation**

The accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
and the rules and regulations of the United States Securities and Exchange
Commission for interim financial information. Accordingly, they do not include
all the information and footnotes necessary for a comprehensive presentation of
financial position and results of operations.

It is management's opinion, however, that all material adjustments (consisting
of normal recurring adjustments) have been made which are necessary for a fair
financial statement presentation. The results for the interim period are not
necessarily indicative of the results to be expected for the year.

For further information, refer to the audited financial statements and footnotes
for the year ended December 31, 2002 included in the Company's Form 10-KSB.

On February 20, 2003, upon the acquisition of certain oil and gas assets (see
Note 3), the Company entered a new development stage. Activities during the
development stage include acquisition of assets, obtaining geological reports,
developing an implementation plan to extract oil and gas and seeking capital.

**Note 2  Nature of Operations and Significant Accounting Policies****(A) Nature of Operations**

         The Company is engaged primarily in the acquisition, development,
         production, exploration for, and the sale of, oil and gas. The Company
         has not generated any sales through June 30, 2003.

         **(B) Use of Estimates**

         In preparing financial statements, management is required to make
         estimates and assumptions that affect the reported amounts of assets
         and liabilities and disclosure of contingent assets and liabilities at
         the date of the financial statements, revenues, and expenses during the
         reported period. Actual results may differ from these estimates.
         Significant estimates as of June 30, 2003 include valuation of stock
         issued for services and the allocation of the purchase price to certain
         oil and gas related assets acquired.

         **(C) Property and Equipment - Oil and Gas Properties**

         The Company uses the successful efforts method of accounting for
         acquisition, exploration, development and production of oil and gas
         properties, whereby only the direct costs of acquiring or drilling
         successful (proved reserves) are capitalized. Costs of acquisition,
         development, and exploration activities that are not known to have
         resulted in the discovery of reserves (unproved) are charged to
         operations. All capitalized costs of oil and gas properties are
         depleted using the units-of-production method based on total proved
         reserves. The capitalized cost of support equipment and fixtures will
         be depreciated over their estimated useful life once they are placed
         into service.

                                      F-4
**American Energy Production, Inc.
                          (A Development Stage Company)
                          Notes to Financial Statements
                                  June 30, 2003**
                                   (Unaudited)

         **(D) Long-Lived Assets**

         The Company reviews long-lived assets and certain identifiable assets
         related to those assets for impairment whenever circumstances and
         situations change such that there is an indication that the carrying
         amounts may not be recoverable. If the non-discounted future cash
         flows of the enterprise are less than their carrying amount, their
         carrying amounts are reduced to fair value and an impairment loss is
         recognized.

         **(E) Recent Accounting Pronouncements**

         In May 2003, the FASB issued SFAS No. 149, Amendment of Statement 133
         on Derivative Instruments and Hedging Activities ("SFAS 149") which
         provides for certain changes in the accounting treatment of derivative
         contracts. SFAS 149 is effective for contracts entered into or
         modified after June 30, 2003, except for certain provisions that
         relate to SFAS No. 133 Implementation Issues that have been effective
         for fiscal quarters that began prior to June 15, 2003, which should
         continue to be applied in accordance with their respective effective
         dates. The guidance should be applied prospectively. The adoption of
         SFAS 149 is not expected to have a material impact on the Company's
         financial position, results of operations or liquidity.

         In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
         Financial Instruments with Characteristics of both Liabilities and
         Equity ("SFAS 150"). This new statement changes the accounting for
         certain financial instruments that, under previous guidance, issuers
         could account for as equity. It requires that those instruments be
         classified as liabilities in balance sheets. Most of the guidance in
         SFAS 150 is effective for all financial instruments entered into or
         modified after May 31, 2003, and otherwise is effective at the
         beginning of the first interim period beginning after June 15, 2003.
         The adoption of SFAS 150 is not expected to have a material impact on
         the Company's financial position, results of operations or liquidity.

         In November 2002, the FASB issued FASB Interpretation No. 45,
         "Guarantor's Accounting and Disclosure Requirements for Guarantees,
         Including Indirect Guarantees of Indebtedness of Others" ("FIN 45").
         FIN 45 requires that a liability be recorded in the guarantor's
         balance sheet upon issuance of a guarantee. In addition, FIN 45
         requires disclosures about the guarantees that an entity has issued,
         including a reconciliation of changes in the entity's product warranty
         liabilities. The initial recognition and initial measurement
         provisions of FIN 45 are applicable on a prospective basis to
         guarantees issued or modified after December 31, 2002, irrespective of
         the guarantor's fiscal year-end. The disclosure requirements of FIN
         45 are effective for the Company for financial statements of interim
         periods beginning July 1, 2003.

                                      F-5

**American Energy Production, Inc.
                          (A Development Stage Company)
                          Notes to Financial Statements
                                  June 30, 2003**
                                   (Unaudited)

         In January 2003, the FASB issued FASB Interpretation No. 46,
         "Consolidation of Variable Interest Entities"("FIN 46"), which
         represents an interpretation of Accounting Research Bulletin No. 51
         ("ARB 51"), "Consolidated Financial Statements". ARB 51 requires that
         a Company's consolidated financial statements include subsidiaries in
         which the Company has a controlling financial interest. That
         requirement usually has been applied to subsidiaries in which the
         Company has a majority voting interest. However, the voting interest
         approach is not effective in identifying controlling financial
         interests in entities (referred to as "variable interest entities")
         that are not controllable through voting interests or in which the
         equity investors do not bear the residual economic risks. FIN 46
         provides guidance on identifying variable interest entities and on
         assessing whether a Company's investment in a variable interest entity
         requires consolidation thereof. FIN 46 is effective immediately for
         investments made in variable interest entities after January 31, 2003
         and it is effective in the first fiscal year or interim period
         beginning after June 15, 2003 for investments in variable interest
         entities made prior to February 1, 2003. The adoption of FIN 46 is not
         expected to have a material impact on the Company's financial
         position, results of operations, or liquidity.

**Note 3  Property and Equipment, Assets Acquisition and Convertible Promissory Note**

On February 20, 2003 (the "Acquisition" date), the Company acquired from a
certain assignor, who is the brother (see Notes 4 and 5) of the Company's
president and sole director, an interest in certain oil and gas leases, oil and
gas wells located on those leases, surface and underground equipment, pipelines
and other property and fixtures in or on the leases, rights of way, leases,
contracts and agreements for pipeline compressor stations or boosters utilized
in the operations of the facilities by the assignors. The above properties are
located in Comanche and Eastland Counties, Texas, in the United States of
America. The Company plans to extract and sell oil and gas from existing wells.
The consideration paid was a convertible promissory note for $2,000,000 at 6%
interest, maturing July 25, 2007. All the leases and wells are collateral for
the promissory note. Upon the maturity date, and at the option of the holder,
the promissory note and accrued interest is payable in either (a) convertible
preferred stock at $1.00 per share and this preferred stock is convertible into
common stock at $1.00 per share or (b) cash. The Company accounted for the
purchase as an asset acquisition at its fair market value of $2,000,000 under
the purchase method of Statement of Financial Accounting Standards No. 141
"Business Combinations". The purchase price is allocated to the various assets
as discussed below. The results of any operations relating to the acquired
assets are included in the Company's financial statements from the Acquisition
date.

The Company has evaluated that the convertible promissory note in accordance
with EITF Issue No.98-5 does not have any beneficial conversion feature as the
exercise price of $1.00 exceeded the fair value of the Company's common stock on
the measurement date of $.04.

Oil and Gas Properties

Acquisition costs of proved property consists of oil and gas lease acquisition
costs relating to proved, developed, non-producing properties. The cost
allocated to the lease was $1,642,500 on the acquisition date. Amortization of
these costs into production costs, using the units-of-production method, will
begin when production commences. Accordingly, there was no depreciation for the
three or six months ended June 30, 2003. Oil and gas properties were as follows
at June 30, 2003:

                  Oil and gas properties                    $      1,642,500
                  Accumulated depletion                                   -
                                                               --------------
                                                               --------------
                                                            $      1,642,500
                                                               ==============

                                      F-6

**American Energy Production, Inc.
                          (A Development Stage Company)
                          Notes to Financial Statements
                                  June 30, 2003**
                                   (Unaudited)

Property and Equipment-Capitalized Costs Relating to Oil and Gas Properties

Certain support equipment and fixtures were acquired as part of the asset
acquisition. The portion of the aggregate $2,000,000 purchase price allocated to
support equipment and fixtures, based on the fair market values of such support
equipment and fixtures, was as follows at the acquisition date and at June 30,
2003:

                  Support equipment and fixtures          $          357,500
                  Accumulated depreciation                                -
                                                               --------------
                                                               --------------
                                                          $          357,500
                                                               ==============

The Company will begin depreciation of the acquired support equipment and
fixtures when development commences. Accordingly, there was no depreciation for
the three or six months ended June 30, 2003.

Supplementary Oil and Gas Information as of February 20, 2003, the lease
acquisition date (Unaudited):

                           Property Acquisition Costs
                                                                Six Months Ended
                                                                  June 30, 2003
                                                               -----------------

                      Proved properties                     $      1,642,500
                                                               =================
                                                               =================

Estimated Gross Reserves and Income Data at February 20, 2003 for United States Properties:

                                                                          PROVED
                                                              Developed                                    Total
                                                            Non-Producing           Undeveloped            Proved
                                                          -------------------     ----------------     ---------------
                                                          -------------------     ----------------     ---------------
Gross Remaining Reserves
    Oil/Condensate - Barrels                                      2,232,522                    -          2,232,522
    Gas - MMCF                                                        2,985                    -              2,985

Income Data
    Future Net Revenue                                 $         68,516,680    $               -         68,516,680
    Deductions                                                  (22,680,167)                   -        (22,680,167)
                                                          -------------------     ----------------     ---------------
                                                          -------------------     ----------------     ---------------
    Future Net Income (FNI)                            $         45,836,513    $               -   $     45,836,513
                                                          ===================     ================     ===============
                                                          ===================     ================     ===============

    Discounted FNI at 10%                              $         33,011,202    $               -    $     33,011,202
                                                          ===================     ================     ===============

**Note 4  Related Party Transactions**

On February 20, 2003, the Company acquired certain oil and gas properties from
the brother of the Company's president and sole director. (See Note 3)

During the three months ended June 30, 2003, the Company's president and sole
director paid $10,000 of professional fees on behalf of the Company. The loan is
non-interest bearing, unsecured and due on demand.

                                      F-7
**American Energy Production, Inc.
                          (A Development Stage Company)
                          Notes to Financial Statements
                                  June 30, 2003**
                                   (Unaudited)

**Note 5  Convertible Note Payable**

On February 20, 2003, the Company executed a $2,000,000 convertible promissory
note accruing interest at 6% (See Note 3). The maturity date is July 25, 2007.
The note is payable at maturity in preferred stock of the Company at $1.00 per
share and. the preferred stock is convertible into common stock at $1.00 per
share. Additionally, at the option of the holder, the debt may be settled for
cash. As of June 30, 2003, the Company had not yet authorized the issuance of
any preferred stock. The note is secured by a deed of trust and a lien against
the leases and the wells and other liens against the same leases and wells of
$25,000. Accrued interest relating to the convertible promissory note at June
30, 2003 was $42,741.

**Note 6  Legal Matters**

The Company is subject to various lawsuits and unasserted claims from vendors
for non-payment of accounts payable plus related legal fees. Excluding legal
fees, which cannot be estimated, the Company has included all amounts in its
accounts payable as of June 30, 2003.

The Company is subject to a lawsuit from one stockholder who invested $100,000
in the Company for 100,000 common shares during a private placement. The Company
believes an unfavorable outcome is not probable.

The Company has included $47,786 of unpaid Federal payroll taxes and employee
withholdings and related penalties and interest in its accrued expenses as of
June 30, 2003. Such amounts are subject to potential IRS tax liens.

During 2002, the Company cancelled various consulting contracts due to
non-performance and demand was made for the return of these shares to the
treasury. As of the issuance date of these financial statements, certain shares
had been returned to the treasury (See Notes 7 and 9). Additionally, there are
currently other demands for return that have not yet been satisfied. The Company
is pursuing these matters accordingly.

**Note 7  Stockholders' Deficiency**

On January 24, 2003, the Company's Board of Directors adopted a resolution to
remove from registration any and all remaining shares of common stock registered
under its Form S-8, which have not been issued or reserved for issuance under
the Communicate Now.Com, Inc. Employee Benefit Plan as filed August 23, 2002.

On January 27, 2003, the Company's Board of Directors adopted a resolution to
create the 2003 Employee Benefit Plan. The Company has authorized for
registration 25,000,000 shares of its common stock on Form S-8.

As of the date of the accompanying financial statements, and under the terms of
this Employee Benefit Plan, the Company issued 22,800,000 shares of its common
stock to various unrelated third parties for future services. The shares are
valued at the Company's quoted market trading price at each grant date since the
shares are deemed fully vested at the grant date and the related expense will be
recognized over the term of the respective service agreement. The following
provides details of these grants:

                                      F-8
**American Energy Production, Inc.
                          (A Development Stage Company)
                          Notes to Financial Statements
                                  June 30, 2003**
                                   (Unaudited)

On January 1, 2003, 4,000,000 common shares were granted for a six-month service
period valued at $0.02 per share based on the closing quoted market trading
price or $80,000. All shares were fully vested at the grant date. During the
three and six months period ended June 30, 2003, the Company recognized $40,000
and $80,000, respectively, of consulting expense.

In February 2003, the Company reached an oral agreement with the consultant to
issue additional common stock under the terms of the initial agreement. In May
2003, the Company issued an additional 250,000 shares of its common stock valued
at $.07 per share based on the closing quoted market trading price or $17,500.
All shares were fully vested at the grant date. These shares were issued as part
of a settlement with the consultant based on work performed and to be performed.
During the three and six months period ended June 30, 2003, the Company
recognized $14,583 and $14,583, respectively, of a stock based settlement
expense and deferred $2,916 in stockholders' deficiency. On January 29, 2003,
2,000,000 common shares were granted for a six-month service period valued at
$0.02 per share based on the closing quoted market trading price or $40,000. All
shares were fully vested at the grant date. During the three and six months
period ended June 30, 2003, the Company recognized $20,000 and $33,333 of
consulting expense and deferred $6,667 in stockholders' deficiency.

On February 8, 2003, 5,100,000 common shares were granted for a one-year service
period valued at $0.07 per share based on the closing quoted market trading
price or $357,000. All shares were fully vested at the grant date. During the
three and six months ended June 30, 2003, the Company recognized $89,250 and
$148,750, respectively, of website expense and deferred $208,250 in
stockholders' deficiency.

On March 1, 2003, 10,000,000 common shares were granted for a six-month service
period valued at $0.03 per share based on the closing quoted market trading
price or $300,000. All shares were fully vested at the grant date. During the
three and months ended June 30, 2003, the Company recognized $50,000 and
$200,000, respectively, of consulting expense and deferred $100,000 in
stockholders' deficiency.

On March 28, 2003, 1,700,000 common shares were granted for a one-year service
period valued at $0.038 per share based on the closing quoted market trading
price or $64,600. All shares were fully vested at the grant date. During the
three and six months ended June 30, 2003, the Company recognized $16,150 and
$16,150, respectively, of consulting expense and deferred $48,450 in
stockholders' deficiency.

On June 30, 2003, the Company cancelled 212,500 shares of its common stock
previously issued to a former consultant for non-performance under the terms of
the original agreement (See Note 6). The transaction was treated as a
settlement. The shares were returned to the treasury. The transaction was
treated as a recapitalization by charging the par value of the common stock and
crediting additional paid in capital for $21. These shares were properly
included and accounted for in the three and six months periods ended,
respectively, loss per share computation.

                                      F-9

**American Energy Production, Inc.
                          (A Development Stage Company)
                          Notes to Financial Statements
                                  June 30, 2003**
                                   (Unaudited)

**Note 8  Operating Agreement**

In June 2003 the Company executed an agreement with a third party and Proco
Operating, Inc. whereby the third party will facilitate the sale of the
Company's common shares under the proposed Regulation S offering (see Note 10)
and the Company and the third party would split the proceeds 50% each, and then
the Company and the third party would each invest such proceeds in the
development of the properties owned by the Company. Each party would then split
the net income from the properties 50% each. However, the Company intends to
amend the terms of this agreement so that the third party would essentially
received 50% of the regulation S offering proceeds and not be further involved
in the development of the Company's properties. This amendment has not been
executed as of the issuance of this report.

**Note 9  Going Concern**

As reflected in the accompanying financial statements, the Company has a net
loss of $930,514 and net cash used in operations of $10,200 for the six months
ended June 30, 2003 and a working capital deficiency of $882,813, deficit
accumulated during the development stage of $701,874 and a stockholders'
deficiency of $925,554 at June 30, 2003. The ability of the Company to continue
as a going concern is dependent on the Company's ability to further implement
its business plan, raise capital, and generate revenues. The financial
statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern.

**Note 10  Subsequent Events**

On July 11, 2003, the Company issued 1,700,000 shares of common stock for
consulting services to be rendered. The term of the agreement was for six
months. At the date of grant, the shares had a fair value of $.065 per share
based on the closing quoted market trading price or $110,500. All shares were
fully vested at the grant date.

On July 23, 2003, the Board of Directors adopted a resolution to issue up to
30,000,000 shares of common stock in connection with a Regulation "S" offering.
On August 4, 2003, the Company issued 10,975,227 shares of common stock into
escrow. The shares have been issued in contemplation of an actual and future
Regulation "S" offering. As of the date of issuance of these financial
statements, the documentation that will serve as the final offering agreement
has yet to be completed. As a result, the terms of the offering can not be
disclosed as these terms are still being determined.

On August 13, 2003, the Company cancelled 2,474,400 shares of its common stock
previously issued to a former attorney for non performance under the terms of
the original agreement (See Note 6). The transaction was treated as a
settlement. The shares were returned to the treasury. The transaction was
treated as a recapitalization by charging the par value of the common stock and
crediting additional paid in capital for $247.

                                      F-10

**ITEM 2**

        American Energy Production Inc. is hereinafter referred to as "the
Company", "we" or "our".

**MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS**

         The following discussion contains certain forward-looking statements
that are subject to business and economic risks and uncertainties,  and our
actual results could differ materially from those forward-looking statements.
The following discussion regarding our financial statements should be read in
conjunction with the financial statements and notes thereto.

                              **RESULTS OF OPERATIONS**

        We were incorporated on January 31, 2000. During the period from our
inception of January 31, 2000 through October 2000, we conducted market
research, raised capital of $1,423,900 before offering costs through a private
placement of our securities, and developed our back office infrastructure and
website. In November 2000, we began selling Internet display advertisements to
small businesses in the Central Texas area. Due to unfavorable results we ceased
operations of our only business product, Bizfinders in August 2001. All
employees were terminated and operations that resulted in revenue ceased.

        During the period of January 1, 2002 through June 30, 2003 the
operations of the Company consisted of a search for oil and gas properties to
acquire and operate. The Company was successful in securing additional oil and
gas properties during this period.

        The management of the company believes it will be successful in securing
additional oil and gas properties but there can be no assurance the management
will be successful in it efforts to re-invent the company as a profitable oil
and gas operation Company, or that it will be successful in the operation of
it's current property, "Proco"

   **RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDING June 30, 2003 COMPARED TO
        RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDING June 30, 2002.**

        Revenue for the three months ending June 30, 2003 was $0. respectively
as compared to $O., for the three months ending June 30, 2002

        The Company incurred $838,138, of stock based expenses in the six months
ending June 30, 2003 relating to consulting, legal and website as compared to
$750,373 during the three and six months ending June 30, 2002.

        Interest expense of $61,019 in the six months ending June 30, 2003
relates to interest on the $2,000,000 promissory note of approximately $42,740
and the remainder is interest on various other loans and notes. Interest in the
prior comparative period in 2002 does not include the $2,000,000 note interest
as this note was issued on February 20, 2003.

                         **MATERIAL TRENDS OR EVENTS**

        Our business plan is to acquire oil and gas properties for development
and Production operations, leading to revenue and profit growth. On July 30th of
2002 the Company entered into a letter of intent to acquire Proco Operating Co.,
Inc., Marble Falls Unit properties via a convertible two million dollar note
($2,000,000). The term of the convertible note is 5 years at an interest rate of
6%. In 2007 at note maturity, the note at the option of the holder will be
paid in cash or convert to Preferred Stock at a conversion rate of $1.00 per
share. The Company has not authorized any Preferred stock at this time and plans
to file an amendment to our articles of Incorporation. There can be no assurance
we will be successful in our efforts to implement our plan in the Proco Marble
Falls Unit.

                                       4

The Company completed the acquisition of the Proco Operating Marble Falls Unit
on February 20, 2003. The Company plans to re-work or re-complete several wells
and use a new type of fracture stimulation on the 150 foot thick Barnett Shale
Formation that covers the entire 3000+ acres on the Marble Falls Unit.

The Company cancelled the 2002 Employee Benefit Plan on January 24, 2003 and
filed an Employee Benefit Plan for 2003 for 25,000,000 shares of S-8 common
stock. The company granted 22,800,000 shares under the 2003 Employee Benefit
Plan. This common stock was issued to employees, consultants and officers during
the first quarter of 2003. From April 1, 2003 to June 30,2003 the Company issued
1,950,000 shares of S-8 stock to consultants for services under the 2003
Employee Benefit Plan and on July 11, 2003 issued an additional 1,700,000 shares
under the same Plan. On July the 30, 2003 the Company cancelled 212,500 shares
of the 2002 Employee Benefit Plan and returned the stock to the treasury that
can be issued at a later date. In July 2003 the Company cancelled 2,474,400
shares of the 2002 Employee Benefit Plan for consulting services and returned
the stock to the treasury that can be issued at a later date.

The Company has signed a Letter of Intent to purchase substantially all of the
oil properties of Production Resources Inc. The oil properties are located in
Medina County, Texas and have approximately 62,000,000 barrels of proven
producing recoverable oil reserves. The Company believes with several enhanced
recovery systems substantially more oil can be recovered in the future. The
Company will complete the definitive purchase agreement in the next forty-five
days with Production Resources Inc.

The Company is in the process of purchasing a producing oil well in Fisher
County, Texas that will add producing assets to the balance sheet.

                         **LIQUIDITY AND CAPITAL RESOURCES**

        As of June 30, 2003, we had no cash resources. We expect revenues from
our oil and gas property development, and loans from various sources, will be
sufficient to cover our working capital requirements for twelve months.

        Our future revenues may be insufficient to fund our operations;
accordingly, we may have to seek additional financing from financial
institutions or other sources. We maintain a line of credit of $42,000 with Bank
One. As of June 30, 2003, we have borrowed $42,000 against the Bank One line of
credit.

        At June 30, 2003 we had total cash of $0., compared to June 30, 2002
when we had total cash of $0. The reason for the ability of the Company to
continue in business was as a result loans received from the sole director and
officer.

                            **MATERIAL SEASONAL ASPECTS**

We have identified several seasonal aspects that would have a material effect on
our current limited operations. Because of the volatile oil commodity markets
world wide and various political and weather changes world wide there may be a
situation where oil and gas markets could fall in price and effect the ability
to sell oil and produced gas at profitable prices.

                                       5

**PART II  OTHER INFORMATION

Item 1            Legal Proceedings**

        All material pending legal proceedings in which we are involved has been
reported in our 10 K SB.

**Item 2            Changes in Securities and Use of Proceeds**

        Working Capital restrictions and other limitations upon the payments of
dividends.

        As reflected in the accompanying financial statements for the three
months ended June 30, 2003, we had a net loss of $527,030 and net cash used in
operations of $10,200. In addition, at June 30, 2003, we had a working capital
deficiency of $882,813. As of June 30, 2003, we had no earnings. From April 1,
2003 to June 30,2003 the Company issued 1,950,000 shares of S-8 stock to
consultants for services under the 2003 Employee Benefit Plan and on July 11,
2003 issue an additional 1,700,000 shares under the same Plan. On July the 30,
2003 the Company cancelled 212,500 shares of the 2002 Employee Benefit Plan and
returned the stock to the treasury that can be issued at a later date. In July
2003 the Company cancelled 2,474,400 shares of the 2002 Employee Benefit Plan
for consulting services and returned the stock to the treasury that can be
issued at a later date Holders of our common stock are entitled to receive
ratably dividends, if any, as may be declared by our board of directors from
funds legally available. We paid a 1 for 5 restricted stock dividend on August
16, 2002, this dividend stock will be restricted until August 16, 2003. We now
anticipate that all earnings, if any, will be retained for development of our
business. Any future dividends will be at the discretion of our Board of
Directors and will depend upon our future earnings, operating and financial
condition, capital requirements, and other factors.

**Item 3            Defaults Upon Senior Securities**

        Not applicable

**Item 4            Submission of Matters to a Vote of Security Holders**

        There have not been any matters submitted to a vote of the Security
Holders.

**Item 5            Other Information**

        Not applicable

**Item 6            Exhibits and Reports on Form 8-K**

        Not Applicable

                                       6

**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) 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.

                                                AMERICAN ENERGY PRODUCTION INC.
Date: August 19, 2003                           By: /s/ Charles Bitters
                                                ----------------------------
                                                Charles Bitters,
                                                President and Director

                                       6
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