U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   FORM 10-QSB

                                   (Mark One)

          QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
               For the quarterly period ending September 30, 2002


         TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
             For the transition period from           to
                                           ----------   ----------

                         Commission file number 0-29613
                                                -------

                         TIDELANDS OIL & GAS CORPORATION
           -----------------------------------------------------------
                 (Name of Small Business Issuer in its Charter)


           NEVADA                                          66-0549380
-------------------------------             ------------------------------------
   (State of Incorporation)                   (IRS Employer Identification No.)



13330 Leopard St., Corpus Christi, TX                     78410
-------------------------------------       -----------------------------------
(Address of principal executive offices)               (Zip Code)



Issuer's telephone number,(   361   )     241      -         2244
                           ---------  ------------   -----------------------

                 9309 North Star Road, Corpus Christi, TX 78409
          -------------------------------------------------------------
          Former Name, former address and former fiscal year if changed
                                since last report

________Indicate by check mark whether the issuer (1) filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such  shorter  period  that the  registrant  was  required  to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days. Yes X  No
         ---   ---


         State the number of shares outstanding of each of the issuer's class of
common equity, as of the latest  practicable date: As of September 30, 2002, the
registrant had 34,283,329 shares of common stock, par value .001 outstanding.

         Transitional Small Business Disclosure Format
         (Check One)
         Yes      No
             ---     ---
<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
                                   FORM 10-QSB


                                      INDEX

                                                                            Page
PART I - Financial Information

Item 1 - Financial Statements
              Condensed Consolidated Balance Sheets as of
              September 30, 2002 and December 31, 2001.....................  3-4

              Condensed Consolidated Statements of Operations
              For the Three Months Ended September 30, 2002 and 2001.......    5

              Condensed Consolidated Statements of Operations
               For the Nine Months Ended September 30, 2002 and 2001.......    6

              Condensed Consolidated Statements of Cash Flows
              For the Nine Months Ended September 30, 2002 and 2001........  7-8

              Notes to Condensed Consolidated Financial Statements......... 9-10

Item 2 - Management's Discussion and Analysis or Plan of Operation........ 11-12

PART II - Other Information

Item 1 - Legal Proceedings ................................................   13

Item 2 - Changes in Securities and Use of Proceeds.........................   13

Item 3 - Defaults Upon Senior Securities...................................   13

Item 4 - Submission of Matters to a Vote of Security Holdings..............   13

Item 5 - Other Information.................................................   14

Item 6 - Exhibits and Reports on Form 8K ..................................   14

Signature..................................................................   15




                                      - 2 -
<PAGE>


                         TIDELANDS OIL & GAS CORPORATION
                                   FORM 10-QSB


                          PART I-FINANCIAL INFORMATION

Item 1.  Financial Statements.  (Unaudited)







<PAGE>
<TABLE>
<CAPTION>

                         TIDELANDS OIL & GAS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS




                                     ASSETS
                                     ------



                                                     September 30, 2002        December 31, 2001
                                                     ------------------       ------------------
                                                        (Unaudited)
<S>                                                  <C>                      <C>
Current Assets:
   Cash                                              $          227,755       $          397,491
   Accounts Receivable                                          108,348                   67,675
   Inventory                                                     19,115                    7,515
   Prepaid Expenses                                             305,340                  304,244
                                                     ------------------       ------------------

         Total Current Assets                                   660,558                  776,925
                                                     ------------------       ------------------

Property Plant and Equipment, Net                             1,076,491                  827,020
                                                     ------------------       ------------------

Other Assets:
   Deposits                                                     696,870                    1,776
   Deferred Charges                                           1,202,700                        0
   Intangible Assets, Net                                        52,910                   52,910
                                                     ------------------       ------------------

         Total Other Assets                                   1,952,480                   54,686
                                                     ------------------       ------------------

         Total Assets                                $        3,689,529       $        1,658,631
                                                     ==================       ==================

</TABLE>









      See Accompanying Notes to Condensed Consolidated Financial Statements

                                       -3-


<PAGE>
<TABLE>
<CAPTION>

                         TIDELANDS OIL & GAS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (CONTINUED)


                    LIABILITIES AND STOCKHOLDERS' (DEFICIT)
                    ---------------------------------------


                                                 September 30, 2002     December 31, 2001
                                                 ------------------    ------------------
                                                     (Unaudited)
<S>                                              <C>                   <C>
Current Liabilities:
   Accounts Payable and
     Accrued Expenses                            $        1,115,142    $        1,268,679
   Current Maturities of Long-Term Debt                   1,244,935               839,123
                                                 ------------------    ------------------

         Total Current Liabilities                        2,360,077             2,107,802
Long-Term Debt                                               24,879               198,767
Due to Related Parties                                    1,619,004             1,534,105
                                                 ------------------    ------------------

         Total Liabilities                                4,003,960             3,840,674
                                                 ------------------    ------------------

Commitments and Contingencies                                  --                    --

Stockholders' (Deficit):
   Common Stock, $.001 par value per share,
     100,000,000 shares authorized;
     34,283,329 shares issued and
     outstanding September 30, 2002
     24,154,900 shares issued and outstanding
     December 31, 2001                                       34,284                24,156
     Additional Paid-in Capital                           6,969,509             3,017,751

   Subscriptions Receivable                                 (18,000)              (18,000)
   Accumulated (Deficit)                                 (7,300,224)           (5,205,950)
                                                 ------------------    ------------------

         Total Stockholders' (Deficit)                     (314,431)           (2,182,043)
                                                 ------------------    ------------------

         Total Liabilities and
           Stockholders' (Deficit)               $        3,689,529    $        1,658,631
                                                 ==================    ==================

</TABLE>







      See Accompanying Notes to Condensed Consolidated Financial Statements

                                       -4-
<PAGE>
<TABLE>
<CAPTION>

                         TIDELANDS OIL & GAS CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                                  Three Months Ended     Three Months Ended
                                                  September 30, 2002     September 30, 2001*
                                                  ------------------     ------------------
<S>                                               <C>                    <C>
Revenues:
   Gas Processing Sales                           $          261,234     $          265,357
   Other                                                       2,533                  2,353
                                                  ------------------     ------------------
         Total Revenues                                      263,767                267,710
                                                  ------------------     ------------------

Operating Expenses:
   Purchases                                                 171,290                182,984
   Operating Expenses                                        113,055                 46,631
   Depreciation and Amortization                              18,091                 11,563
   Interest Expense                                           12,728                 16,582
   General and Administrative                                518,623                200,805
                                                  ------------------     ------------------
         Total Operating Expenses                            833,787                458,565
                                                  ------------------     ------------------
           Operating (Loss)                                 (570,020)              (190,855)

 Non-Operating Expenses:
   Litigation Settlement                                     492,000                      0
                                                  ------------------     ------------------

(Loss) from Continuing Operations                         (1,062,020)              (190,855)

(Loss) from Discontinued Operations                                0                (87,741)
                                                  ------------------     ------------------

(Loss) Before Provision for Income Taxes                  (1,062,020               (278,596)
Provision for Income Taxes                                         0                      0
                                                  ------------------     ------------------

   Net (Loss)                                     $       (1,062,020)    $         (278,596)
                                                  ==================     ==================
Net (Loss) Per Common Share
    Basic
   (Loss) From Continuing Operations              $           (0.032)    $           (0.008)
   (Loss) From Discontinued Operations                        (0.000)                (0.004)
                                                  ------------------     ------------------
         Total                                    $           (0.032)    $           (0.012)
                                                  ==================     ==================
Weighted Average Number of Common
   Shares Outstanding, Basic                              32,799,579             23,162,520
                                                  ==================     ==================
   Diluted
   Loss From Continuing Operations                $           (0.032)    $           (0.008)
   Loss From Discontinued Operations                          (0.000)                (0.004)
                                                  ------------------     ------------------
         Total                                    $           (0.032)    $           (0.012)
                                                  ==================     ==================
Weighted Average Number of Common
   Shares Outstanding, Diluted                            32,799,579             23,292,520
                                                  ==================     ==================
</TABLE>

* The statement of consolidated  operations for the three months ended September
30,  2001  has  been   reclassified  to  conform  with  the  December  31,  2001
presentation.


      See Accompanying Notes to Condensed Consolidated Financial Statements

                                       -5-
<PAGE>
<TABLE>
<CAPTION>

                         TIDELANDS OIL & GAS CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                                    Nine Months Ended     Nine Months Ended
                                                   September 30, 2002    September 30, 2001*
                                                   ------------------    ------------------
<S>                                                <C>                   <C>
Revenues:
   Gas Processing Sales                            $          637,825    $          855,002
   Other                                                        8,387                27,789
                                                   ------------------    ------------------
         Total Revenues                                       646,212               882,791
                                                   ------------------    ------------------

Operating Expenses:
   Purchases                                                  409,022               579,849
   Operating Expenses                                         365,583               150,106
   Depreciation and Amortization                               53,801                33,486
   Interest Expense                                            59,404                62,810
   General and Administrative                               1,360,676               720,881
                                                   ------------------    ------------------
         Total Operating Expenses                           2,248,486             1,547,132
                                                   ------------------    ------------------
         Operating (Loss)                                  (1,602,274)             (664,341)

Non-Operating Expenses:
   Litigation Settlement                                      492,000                     0
                                                   ------------------    ------------------

Net (Loss) from Continuing Operations                      (2,094,274)             (664,341)

(Loss) From Discontinued Operations                                 0              (334,985)
                                                   ------------------    ------------------
Net (Loss) Before Provision For Income Taxes               (2,094,274)             (999,326)
   Provision for Income Taxes                                       0                     0
                                                   ------------------    ------------------

Net (Loss)                                         $       (2,094,274)   $         (999,326)
                                                   ==================    ==================
Net (Loss) Per Common Share
   Basic
   (Loss) From Continuing Operations               $           (0.072)   $           (0.031)
   (Loss From Discontinued Operations                          (0.000)               (0.015)
                                                   ------------------    ------------------
         Total                                     $           (0.072)   $           (0.046)
                                                   ==================    ==================
Weighted Average Number of Common
   Shares Outstanding, Basic                               29,219,115            21,722,520
                                                   ==================    ==================
   Diluted
   (Loss) From Continuing Operations               $           (0.072)   $           (0.030)
   (Loss) From Discontinued Operations                         (0.000)               (0.016)
                                                   ------------------    ------------------
         Total                                     $           (0.072)   $           (0.046)
                                                   ==================    ==================
Weighted Average Number of Common
Shares Outstanding, Diluted                                29,244,115            21,852,520
                                                   ==================    ==================
</TABLE>


* The statement of  consolidated  operations for the nine months ended September
30,  2001  has  been   reclassified  to  conform  with  the  December  31,  2001
presentation.

      See Accompanying Notes to Condensed Consolidated Financial Statements

                                       -6-
<PAGE>
<TABLE>
<CAPTION>

                         TIDELANDS OIL & GAS CORPORATION
                 STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS
                                   (UNAUDITED)

                                                      Nine Months Ended     Nine Months Ended
                                                     September 30, 2002    September 30, 2001
                                                     ------------------    ------------------
<S>                                                  <C>                   <C>
Cash Flows Provided (Required) By
   Operating Activities:
    Net (Loss)
      Continuing Operations                          $       (2,094,274)   $         (664,341)
      Discontinued Operations                                         0              (334,985)
    Adjustments to Reconcile Net (Loss)
       to Net Cash Provided (Required) By
       Operating Activities:
       Depreciation, Depletion and Amortization
        Continuing Operations                                    53,801                33,486
        Discontinued Operations                                       0                18,843
     Loss on Disposal of Oil and Gas Properties                       0                56,450
     Issuance of Common Stock
        For Services Provided                                   391,265               164,800
        For Litigation Settlement                               492,000                17,000
   Officers' Salaries                                           180,000               180,000
     Changes in:
        Accounts Receivable                                     (40,673)               47,216
        Inventory                                               (11,600)                8,202
        Prepaid Expenses                                        285,571                77,008
        Other Assets                                           (352,550)                 (283)
        Accounts Payable and Accrued Expenses                   354,463                29,432
        Current Maturities of Long-Term Debt                    405,812              (137,726)
                                                     ------------------    ------------------
Net Cash (Required)
   by Operating Activities                                     (336,185)             (504,898)
                                                     ------------------    ------------------

Cash Flows Provided (Required)
   by Investing Activities:
      Acquisitions of Property, Plant & Equipment              (303,183)             (137,563)
      Proceeds From disposals of Oil
       And Gas Properties                                             0               150,000
                                                     ------------------    ------------------

 Net Cash Provided (Required)
   by Investing Activities                                     (303,183)               12,437
                                                     ------------------    ------------------
</TABLE>





      See Accompanying Notes to Condensed Consolidated Financial Statements

                                       -7-
<PAGE>
<TABLE>
<CAPTION>

                         TIDELANDS OIL & GAS CORPORATION
                 STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS
                                   (UNAUDITED)
                                   (CONTINUED)

                                                        Nine Months            Nine Months
                                                           Ended                  Ended
                                                    September 30, 2002     September 30, 2001*
                                                    ------------------     ------------------
<S>                                                 <C>                    <C>
Cash Flows Provided (Required) by
   Financing Activities:
   Proceeds From Issuance of Common Stock                            0                 44,108
   Decrease Stock Subscriptions
     Receivable                                                      0                 41,913
  Reductions of Long-Term Loans                               (173,888)                     0
  Issuance of Short-Term Debt Pursuant
     To Litigation Settlement                                        0                 75,000
  Proceeds of Loans From
     Related Parties                                           643,520                300,974
                                                    ------------------     ------------------

Net Cash Provided (Required)
   by Financing Activities                                     469,632                461,995
                                                    ------------------     ------------------

Net Increase (Decrease) in Cash                               (169,736)               (30,466)

Cash at Beginning of Period                                    397,491                312,509
                                                    ------------------     ------------------
Cash at End of Period                               $          227,755     $          282,043
                                                    ==================     ==================

Supplemental Disclosures of
   Cash Flow Information:
    Cash Payments for Interest                      $           31,443     $           64,178
                                                    ==================     ==================

      Cash Payments for Income Taxes                $                0     $                0
                                                    ==================     ==================
Non-Cash Financing Activities:
   Issuance of Common Stock:
      Operating Activities                          $          391,265     $          250,000
      Capital Contribution to Investments                            0                 13,000
      Deposit - Pipeline Acquisition                           355,000                      0
      Payment of Accounts Payable                              508,000                      0
      Litigation Settlement                                    492,000                      0
      Prepayment of Consulting Contract                        645,000                      0
      Prepayment of Financing Fee                              832,000                      0
      Repayment of Loans From
        Related Parties                                        738,621                      0
                                                    ------------------     ------------------

      Total Non-Cash Financing Activities           $        3,961,886     $          263,000
                                                    ==================     ==================
</TABLE>

*The statement of  consolidated  cash flows for the nine months ended  September
30, 2001 has been  reclassified  (Note 2) to conform with the September 30, 2002
presentation.

      See Accompanying Notes to Condensed Consolidated Financial Statements

                                       -8-

<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS




NOTE 1 - BASIS OF PRESENTATION
------   ---------------------

         The accompanying  unaudited condensed consolidated financial statements
         for the nine month periods ended  September 30, 2002 and 2001 have been
         prepared in conformity with accounting principles generally accepted in
         the United States of America for interim financial information and with
         the  instructions  to Form 10-QSB and  Regulation  S-B.  The  financial
         information  as of December 31, 2001 is derived  from the  registrant's
         Form 10-KSB for the year ended December 31, 2001.  Certain  information
         or  footnote  disclosures  normally  included in  financial  statements
         prepared in accordance with accounting principles generally accepted in
         the United States of America have been condensed or omitted pursuant to
         the rules and regulations of the Securities and Exchange Commission.

         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  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.  In
         the  opinion  of  management,  the  accompanying  financial  statements
         include all adjustments  necessary (which are of a normal and recurring
         nature) for the fair presentation of the results of the interim periods
         presented. While the registrant believes that the disclosures presented
         are  adequate  to keep the  information  from being  misleading,  it is
         suggested  that  these  accompanying  financial  statements  be read in
         conjunction  with  the  registrant's  audited  consolidated   financial
         statements and notes for the year ended December 31, 2001,  included in
         the registrant's Form 10-KSB for the year ended December 31, 2001.

         Operating  results for the nine-month  period ended  September 30, 2002
         are not necessarily  indicative of the results that may be expected for
         the  remainder  of the  fiscal  year  ending  December  31,  2002.  The
         accompanying  unaudited  condensed  consolidated  financial  statements
         include  the   accounts  of  the   registrant   and  its   wholly-owned
         subsidiaries.  All significant  inter-company accounts and transactions
         have been eliminated in consolidation.










                                       -9-
<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - DISCONTINUED OPERATIONS
------   -----------------------

         As a result of management  activities,  the Company  segregated  losses
         from  discontinued  operations  for its  December  31,  2001  financial
         statements.   Accordingly,  we  have  restated  herein,  the  Condensed
         Consolidated   Statement  of  Operations  for  the  nine  months  ended
         September   30,  2001  to  reflect   these  losses  from   discontinued
         operations.

NOTE 3 - LITIGATION
------   ----------

         On September  10,  2002,  the Company  entered  into a  Settlement  and
         Release  Agreement with Swartz  Private  Equity,  LLC,.  This Agreement
         settles the litigation between Tidelands and Swartz. The Company issued
         1,200,000  common shares to Swartz  Private  Equity,  LLC in connection
         with Swartz's  cashless exercise of common stock warrants to Swartz for
         its financing  commitments  on September 7, 2000.  The warrants,  among
         other  items,  were the subject  matter of the  litigation.  The Swartz
         shares may be available  for immediate  public resale under  Securities
         and Exchange Commission rule 144 (k).

NOTE 4 - OTHER
------   -----

         On  September  5, 2002,  the  Company  issued  1,000,000  shares of its
         restricted  common  stock  valued at  $355,000 in  connection  with its
         acquisition of 225 miles of large diameter pipeline from ZG Gatherings,
         Ltd.

         On  September  23, 2002,  the Company  issued  1,200,000  shares of its
         common stock valued at $492,000  pursuant to the settlement with Swartz
         Private Equity, LLC.

         On  September  26,  2002,  the  Company  issued  487,500  shares of its
         restricted  common  stock  valued at $69,225 to Stanley  Merdinger  for
         consulting services.

         On September 29, 2002,  the Company issued 280,000 shares of its common
         stock  valued at $56,000 to Greg  Wilson in payment of prior legal fees
         and interest.

NOTE 5 - SUBSEQUENT EVENTS
------   -----------------

         Effective October 1, 2002, the Company completed its acquisition of the
         ZG  Gathering  Ltd's 225 mile  pipeline  system  located  in 4 counties
         within the State of Texas.

         Consideration for the purchase  includes  1,000,000 shares of Tidelands
         Common Stock, assumption of $3,709,869 of debt due Northern Natural Gas
         and a one year $300,000 promissory note bering 5% nterest P.A.







                                      -10-
<PAGE>

Item 2.  Management's Discussion and Analysis or Plan of Operation.

         The following discussion of our results of operations and liquidity and
capital resources should be read in conjunction with our condensed  consolidated
financial  statements  and related  notes  thereto  appearing  elsewhere in this
report.

OVERVIEW:

The Company  continues to focus its plan of operation on natural gas  processing
and  pipeline  transportation  and the  development  of  international  pipeline
crossings into Mexico.

We  completed  the  acquisition  of the  pipeline  system known as the ZG system
effective  October  1,  2002.  As a  result  of  this  acquisition,  we now  own
approximately 400 miles of gas pipeline.

Additionally,  we are planning to add more natural gas  gathering  lines to this
new system which will  increase  our gas supply for the existing gas  processing
plant.  Revenues will also be increased by the  through-put of the gas plant and
thereby increase propane/butane sales.

During 2001, we organized a subsidiary named, Reef International,  LLC. Reef has
obtained the necessary  State and Federal  permits for the  construction  of the
international  pipeline crossing between Eagle Pass, Texas and Piedras,  Mexico.
Approvals have been secured from the State of Texas for these  permits.  Federal
Presidential  Permits have been issued for both our natural gas crossing and our
propane/butane  crossing.  All  engineering and  construction  studies have been
finalized and approved by both state and federal agencies.

In  addition  to  the  Eagle   Pass/Piedras   Negras,   Mexico   crossing   Reef
International,   LLC.  has  commenced  the  permitting   process  for  a  second
international crossing at El Paso, Texas to Juarez, Mexico.

RESULTS OF OPERATIONS

REVENUES:  The Company reported revenues of $646,212 from continuing  operations
for the nine months ended  September  30, 2002 as compared  with  revenues  from
continuing  operations of $882,791 for the nine months ended September 30, 2001.
The revenue reductions were due primarily to decreases in the sales price of gas
related products.

TOTAL COSTS AND EXPENSES:  Total costs and expenses from  continuing  operations
increased  from  $1,547,132  for the nine  months  ended  September  30, 2001 to
$2,248,486 for the nine months ended September 30, 2002.

COST OF  SALES:  The  cost  of  sales  (purchases)  from  continuing  operations
decreased from $579,849 for the nine months ended September 30, 2001 to $409,022
for the nine months  ended  September  30, 2002.  The  reduction of $170,827 was
primarily due to reduction of gas purchase prices during the period.


                                      -11-
<PAGE>

OPERATING  EXPENSES:   Other  operating  expenses  from  continuing   operations
increased  form $150,106 for the nine months  September 30, 2001 to $365,583 for
the nine months ended September 30, 2002. The increase of $215,477 consisted for
the most part of costs associated with the redeployment of certain  personnel to
pipeline maintenance and increased casualty insurance costs.

SELLING GENERAL AND ADMINISTRATIVE EXPENSES:  Selling general and administrative
expenses from continuing  operations increased from $720,881 for the nine months
ended  September 30, 2001 to $1,360,676 for the nine months ended  September 30,
2002. The increase of $639,795 in 2002 is substantially  due to higher personnel
costs, increased consulting fees and higher legal fees and costs.

INCOME TAX: The pre-tax loss increased from ($999,326) for the nine months ended
September 30, 2001 to ($2,094,274)  for the nine months ended September 30, 2002
on increase of $1,094,948.

LIQUIDITY AND CAPITAL  RESOURCES:  Capital  expenditures  during the nine months
ended  September 30, 2002 totaled  $303,183 as compared with $137,563 during the
nine months  ended  September  30,  2001.  The  increase  of  $165,620  consists
primarily of pre-construction costs regarding our planned international crossing
to Mexico.

Total debt  increased  from  $3,840,674  at December 31, 2001 to  $4,003,960  at
September  30,  2002 of which  $1,346,425  was unpaid  officers  and  director's
salaries,  fees and expense reimbursements and $272,579 was loans from officers.
Total debt as a percentage of the sum of total debt and shareholders' equity was
108.5% and 231.6% respectively.


Net loss for the nine  months  ended  September  30,  2002 was  $(2,094,274)  an
increase of 109.6%  from the net loss of  ($999,326)  for the nine months  ended
September 30, 2001. Diluted net loss from continuing operations per common share
increased from ($0.030) to ($0.072).  The net loss per share calculation for the
nine  months  ended  September  30,  2002  included  on  increase  in actual and
equivalent shares outstanding.

FORWARD-LOOKING STATEMENTS:

         We have included  forward-looking  statements in this report.  For this
purpose,  any  statements  contained in this report that are not  statements  of
historical fact may be deemed to be forward looking statements. Without limiting
the foregoing, words such as "may", "will", "expect",  "believe",  "anticipate",
"estimate",  "plan" or "continue" or the negative or other variations thereof or
comparable  terminology  are  intended to identify  forward-looking  statements.
These statements by their nature involve  substantial  risks and  uncertainties,
and actual  results  may differ  materially  depending  on a variety of factors.
Factors that might cause  forward-looking  statements to differ  materially from
actual  results  include,  among other  things,  overall  economic  and business
conditions,  demand  for the  Company's  products,  competitive  factors  in the
industries  in which we compete or intend to compete,  natural gas  availability
and cost and timing,  impact and other  uncertainties of our future  acquisition
plans.


                                      -12-
<PAGE>

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK:

         The Company does not issue or invest in financial  instruments or their
derivatives for trading or speculative  purposes.  The operations of the Company
are conducted  primarily in the United States,  and, are not subject to material
foreign  currency  exchange risk.  Although the Company has outstanding debt and
related  interest  expense,  market risk of interest rate exposure in the United
States is currently not material.

                           PART II- OTHER INFORMATION

Item 1.  Legal Proceedings.

         On  September  10,  2002,  we entered  into a  Settlement  and  Release
Agreement with Swartz Private Equity, LLC. This Agreement settled the litigation
between Tidelands and Swartz.

Item 2.  Changes in Securities and Use of Proceeds

         Recent Sales of Unregistered Securities

         During the third  quarter of 2002,  the  Company  offered  and sold the
following  securities pursuant to exemptions from the registration  requirements
of the Securities Act of 1933, as amended (the "Securities Act").

         On  September  10,  2002,  we entered  into a  Settlement  and  Release
Agreement with Swartz Private Equity, LLC. This Agreement settled the litigation
between  Tidelands and Swartz. On September 16, 2002, we authorized the issuance
and issued 1,200,000  common shares to Swartz Private Equity,  LLC in connection
with  Swartz's  cashless  exercise  of  common  stock  warrants  based  on  Rule
144(d)(3)(ii)  and (k). We had originally issued common stock warrants to Swartz
based  on the  Section  4(2),  and,  or  Regulation  D Rule 506  Securities  Act
transaction  exemption  for its financing  commitment on September 7, 2000.  The
warrants,  among other items,  were the subject matter of the  litigation.  This
transaction was valued at $492,000.

         On September  16, 2002, we  authorized  the issuance of 280,000  common
shares for  conversion  of a $56,000  promissory  note  obligation  representing
$50,000 of accrued legal fees and $6,000 accrued  interest  expense.  The shares
were issued pursuant to securities  transaction  exemption  Section 3(a)9 of the
Securities Act.

         On  September  26, 2002,  we issued  487,500  common  shares to Stanley
Merdinger  for  consulting  services  valued at $69,225.  The shares were issued
pursuant to securities transaction exemption Section 4(2) of the Securities Act.


Item 3.  Defaults Upon Senior Securities.

         None.

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

         No matter was submitted to a vote of the security holders,  through the
solicitation  of proxies or  otherwise,  during the third  quarter of the fiscal
year covered by this report.


                                      -13-
<PAGE>

Item 5.  Other Information.

         Recently,  we executed an  acquisition  agreement  to purchase  another
pipeline  system  which is  commonly  known as the Z G system  which  would give
Tidelands  approximately 400 miles of large diameter pipeline thereby increasing
our  available  gas supply for  transportation  to Mexico  through our  proposed
international  pipeline  crossings.  The Z G  system  was  originally  built  by
Northern Natural Gas Pipeline in the mid-1980's and is located  southwest of San
Antonio, Texas running northwest of Laredo, Texas.

         On December 3, 2001, we entered into a Purchase and Sale Agreement with
ZG Gathering,  Ltd. Sale  conditions were satisfied on September 6, 2002 and the
purchase was closed on October 1, 2002. With this transaction we have acquired a
225 mile large  diameter gas pipeline  system.  The purchase  price included One
Million  shares of  Tideland's  common  stock,  the  assumption  of ZG Gathering
pipeline debt to Northern GAs of $3,709,869  and a one year $300,000  promissory
note bearing interest of 5% P.A.

         The pipeline is located in Dimmit,  Frio,  Uvalde and Zavala  counties,
Texas. We plan to connect this pipeline to our existing  pipeline system.  These
connected  pipeline  systems  will  enable us to  deliver  gas  products  to our
proposed   international  gas  pipeline  crossing  at  Piedras  Negras,  Mexico.
Additionally,  we will have the ability to deliver  natural gas to several other
markets outside the Maverick Basin.

         Reef International, LLC, a subsidiary, has obtained the necessary State
and Federal permits for the construction of the international  pipeline crossing
between Eagle Pass, Texas and Piedras,  Mexico. Approvals have been secured from
the State of Texas for these  permits.  Federal  Presidential  Permits have been
issued for both our natural gas crossing and our  propane/butane  crossing.  All
engineering  and  construction  studies have been finalized and approved by both
state and federal agencies.

         On October 5,  2002,  we signed  contracts  for a Five  Million  Dollar
bridge loan with Quality  Diamonds,  Inc..  The lender  issued us a check in the
amount of Five Million  Dollars with  instructions to hold the check until funds
could be transferred  into the lender's bank account.  Subsequently,  the lender
notified us that the funds were not available as originally contemplated. We are
reviewing our options with this lender while  concurrently  seeking  alternative
financing.

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

         (a)      Exhibits

         99.1     Officer Certification pursuant to Sarbanes-Oxley Act of 2002.
         99.2     Officer Certification pursuant to Sarbanes-Oxley Act of 2002.

         (b)      Reports on Form 8-K.


                                      -14-
<PAGE>

         On  October  11,  2002 we filed a Current  Report on Form 8-K,  Item 5,
Other Events and  Regulation FD  Disclosure,  relating to the  settlement of the
Swartz Private Equity, LLC litigation.

SIGNATURES

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

Dated: November 14, 2002

TIDELANDS OIL & GAS CORPORATION


 /s/ Michael Ward
--------------------------
By: Michael Ward
Title: President



 /s/ Royis Ward
--------------------------
By: Royis Ward
Title: Secretary/Treasurer


 /s/ Ahmmed Karim
--------------------------
By: Ahmmed Karim
Title: Vice President











                                      -15-