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, 2001


      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, 2001, the
registrant had 23,608,948  shares of common stock,  par value .001  outstanding.
22,716,091

        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, 2001 and December 31, 2000 ........................   3-4

         Condensed Consolidated Statements of Operations
         For the Three Months Ended September 30, 2001 and 2000 ..........     5

         Condensed Consolidated Statements of Operations
         For the Nine Months Ended September 30, 2001 and 2000 ...........     6

         Condensed Consolidated Statements of Cash Flows
         For the Nine Months Ended September 30, 2001 and 2000 ...........   7-8

         Notes to Condensed Consolidated Financial Statements ............  9-12

Item 2 - Management's Discussion and Analysis or Plan of Operation .......    13

PART II - Other Information

Item 1 - Legal Proceedings ...............................................    14

Item 2 - Changes in Securities and Use of Proceeds .......................    14

Item 3 - Defaults Upon Senior Securities .................................    14

Item 4 - Submission of Matters to a Vote of Security Holdings ............    14

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

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

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



                                      - 2 -
<PAGE>

PART I-FINANCIAL INFORMATION

Item 1. Financial Statements. (Unaudited)

                         TIDELANDS OIL & GAS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS



                                     ASSETS
                                     ------



                                         September 30, 2001    December 31, 2000
                                         ------------------    -----------------
                                            (Unaudited)
Current Assets:
   Cash                                     $     282,043        $     312,509
   Accounts Receivable                             98,307              145,523
   Inventory                                       10,010               18,212
   Prepaid Expenses                                25,764              102,772
                                            -------------        -------------
           Total Current Assets                   416,124              579,016
                                            -------------        -------------

Oil and Gas Properties (Net)                      664,624              900,683
                                            -------------        -------------

Other Assets:
   Deposits and Organizational
     Costs, (Net)                                   1,696                1,594
   Investments                                     23,764               10,764
   Intangible Assets, Net                         303,861               56,712
   Pre-Construction Costs                         117,875                    0
   Due From Related Parties                             0                6,214
                                            -------------        -------------
           Total Other Assets                     447,196               75,284
                                            -------------        -------------

                Total Assets                $   1,527,944        $   1,554,983
                                            =============        =============











      See Accompanying Notes to Condensed Consolidated Financial Statements
                                      - 3 -
<PAGE>
<TABLE>
<CAPTION>

                         TIDELANDS OIL & GAS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS


                     LIABILITIES AND STOCKHOLDER'S (DEFICIT)
                     ---------------------------------------


                                                September 30, 2001    December 31, 2000
                                                ------------------    -----------------
                                                    (Unaudited)
<S>                                             <C>                   <C>
Current Liabilities:
   Accounts Payable and
      Accrued Expenses                             $     791,901        $     762,469
   Current Maturities of Long-Term Debt                  616,826              679,552
                                                   -------------        -------------
           Total Current Liabilities                   1,408,727            1,442,021

Long-Term Debt                                            37,000               37,000

Due to Related Parties                                 1,324,760              850,000
                                                   -------------        -------------

           Total Liabilities                           2,770,487            2,329,021
                                                   -------------        -------------

Commitments and Contingencies

Stockholders' (Deficit)
   Common stock $.001 par value
      per share, 100,000,000 shares
      authorized; 22,716,091 shares issued
      and outstanding September 30, 2001
      20,728,948 shares issued and
      outstanding, December 31, 2000                      22,717               20,729

   Additional Paid-in Capital                          2,359,338            1,872,418
   Subscriptions Receivable                              (25,587)             (67,500)
   Accumulated (Deficit)                              (3,599,011)          (2,599,685)
                                                   -------------        -------------

           Total Stockholders' (Deficit)              (1,242,543)            (774,038)
                                                   -------------        -------------

           Total Liabilities and
             Stockholders' (Deficit)               $   1,527,944        $   1,554,983
                                                   =============        =============

</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, 2001    September 30, 2000
                                              ------------------    ------------------
<S>                                           <C>                   <C>
Revenues:
   Oil and Gas Sales                             $           0         $           0
   Other                                                18,131                     0
   Gas Processing Sales                                265,357                62,487
                                                 -------------         -------------
           Total Revenue                               283,488                62,487
                                                 -------------         -------------

Operating Expenses:
   Lease Operating                                           0                89,983
   Cost of Sales - Gas Processing                      229,615                     0
   Depreciation, Depletion and Amortization             17,955                 6,887
   Interest                                             18,517                 2,060
   General and Administrative                          293,997               144,774
                                                 -------------         -------------
           Total Operating Expenses                    560,084               243,704
                                                 -------------         -------------
           Operating (Loss)                           (276,596)             (181,217)
                                                 -------------         -------------

Non-Operating Income (Expenses)
  Litigation Settlement                                      0                     0
  Company's Share of Equity Method
      In Investee's Losses                                   0                16,184
  Loss on Disposal of Assets                            (2,000)              (27,809)
                                                 -------------         -------------
           Total Non-Operating
                Income (Expenses)                       (2,000)              (11,625)
                                                 -------------         -------------

   (Loss) Before Provision
     For Income Taxes                                 (278,596)             (192,842)
   Income Taxes                                              0                     0
                                                 -------------         -------------

Net (Loss)                                       $    (278,596)        $    (192,842)
                                                 -------------         -------------

Net (Loss) Per Common Share-Basic                $      (0.012)        $      (0.011)
                                                 -------------         -------------

Weighted Average Number of
   Common Shares Outstanding-Basic                  23,162,520            17,930,489
                                                 =============         =============
Net (Loss) Per Common Share
   Diluted                                       $      (0.012)        $      (0.010)
                                                 -------------         -------------

Weighted Average Number of
   Common Shares Outstanding-
   Diluted                                          23,292,520            19,630,489
                                                 =============         =============

</TABLE>

*The  consolidated  statement of operations for the three months ended September
30, 2000 has been restated to conform with the September 30, 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, 2001    September 30, 2000
                                              ------------------    ------------------
<S>                                           <C>                   <C>
Revenues:
   Oil and Gas Sales                             $      54,840         $      99,588
   Other                                                74,768                     0
Gas Processing Sales                                   855,002                     0
                                                 -------------         -------------
           Total Revenue                               984,610                99,588
                                                 -------------         -------------

Operating Expenses:
   Lease Operating                                     145,592               183,063
   Cost of Sales - Gas Processing                      729,955                     0
   Depreciation, Depletion and Amortization             52,329                19,291
   Interest                                             65,843                 9,561
   General and Administrative                          864,480               409,148
                                                 -------------         -------------
           Total Operating Expenses                  1,858,199               621,063
                                                 -------------         -------------
           Operating Loss                             (873,589)             (521,475)
                                                 -------------         -------------

Non-Operating Expenses
    Litigation Settlement                               92,000                     0
   Company's Share of Equity Method
      In Investee's Losses                                   0                30,396
    Loss on Disposal of Assets                          33,737                27,809
                                                 -------------         -------------
           Total Non-Operating Expenses                125,737                58,205
                                                 -------------         -------------

   (Loss) Before Provision
     For Income Taxes                                 (999,326)             (579,680)
   Income Taxes                                              0                     0
                                                 -------------         -------------

Net (Loss)                                       $    (999,326)        $    (579,680
                                                 -------------         -------------

Net (Loss) Per Common Share-Basic                $      (0.046)        $      (0.041)
                                                 -------------         -------------

Weighted Average Number of
   Common Shares Outstanding-Basic                  21,722,520            17,700,489
                                                 =============         =============

Net (Loss) Per Common Share
   Diluted                                       $      (0.046)        $      (0.037)
                                                 -------------         -------------

Weighted Average Number of
   Common Shares Outstanding-
   Diluted                                          21,852,520            19,655,489
                                                 =============         =============

</TABLE>

*The  consolidated  statement of operations for the nine months ended  September
30, 2000 has been restated to conform with the September 30, 2001 presentation.

      See Accompanying Notes to Condensed Consolidated Financial Statements

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

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


                                             Nine Months Ended     Nine Months Ended
                                             September 30, 2001    September 30, 2000
                                             ------------------    ------------------
<S>                                          <C>                   <C>
Cash Flows Provided (Required)
  By Operating Activities:
   Net (Loss)                                  $    (999,326)        $    (579,680)
  Adjustments to Reconcile Net
   (Loss) to Net Cash Provided
   (Required) By Operating Activities:

Depreciation, Depletion
  And Amortization                                    52,329                19,291
  Loss on disposal of Oil & Gas Properties            56,450                     0
  Issuance of Common Stock
     For Services Provided                           164,800               143,600
   Litigation Settlement                              17,000                     0
   Officers' Salaries                                180,000               180,000
   Changes in
     Accounts Receivable                              47,216                   878
     Inventory                                         8,202                     0
     Prepaid Expenses                                 77,008                 8,757
     Other Assets                                       (283)                 (750)
     Accounts Payable and
       Accrued Expenses                               29,432                72,371
     (Decrease) in Drilling Advances                       0               (25,967)
     Current Maturities of
       Long-Term Debt                               (137,726)                    0
                                               -------------         -------------
Net Cash Provided (Required)
  Operating Activities                              (504,898)             (181,500)
                                               -------------         -------------

Cash Flows Provided (Required) By
  Investing Activities
  (Increase) in Investments                                0               (43,933)
  Acquisitions of Oil
     And Gas Properties                             (137,563)                    0
  Proceeds from Disposals of Oil
     And Gas Properties                              150,000                 1,172
                                               -------------         -------------

Net Cash Provided (Required) by
  Investing Activities                                12,437               (42,761)
                                               -------------         -------------

</TABLE>




      See Accompanying Notes To Condensed Consolidated Financial Statements
                                      - 7 -
<PAGE>
<TABLE>
<CAPTION>

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

                                            Nine Months Ended     Nine Months Ended
                                           September 30, 2001    September 30, 2000*
                                           ------------------    ------------------
<S>                                        <C>                   <C>

Cash Flows Provided by
  Financing Activities
     Proceeds from Issuance of
       Common Stock                           $      44,108         $           0
     Decrease In Subscription Receivable             41,913                71,575
     Increase in Long-Term Debt                      75,000               227,925
     Proceeds from Related Parties                  300,974                57,281
                                              -------------         -------------

Net Cash Provided by
  Financing Activities                              461,995               356,781
                                              -------------         -------------

Net Increase (Decrease) in Cash                     (30,466)              132,520

Cash at Beginning of Period                         312,509                51,065
                                              -------------         -------------

Cash at End of Period                         $     282,043         $     183,585
                                              =============         =============

Supplemental Disclosures of
  Cash Flow Information
     Cash Payments for Interest               $      64,178         $       1,064
                                              =============         =============

     Cash Payments for Income Taxes           $           0         $         500
                                              =============         =============

     Non-Cash Transactions:
       Common Stock Issued For
         Additional Investment In
           Joint-Venture                      $      13,000         $           0
                                              =============         =============

     Common Stock Issued For
       Engineering Studies For Possible
         Future Joint Venture                 $     250,000         $           0
                                              =============         =============

     Common Stock Issued In
       Payment of Accrued
       Expenses and Accounts Payable          $           0         $     143,600
                                              =============         =============

     Common Stock Issued For
       An Acquisition                         $           0         $       5,970
                                              =============         =============

</TABLE>

*The  consolidated  statements of cash flows for the nine months ended September
30, 2000 have been restated to conform with the September 30, 2001 presentation.

            See Accompanying Notes to Condensed 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, 2001 and 2000,  have
          been  prepared  in  conformity  with  generally  accepted   accounting
          principles for interim financial information and with the instructions
          to Form 10-QSB and  Regulation  S-B. The financial  information  as of
          December 31, 2000,  is derived from the  registrant's  Form 10-KSB for
          the year ended  December 31,  2000.  Certain  information  or footnote
          disclosures  normally  included in  financial  statements  prepared in
          accordance  with generally  accepted  accounting  principles 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 generally
          accepted  accounting  principles 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, 2000, included in
          the registrant's Form 10-KSB for the year ended December 31, 2000.

          Operating  results for the nine-month  period ended September 30, 2001
          are not necessarily indicative of the results that may be expected for
          the  remainder  of the fiscal  year  ending  December  31,  2001.  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 - RESTATEMENT - CHANGE IN ACCOUNTING PRINCIPLE
------   --------------------------------------------

          On October 12, 1998 the Company  (formerly  known as C2  Technologies,
          Inc.),   Tidelands  Oil  Corporation  and  Tidelands  Gas  Corporation
          (Tidelands Oil Corporation and Tidelands Gas Corporation and Tidelands
          Gas  Corporation  related  through  common  ownership)  entered into a
          purchase agreement "C2 Agreement." C2 Technologies,  Inc., an inactive
          Nevada corporation, was listed on the U.S. Over-The-Counter Market and
          Trading  Under  the  Symbol  "CTTG".  Pursuant  to the terms of the C2
          agreement,  the  Company  issued  8,635,000  shares of its  restricted
          common  stock  in  exchange  for  all of  the  outstanding  shares  of
          Tidelands Oil Corporation and Tidelands Gas  Corporation.  As a result
          of  this  transaction,   the  former  shareholders  of  Tidelands  Oil
          Corporation and Tidelands Gas  Corporation  wound up owning a majority
          of the  Company's  voting  equity.  This  transaction  was  originally
          accounted by the purchase method.

          During  the  fourth  quarter  of the year 2000 the  management  of the
          company  reviewed  the criteria of the above  transaction.  Management
          determined  that  to  present  a  more  accurate  financial  statement
          presentation,   the  Company  would  change  the  accounting  of  this
          transaction   from  the  purchase   method  to  accounting   for  this
          transaction  as a reverse  acquisition.  As a result of this change in
          accounting  principle the prior years financial results of the Company
          were restated as follows:

          For the Nine Months Ended September 30, 2000:

          Net (Loss) as Previously Reported                      $     (719,825)
          Reversal of Amortization of Goodwill Expense                  140,145
                                                                 --------------
          Net (Loss) - Restated                                  $     (579,680)
                                                                 ==============
          Net (Loss) Per Common Share - Basic-
            As Previously Reported                               $       (0.041)
          Reduction As A Result of Restatement                           (0.008)
                                                                 --------------
          Net (Loss) Per Common Share - Basic Restated           $       (0.033)
                                                                 ==============

          Net (Loss) Per Common Share - Diluted -
             As Previously Reported                              $       (0.037)
          Reduction As a Result of Restatement                   $       (0.007)
                                                                 --------------
          Net (Loss) Per Common Share - Diluted - Restated       $       (0.030)
                                                                 ==============






                                     - 10 -
<PAGE>


                         TIDELANDS OIL & GAS CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ITEM 3 - ACQUISITIONS
------   ------------

          On April 19,  2000 the  Company  entered  into a business  combination
          agreement with OMNI Acquisition Corporation (OMNI), an inactive Nevada
          corporation,  incorporated January 12, 2000, in which the Company will
          acquire OMNI in a share exchange  transaction followed by a short form
          merger.  On February  18, 2000,  OMNI filed a form 10-SB  Registration
          Statement  with  the  Securities  and  Exchange   Commission  and  was
          classified as a "blank check reporting company".

          Pursuant to the business combination agreement,  the Company exchanged
          250,000  shares  of  restricted  common  stock,  valued  at $250,  for
          5,000,000  issued  and  outstanding  shares  of  OMNI.  OMNI  had $-0-
          revenues and $-0- assets.  The Company  accounted for this transaction
          by the purchase method.  On May 11, 2000 OMNI merged into the Company.
          The Company was the surviving  corporation  and OMNI was the dissolved
          corporation.

          On December 1, 2000,  the Company  acquired the  remaining  50% of its
          investment in Rio Bravo Energy,  LLC. (Rio Bravo) and its wholly-owned
          subsidiary  Sonora  Pipeline,  LLC.,  for a total  purchase  price  of
          $505,558.  The purchase of Rio Bravo was accounted for by the purchase
          method, whereby the underlying assets acquired and liabilities assumed
          are  recorded at their fair value.  The excess of the amount paid over
          the fair value of Rio  Bravo's  identifiable  net assets was  $57,029,
          which has been reflected in the balance sheet as goodwill. The Company
          expects to benefit from the goodwill acquired over a period of fifteen
          years.

          In  accordance  with  Accounting  Principle  Board  Opinion  #16,  the
          unaudited proforma condensed consolidated results of operations of the
          Company are as follows:

                         Tidelands Oil & Gas Corporation
                 Condensed Consolidated Statement of Operations
                      Nine Months Ended September 30, 2000
                                   "Pro Forma"
                                   (Unaudited)

          Revenues                                          $       808,766

          Costs and Expenses                                        869,557
                                                            ---------------

          Net (Loss)                                        $       (60,791)
                                                            ===============

          Net (Loss) Per Common Share                       $        (0.003)
                                                            ---------------

          Weighted Average Shares Outstanding                    19,655,489
                                                            ===============


                                     - 11 -
<PAGE>

                           TIDELANDS OIL & GAS CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



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

          In March 2001 the Company formed Reef  International,  Inc.  (REEF), a
          limited liability corporation. REEF will be acquiring and constructing
          pipelines  to  transport  natural  gas  products  from  the Rio  Bravo
          processing plant to Mexico.  In April of 2001 the Company  exchanged a
          50%   interest  in  Reef  for   financial   assistance   from  Rainbow
          Investments,  Inc. for the construction of this international pipeline
          and  acquisition  of  connecting  pipelines.  REEF is currently in the
          permitting  stage of  operations.  On  September  18, 2001 the Company
          reacquired the 50% interest in REEF from Rainbow Investments, Inc. for
          the assumption of liabilities of REEF at the time of acquisition.

          In September,  2001, the Company received  agreement to cancel 892,857
          shares of previously  issued and outstanding  restricted common stock.
          The previously  issued restricted common stock was part of an issuance
          of 1,785,714 shares for financial consulting services.

          In May of 2001  the  Company  secured  a  three-year,  $1,000,000,  8%
          interest-bearing  line of credit.  In  consideration  for this line of
          credit the Company issued 200,000 shares of restricted common stock.

          See Item 2, Part I - Financial Information










                                     - 12 -
<PAGE>

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

         Plan of Operation

         The Company has refocused its plan of operations toward our natural gas
processing  plant and pipeline network along with the permitting and preliminary
construction of our new international pipeline crossing.

         The Company has  conveyed its oil and gas wells and assigned its leases
to The  Exploration  Company  (TXCO),  thereby  avoiding the plugging  liability
imposed by the State of Texas.  Management has not yet determined if the Company
will continue further oil and gas producing operations.

         Rio Bravo  Energy  plans to  increase  the volume of gas shipped to the
plant by acquiring additional gas for processing with increased shipments of gas
products to end-user customers.

         Sonora Pipeline,  LLC. is currently evaluating several pipeline systems
for possible  purchase.  These systems,  if acquired,  would change the pipeline
network as it presently exists.

         Reef  International,  LLC was formed to obtain permits and construct an
international  pipeline  crossing  between  Texas and Mexico.  The pipeline will
transport  natural  gas to Piedra  Negras,  Mexico for  distribution  by CONAGAS
(Cianacional DE Gas, S.A. DE C.V.).  Reef will also transport propane and butane
products into Mexico storage facilities with this pipeline. Reef is in the final
permitting stage of this project.

         The  Company  forecasts,  for the  next  twelve  months,  its net  cash
requirements  to be  approximately  $600,000.  This  net cash  flow  requirement
consists primarily of the Company's short-term repayments.  Current and expected
increased  production  from its  operations  should  provide  the  Company  with
sufficient revenues to cover its expenses.

         On May 1, 2001, the Company secured a three year 10% $1,000,000 Line of
Credit to meet its future cash flow  requirements.  The Company  agreed to issue
200,000  shares of restricted  common stock as  consideration  for providing the
Line of Credit.

         The Company is seeking  additional  financial partners for expansion of
its pipeline and natural gas processing businesses.

         It is anticipated  that significant  revenues from Reef  International,
LLC will begin in the third quarter of 2002.



                                     - 13 -
<PAGE>

                           PART II- OTHER INFORMATION


Item 1.         Legal Proceedings.

         Tidelands Oil & Gas  Corporation  vs. Swartz  Private  Equity,  LLC was
filed in U.S. District Court for the Southern District of Texas,  Corpus Christi
Division, Case Number C-01-260 on June 11, 2001.

         The case  alleges  that the  contracts  executed  by both  parties  are
unenforceable.  Tidelands  had  filed a  Registration  Statement  on  Form  SB-2
Securities  and Exchange  Commission  in connection  with the Swartz  contracts.
Tidelands was unable to complete the filed Registration because of problems with
the Swartz  investment  agreement.  The complaint alleges that it was impossible
for Tidelands to place a put for shares and funds with Swartz.  It is Tideland's
counsels'  opinion  that the entire  transaction  was  illusory  and without any
consideration paid by Swartz thus making the contracts unenforceable.

         Tidelands  seeks  cancellation  of all warrants and  contracts  between
Tidelands and Swartz.

         Tidelands  seeks  breach of contract  and  compensatory  damages in the
amount of $20,000,000 Dollars.

         Swartz Private  Equity,  LLC vs.  Tidelands Oil & Gas  Corporation  was
filed in the  Superior  Court Of Fulton  County  State Of  Georgia,  Case Number
2001CV39166 on June 18, 2001.

         The case alleges that the  contracts  between  Swartz and Tidelands are
still in effect and all  covenants  should be  enforceable.  In addition  Swartz
seeks  damage for breach of contract,  defamation,  interference  with  business
relationships and additional  shares to be issued on an anti-dilution  clause in
the contracts. Swartz seeks unspecified monetary damages and, or stock.


Item 2.         Changes in Securities and Use of Proceeds

         Not Applicable


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 first  quarter of the fiscal
year covered by this report.


                                     - 14 -
<PAGE>

Item 5.         Other Information.

         None.

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

         (a)  Exhibits

         (b)  Reports on Form 8-K.  No reports  were  filed  during the  quarter
covered by this report.


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 6, 2001

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 -