<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB

        (Mark One)
[X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934 [FEE REQUIRED]
        For the fiscal year ended December 31, 2003

[ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
        For the transition period from                to                .
                                       --------------    ---------------

                          Commission File Number 1-6336

                            PETROMINERALS CORPORATION
                 (Name of small business issuer in its charter)

           DELAWARE                                     95-2573652
--------------------------------            ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

                970 CALLE NEGOCIO, SAN CLEMENTE, CALIFORNIA 92673
                -------------------------------------------------
                    (Address of principal executive offices)

                    Issuer's telephone number: (949) 366-3888
                                               --------------

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(G) of the Act:

COMMON STOCK, PAR VALUE $.80
----------------------------
(Title of Class)

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

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

The issuer's revenues for its most recent fiscal year were approximately
$916,000.

Check whether the Issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. [ ] yes [X] no

Transitional small business disclosure format. [ ] yes [X] no

The number of shares of Registrant's common stock outstanding was 1,059,404 as
of December 31, 2003.

The aggregate market value of the Registrant's voting stock held by
non-affiliates of the Registrant was approximately $249,805

The total number of pages in this Form 10-KSB are 43.

The Index of Exhibits included in this Form 10-KSB is located at page 40.

                                       1
<PAGE>

                            PETROMINERALS CORPORATION
                                     PART I


ITEM 1.  BUSINESS

Petrominerals Corporation (Petrominerals or the Company), a Delaware Corporation
formed in 1966, has been engaged in oil and gas exploration, drilling,
production and other oil industry - related businesses. At various times in the
past, the Company has merged with and acquired several companies engaged in
similar activities. The common stock of Petrominerals is currently trading on
the OTC Bulletin Board.

In April 1998 substantially all of the Company's oil and gas properties were
sold to an unrelated entity.

In September 1989 and again in February 2000, the Company was advised by the
Environmental Protection Agency (EPA) that it was potentially responsible for
clean-up of waste disposal sites in Monterey Park, California, and Casmalia,
California, respectively. Both sites involved the permitted disposition of
non-hazardous drilling mud and oil field fluids. In 1973, 1975, and 1977 the
waste disposed of at the Monterey Park site was from drilling operation of
Century Oil Corporation, subsequently merged into Petrominerals and in 1980 and
1981 waste was disposed of at the Casmalia site from drilling operations in the
Santa Maria, California area. Following protracted negotiations, in 2001 the
Company settled both claims for future payments of approximately $725,000.
(See item 3 - Legal Proceedings.)

After reserving for the EPA liabilities discussed above, the Company's
shareholder equity at December 31, 2001 fell to $1.3 million. The Company
notified Nasdaq under the terms of its Nasdaq SmallCap Market Listing Agreement
that required the Company to maintain a minimum shareholder equity of $2.0
million. On May 30, 2002, the Company announced that Company's representatives
appeared before the Nasdaq Hearing Panel to request additional time to return to
compliance. The Hearing Panel rejected the Company's request and delisted the
Company's securities effective July 9, 2002. The Company's securities, however,
were immediately eligible and are currently trading on the OTC Bulletin Board.

BUSINESS STRATEGY

Following the sale of most of our oil and gas properties in 1998 Petrominerals
has attempted to re-deploy its assets both by acquiring oil and gas producing
properties and by merger with another company.

In September 1999 we completed the acquisition of a 25% interest in the 6,000
acre Smith Ranch field in southwest Wyoming for $102,000 in cash and a
commitment to participate in the drilling of two wells. Following an evaluation
of the coal bed methane potential on the acreage, the Company and its partners
concluded that they lacked the resources to develop the property and the
properties were sold to an related party in 2003. (See Item 2 - Properties.)

In October 2003, Company entered into an agreement to purchase from a related
party a Fifty (50%) percent interest in a producing oil and gas lease and its
related wells and facilities, providing the Company's due diligence supported
the represented values. Company has not concluded its due diligence at the
present time.

In general, the Company's efforts to acquire oil and gas properties, borrow
money and/or merge with another company have been significantly hampered by the
uncertain nature of the potential EPA liabilities discussed above. While this
issue has now been settled and the extent of the liability has been quantified,
our cash resources will be substantially reduced as a result of the settlement;
and we may not be able to carry out our growth plan on the scale originally
contemplated. Nevertheless, management is actively pursuing a number of
potential business opportunities.

OPERATING HAZARDS

Our operations are subject to all of the operating hazards and risks associated
with producing oil and gas including, but not limited to, environmental
pollution and personal injury. The Company carries general liability insurance.

                                       2
<PAGE>

ITEM 1.  BUSINESS (CONTINUED)

GOVERNMENTAL REGULATIONS

Federal, state and local governments impose numerous laws and regulations on the
production and sale of oil and gas. In addition, state and Federal regulations
have been adopted which pertain to the spacing of wells, prevention of waste of
oil and gas, limiting rates of production, prorating of productions, handling of
waste water and similar matters. All such laws and regulations are subject to
change at any time, and there is no way to ascertain either the likelihood or
potential effect of such future changes.

ENVIRONMENTAL MATTERS

The Company is subject to federal, state and local requirements regulating the
discharge of materials into the environment, the handling and disposal of solid
and hazardous wastes, and protection of health and the environment generally
(collectively "Environmental Laws"). Governmental authorities have the power to
require compliance with these Environmental Laws, and violators may be subject
to civil or criminal penalties, injunctions or both. Third parties may also have
the right to sue for damages and/or enforce compliance and to require
remediation for contamination.

The Company is also subject to Environmental Laws that impose liability for
costs of cleaning up contamination resulting from past spills, disposal and
other releases of substances. In particular, an entity may be subject to
liability under the Federal Comprehensive Environmental Response, Compensation
and Liability Act and similar state laws that impose liability - without a
showing of fault, negligence or regulatory violations - for the generation,
transportation or disposal of hazardous substances that have caused or may cause
environmental contamination. In addition, an entity could be liable for cleanup
of property it owns or operates even if it did not contribute to contamination
of such property.

As discussed above, in 2001 we settled certain EPA claims against the Company
and predecessor companies and reserved $725,000 for this expense. (See Financial
Statements, Item 7 for further information).

EMPLOYEES

As of December 31, 2003, the Company employed a total of two individuals, both
part time.

SEGMENTS

The Company considers its principal business to fall within one industry. All
revenues are derived from the Production of oil and gas. (See Financial
Statements, Item 7 for further information).

ITEM 2.  PROPERTIES

The Company owns varying interests in oil producing properties in southern
California and is in the process of acquiring an interest in an oil producing
property in northern California.

CALIFORNIA OIL PROPERTIES

Under terms of the 1998 sale, we retained a 53% working interest in the Castaic
Hills Unit, a 100% working interest in a single oil well and an 83.3% working
interest in two oil wells in the Hasley Canyon field. All of these properties
are in close proximity and are located near Santa Clarita, California. During
the year 2002, Management initiated abandonment procedures for the two wells in
the Hasley Canyon field and will complete these procedures during 2004. For the
year ended December 31, 2003, the operating expenses and abandonment costs for
these interests exceeded the oil revenues. With oil prices at historically high
levels, the operator of the Castaic Hills Unit has initiated a program of
returning wells to production and enhancement of the water disposal activities.

                                       3
<PAGE>

ITEM 2.  PROPERTIES (CONTINUED)

WYOMING GAS PROPERTIES

In 1999 the Company acquired a 25% working interest in natural gas properties
and prospects on approximately 6,000 acres in Sweetwater and Carbon counties,
Wyoming. The property included a limited amount of conventional gas production
and an extensive coal bed methane gas prospect. As a part of the consideration
for the purchase, the Company participated in the cost of drilling two wells.
Efforts to increase the production of conventional gas were disappointing;
however test work in the coal beds indicated the presence of substantial gas
reserves. Company and its partners concluded that they lacked the financial
resources to develop these reserves. In May of 2003, the Company sold its
twenty-five percent interest in the Wyoming gas field for $129, 000. The Company
charged $6,000 to loss on the sale of property.

PRODUCTION PAYMENT

As additional consideration for the 1998 sale of its producing properties, we
retained a production payment in the amount of $931,000. Company receives
payments from the buyer in any month the posted price for the oil produced
exceeds $13.50 per barrel. As of December 31, 2003 cumulative production
payments to the Company totaled $931,000.

OIL AND GAS RESERVE INFORMATION

The tables located in Note 11 of Item 7 located elsewhere herein set forth
information with respect to the engineering estimates of proved oil and gas
reserves owned by the Company. As of December 31, 1998, all remaining interests
of the California property have been impaired. The reserves are shown in barrels
of oil equivalent (boe). Except as set forth in this report, Company has not
filed any estimates of proved reserves with any federal authority or agency
during the last fiscal year. The Company's net interest in proved reserves and
related valuations for the California properties for the years ended December
31, 2002 and 2003 were prepared by Babson & Sheppard, an independent petroleum
engineering firm in Long Beach, California. Reserve estimate are based upon
detailed engineering and geological studies. Where an adequate production trend
has been established, extrapolation of production performance is used. If
insufficient well data is available for performance calculations, the initial
gas or oil in place volumes are estimated from geological interpretation of
reservoirs, analysis of production from wells in similar surrounding areas, or
other techniques. Petroleum engineering is not an exact science, and it involves
estimates based upon numerous factors, many of which are inherently variable and
uncertain. Such factors include the price of oil and gas and estimates of oil
and gas production and costs. Estimates of reserves and future net revenue costs
involve projecting future results by estimating future events. Therefore, there
are no assurances that actual productions, revenues, taxes, development
expenditures and operating expenses will occur as estimated.

The Company periodically evaluates its oil and gas properties for impairment by
determining if the carrying value of the properties exceeds the present value of
their estimated future net cash inflows. Current accounting standards do not
allow the Company to reinstate previous impairment write-offs.

PRODUCTION INFORMATION

The following table sets forth the Company's net production of oil and gas for
the years ended December 31 (in thousands). Net production represents production
owned by Petrominerals and produced to its interest, less royalty and other
similar interests.

                                                            2003     2002
                                                            ----     ----
         Net annual production Gas (Mmcf)                     -        4
         Net annual production Oil (MBbl)                     8       10


                                       4
<PAGE>

ITEM 2.  PROPERTIES (CONTINUED)

The following table sets forth the average sales price and average production
(lifting) cost per unit of oil produced by the Company for the years ended
December 31,

                                                        2003            2002
                                                       -----            ----

Average sales price of gas per Mcf                      -             $ 4.75
Average sales price of oil per barrel                  $27.96         $21.50
Average production cost per barrel equivalent          $29.74         $21.21

PRODUCTIVE WELLS AND ACREAGE

Proved developed oil and gas properties are properties on which wells have been
drilled, and are capable of producing crude oil or natural gas in commercial
quantities. Undeveloped oil and gas properties are properties on which wells
have not been drilled. Information on the retained properties is shown below.
(See Note 1 to the financial statement located in Item 7 herein for additional
details.)

                                                         Gross           Net
                                                         -----           ---
Producing Wells                                             23            17
Developed acreage (acres)                                  612           452
Undeveloped acreage (acres)                              2,300         1,700


ITEM 3 - LEGAL PROCEEDINGS

The Company is not a party to nor is its property the subject of any material
legal proceedings other than ordinary routine litigation incidental to its
business, or which is covered by insurance, except as set forth below:

In December 1989, the Company was notified by the United States Environmental
Protection Agency (EPA) that, under the provisions of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (CERCLA), the
Company was considered a potentially responsible party (PRP) in the clean-up of
the Operating Industries, Inc. (OII) waste disposal site located in Monterey
Park, California. Century Oil Corporation, a company that merged into
Petrominerals Corporation in 1979, disposed of drilling mud and water at the OII
disposal site, at various times from 1975 to 1977.

On December 20, 2001, the Company agreed to a settlement option for liabilities
related to the OII site in which the Company would pay $483,333 plus interest in
three installments over the next two years (see Item 7, Note 8 - ENVIRONMENTAL
MATTERS).

In November, 2003, the Company was notified by the EPA that it had identified
the Company as having disposed of additional waste material at the OII site that
were not the subject of the prior settlement. Management believes that the EPA
is in error as to the Company; however, the amount being discussed is believed
not sufficient to affect the financial operation of the Company.

On February 7, 2000, the Environmental Protection Agency (EPA) advised the
Company that it had been identified as having disposed of waste material at the
Casmalia Disposal site in Santa Barbara County, California, and that the Company
is potentially liable per certain costs associated with site cleanup. Records
supplied by the EPA indicate that the Company disposed of allowable
non-hazardous drilling mud and other oil field fluids at the site at various
times between 1980 and 1985.

On December 20, 2001, the Company agreed to a settlement option for liabilities
related to the Casmalia Disposal site in which the Company will pay $241,667.
The Company will have the option to pay in three installments over the next two
to three years from the date of the entry of Consent Decree; however, no date
has been set for the entry of a Consent Decree.(see Item 7, Note 8 -
Environmental Matters).

An action was filed against the Company in California, along with Morris V.
Hodges, Daniel H. Silverman ("Silverman" a former officer of the Company),
Nevadacor Energy, Inc. ("Nevadacor"), Kaymor Petroleum Products, and Hillcrest

                                       5
<PAGE>

ITEM 3 - LEGAL PROCEEDINGS (CONTINUED)

Beverly Oil Corporation ("HBOC"), as defendants by Sole Energy Company ("Sole")
as plaintiff. The complaint alleges that the defendants, and each of them,
interfered with Sole's contractual relationship and prospective economic
advantage. The crux of this matter issued out of a non-binding letter of intent
negotiations between Sole and Nevadacor on the purchase of HBOC. Nevadacor
terminated these negotiations with Sole in writing prior to Company's offer to
purchase HBOC from Nevadacor. However, and notwithstanding the termination by
Nevadacor, Sole joined the Company and Silverman as defendants in this suit. As
the Company had been assured that negotiations between Sole and Nevadacor were
over, the Company entered into a letter of intent agreement with Nevadacor for
the purchase of HBOC. These negotiations were interrupted by the lawsuit filed
by Sole and the Company terminated its agreement with Nevadacor. The Company
believes that the allegations against the Company and Silverman had no substance
or merit; however, it has produced a legal quagmire resulting in a Judgment
against the Company for $19,257,416.29 as previously announced by the Company.
The current progress of the lawsuit is that the Post-Trial Motions eliminated
the huge $19,257,416.29 Jury Verdict and granted Company a new trial because the
evidence received at trial as a matter of law did not support the Verdict.
Plaintiffs appealed and Petrominerals and Silverman filed a protective cross
appeal. This appeal and cross-appeal is Appellate Case No. G031877. This appeal
will review the various post-trial motions (i.e., JNOVs and Motion for New
Trial) and, if necessary, the underlying jury trial and the judgment based upon
the jury's verdict. Because of the legal quagmire resulting in two appeals by
Company and two other appeals by other defendants and one appeal by the
Plaintiff this litigation has been material to the Company's financial
condition. Further because of the damage caused to Company's economic advantage
because of interference by Sole in the Company's agreement for purchase, the
Company intends to pursue all remedies available to it from Sole and its
principals. (see Item 7, Note 9 - CONTINGENCIES).


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

During the fourth quarter of 2003, no matters were submitted to a vote of
security holders through the solicitation of proxies or otherwise.


                                       6
<PAGE>

                            PETROMINERALS CORPORATION
                                     PART II

ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS

The Company's common stock is currently traded in the OTCBB under the symbol
PTRO. The following table sets forth the range of high and low sales prices on
the OTCBB for the Company's common stock, for the fiscal years ended December
31, by fiscal quarters as indicated:

                                                    High               Low
                                                    ----               ---
2002
     First quarter                                 $ 1.49            $ 0.94
     Second quarter                                  1.80              0.43
     Third quarter                                   1.00              0.65
     Fourth quarter                                  0.56              0.26

2003
     First quarter                                 $ 0.26           $  0.26
     Second quarter                                  0.27              0.17
     Third quarter                                   0.24              0.16
     Fourth quarter                                  0.50              0.16


Company has approximately 843 shareholders of record of its common stock as of
December 31, 2003.

No regular dividends for Petrominerals' stock have been declared since 1986. The
Board of Directors has no current intention to declare or pay dividends in the
foreseeable future. The Board of Directors periodically reviews the financial
position of the Company and evaluates whether or not it will declare dividends.

ITEM 6 - MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion should assist in an understanding of the Company's
financial position and results of operations for each of the two years in the
period ended December 31, 2003. The Notes to Financial Statements as of December
31, 2003, included elsewhere herein, contain detailed information that should be
referred to in conjunction with this discussion.

BUSINESS REVIEW

The current President and CEO of the Company was appointed to his position by
the Board of Directors on July 1, 2002 and re-elected to his position on October
30, 2003. He continued efforts to cut corporate overhead, disposing of
unproductive assets and to locate suitable acquisition and merger opportunities
for the Company. The Company has reviewed opportunities and remains actively
involved in the process of identifying and reviewing acquisition and merger
candidates. The primary goal of management remains to ensure future profitable
growth for the Company and to create and maximize value for the shareholders.
The Company continues to seek new business opportunities; however due to the
prolonged depletion of cash resources, future plugging obligation, payments to
EPA and the possibility of an unfavorable judgment against the Company,
prospects for consummating a new business transaction are limited. Interested
parties should be aware that unless a new business opportunity can be
implemented, the Company prospects are doubtful.

The Company has two primary assets. First, as a result of the sale of
substantially all its California oil and gas producing assets, an agreement was
signed on February 4, 1998, effective April 1, 1998, that provided an additional
reserve production payment of $931,000. This payment is paid in installments in
any month which certain posted prices for oil produced exceeds $13.50 per
barrel. The monthly payment is equal to one-half of the difference between the
weighted average price and $13.50, multiplied by the number of barrels produced.
There is no stated interest associated with the payment.

                                       7
<PAGE>


ITEM 6 - MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)

BUSINESS REVIEW (CONTINUED)

Second, the Company has ownership in oil and gas production. As noted in Item 2,
the Company retained an interest in several leases in California as part of the
April 1998 sale. At some point in the future, the Company may be responsible for
an abandonment liability, the amount of which is unknown at this time.

In September of 1999, the Company entered into a purchase and joint venture
participation agreement with Thorofare Resources, Inc., a Wyoming Corporation.
Under this contract, HAT, LLC, a Nevada Limited Liability Company, Nevadacor
Energy, Inc., a Nevada corporation, and Petrominerals purchased a fifty percent
interest in sixteen wells together with the accompanying lease acreage
(Petrominerals' Group). In addition, two new wells were drilled on the acreage.
The Petrominerals Group determined that they did not have the financial ability
to continue development of the coal seam activities with the Wyoming Project and
sold their interest to an unrelated company in 2003. Management has received
$127,068 as its share of the proceeds of a sale in May 2003.

2003 COMPARED WITH 2002

The Company had a net income of approximately $184,000 compared to a net loss of
$892,000 in the prior year. The current year income was due to the loss from
continuing operations of the Company's oil and gas operations and insurance
recovery related to the costs of litigation. (see Item 7, Note 8 - Environmental
Matters and Note 9 Contingencies)

The Company's other income decreased by approximately $41,000 during 2003, due
primarily to collections received on the 1998 production payment that exceeded
its carrying value. (See Item 7, Note 3 - Disposition/Acquisition of Assets).

General and administrative expenses decreased by approximately 63% due to
decreased legal fees from the Sole litigation. (See Item 3 - Legal Proceedings
and Item 7, Note 9 - Contingencies)

The Company had positive cash flows from operations of approximately $195,000
for the year ended December 31, 2003, as compared with a negative cash flow from
operations of $927,000 in the prior year. The decrease in cash flow from
operating activities was primarily the result of the Sole litigation. (See Item
3 - Legal Proceedings and Item 7, Note 9 - Contingencies)

After reserving for the EPA liabilities discussed above, the Company's
shareholder equity at December 31, 2001 fell to $1.3 million. The Company
notified Nasdaq under the terms of its Nasdaq SmallCap Market Listing Agreement
that required the Company to maintain a minimum shareholder equity of $2.0
million. On May 30, 2002, the Company announced that Company's representatives
appeared before the Nasdaq Hearing Panel to request additional time to return to
compliance. The Hearing Panel rejected the Company's request and delisted the
Company's securities effective July 9, 2002. The Company's securities, however,
were immediately eligible and are currently trading on the OTC Bulletin Board.
(see Item 7, Note 8 - Environmental Matters)

                                       8
<PAGE>

ITEM 7 - INDEPENDENT AUDITORS' REPORT AND
           FINANCIAL STATEMENTS FOR THE YEARS ENDED
           DECEMBER 31, 2003 AND 2002




                            PETROMINERALS CORPORATION
                          INDEPENDENT AUDITORS' REPORT
                            AND FINANCIAL STATEMENTS
                               FOR THE YEARS ENDED
                           DECEMBER 31, 2003 AND 2002



                                TABLE OF CONTENTS




Independent Auditors" Report ............................................     10


Balance Sheets ..........................................................     11


Statements of Operations ................................................     12


Statement of Shareholders Equity ........................................     13


Statements of Cash Flows ................................................     14


Notes to the Financial Statements........................................     15





                                       9
<PAGE>



                          INDEPENDENT AUDITORS' REPORT



Board of Directors and Shareholders
Petrominerals Corporation
San Clemente, California


We have audited the accompanying balance sheets of Petrominerals Corporation (a
Delaware corporation) as of December 31, 2003 and 2002 and the related
statements of operations, shareholders' equity, and cash flows for the years
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Petrominerals Corporation as of
December 31, 2003 and 2002 and the results of its operations and cash flows for
the years then ended, in conformity with accounting principles generally
accepted in the United States of America.


Mendoza Berger & Company, LLP




Irvine, California
February 18, 2004


                                       10
<PAGE>
<TABLE>

                                      PETROMINERALS CORPORATION
                                           BALANCE SHEETS
                                     DECEMBER 31, 2003 AND 2002
----------------------------------------------------------------------------------------------
                          (Dollars in thousands, except par value amounts)

                                               ASSETS
<CAPTION>

                                                                          2003          2002
                                                                        --------      --------
<S>                                                                     <C>           <C>
Current Assets:
  Cash and cash equivalents                                             $   618       $   429
  Accounts receivable                                                         2            33
  Accounts receivable - related party                                        12            --
  Notes receivable                                                           35           100
  Prepaid expenses                                                           61            61
  Advance for acquisition                                                   200            --
                                                                        --------      --------

     Total current assets                                                   928           623

Restricted cash                                                              25            25
Property and equipment, net (including oil and gas properties
   accounted for on the successful efforts method)                           --           131
Deposits                                                                     69           139
                                                                        --------      --------

    Total assets                                                        $ 1,022       $   918
                                                                        ========      ========


                                LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                                          235           231
  Accrued liabilities                                                   $   325       $   409
                                                                        --------      --------

    Total current liabilities                                               560           640

Commitments and contingencies
Shareholders' equity:
  Preferred stock:
    $.10 par value, 2,900,000 shares authorized;
       no shares issued and outstanding                                      --            --
  Common stock:
    $.80 par value, 20,000,000 shares authorized; 1,059,404 shares
       issued and outstanding at December 31, 2003 and 2002,
       respectively                                                         848           848
Capital in excess of par value                                              563           563
Accumulated deficit                                                        (949)       (1,133)
Cumulative other comprehensive income                                        --            --
                                                                        --------      --------

    Total shareholders' equity                                              462           278
                                                                        --------      --------

    Total liabilities and shareholders' equity                          $ 1,022       $   918
                                                                        ========      ========
</TABLE>


<PAGE>
<TABLE>

                            PETROMINERALS CORPORATION
                            STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
                (Dollars in thousands, except per share amounts)
-----------------------------------------------------------------------------------
<CAPTION>

                                                                2003         2002
                                                              --------     --------
<S>                                                           <C>          <C>
Revenues
  Oil and gas                                                 $   212      $   211
  Other income                                                    192          233
  Insurance recoveries                                            512          427
                                                              --------     --------

    Total Revenues                                                916          871
                                                              --------     --------

Costs and Expenses
  Oil and gas                                                     322          383
  Depreciation, depletion and amortization                         --            2
  General and administrative                                      404        1,078
  Impairment loss                                                  --          300
  Loss on sale of property                                          6           --
                                                              --------     --------

    Total Costs and Expenses                                      732        1,763
                                                              --------     --------

Net income (loss)                                             $   184      $  (892)
                                                              ========     ========

Other Comprehensive Income (Loss):
  Net income (loss)                                           $   184      $  (892)
  Unrealized holding gain (loss) on land held for resale           --           38
                                                              --------     --------

     Total Other Comprehensive Income (Loss)                  $   184      $  (854)
                                                              ========     ========

Net Loss per Share                                            $  0.17      $ (0.84)
                                                              ========     ========

Weighted Average Common Shares Outstanding                      1,059        1,059
                                                              ========     ========
</TABLE>

                                       11
<PAGE>
<TABLE>

                                                     PETROMINERALS CORPORATION
                                                 STATEMENT OF SHAREHOLDERS' EQUITY
                                          FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
                                          (Dollars in thousands, except number of shares)
----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>

                                                                                                     CUMULATIVE
                                                                                                        OTHER
                                    NUMBER OF                        CAPITAL IN                        COMPRE-
                                     COMMON                          EXCESS OF       ACCUMULATED       HENSIVE
                                     SHARES           AMOUNT         PAR VALUE         DEFICIT       INCOME (LOSS)        TOTAL
                                  -----------      -----------      -----------      -----------      -----------      -----------
<S>                                <C>             <C>              <C>              <C>              <C>              <C>
Balance, December 31, 2001         1,159,404       $      928       $      633       $     (241)      $      (38)      $    1,282

Retirement of shares issued         (100,000)             (80)             (70)              --               --             (150)
   in 2001                                --               --               --             (892)              --             (892)
Net loss
Reversal of unrealized
   holding loss on land held
   for sale                               --               --               --               --               38               38
                                  -----------      -----------      -----------      -----------      -----------      -----------

Balance, December 31, 2002         1,059,404              848              563           (1,133)              --              278

Net income                                --               --               --              184               --              184
                                  -----------      -----------      -----------      -----------      -----------      -----------

Balance, December 31, 2002         1,059,404       $      848       $      563       $     (949)      $       --       $      462
                                  ===========      ===========      ===========      ===========      ===========      ===========

</TABLE>

                                                                12
<PAGE>
<TABLE>

                                 PETROMINERALS CORPORATION
                                 STATEMENTS OF CASH FLOWS
                      FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
                                  (Dollars in thousands)
----------------------------------------------------------------------------------------

                                                                    2003          2002
                                                                  --------      --------
<S>                                                               <C>           <C>
Cash flows from operating activities:
   Net income (loss)                                              $   184       $  (892)
   Adjustment to reconcile net income (loss) to net cash
       provided by (used in) operating activities:
        Depreciation, depletion and amortization                       --             2
        Impairment loss                                                --           300
        Loss on sale of property                                        6            --
Changes in operating assets and liabilities:
   Accounts receivable                                                 19           (33)
   Prepaid expenses                                                    --           (27)
   Deposits                                                            70           (96)
   Accounts payable and accrued liabilities                           (84)         (181)
                                                                  --------      --------

Net cash provided by (used in) operating activities                   195          (927)
                                                                  --------      --------

Cash flows from investing activities:
   Purchase of property and equipment                                  --            (2)
   Proceeds from sale of assets                                       129             5
   Note receivable                                                     65          (100)
   Advance for acquisition                                           (200)           --
                                                                  --------      --------

Net cash used in investing activities                                  (6)          (97)
                                                                  --------      --------

Net decrease in cash and cash equivalents                             189        (1,024)

Cash and cash equivalents at beginning of year                        429         1,453
                                                                  --------      --------

Cash and cash equivalents at end of year                          $   618       $   429
                                                                  ========      ========

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
   FINANCING ACTIVITIES:
      Write-off of fully depreciated property per physical
         asset listing                                            $   345       $    --
                                                                  ========      ========
      Reversal in 2002 and purchase in 2001 of land held for
         resale through issuing $100 note payable and $150
         common stock (100,000 shares)                            $    --       $  (250)
                                                                  ========      ========

      Unrealized holding loss on land held for resale and
         reversal                                                 $    --       $    38
                                                                  ========      ========
</TABLE>

                                            13
<PAGE>

                            PETROMINERALS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
     (Dollars in thousands, except oil price per barrel, par value amounts,
                             and per share amounts)
--------------------------------------------------------------------------------

1 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     ------------------------------------------

     BUSINESS
     --------

     Petrominerals Corporation's (the Company's) principal business activities
     consist of the production and sale of crude oil and natural gas within the
     United States.

     USE OF ESTIMATES
     ----------------

     The preparation of financial statements in conformity with accounting
     principles generally accepted in the United States of America requires
     management 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 and the reported
     amounts of revenues and expenses during the reporting period. Actual
     results could differ from those estimates.

     CASH AND CASH EQUIVALENTS
     -------------------------

     The Company considers all highly liquid investments purchased with an
     original maturity of less than three months to be cash equivalents.

     RESTRICTED CASH
     ---------------

     The Company has a Certificate of Deposit ("CD") with a value of
     approximately $25 at December 31, 2003 and 2002 that has been recorded as
     restricted cash. The CD has been pledged to the Bureau of Land Management
     to cover environmental costs.

     REVENUE RECOGNITION
     -------------------

     Revenues from the sale of petroleum produced are recognized upon the
     passage of title, net of royalties and non-company interests.

     PROPERTY AND EQUIPMENT
     ----------------------

     Oil and gas properties are accounted for using the successful efforts
     method of accounting. Costs of drilling and equipping successful
     exploratory and developmental wells are capitalized. All other exploratory
     expenses are charged to operations as incurred. The carrying value of oil
     and gas properties is evaluated in relation to the estimated present value
     of the future net revenues. Depletion, depreciation and amortization are
     calculated using the units-of-production method based on recoverable
     reserves. The Company did not incur any exploratory costs during the years
     ended December 31, 2003 and 2002.

                                       14
<PAGE>

                            PETROMINERALS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
     (Dollars in thousands, except oil price per barrel, par value amounts,
                             and per share amounts)
--------------------------------------------------------------------------------

1 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
     ------------------------------------------

     PROPERTY AND EQUIPMENT (Continued)
     ----------------------------------

     In March 1995, the Financial Accounting Standards Board (FASB) issued
     Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for
     the Impairment of Long-Lived Assets and/or Long-Lived Assets to be Disposed
     of." In August 2001, FASB issued SFAS No. 144, "Accounting for the
     Impairment or Disposal of Long-Lived Assets". These statements require the
     review of long-lived assets for possible impairment whenever events or
     changes in circumstances indicate that the carrying amount of an asset may
     not be recoverable. They established guidelines for determining
     recoverability based on future net cash flows from the use of the asset and
     for the measurement of the impairment loss.

     Impairment loss under SFAS No. 121 and 144 is calculated as the difference
     between the carrying amount of the asset and its fair value. Any impairment
     loss is recorded in the current period in which the recognition criteria
     are first applied and met. Under the successful efforts method of
     accounting for oil and gas operations, the Company periodically assesses
     its proved properties for impairments by comparing the aggregate net book
     carrying amount of all proved properties with their aggregate future net
     cash flows. The statements require the impairment review to be performed on
     the lowest level of asset groupings for which there are identifiable cash
     flows. In the case of the Company, this results in an impairment review of
     the Santa Clarita, California, and Carbon County, Wyoming, properties.

     The Company adopted SFAS No. 121 in 1996 and SFAS No. 144 in 2002. The
     future impairment loss on the oil and gas properties has been calculated as
     the difference between the asset book carrying amounts and future
     discounted net cash flow projections, giving consideration to recent
     prices, pricing trends and estimated reserve quantities. These projections
     represent the Company's best estimate of fair value based on the
     information available. At December 31, 2002, due to the depletion of the
     wells being pumped at the Wyoming properties, impairments were indicated.
     The Company recorded no impairment losses for the year ended December 31,
     2003.

     Upon the sale of oil and gas reserves in place, costs less accumulated
     amortization of such property are removed from the accounts and resulting
     gain or loss on sale is reflected in operations. Upon abandonment of
     properties, the reserves are deemed fully depleted and any unamortized
     costs are recorded in the statement of operations under loss on leases.

     DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
     -----------------------------------------------------

     The carrying amount of cash and cash equivalents, restricted cash, accounts
     receivable, other current assets, accounts payable and accrued expenses
     approximates fair value because of the short-term maturity of these
     instruments.


                                       15
<PAGE>

                            PETROMINERALS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
     (Dollars in thousands, except oil price per barrel, par value amounts,
                             and per share amounts)
--------------------------------------------------------------------------------

1 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
     ------------------------------------------

     INCOME TAXES
     ------------

     The provision for income taxes is based on pretax financial accounting
     income. Deferred tax assets and liabilities are recognized for the expected
     tax consequences of temporary differences between the tax basis of assets
     and liabilities and the reported net amounts.

2 -  PROPERTY AND EQUIPMENT
     ----------------------

     Property and equipment, all of which is located in the United States, is
     stated at cost or net realizable value and consists of the following at
     December 31 (in thousands):

                                                             2003          2002
                                                            ------        ------

Developed and undeveloped properties                        $  --         $ 431
Less: allowance for impairment                                 --          (300)
                                                            ------        ------

Net developed and undeveloped properties                       --           131
                                                            ------        ------

Other property and equipment:
     Furniture, fixtures and equipment                        106           451
     Accumulated depreciation related to other
        Property and equipment                               (106)         (451)
                                                            ------        ------

Net other property and equipment                               --            --
                                                            ------        ------

Property and equipment, net                                 $  --         $ 131
                                                            ======        ======

     Depreciation, depletion and amortization for the years ended December 31,
     2003 and 2002 were $0 and $2, respectively.

     During 2002, the Company determined that the decline in estimated oil and
     gas reserves due to the depletion of the wells currently being pumped in
     Wyoming indicated impairment of the Company's remaining oil and gas
     properties. The estimated undiscounted cash flows anticipated from
     operating the oil and gas properties indicated that a write-down to fair
     market value was required under SFAS 121 and 144. This write down resulted
     in a charge to income of $300 for the year ended December 31, 2002 which is
     included in the statements of operations as impairment losses.

                                       16
<PAGE>

                            PETROMINERALS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
     (Dollars in thousands, except oil price per barrel, par value amounts,
                             and per share amounts)
--------------------------------------------------------------------------------

3 -  DISPOSITION/ACQUISITION OF ASSETS
     ---------------------------------

     MONTEREY COUNTY
     ---------------

     On October 30, 2003, the Board of Directors approved a Company acquisition
     involving a 50% interest in a certain oil and gas lease property located
     between King City and Soledad in Monterey County, California, together with
     three oil wells (two producing and one non-producing), well equipment, tank
     farm and related facilities for $200. The acquisition agreement includes a
     rescission option pending an acceptable environmental examination or oil
     reserve evaluation. The Company's advance would be refunded if the
     examination or report differs significantly from previous representations.
     The rescission option expires August 1, 2004. The purchase price is
     reflected as advance for acquisition on the accompanying balance sheet at
     December 31, 2003.

     The Company recognized $12 in oil sales and incurred $36 in production
     expenses associated with the Monterey County property for the year ended
     December 31, 2003.

     This acquisition involves a related party transaction as the opportunity
     was presented by the Company's president, as initiating with California Oil
     Independents, a California corporation that is owned and controlled by him.
     The Company's President also owns a 2 1/3% overriding royalty from
     production on the property that he obtained from Phillips Petroleum Company
     in 1990.

     SALE OF OIL AND GAS OPERATING ASSETS (In thousands, except price per
     barrel)
     ------------------------------------

     Other income on the Company statements of operations of $183 and $195 for
     the years ended December 31, 2003 and 2002, respectively, consists of
     production payments received from a 1998 sale of oil and gas operating
     assets. The production payments are payable in any month which certain
     postings for crude oil exceeds $13.50 per barrel. The monthly payment is
     equal to one-half of the difference between the posted price and $13.50,
     multiplied by the barrels produced.

     The Company retained an interest in some of its properties. According to
     the independent engineer's reserve report, the value of reserves related to
     the remainder properties was $0 at December 31, 2003 and 2002. The Company
     had previously determined that it was no longer economically feasible to
     continue production operations at these wells. However, during 2002, the
     Company reassumed the production function and continued the operation of
     these wells.

                                       17
<PAGE>

                            PETROMINERALS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
     (Dollars in thousands, except oil price per barrel, par value amounts,
                             and per share amounts)
--------------------------------------------------------------------------------

3 -  DISPOSITION/ACQUISITION OF ASSETS (CONTINUED)
     ---------------------------------------------

     SALE OF OIL AND GAS OPERATING ASSETS
     ------------------------------------

     In 1999, the Company acquired a 25% interest in a natural gas field in
     Wyoming. The Company's acquisition of the 25% interest was concluded as a
     participant with two other related companies (see Note 6 for detail of
     related party transactions), HAT, LLC and Nevadacor Energy, Inc., which
     together acquired 50% of Thorofare Energy, Inc.'s existing acreage
     position, existing wells, well operating equipment and facilities together
     with production and pipelines and prospective acreage acquisition in an
     area of interest negotiated between the parties.

     In May of 2003, the Company sold its twenty-five percent interest in the
     Wyoming gas field for $129. The Company charged $6 to loss on the sale of
     property.

     LAND HELD FOR RESALE
     --------------------

     On September 20, 2001, the Company acquired a 49% interest in certain real
     property located in Signal Hill, California. As of December 31, 2001, this
     land was being held for resale and in accordance with Statement of
     Financial Accounting Standards (SFAS) No. 121, "ACCOUNTING FOR THE
     IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED
     OF" and SFAS No. 144 "ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF
     LONG-LIVED ASSETS" and carried at the lower of cost or estimated realizable
     value. The estimated realizable value was the estimated selling price in
     the normal course of business less reasonably predictable costs of
     completion and disposal. Unrealized gains or losses are excluded from
     earnings and reported in a separate component of stockholder's equity as
     cumulative other comprehensive income (loss).

     On October 11, 2002, the Company exercised its rescission rights per the
     acquisition agreement and rescinded the purchase. A rescission and mutual
     release agreement was executed in conjunction with the rescission. The
     Company effectively reversed the recording of the purchase transaction as
     of December 31, 2002 and retired the 100,000 shares and cancelled the note
     payable.


                                       18
<PAGE>

                            PETROMINERALS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
     (Dollars in thousands, except oil price per barrel, par value amounts,
                             and per share amounts)
--------------------------------------------------------------------------------

3 -  DISPOSITION/ACQUISITION OF ASSETS (CONTINUED)
     ---------------------------------

     LAND HELD FOR RESALE (Continued)

     The carrying amount and estimated market value of the land at December 31
     (in thousands), was as follows:

                                                  2003
                          ------------------------------------------------------
                                            GROSS         GROSS
                           AMORTIZED     UNREALIZED     UNREALIZED      MARKET
                             COST          GAINS          LOSSES        VALUE
Land held for resale      $      --      $     --      $      --      $      --
                          ==========     =========     ==========     ==========

                                                  2002
                          ------------------------------------------------------


                                            GROSS         GROSS
                           AMORTIZED     UNREALIZED     UNREALIZED      MARKET
                             COST          GAINS          LOSSES        VALUE


Land held for resale      $      --      $     38      $      --      $      --
                          ==========     =========     ==========     ==========

4 -  INCOME TAXES
     ------------

     The provision for income tax was $0 for the years ended December 31, 2003
     and 2002, respectively.

     Deferred income taxes reflect the net tax effects of temporary differences
     between the carrying amount of assets and liabilities for financial
     reporting purposes and the amount used for income tax purposes. The
     following table summarizes the significant components of the Company's
     deferred tax assets and liabilities as of December 31 (in thousands):

                                                            2003          2002
                                                          --------      --------
Deferred Tax Assets:
  Net operating loss carryforwards                        $ 2,513       $ 2,852
Impairment loss                                                --           102
Valuation reserve for deferred tax assets                  (2,513)       (2,954)
                                                          --------      --------

     Net Deferred Tax Assets                              $    --       $    --
                                                          ========      ========

                                       19
<PAGE>

                            PETROMINERALS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
     (Dollars in thousands, except oil price per barrel, par value amounts,
                             and per share amounts)
--------------------------------------------------------------------------------

4 -  INCOME TAXES (Continued)
     ------------------------

     At December 31, 2003, the Company had net operating loss carryforwards of
     approximately $7,392 for Federal income tax purposes that will expire
     beginning in the year 2004. For financial reporting purposes, a valuation
     allowance of $2,513 and 2,954 has been recorded to offset the deferred tax
     asset related primarily to these carryforwards as of December 31, 2003 and
     2002, respectively.

5 -  COMMON STOCK (In thousands, except par value and per share amounts)
     ------------

     On February 8, 1993, the Board of Directors adopted the 1993 Incentive
     Stock Option Plan and the 1993 Non-Statutory Stock Option Plan (the Plans).
     The Plans provide for the granting of options to purchase up to a maximum
     of 150,000 shares of the Company's common stock to officers, key employees
     and directors who are not otherwise employed by the Company. Under the
     Plans, options granted to non-employee directors are limited to a maximum
     of 7,500 shares of the Company's common stock. The Plans expired on
     February 8, 2003.

     On March 6, 1997, the Board adopted a resolution granting stock options to
     purchase up to 5,000 shares of common stock to the then CEO, and up to
     2,500 shares of common stock to each of the three non-employee directors.
     Under the terms of the resolution, the former CEO and each of the directors
     can purchase shares of common stock for the average price that the
     Company's stock was trading before and after March 6, 1997. This average is
     $3.00 per share. The Company has not yet issued these options.

     In September 1999, the Company entered into an agreement with a key
     employee. Under this agreement, the Company granted stock options to
     purchase up to 60,000 shares of common stock to the key employee. Under the
     terms of the agreement, the employee can purchase 20,000 shares of common
     stock at a price of $3.00 per share vesting upon execution of the
     engagement agreement; another 20,000 shares of common stock at a price of
     $3.00 per share vesting in six months from the execution date of the
     engagement agreement; and another 20,000 shares of common stock at a price
     of $5.00 per share vesting in eighteen months from the execution date of
     the engagement agreement. These options have a five year life and expire in
     September 2004.

     On October 5, 1999, the Board of Directors adopted a resolution to award
     stock options to purchase up to 20,000 shares of common stock to its
     employee directors, 11,000 shares of common stock to its non-employee
     directors, and 10,000 shares to its corporate counsel. Under the terms of
     the resolution of common stock. These stock options can be exercised at a
     price fixed to average market price of shares traded during the month of
     October 1999. This average price is approximately $2.72 per share.

                                       20
<PAGE>

                            PETROMINERALS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
     (Dollars in thousands, except oil price per barrel, par value amounts,
                             and per share amounts)
--------------------------------------------------------------------------------

5 -  COMMON STOCK (Continued)
     ------------------------

     No stock options were exercised during the years ended December 31, 2003
     and 2002.

     In 2001 in conjunction with the purchase of the Signal Hill property, the
     Company issued 100,000 shares of common stock valued at $150,000. On
     October 11, 2002, the Company retired the shares issued in 2001 in
     connection with rescission of the land purchase, see Note 3, Land Held for
     Resale.

     In February 1997, the Financial Accounting Standards Board (FASB) issued
     Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
     Share," which is effective for the Company beginning December 31, 1998.
     SFAS 128 replaced the presentation of primary earnings per share with a
     presentation of basic earnings per share based upon the weighted average
     number of common shares for the period. It also requires dual presentation
     of basic and diluted earnings per share for companies with complex capital
     structures. Basic and diluted earnings per share for the twelve months
     ended December 31, 2003 and 2002 are as follows:

<TABLE>
<CAPTION>
                                                  2003                                   2002
                                                  ----                                   ----

                                      Weighted                               Weighted
                                   Average Shares      Income (Loss)      Average Shares      Income (Loss)
                                  (in thousands)        Per Share         (in thousands)        Per Share
                                  ---------------       ----------        ---------------       ---------
<S>                                   <C>                <C>                   <C>                <C>
Basic

  Net income (loss)                   1,059              $ 0.17                1,059              $(0.84)
                                     =======             =======              =======             =======

Diluted

  Net income (loss)                   1,059              $ 0.17                1,059              $(0.84)
                                     =======             =======              =======             =======
</TABLE>

     Basic and diluted earnings per share are the same for 2002, as any impact
     from the exercise of stock options would be anti-dilutive. There are no
     common stock equivalents for 2003.

6 -  RELATED PARTIES AND RELATED PARTY TRANSACTIONS
     ----------------------------------------------

     During the periods covered by the financial statements, the Company was
     involved in various transactions with related parties. These related
     parties consist primarily of corporations and joint ventures in which
     officers, directors, and shareholders of the Company, directly and/or
     indirectly, own varying ownership interest and/or are officers and
     directors thereof. Related party transactions involving rent paid by the
     Company (in thousands) were approximately $18 for 2003 and 2002,
     respectively.

                                       21
<PAGE>

                            PETROMINERALS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
     (Dollars in thousands, except oil price per barrel, par value amounts,
                             and per share amounts)
--------------------------------------------------------------------------------

6 -  RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
     ----------------------------------------------

     As mentioned in Note 3, during 1999, the Company entered into an agreement
     to gain working interest in certain wells and leases in the state of
     Wyoming. Two participating entities with Petrominerals Corporation in the
     acquisition are HAT, LLC and Nevadacor Energy, Inc. Nevadacor is acting as
     agent for Kaymor Energy, LLC (a Nevada limited liability company), the
     members of which are HBOC Energy Marketing, Inc. ("HBOC"), a California
     corporation, and Morris V. Hodges, individually. HBOC is controlled by
     Morris V. Hodges and was formerly known as Kaymor Petroleum Products, Inc.
     Morris V. Hodges was Petrominerals Corporation's President and CEO until
     July 1, 2002.

     On July 17, 2002, the Company issued a note receivable to Nevadacor Energy,
     Inc. in the amount of $100. The note bears interest at 7% per annum
     commencing on January 1, 2003. The due date on the note is June 30, 2004
     and the note is secured by Nevadacor's interest in the Wyoming property.
     The outstanding balance on the note as of December 31, 2003 and 2002 was
     $35 and $100, respectively.

     The Company is currently operating under a month to month lease for its
     office space with an entity owned by an officer of the Company. The monthly
     rent under this lease is $2 per month.

     The Company's Board of Directors has committed to a new lease with the same
     affiliate for a one year period with the option to extend for an additional
     year as of April 1, 2004. Additional lease terms are under negotiations.

     The Company has a $12 accounts receivable from a company which is related
     through ownership by the Company's President.

                                       22
<PAGE>

                            PETROMINERALS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
     (Dollars in thousands, except oil price per barrel, par value amounts,
                             and per share amounts)
--------------------------------------------------------------------------------

7 -  UNAUDITED QUARTERLY FINANCIAL DATA (In thousands, except per share amounts)
     ----------------------------------

<TABLE>
<CAPTION>
                                                              2003
                                 ---------------------------------------------------------------
                                   FIRST       SECOND         THIRD        FOURTH
                                  QUARTER      QUARTER       QUARTER       QUARTER        YEAR
                                 --------     --------      --------      --------      --------
<S>                              <C>          <C>           <C>           <C>           <C>
Revenues                         $   139      $   378       $   329       $    70       $   916
Costs and expenses                   176          227           171           158           732
                                 --------     --------      --------      --------      --------

Net income (loss)                $   (37)     $   151       $   158       $   (88)      $   184
                                 ========     ========      ========      ========      ========

Net income (loss) per share      $ (0.03)     $  0.14       $  0.15       $ (0.08)      $  0.17
                                 ========     ========      ========      ========      ========

                                                              2002
                                 ---------------------------------------------------------------
                                   FIRST       SECOND         THIRD        FOURTH
                                  QUARTER      QUARTER       QUARTER       QUARTER        YEAR
                                 --------     --------      --------      --------      --------

Revenues                         $   216      $   257       $   257       $   141       $   871
Costs and expenses                   153          462           411           737         1,763
                                 --------     --------      --------      --------      --------

Net income (loss)                $    63      $  (205)      $  (154)      $  (596)      $  (892)
                                 ========     ========      ========      ========      ========

Net income (loss) per share      $  0.05      $ (0.18)      $ (0.15)      $ (0.56)      $ (0.84)
                                 ========     ========      ========      ========      ========
</TABLE>

8 -  ENVIRONMENTAL MATTERS
     ---------------------

     MONTEREY PARK, CALIFORNIA
     -------------------------

     On December 6, 1989, the Company was notified by the United States
     Environmental Protection Agency ("EPA") that, under provisions of the
     Comprehensive Environmental Response, Compensation and Liability Act of
     1980 ("CERCLA"), the Company was considered a potentially responsible party
     ("PRP") in the clean-up of the Operating Industries, Inc. ("OII") waste
     disposal site, located in Monterey Park, California. The EPA has also
     contacted approximately 270 other PRPs who disposed of liquid waste at this
     site. The Company is in the fourth tier of PRPs notified by the EPA,
     regarding this site.

                                       23
<PAGE>

                            PETROMINERALS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
     (Dollars in thousands, except oil price per barrel, par value amounts,
                             and per share amounts)
--------------------------------------------------------------------------------

8 -  ENVIRONMENTAL MATTERS (Continued)
     ---------------------------------

     MONTEREY PARK, CALIFORNIA (Continued)
     -------------------------

     On December 20, 2001, the Company agreed to a settlement option for
     liabilities related to the OII site in which the Company will pay $483 plus
     interest in three installments as follows: The first installment of $317
     was due and paid within thirty (30) days following receipt of notice of
     entry of the Consent Decree (June 7, 2002). The second installment of $86
     (which amount includes interest of $3 at the Superfund rate of 3.35% to the
     due date) was due and paid one year after the due date of the first
     installment. The third installment of $89 (which amount includes interest
     of $6 at the Superfund rate of 3.35% compounded annually to the due date)
     will be due two years after the due date of the first installment. As a
     result, the Company has included in accrued liabilities $82 and $166 at
     December 31, 2003 and 2002, respectively.

     SANTA BARBARA, CALIFORNIA
     -------------------------

     On February 7, 2000, the Environmental Protection Agency ("EPA") advised
     the Company that it had been identified as having disposed of waste
     material at the Casmalia Disposal site in Santa Barbara County, California,
     and that the Company is potentially liable for certain costs associated
     with site cleanup.

     On December 20, 2001 the Company agreed to an informal settlement option
     for liabilities related to the Casmalia disposal site in which the Company
     will pay $243 upon the issuance of a formal Consent Decree. At the present
     time the Consent Decree has not been entered. The Company has included
     approximately $243 in accrued liabilities at December 31, 2003 and 2002.


                                       24
<PAGE>

                            PETROMINERALS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
     (Dollars in thousands, except oil price per barrel, par value amounts,
                             and per share amounts)
--------------------------------------------------------------------------------
9 -  CONTINGENCIES
     -------------

     An action was filed against the Company (the Defendant) and a former
     officer alleging interference with contractual negotiations in the
     potential purchase of property. A motion for summary judgment in favor of
     the Company was granted; then reversed and appealed. A judgment of $19,257
     was entered against the Company, which was then overturned. The plaintiffs
     appealed this judgment. The Company filed a protective cross appeal. A
     motion for a new trial has been granted. The Company believes that the
     allegations against it have no substance or merit and will vigorously
     defend its position. For the years ended December 31, 2003 and 2002 $175
     and $807, respectively, in litigation expenses have been incurred and are
     included in general and administrative expenses in the Company's statements
     of operations. The Company has recovered $512 and $427 in 2003 and 2002,
     respectively, from insurance coverage.

     The Company has certain contingent liabilities with respect to litigation,
     claims, taxes, government regulations and contractual agreements arising
     from the ordinary course of business.

     While there are always risks inherent in resolution of any contingency, it
     is the opinion of management that such contingent liabilities will not
     result in any loss which would have an adverse material effect on the
     Company's financial position.

     The Company is subject to other possible loss contingencies pursuant to
     federal, state and local environmental laws and regulations. These include
     existing and potential obligations to investigate the effects of the
     release of certain hydro-carbons or other substances at various sites; to
     remediate or restore these sites; and to compensate others for damages and
     to make other payments as required by law or regulation. These obligations
     relate to sites owned by the Company or others, and are associated with
     past and present oil and gas operations. The amount of such obligations is
     indeterminate and will depend on such factors as the unknown nature and
     extent of contamination, the unknown timing, extent and method of remedial
     actions which may be required, the determination of the Company's liability
     in proportion to other responsible parties, and the state of the law.

10 - CONCENTRATION OF BUSINESS AND CREDIT RISK
     -----------------------------------------

     The Company sold substantially all of its oil and gas to Pacific Marketing
     and Transportation, LLC (Pacific) in 2003 and 2002. In fiscal years 2003
     and 2002, revenue from sales to Pacific was more than 50% of the Company's
     gross revenue from continuing operations.

                                       25
<PAGE>

                            PETROMINERALS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
     (Dollars in thousands, except oil price per barrel, par value amounts,
                             and per share amounts)
--------------------------------------------------------------------------------

10 - CONCENTRATION OF BUSINESS AND CREDIT RISK (Continued)
     -----------------------------------------

     The Company maintains most cash and cash equivalents in short-term money
     market accounts which exceed Federal Insurance limits. At December 31, 2003
     and 2002, unsecured cash and cash equivalents were $418 and $283,
     respectively.

11 - SUPPLEMENTAL OIL AND GAS PROPERTIES AND RELATED RESERVES (UNAUDITED)
     --------------------------------------------------------------------

     RESULTS OF OPERATIONS
     ---------------------

     Selected financial information for oil and gas operations accounted for
     under the successful efforts methods for the years ended December 31, is
     summarized below (in thousands):

                                                            2003        2002
                                                           ------      ------
     Produced oil and gas sales                            $ 212       $ 211
     Less:
       Operating expenses                                    322         383
       Depreciation, depletion and amortization               --           2
                                                           ------      ------

     Results of operations from oil and gas producing
        activities, excluding corporate overhead and
        interest costs                                     $(110)      $(174)
                                                           ======      ======


     ESTIMATED QUANTITIES OF OIL AND GAS RESERVES
     --------------------------------------------

     The following table presents the Company's estimates of its proved oil
     equivalent (in thousands of barrels equivalent*) reserves, which are all
     located in the United States. All reserve estimates have been prepared by
     independent petroleum engineers. The Company emphasizes that reserve
     estimates are inherently imprecise and are expected to change as future
     information becomes available. Estimates of its proved oil reserves for the
     years ended December 31, are as follows:

                                       26
<PAGE>

                            PETROMINERALS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
     (Dollars in thousands, except oil price per barrel, par value amounts,
                             and per share amounts)
--------------------------------------------------------------------------------

11 - SUPPLEMENTAL OIL AND GAS PROPERTIES AND RELATED RESERVES  (UNAUDITED)
     (Continued)
     ---------------------------------------------------------------------

     ESTIMATED QUANTITIES OF OIL AND GAS RESERVES (Continued)
     --------------------------------------------

                                                             2003       2002
                                                            -----      -----
     Proved developed and undeveloped reserves: (Mboe)
       Beginning of period                                    63          2
       Purchase of minerals in place                         370         --
       Revision of previous estimates                          3         71
       Production                                             (8)       (10)
                                                            -----      -----

     End of period                                           428         63

     Proved developed reserves:
       Beginning of period                                    63          2
       End of period                                         428         63


       * (Six mcf of natural gas has been converted to one barrel of crude oil).

     DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED OIL AND GAS RESERVES
     ------------------------------------------------------------------------

     A standardized measure of discounted future net cash flows is presented
     below for each of the years ended December 31, 2003 and 2002. Future cash
     inflows are computed by applying year-end prices of oil and gas relating to
     the Company's proved reserves to year-end quantities of those reserves.

     Future development and production costs are computed by estimating the
     expenditures to be incurred for developing and producing proved oil and gas
     reserves, based on year-end costs and assuming continuation of existing
     economic conditions.

     Future income tax expense is computed by applying year-end statutory rates
     (adjusted for permanent differences) to the future pretax net cash flows
     relating to the Company's proved oil and gas reserves, less the tax basis
     at each year-end of the properties involved. A 10% annual discount rate is
     used to reflect the timing of future net cash flows relating to proved oil
     and gas reserves.

                                       27
<PAGE>

                            PETROMINERALS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
     (Dollars in thousands, except oil price per barrel, par value amounts,
                             and per share amounts)
--------------------------------------------------------------------------------

11 - SUPPLEMENTAL OIL AND GAS PROPERTIES AND RELATED RESERVES (UNAUDITED)
     (Continued)
     --------------------------------------------------------------------

     DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED OIL AND GAS RESERVES
     (Continued)
     ------------------------------------------------------------------------

     The projections should not be viewed as realistic estimates of future cash
     flows, nor should the "standardized measure" be interpreted as representing
     current value to the Company. Material revisions to estimates of proved
     reserves may occur in the future; development and production of the
     reserves may not occur in the periods assumed; and actual prices realized
     and actual costs incurred may vary significantly from those used.

     The following reserve estimates and resulting future net cash flows were
     developed in accordance with Securities and Exchange Commission rules,
     using selling prices in effect at the end of the years indicated. Both the
     quantity estimates and "cash flow" of reserves are sensitive to sales
     prices in effect at the year end quantification date. During periods of
     rapidly changing prices, reserve information must be examined with this
     understanding. Reserve estimates and resulting future net cash flows for
     the years ended December 31, are as follows (in thousands):

                                                        2003          2002
                                                      --------      --------

Future cash inflows                                   $ 9,504       $ 1,692
Future production and development costs                (2,604)       (1,217)
                                                      --------      --------

Future net cash flows                                   6,900           475
10% annual discount for estimated timing of cash
   flows                                               (3,039)         (120)
                                                      --------      --------

Standardized measure of discounted future net
   cash flows                                         $ 3,861       $   355
                                                      ========      ========

                                       28
<PAGE>

                            PETROMINERALS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
     (Dollars in thousands, except oil price per barrel, par value amounts,
                             and per share amounts)
--------------------------------------------------------------------------------

11 - SUPPLEMENTAL OIL AND GAS PROPERTIES AND RELATED RESERVES (UNAUDITED)
     (Continued)
     --------------------------------------------------------------------

     DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED OIL AND GAS RESERVES
     (Continued)
     ------------------------------------------------------------------------

     Following are the principal sources of change in the standardized measure
     of discounted future cash flows for the years ended December 31, (in
     thousands):

                                                            2003          2002
                                                          --------      --------

Beginning balance                                         $   355       $     3
Sales and transfers of oil and gas produced, net of
   production costs                                           109           172
Net changes in prices and production costs, based
   on beginning of year barrels                               994           493
Revisions to previous estimates                              (970)         (124)
Accretion of discount                                          --            --
Net change in income taxes                                 (2,748)         (189)
Purchase of minerals in place                               6,120            --
Other                                                          --            --
                                                          --------      --------

Ending balance                                            $ 3,860       $   355
                                                          ========      ========

                                       29
<PAGE>

                                    PART III


ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934

The Executive Officers of Petrominerals, together with the years in which such
Officers were named to their present offices are as follows:

                                                                Year Named to
            Name                 Position with Company        Present Position
            ----                 ---------------------        ----------------

     Everett L. Hodges*          President, Chief                    2002
                                 Executive Officer,
                                 Chief Financial Officer and
                                 Director

     John A. Erickson            Secretary / Treasurer               2002

Each of the Executive Officers serves at the pleasure of the Board of Directors.

     *Mr. Everett L. Hodges was elected President and Chief Executive Officer on
     October 30, 2003.


BIOGRAPHICAL INFORMATION

The following table sets forth the name, principal occupation, age and the year
in which the individual first became a director, and business experience during
the last five years:

EVERETT L. HODGES                     71          Director                  1979

Mr. Everett L. Hodges served as President of the Company from September 1987
through February 1992. For more than the past ten years, Mr. Hodges has held a
controlling interest in and has served as a director and officer of Energy
Production & Sales Co.; California Oil Independents, Inc.; Coastal Petroleum
Refiners, Inc.; and has served as a director and officer of St. James Oil
Corporation since 1988. Mr. Hodges has also served as the President of the
Violence Research Foundation, a non-profit foundation, since its inception in
1991. Certain of the foregoing companies have been affiliated with the Company
in various transactions. See Item 12 - "Certain Relationships and Related
Transactions."

JOHN A. ERICKSON                   80           Director                    2000

Mr. John A. Erickson, for more than the past ten years, has served as a director
and officer of St. James Oil Corporation, County Water Company, La Fortuna
Associates and OSCA Development Company and has recently retired as a director
of Weybrun Security Company. Mr. Erickson is currently sitting on the Company's
audit committee.

DONALD R. CLEM                     71           Director                    2003

Mr. Donald R. Clem is a retired Certified Public Accountant and has had
extensive experience for more than 32 years as a CPA, owning his own accounting
Company for most of that time and serving clients heavily involved in the oil
and gas and real estate industries.

FRED RHYME                            79       Director                     2003

*The Board of Directors has not filed the vacancy on the Board due to the
resignation of Mr. McMahon; thus the Board of Directors currently has Four (4)
Directors.

                                       30
<PAGE>

ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934 (Continued)
-----------------------------------------------------------------------------


STANDING COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS

Standing Committees
-------------------

The Company has certain standing committees, each of which is described below:

AD-HOC COMMITTEE - This committee consists of Messrs. Everett L. Hodges and John
A. Erickson. This committee evaluates proposed acquisitions, mergers or other
pertinent negotiations which may come before the Board. This committee held no
meetings during the last fiscal year, as all discussions and decisions were made
by the full Board of Directors, which includes the Ad-Hoc Committee membership.

AUDIT COMMITTEE - This committee consists of Mr. Clem and Mr. Erickson. The
Audit Committee is responsible for reviewing the scope and procedures of
internal auditing work, the results of independent audits, the accounting
policies of management, and recommends to the Board the appointment of the
Company's outside auditors. This committee did not hold any meetings during the
last fiscal year, as all discussions and decisions were made by the full Board
of Directors, which includes the Audit Committee membership.

ATTENDANCE AT BOARD MEETINGS

During the last fiscal year, the Board of Directors of the Company held four
special meetings and no regular meetings. Attendance at all such meetings of the
Board except one was 100%.

ITEM 10 - EXECUTIVE COMPENSATION

The following Summary Annual Compensation Table sets forth all cash compensation
paid, distributed or accrued for services, including salary and bonus amounts
rendered in all capacities for the Company during the fiscal year ended December
31, 2002, whose annual cash compensation exceeded $100,000 or served as Chief
Executive Officer. All other tables required to be reported have been omitted as
there has been no compensation awarded to, earned by or paid to any of the
Company's executives in any fiscal year covered by the table except the
$24,000.00 paid to Everett L. Hodges as President, representing $2000 each
month.


SUMMARY ANNUAL COMPENSATION TABLE

                                                               Year       Salary
                                                               ----       ------
Everett L. Hodges, President, Chief Executive Officer and      2003      $24,000
Chief Financial Officer.


OTHER COMPENSATION OF EXECUTIVE OFFICERS

The Company provided travel and entertainment expenses to its executive officers
and key employees. The aggregate amount of such compensation, as to any other
executive officer or key employee, did not exceed the lesser of $25,000 or 10%
of the cash compensation paid to such executive officer or key employee, nor did
the aggregate amount of such other compensation exceeded 10% of the cash
compensation paid to all executive officers or key employees as a group.

                                       31
<PAGE>

ITEM 10 - EXECUTIVE COMPENSATION (CONTINUED)

TERMINATION AND CHANGE IN CONTROL ARRANGEMENTS

In July 1993, the Board of Directors adopted a severance plan for executive
officers providing that, in the event of termination of employment as a result
of a change in control of the corporation, that such executive officer would
receive severance in the amount of one year's base salary. The Plan does not
provide for any severance in the event of the resignation, retirement or
termination of any Executive Officer's employment with the Company for reasons
other than a change in control of the Company.

COMPENSATION OF DIRECTORS

During the year ended December 31, 2003, the one employee director and President
received $2,000.00 per month. The non-employee directors who held office were
paid $500 per meeting for a total of $2,000.00 in compensation paid to directors
of the Company. In addition, the non-employee directors are reimbursed for
reasonable expenses incurred in connection with any meetings attended.

The Company did not pay any additional fees to directors for serving as members
of the Audit or Ad-Hoc Committees during the last fiscal year.

ITEM 11 - SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT

The following table lists the beneficial ownership as of March 30, 2004, of the
Company's common stock with respect to all directors and officers as a group, to
the extent that it is known to the Company, either through Securities Exchange
Act filings or information supplied by the persons named in the table.

Name of Director                    Number of Shares
or Number of                        and Nature of          Percent
Persons in Group                    Beneficial Ownership   Of Class
----------------                    --------------------   --------

John A. Erickson                           9,555              .82%
Everett L. Hodges                         88,060 (1)(2)      7.60%
Fred Rhyme                                 1,000              .00%

All directors and officers as a group,
including the persons named above
 (3 Persons)                              98,615             9.00% computations)
----------------------

     (1)  Everett L. Hodges was granted 3,125 shares of the Company's common
          stock under the Directors Stock Compensation Plan in 1994 in lieu of
          cash directors fees for the period from May 1, 1992 to June 1, 1994.
          See "Directors Stock Compensation Plan"

     (2)  The 88,060 shares beneficially held by Everett L. Hodges include
          73,487 shares held of record jointly in the Everett L. Hodges and Mary
          M. Hodges Trust. This amount also includes 4,175 shares held directly
          by Everett L. Hodges, and 10,398 shares held of record by Energy
          Production & Sales Co., Inc. (EPS). The 88,060 shares do not include
          10,052 shares held in trust for the children and grandchild of Everett
          L. and Mary M. Hodges, as to which Mr. and Mrs. Everett L. Hodges
          disclaim any beneficial ownership.

                                       32
<PAGE>

ITEM 11 - SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT (CONTINUED)
1993 INCENTIVE STOCK OPTION PLAN AND 1993 NON-STATUTORY STOCK OPTION PLAN
(CONTINUED)

1993 INCENTIVE STOCK OPTION PLAN AND 1993 NON-STATUTORY STOCK OPTION PLAN

The Company has in effect two stock option plans - the 1993 Incentive Stock
Option Plan (the Incentive Plan) and the 1993 Non-Statutory Stock Option Plan
(the Non-Statutory Plan) (the Incentive Plan and the Non-Statutory Plan are
sometimes collectively referred to herein as the Plans), which were adopted by
the Board of Directors and approved by the shareholders of the Company in 1993.
The Plans in the aggregate provide for the granting of options to purchase a
maximum of 150,000 shares of the Company's common stock to employees and
directors of the Company and its affiliates (as defined herein); however,
options which may be granted to non-employee directors are limited to a maximum
of 7,500 shares. The Plans expired on February 8, 2003.

Any of the Company's current or future employees who render, in the opinion of
the Board of Directors, the type of services which tend to contribute materially
to the success of the Company or an affiliate of the Company are eligible to
participate in the Incentive Plan. Any of the Company's current or future
employees or directors (whether or not otherwise employed by the Company) who
render, in the opinion of the Board of Directors, the type of services which
tend to contribute materially to the success of the Company or an affiliate of
the Company are eligible to participate in the Non-Statutory Plan.

The Plans are administered by the Board of Directors of the Company which has
the authority to determine the employees and directors to whom options are to be
granted, the number of shares subject to each option price of outstanding
options (but not below the fair market value of the shares subject thereto), to
enter into agreements relating to the value of the option at the date of grant,
and to make all other determinations necessary or advisable to the
administration of the Plan. With the consent of the optionee, the Board of
Directors will also have the power to substitute options with different terms
for previously granted options, or to amend the terms of any option.

The Board of Directors may delegate administration of the Plan to a committee
composed of not less than three members of the Board of Directors.
Administration of the Plan with respect to committee members, however, just
remain vested in the Board. With respect to options granted to a director, the
Board of Directors shall take action by a vote sufficient without counting the
vote of the interested director. Interested directors may be counted in
determining the presence of quorum at a meeting of the Board of Directors which
authorized the granting of options to such directors.

1993 STOCK BONUS PLAN

In February 1993, the Board of Directors adopted the Company's 1993 Stock Bonus
Plan (Bonus Plan). The Bonus Plan provides the awarding of up to 6,250 shares of
the Company's common stock to officers and key employees of the Company. The
Plan is administered by the Board of Directors which has the authority to
determine the officers and key employees to whom stock bonuses are to be
awarded, the time or times at which stock bonuses will be awarded, and, subject
to the limits discussed below, the number of shares to be granted under each
award. The Board of Directors has the power to delegate the administration of
the Bonus Plan to a committee of the Board appointed in accordance with the
Company's Bylaws. The aggregate fair market value (determined as of the date of
grant) of the shares of common stock awarded to any officer or key employee
under the Bonus Plan in any one calendar year cannot exceed one-sixth of the
officer's or key employee's salary (excluding bonuses and awards under other
incentive plans maintained by the Company) for such calendar year. The Bonus
Plan terminated on February 8, 1998.

DIRECTORS STOCK COMPENSATION PLAN

On April 16, 1992, as part of its cost containment program, the Board of
Directors of the Company adopted the Directors Stock Compensation Plan (the
Stock Compensation Plan). The Stock Compensation Plan provides for the granting
of stock to non-employee directors of the Company in lieu of paying director's
fees in cash. The purpose of the Stock Compensation Plan is to minimize cash
outflow from the Company by compensating non-employee directors for their
services to the Company in stock rather than in cash. The maximum number of
shares provides for the Stock Compensation Plan is 18,750. Only non-employee
directors of the Company are eligible to participate in the Stock Compensation
Plan. In February 1994 and February 1993, a distribution of 2,075 shares and

                                       33
<PAGE>

ITEM 11 - SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT (CONTINUED)
DIRECTORS STOCK COMPENSATION PLAN (CONTINUED)

1,050 shares was made to each of the non-employee directors under this Plan,
respectively. This Plan terminated on February 10, 1995, at which time all of
the shares issued under this Plan were distributed to non-employee directors.
The Stock Compensation Plan is administered by the disinterested members of the
Board, or, in the event there are none such, the President and Chief Executive
Officer and the Secretary of the Company. The granting of stock under the Stock
Compensation Plan is according to a pre-set formula. Directors fees payable to
non-employee directors of the Company under this plan were set by the Board at
$700 per month. Under the Stock Compensation Plan, the eligible directors
received stock at a value of $700 per month, determined by the average trading
price as quoted for the calendar month immediately preceding the month in which
the directors fees are earned; provided, however, that the valuation of the
stock shall not be less than the net book value of the Company expressed on a
per share basis. Any shares issued under this plan shall be restricted shares,
subject to a two year holding period.

REPORTABLE TRANSACTIONS

To the knowledge of the Company, as of March 30, 2004, all reporting persons
have properly filed the appropriate forms on all reportable transactions and all
forms were timely filed in compliance with Section 16(a) of the Exchange Act.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

On March 6, 1997, the Board adopted a resolution granting stock options to
purchase up to 5,000 shares of common stock to the CEO, and up to 2,500 shares
of common stock to each of the three non-employee directors. Under the terms of
the resolution, the CEO and each of the directors can purchase shares of common
stock for the average price that the Company's stock was trading before and
after March 6, 1997. This average is $3.00 per share. The Company has not yet
issued these options.

No stock options were exercised during the years ended December 31, 2003 and
2002.

ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

TRANSACTIONS WITH MANAGEMENT AND OTHERS

As mentioned in Note 3, during 1999, the Company entered into an agreement to
gain working interest in certain wells and leases in the state of Wyoming. Two
participating entities with Petrominerals Corporation in the acquisition are
HAT, LLC and Nevadacor Energy, Inc. Nevadacor is acting as agent for Kaymor
Energy, LLC (a Nevada limited liability company), the members of which are HBOC
Energy Marketing, Inc. ("HBOC"), a California corporation, and Morris V. Hodges,
individually. HBOC is controlled by Morris V. Hodges and was formerly known as
Kaymor Petroleum Products, Inc. Morris V. Hodges was Petrominerals Corporation's
president and CEO until July 1, 2002, and is a shareholder.

On October 30, 2003, Company entered into an agreement to purchase a 50%
interest in three oil wells and an oil and gas lease in Monterey County,
California; conditioned upon an independent engineering evaluation acceptable to
Company. The opportunity was presented to Company by California Oil
Independents, a California corporation controlled by Everett L. Hodges. As due
diligence efforts by the Company representatives have not been completed,
Company may elect to go forward with the acquisition or rescind and have
restored all monies paid for the acquisition. See Item 7- "Related Parties and
Related Party Transactions"

                                       34
<PAGE>

ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (CONTINUED)

INDEBTEDNESS OF MANAGEMENT

During the Company's last fiscal year, no executive officer, director, any
member of the immediate family or any of those persons, any corporation or
organization for which any of those persons serve as an executive officer or
partner or which they own directly or indirectly 10% or more of its equity
securities, or any trust or other estate in which any of the Company's executive
officers or directors have a substantial beneficial interest or for which they
serve as a trustee or in a similar capacity, has owed the Company at any time
since the beginning of its last fiscal year more than $60,000.



                                       35
<PAGE>

ITEM 13 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

                                                                         Page(s)
                                                                         -------
A. LIST OF DOCUMENTS
   -----------------
         1.   Report of Mendoza Berger & Company, LLP                       10
              Balance Sheets at December 31, 2003 and 2002                  11
              Statements of Operations for the Years Ended
              December 31, 2003 and 2002                                    12
              Statements of Shareholders' Equity for the Years Ended
              December 31, 2003 and 2002                                    13
              Statements of Cash Flows for the Years Ended
              December 31, 2003 and 2002                                    14
              Notes to Financial Statements                               15-29


         2. Reports on Form 8-K
              A Form 8-K was filed on May 31, 2002;
              A Form 8-K was filed on November 7, 2002;
              A Form 8-K was filed on March 18, 2003; and
              A Form 8-K/A was filed on March 28, 2002

         3. Exhibits

              (2)(a) Order Approving Disclosure Statement and Fixing Time for
                     Filing Acceptances and Rejections of Plan and Fixing Date
                     for Confirmation Hearing for Hydro-Test International,
                     Inc.*
              (2)(b) Supplemental Hydro-Test International, Inc. Chapter 11
                     Disclosure Statement*
              (2)(c) Supplemental Hydro-Test International, Inc. Chapter 11
                     Plan*
              (3)(a) Certificate of Incorporation**
              (3)(a)(I) Amendment of Certificate of Incorporation***
              (3)(b) Bylaws, as Amended***
              (10)(a) Petrominerals Corporation 1993 Incentive Stock Option Plan
                     and 1993 Non-Statutory Stock Option Plan Incorporation****
              (10)(b) Form of Petrominerals Corporation Employee Stock Option
                     Agreement****
              (10)(c) Petrominerals Corporation 1993 Employee Stock Bonus
                     Plan*****
              (10)(d) Petrominerals Corporation Directors Stock Compensation
                     Plan******
              (21)   Subsidiaries of the Registrant

*      Incorporated herein by reference to Exhibit of same number in
       Registrant's Annual Report on Form 10-K for the year ended December 31,
       1995.

**     Incorporated herein by reference to Exhibit of same number in
       Registrant's Annual Report on Form 10-K for the year ended December 31,
       1981.

***    Incorporated herein by reference to Exhibit of same number in
       Registrant's Annual Report on Form 10-K for the year ended December 31,
       1987.

****   Incorporated herein by reference to Form S-8 Registration No. 33-70690,
       as filed with the Securities and Exchange Commission on October 22, 1993.

                                       36
<PAGE>

ITEM 13 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(CONTINUED)


*****  Incorporated herein by reference to Form S-8 Registration No. 33-70688,
       as filed with the Securities and Exchange Commission on October 22, 1993.

****** Incorporated herein by reference to Form S-8 Registration No. 33-70692,
       as filed with the Securities and Exchange Commission on October 22, 1993.

Exhibits  -  Exhibits 99.1 (Certification of Chief Financial Officer and
                Chief Executive Officer)


ITEM 14 - CONTROLS AND PROCEDURES.

As of December 31, 2003, an evaluation was performed under the supervision and
with the participation of our management, including the CEO/CFO, of the
effectiveness of the design and operation of our disclosure controls and
procedures. Based on that evaluation, our management, including the CEO/CFO,
concluded that our disclosure controls and procedures were effective as of
December 31, 2003. There have been no significant changes in our internal
controls or in other factors that could significantly affect internal controls
subsequent to December 31, 2003.


                                       37
<PAGE>

                                   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.

PETROMINERALS CORPORATION
(Registrant)


By:  Everett L. Hodges
     ------------------------------
     Everett L. Hodges, President
     and Chief Executive Officer

Dated:  March 30, 2004


Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates included:


Dated: March 30, 2004                  By: Everett L. Hodges
                                           -------------------------------------
                                           Everett L. Hodges, President,
                                           Chief Executive Officer,
                                           Chief Financial Officer, and Director


Dated: March 30, 2004                  By: John A. Erickson
                                           -------------------------------------
                                           John A. Erickson, Director



Dated: March 30, 2004                  By: Fred Rhyme
                                           -------------------------------------
                                              Fred Rhyme, Director


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