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 June 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 July 13, 2001,  the
registrant had 23,608,948 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
               June 30, 2001 and December 31, 2000 ........................ 3-4

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

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

              Condensed Consolidated Statements of Cash Flows
              For the Six Months Ended June 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    ..................   14-15

Item 3 - Defaults Upon Senior Securities................................      15

Item 4 - Submission of Matters to a Vote of Security Holdings...........      15

Item 5 - Other Information..............................................   15-16

Item 6 - Exhibits and Reports on Form 8K ...............................      16

Signature...............................................................      16



                                      - 2 -


<PAGE>

                          PART I-FINANCIAL INFORMATION

Item 1.  Financial Statements.  (Unaudited)

                         TIDELANDS OIL & GAS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS



                                     ASSETS
                                     ------



                                                     June 30,      December 31,
                                                         2001           2000
                                                    ------------   ------------
                                                    (Unaudited)
Current Assets:
   Cash                                             $    388,896   $    312,509
   Accounts Receivable                                   139,028        145,523
   Inventory                                              13,169         18,212
   Prepaid Expenses                                       51,405        102,772
                                                    ------------   ------------
           Total Current Assets                          592,498        579,016
                                                    ------------   ------------

Oil and Gas Properties (Net)                             665,084        900,683
                                                    ------------   ------------

Other Assets:
   Deposits and Organizational
     Costs, Net                                            1,847          1,594
   Investments                                            24,514         10,764
   Intangible Assets, Net                                304,811         56,712
   Due From Related Parties                                    0          6,214
                                                    ------------   ------------
           Total Other Assets                            331,172         75,284
                                                    ------------   ------------

                Total Assets                        $  1,588,754   $  1,554,983
                                                    ============   ============








      See Accompanying Notes to Condensed Consolidated Financial Statements

                                     - 3 -


<PAGE>


                         TIDELANDS OIL & GAS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS


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

                                                     June 30,      December 31,
                                                        2001            2000
                                                   ------------    ------------
                                                    (Unaudited)
Current Liabilities:
   Accounts Payable and
      Accrued Expenses                             $    827,316    $    762,469
   Current Maturities of Long-Term Debt                 675,779         679,552
                                                   ------------    ------------
           Total Current Liabilities                  1,503,095       1,442,021

Long-Term Debt                                           37,000          37,000

Due to Related Parties                                1,051,048         850,000
                                                   ------------    ------------

           Total Liabilities                          2,591,143       2,329,021
                                                   ------------    ------------

Commitments and Contingencies

Stockholders' (Deficit)
   Common stock $.001 par value
      per share, 100,000,000 shares
      authorized; 23,608,948 shares issued
      and outstanding June 30, 2001
       20,728,948 shares issued and
      outstanding, December 31, 2000                     23,609          20,729

   Additional Paid-in Capital                         2,359,338       1,872,418
   Subscriptions Receivable                             (64,921)        (67,500)
   Accumulated (Deficit)                             (3,320,415)     (2,599,685)
                                                   ------------    ------------

           Total Stockholders' (Deficit)             (1,002,389)       (774,038)
                                                   ------------    ------------

           Total Liabilities and
             Stockholders' (Deficit)               $  1,588,754    $  1,554,983
                                                   ============    ============




      See Accompanying Notes to Condensed Consolidated Financial Statements

                                      - 4 -

<PAGE>

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

                                              Three Months    Three Months
                                                 Ended           Ended*
                                                June 30,        June 30,
                                                   2001            2000
                                              ------------    ------------
Revenues:
   Oil and Gas Sales                          $     31,215    $     20,731
   Other                                           (18,738)              0
   Gas Processing Sales                            329,663               0
                                              ------------    ------------
           Total Revenue                           342,140          20,731
                                              ------------    ------------

Operating Expenses:
   Lease Operating                                  79,584          53,518
   Cost of Sales - Gas Processing                  257,521               0
   Depreciation, Depletion and Amortization         16,825           6,202
   Interest                                         19,248           6,400
   General and Administrative                      376,999         137,851
                                              ------------    ------------
           Total Operating Expenses                750,177         203,971
                                              ------------    ------------
           Operating Loss                         (408,037)       (183,240)
                                              ------------    ------------

Non-Operating Expenses
  Litigation Settlement                                  0               0
  Company's Share of Equity Method
      In Investee's Losses                               0          24,331
  Loss on Disposal of Assets                        31,737               0
                                              ------------    ------------
           Total Non-Operating Expenses             31,737          24,331
                                              ------------    ------------

   (Loss) Before Provision
     For Income Taxes                             (439,774)       (207,571)
   Income Taxes                                          0               0
                                              ------------    ------------

Net (Loss)                                    $   (439,774)   $   (207,571)
                                              ------------    ------------

Net (Loss) Per Common Share-Basic             $     (0.020)   $     (0.012)
                                              ------------    ------------

Weighted Average Number of
   Common Shares Outstanding-Basic              22,243,948      17,650,489
                                              ============    ============

Net (Loss) Per Common Share
  Diluted                                     $     (0.020)   $     (0.011)
                                              ------------    ------------

Weighted Average Number of
   Common Shares Outstanding-
   Diluted                                      22,373,948      18,780,489
                                              ============    ============

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

      See Accompanying Notes to Condensed Consolidated Financial Statements


                                     - 5 -

<PAGE>

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

                                               Six Months      Six Months
                                                  Ended           Ended*
                                                March 31,       March 31,
                                                   2001            2000
                                              ------------    ------------
Revenues:
   Oil and Gas Sales                          $     54,840    $     37,101
   Other                                            25,436               0
   Gas Processing Sales                            620,846          37,101
                                              ------------    ------------
           Total Revenue                           701,122          37,101
                                              ------------    ------------

Operating Expenses:
   Lease Operating                                 145,592          93,080
   Cost of Sales - Gas Processing                  500,340               0
   Depreciation, Depletion and Amortization         34,374          12,404
   Interest                                         47,326           7,501
   General and Administrative                      570,483         264,374
                                              ------------    ------------
           Total Operating Expenses              1,298,115         377,359
                                              ------------    ------------
           Operating Loss                         (596,993)       (340,258)
                                              ------------    ------------

Non-Operating Expenses
    Litigation Settlement                           92,000               0
   Company's Share of Equity Method
      In Investee's Losses                               0          46,580
    Loss on Disposal of Assets                      31,737               0
                                              ------------    ------------
           Total Non-Operating Expenses            123,737          46,580
                                              ------------    ------------

   (Loss) Before Provision
     For Income Taxes                             (720,730)       (386,838)
   Income Taxes                                          0               0
                                              ------------    ------------

Net (Loss)                                    $   (720,730)   $   (386,838)
                                              ------------    ------------

Net (Loss) Per Common Share-Basic             $     (0.032)   $     (0.022)
                                              ------------    ------------

Weighted Average Number of
   Common Shares Outstanding-Basic              22,206,448      17,650,489
                                              ============    ============

Net (Loss) Per Common Share
  Diluted                                     $     (0.032)   $     (0.020)
                                              ------------    ------------

Weighted Average Number of
   Common Shares Outstanding-
   Diluted                                      22,298,948      19,605,439
                                              ============    ============

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

      See Accompanying Notes to Condensed Consolidated Financial Statements

                                      - 6 -

<PAGE>

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


                                                      Six Months    Six Months
                                                        Ended         Ended*
                                                       June 30,      June 30,
                                                         2001          2000
                                                      ----------    ----------
Cash Flows Provided (Required)
  By Operating Activities:
   Net (Loss)                                         $ (720,730)    $(386,838)
  Adjustments to Reconcile Net
   (Loss) to Net Cash Provided
    (Required) By Operating Activities:

Depreciation, Depletion
  And Amortization                                        34,374        12,404
   Loss on disposal of Oil & Gas Properties               53,255
   Issuance of Common Stock
     For Services Provided                               164,800             0
   Litigation Settlement                                  92,000             0
   Officers' Salaries                                    120,000       120,000
   Changes in
     Accounts Receivable                                   6,495          (954)
     Inventory                                             5,043             0
     Prepaid Expenses                                     51,367         5,752
     Other Assets                                           (382)         (750)
     Accounts Payable and
       Accrued Expenses                                   64,847         3,279
     Current Maturities of
        Long-Term Debt                                   (78,773)
                                                      ----------    ----------
Net Cash Provided (Required)
  By Operating Activities                               (207,704)     (247,107)
                                                      ----------    ----------

Cash Flows (Required) By
  Investing Activities
  (Increase) in Investments                                 (750)      (27,749)
  Acquisitions of Oil
     And Gas Properties                                        0        (5,000)
  Proceeds from Disposals of Oil
      And Gas Properties                                 150,000             0
                                                      ----------    ----------

Net Cash (Required) by
  Investing Activities                                   149,250       (32,749)
                                                      ----------    ----------



      See Accompanying Notes To Condensed Consolidated Financial Statements

                                      - 7 -

<PAGE>

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



                                           Six Months      Six Months
                                             Ended           Ended*
                                            June 30,        June 30,
                                              2001            2000
                                           ----------      ----------


Cash Flows Provided by
  Financing Activities
     Proceeds from Issuance of
       Common Stock                        $   45,000      $        0
     Decrease Subscription Receivable           2,579          59,575
     Increase in Long-Term Debt                     0         179,520
     Proceeds from Related Parties             87,262          31,952
                                           ----------      ----------

Net Cash Provided by
  Financing Activities                        134,841         271,047
                                           ----------      ----------

Net Increase (Decrease) in Cash                76,387          (8,809)

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

 Cash at End of Period                     $  388,896      $   42,256
                                           ==========      ==========

Supplemental Disclosures of
  Cash Flow Information
     Cash Payments for Interest            $   47,376      $      617
                                           ==========      ==========

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



*The  consolidated  statements  of cash flows for the six months  ended June 30,
2000 have been restated to conform with the June 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 six month  periods  ended  June 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 six-month period ended June 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 Six Months Ended June 30, 2000:

         Net (Loss) as Previously Reported                          $  (480,268)
         Reversal of Amortization of Goodwill Expense                    93,430
                                                                    -----------
         Net (Loss) - Restated                                      $  (386,838)
                                                                    ===========
         Net (Loss) Per Common Share - Basic-
           As Previously Reported                                   $    (0.027)
         Reduction As A Result of Restatement                            (0.005)
                                                                    -----------
         Net (Loss) Per Common Share - Basic Restated               $    (0.022)
                                                                    ===========

         Net (Loss) Per Common Share - Diluted -
            As Previously Reported                                  $    (0.025)
         Reduction As a Result of Restatement                       $    (0.005)
                                                                    -----------
         Net (Loss) Per Common Share - Diluted - Restated           $    (0.020)
                                                                    ===========


                                      -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
                         Six Months Ended June 30, 2000
                                   "Pro Forma"
                                   (Unaudited)

         Revenues                                                  $    466,619

         Costs and Expenses                                             559,779
                                                                   ------------

         Net (Loss)                                                $    (93,160)
                                                                   ============

         Net (Loss) Per Common Share                               $     (0.005)
                                                                   ------------

         Weighted Average Shares Outstanding                         19,605,489
                                                                   ============

                                      -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.

         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  towards 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

Recent Sales of Unregistered Securities

         During the quarterly  period ending June  30,2001,  the Company  issued
restricted  common  stock,  for the private  transactions  set forth  below,  in
reliance on section 4(2) of the Securities Act of 1933 as amended.

         The Company  issued  360,000  shares of  restricted  common  stock to a
consultant for a consideration  of $18,000.  The shares were issued in a private
transaction  pursuant to Section 4(2) of the Securities Act of 1933, as amended,
(the "Securities Act").

         The Company  issued  540,000  shares of  restricted  common  stock to a
employee  for a  consideration  of $27,000.  The shares were issued in a private
transaction  pursuant to Section 4(2) of the Securities Act of 1933, as amended,
(the "Securities Act").

         The  Company  issued  200,000  shares of  restricted  common  stock for
providing a  $1,000,000  line of credit,  valued and  recorded  at $32,000.  The
shares were  issued in a private  transaction  pursuant  to Section  4(2) of the
Securities Act of 1933, as amended, (the "Securities Act").

         The  Company  issued  80,000  shares  of  restricted  common  stock for
consulting  services  rendered valued and recorded at $ 12,800.  The shares were
issued in a private  transaction  pursuant to Section 4(2) of the Securities Act
of 1933, as amended, (the "Securities Act").


                                      -14-
<PAGE>

         The Company issued 250,000 shares of restricted  common stock for legal
services,  valued and recorded at $ 20,000.  The shares were issued in a private
transaction  pursuant to Section 4(2) of the Securities Act of 1933, as amended,
(the "Securities Act").

         The  Company  issued  250,000  shares of  restricted  common  stock for
consulting services,  valued and recorded at $ 20,000. The shares were issued in
a private transaction pursuant to Section 4(2) of the Securities Act of 1933, as
amended, (the "Securities Act").

         The  Company  issued  250,000  shares of  restricted  common  stock for
consulting services,  valued and recorded at $ 20,000. The shares were issued in
a private transaction pursuant to Section 4(2) of the Securities Act of 1933, as
amended, (the "Securities Act").

         All of  the  above-described  common  stock  issued  in  these  private
transactions is deemed restricted securities.


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 second  quarter of the fiscal
year covered by this report.


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: August 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