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, 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
                           ---------  -------------   -----------------------

                      13330 Leopard St., Corpus Christi, TX
--------------------------------------------------------------------------------
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 June 30, 2002,  the
registrant had 31,315,829 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, 2002 and December 31, 2001..............................   3-4

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

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

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

         Notes to Condensed Consolidated Financial Statements.............  9-11

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

PART II - Other Information

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

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

Item 6 - Exhibits and Reports on Form 8K .................................    15

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


                                      - 2 -
<PAGE>

                          PART I-FINANCIAL INFORMATION

Item 1.  Financial Statements.  (Unaudited)


                         TIDELANDS OIL & GAS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS



                                     ASSETS
                                     ------



                                             June 30, 2002     December 31, 2001
                                           -----------------   -----------------
                                              (Unaudited)

Current Assets:
      Cash                                 $         213,151   $         397,491
      Accounts Receivable                            107,718              67,675
      Inventory                                       13,600               7,515
      Prepaid Expenses                               522,789             304,244
                                           -----------------   -----------------
         Total Current Assets                        857,258             776,925
                                           -----------------   -----------------

Property Plant and Equipment, Net                  1,042,429             827,020
                                           -----------------   -----------------

Other Assets:
      Deposits                                         1,870               1,776
      Deferred Charges                             1,280,550                   0
      Intangible Assets, Net                          52,910              52,910
                                           -----------------   -----------------
         Total Other Assets                        1,335,330              54,686
                                           -----------------   -----------------

         Total Assets                      $       3,235,017   $       1,658,631
                                           =================   =================







      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)
                     ---------------------------------------


                                                      June 30, 2002      December 31, 2001
                                                    -----------------    -----------------
                                                       (Unaudited)
<S>                                                 <C>                  <C>

Current Liabilities:
      Accounts Payable and
          Accrued Expenses                          $       1,077,448            1,268,679
      Current Maturities of Long-Term Debt                    739,028              839,123
                                                    -----------------    -----------------
         Total Current Liabilities                          1,816,476            2,107,802

Long-Term Debt                                                297,382              198,767

Due to Related Parties                                      1,345,795            1,534,105
                                                    -----------------    -----------------

         Total Liabilities                                  3,459,653            3,840,674
                                                    -----------------    -----------------

Commitments and Contingencies                                    --                   --

Stockholders' (Deficit)
      Common Stock, $.001 par value per share,
        100,000,000 shares authorized;
          31,315,829 shares issued and
         outstanding June 30, 2002
         24,154,900 shares issued and outstanding
          December 31, 2001                                    31,317               24,156

Additional Paid-in Capital                                  6,000,251            3,017,751
Subscriptions Receivable                                      (18,000)             (18,000)
Accumulated (Deficit)                                      (6,238,204)          (5,205,950)
                                                    -----------------    -----------------

         Total Stockholders' (Deficit)                       (224,636)          (2,182,043)
                                                    -----------------    -----------------

         Total Liabilities and
              Stockholders' (Deficit)               $       3,235,017    $       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
                                               June 30, 2002         June 30, 2001*
                                             ------------------    ------------------
 <S>                                          <C>                   <C>

Revenues:
      Gas Processing Sales                   $          238,345    $          298,462
      Other                                               2,231                13,023
                                             ------------------    ------------------
           Total Revenues                               240,576               311,485
                                             ------------------    ------------------

Operating Expenses:
      Purchases                                         144,030               202,228
      Operating Expenses                                131,497                55,293
      Depreciation and Amortization                      17,877                10,962
      Interest                                           23,856                18,723
      General and Administrative                        577,267               351,249
                                             ------------------    ------------------
         Total Operating Expenses                       894,527               638,455
                                             ------------------    ------------------
Net (Loss) From Continuing Operations                  (653,951)             (326,970)
       (Loss) From Discontinued Operations
        (Note 2)                                              0              (139,804)
                                             ------------------    ------------------
Net (Loss)                                   $         (653,951)   $         (466,774)
                                             ==================    ==================

Net (Loss) Per Common Share
      Basic
      Loss From Continuing Operations        $           (0.022)   $           (0.015)
      Loss From Discontinued Operations                  (0.000)               (0.006)
                                             ------------------    ------------------
         Total                               $           (0.022)   $           (0.021)
                                             ==================    ==================
Weighted Average Number of Common
      Shares Outstanding, Basic                      29,745,365            22,243,948
                                             ==================    ==================

      Diluted
      Loss From Continuing Operations        $           (0.022)   $           (0.015)
      Loss From Discontinued Operations                  (0.000)               (0.006
                                             ------------------    ------------------
         Total                               $           (0.022)   $           (0.021)
                                             ==================    ==================
Weighted Average Number of Common
   Shares Outstanding, Diluted                       29,745,365            22,373,948
                                             ==================    ==================
</TABLE>


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



      See Accompanying Notes to Condensed Consolidated Financial Statements
                                       -5-
<PAGE>

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


                                           Six Months Ended    Six Months Ended
                                             June 30, 2002      June 30, 2001*
                                           ----------------    ----------------


Revenues:
      Gas Processing Sales                 $        376,591    $        589,645
      Other                                           5,854              25,436
                                           ----------------    ----------------
           Total Revenues                           382,445             615,081
                                           ----------------    ----------------

Operating Expenses:
      Purchases                                     237,732             396,865
      Operating Expenses                            252,528             103,475
      Depreciation and Amortization                  35,710              21,923
      Interest                                       46,676              46,228
      General and Administrative                    842,053             520,076
                                           ----------------    ----------------
         Total Operating Expenses                 1,414,699           1,088,567
                                           ----------------    ----------------
Net (Loss) From Continuing Operations            (1,032,254)           (473,486)
       (Loss) From Discontinued Operations
        (Note 2)                                          0            (247,244)
                                           ----------------    ----------------
Net (Loss)                                 $     (1,032,254)   $       (720,730)
                                           ================    ================

Net (Loss) Per Common Share
      Basic
      Loss From Continuing Operations      $         (0.037)   $         (0.021)
      Loss From Discontinued Operations              (0.000)             (0.011)
                                           ----------------    ----------------
         Total                             $         (0.037)   $         (0.032)
                                           ================    ================
Weighted Average Number of Common
      Shares Outstanding, Basic                  27,735,365          22,168,948
                                           ================    ================

      Diluted
      Loss From Continuing Operations      $         (0.037)   $         (0.021)
      Loss From Discontinued Operations              (0.000)             (0.011)
                                           ----------------    ----------------
         Total                             $         (0.037)   $         (0.032)
                                           ================    ================
Weighted Average Number of Common
   Shares Outstanding, Diluted                   27,760,365          22,298,948
                                           ================    ================


* The  statement of  consolidated  operations  for the six months ended June 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)

                                                    Six Months Ended    Six Months Ended
                                                      June 30, 2002       June 30, 2001
                                                    ----------------    ----------------
<S>                                                 <C>                 <C>

Cash Flows Provided (Required) By
  Operating Activities:
    Net (Loss)
      Continuing Operations                         $     (1,032,254)   $       (473,486)
      Discontinued Operations                                      0            (247,244)
    Adjustments to Reconcile Net (Loss)
           to Net Cash Provided (Required) By
          Operating Activities:

    Depreciation, Depletion and Amortization
         Continuing Operations                                35,710              21,923
         Discontinued Operations                                   0              12,451
      Loss on Disposal of Oil and Gas Properties                   0              53,255
      Issuance of Common Stock
           For Services Provided                             250,373             164,800
           For Litigation Settlement                               0              17,000
     Officers' Salaries                                      120,000             120,000
   Changes in
            Accounts Receivable                              (40,043)              6,495
            Inventory                                         (6,085)              5,043
            Prepaid Expenses                                  68,122              51,367
            Other Assets                                     (18,733)               (382)
            Accounts Payable and Accrued Expenses            260,769              64,847
            Current Maturities of Long-Term Debt            (100,095)            (78,773)
                                                    ----------------    ----------------

Net Cash (Required)
   by Operating Activities                                  (462,236)           (282,704)
                                                    ----------------    ----------------
Cash Flows Provided (Required)
   by Investing Activities:
        (Increase) in Investments                                  0                (750)
      Acquisitions of Property, Plant & Equipment           (251,030)                  0
      Proceeds From disposals of Oil
        And Gas Properties                                         0             150,000
                                                    ----------------    ----------------

 Net Cash Provided (Required)
    by Investing Activities                                 (251,030)            149,250
                                                    ----------------    ----------------
</TABLE>




      See Accompanying Notes to Condensed Consolidated Financial Statements
                                       -7-
<PAGE>

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

                                   (CONTINUED)


                                                 Six Months        Six Months
                                                    Ended             Ended
                                               June 30, 2002     June 30, 2001*
                                               --------------    --------------


Cash Flows Provided by Financing Activities
      Proceeds From Issuance of Common Stock                0            45,000
      Decrease Stock Subscriptions
        Receivable                                          0             2,579
      Proceeds From Long-Term Loans                    98,615                 0
      Issuance of Short-Term Debt Pursuant
        To Litigation Settlement                            0            75,000
      Proceeds of Loans From
         Related Parties                              430,311            87,262
                                               --------------    --------------


Net Cash Provided by Financing Activities             528,926           209,841
                                               --------------    --------------

Net Increase (Decrease) in Cash                      (184,340)           76,387
Cash at Beginning of Period                           397,491           312,509
                                               --------------    --------------
Cash at End of Period                          $      213,151    $      388,896
                                               ==============    ==============

Supplemental Disclosures of
   Cash Flow Information
      Cash Payments for Interest               $       22,825    $       47,376
                                               ==============    ==============

      Cash Payments for Income Taxes           $            0    $            0
                                               ==============    ==============
Non-Cash Financing Activities:
   Issuance of Common Stock:
      Operating Activities                     $      250,373    $      164,800
      Capital Contribution to Investments                   0            13,000
      Payment of Accounts Payable                     452,000                 0
      Litigation Settlement                                 0            17,000
      Prepayment of Consulting Contract               716,667           250,000
      Prepayment of Financing Fee                     832,000                 0
      Repayment of Loans From
        Related Parties                               738,621                 0
                                               --------------    --------------

      Total Non-Cash Financing Activities      $    2,986,661    $      444,800
                                               ==============    ==============


*The statement of consolidated cash flows for the six months ended June 30, 2001
has been reclassified (Note 2) to conform with the June 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 six  month  periods  ended  June 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 six-month period ended June 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 six months ended June 30,
         2001 to reflect these losses from discontinued operations.

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

         In June 2001,  the  Company  commenced  an action in the United  States
         District  court  for the  Southern  District  of Texas  against  Swartz
         Private Equity, LLC ("Swartz"). Shortly thereafter, Swartz commenced an
         action  in the  Superior  Court of  Fulton  County,  Georgia  which was
         removed to the United States  District Court for the Northern  District
         of  Georgia.  The Texas  action has been  transferred  to the  Northern
         District of Georgia and both  actions are being dealt with  jointly for
         discovery purposes.

         The Company seeks declaratory and rescissionary  relief seeking to have
         the Court  declare that the  agreements  between the Company and Swartz
         are void and  unenforceable and rescission in amounts to be established
         at trial which it alleges to be $20,000,000.

         The Swartz action seeks to enforce the agreements signed by the parties
         and the  issuance of  1,157,150  shares of common  stock,  payment of a
         claimed  termination  fee in the amount of $200,000 and damages for the
         alleged  failure of the  Company to issue the shares  claimed by Swartz
         including damages arising from any market fluctuations.  Alternatively,
         Swartz's  complaint  seeks a direction  to the Company to  specifically
         perform the agreements.

         In addition,  Swartz's complaint seeks damages in an unspecified amount
         for claimed defamation concerning Swartz.

         Further,  Swartz's complaint seeks damages in an unspecified amount for
         claimed  "international  interference  with  contractual  relations and
         intentional interference with business relations". The Swartz complaint
         also seeks punitive damages.

         The above two actions are in the discovery  stages. At this preliminary
         stage,  no  evaluation of the outcome of the  litigations  can be made.
         Management is responding to these  litigations  by vigorously  pressing
         its  position  and  contesting   those  taken  by  Swartz.   Settlement
         discussions  have been opened between the parties but have not resulted
         in any offer being made by either side which is seriously considered by
         the other.


                                      -10-
<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS




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

         On April 2, 2002, the company registered 1,000,000 shares of its common
         stock valued at $552,000 for use in payment of legal fees in connection
         with the Schwartz litigation described above and other ongoing matters.

         On May 30, 2002, the company issued  1,967,016 shares of its restricted
         common  stock  valued at $678,621 to two  officers in payment of direct
         loans and expense  reimbursements  and 173,913 shares of its restricted
         common stock  valued at $60,000 in payment of  directors  fees due to a
         director.








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

         None










                                      -11-


<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.

The Company is also evaluating other pipeline systems for possible acquisitions.
Recently,  the Company  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.  We  anticipate  that this
acquisition  will be  completed in mid August  2002,  subject to the  successful
completion of the Company's financing efforts.

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.

Tideland's  President  and  CEO,  Michael  Ward,  attended  the  Texas  Trade  &
Investment Mission conference held in Mexico City, Mexico on May 15-17th,  2002.
Mr. Ward prepared a presentation  for the conference  relating to our permitting
experience and  construction  planning  process for our  international  pipeline
crossings. This energy conference was attended by all sectors of the natural gas
industry  in the United  States and  Mexico.  The  purpose of this  mission  and
conference is to promote similar international energy projects.

                                      -12-
<PAGE>

RESULTS OF OPERATIONS

REVENUES:  The Company reported revenues of $382,445 from continuing  operations
for the six months ended June 30, 2002 as compared with revenues from continuing
operations  of  $615,081  for the six months  ended June 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  $1,088,567 for the six months ended June 30, 2001 to $1,414,699
for the six  months  ended  June  30,  2002.  COST OF  SALES:  The cost of sales
(purchases)  from  continuing  operations  decreased  from  $396,865 for the six
months  ended June 30, 2001 to $237,732  for the six months ended June 30, 2002.
The reduction of $159,133 was primarily due to reduction of gas purchase  prices
during the period.

OPERATING  EXPENSES:   Other  operating  expenses  from  continuing   operations
increased  from  $103,475 for the six months ended June 30, 2001 to $252,528 for
the six months ended June 30, 2002.  The increase of $149,053  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 $520,076 for the six months
ended  June,  2001 to  $842,053  for the six  months  ended June 30,  2002.  The
increase of $321,977 in 2002 is  substantially  due to higher  personnel  costs,
increased consulting fees and higher legal fees and costs.

INCOME TAX: The pretax loss increased  from  ($720,730) for the six months ended
June 30, 2001 to ($1,032,254) for the six months ended June 30, 2002 an increase
of $311,524.

LIQUIDITY  AND CAPITAL  RESOURCES:  Capital  expenditures  during the six months
ended June 30,  2002  totaled $ 251,030  as  compared  with $-0-  during the six
months  ended June 30,  2001.  The  increase of $251,030  consists  primarily of
pre-construction costs regarding our planned international crossing to Mexico.

Total debt decreased from  $3,840,674 at December 31, 2001 to $3,459,653 at June
30, 2002 of which $1,258,589 was unpaid officer's and directors  salaries,  fees
and expense reimbursements and $87,207 was loans from officers. Total debt as of
June 30, 2002 and  December 31, 2001  expressed  as a  percentage  of the sum of
total debt and shareholders' equity was 107.0% and 231.6% respectively.

Net loss for the six months ended June 30, 2002 was  ($1,032,254) an increase of
43.3% from the net loss of  ($720,730)  for the six months  ended June 30, 2001.
Diluted net loss per common share  increased from ($0.014) to ($0.037).  The net
loss per share  calculation  for the six months ended June 30, 2002  included an
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.

                                      -13-
<PAGE>

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.

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.

         In June 2001,  the  Company  commenced  an action in the United  States
District Court for the Southern District of Texas against Swartz Private Equity,
LLC ("Swartz").  Shortly thereafter,  Swartz commenced an action in the Superior
Court of Fulton County,  Georgia which was removed to the United States District
Court  for  the  Northern  District  of  Georgia.  The  Texas  action  has  been
transferred to the Northern District of Georgia and both actions are being dealt
with jointly for discovery purposes.

         The Company seeks declaratory and rescissionary  relief seeking to have
the Court  declare that the  agreements  between the Company and Swartz are void
and  unenforceable and rescission in amounts to be established at trial which it
alleges to be $20,000,000.

         The Swartz action seeks to enforce the agreements signed by the parties
and the  issuance  of  1,157,150  shares of common  stock,  payment of a claimed
termination fee in the amount of $200,000 and damages for the alleged failure of
the Company to issue the shares claimed by Swartz including damages arising from
any market fluctuations.  Alternatively, Swartz's complaint seeks a direction to
the Company to specifically perform the agreements.

         In addition,  Swartz's complaint seeks damages in an unspecified amount
for claimed defamation concerning Swartz.

         Further,  Swartz's complaint seeks damages in an unspecified amount for
claimed  international  interference with contractual  relations and intentional
interference with business  relations.  The Swartz complaint also seeks punitive
damages.

         The above two actions are in the discovery  stages. At this preliminary
stage, no evaluation of the outcome of the  litigations can be made.  Management
is  responding  to these  litigations  by  vigorously  pressing its position and
contesting  those  taken by  Swartz.  Settlement  discussions  have been  opened
between the parties but have not resulted in any offer being made by either side
which is seriously considered by the other.

                                      -14-
<PAGE>

Item 2.  Changes in Securities and Use of Proceeds

         Recent Sales of Unregistered Securities

         During the second  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.

         On May 30, 2002,  the Company  issued  1,967,016  common  shares to two
officers in payment of direct loans and expense reimbursements.  The transaction
was valued at $678,621.

         On May 30,  2002,  the  Company  issued  173,913  shares  to a  company
director as a directors fee. The transaction was valued at $60,000.

         The shares issued above were issued in a private transactions  pursuant
to Section 4(2) of the  Securities  Act of 1933,  as amended,  (the  ~Securities
Act~). These shares are considered restricted securities and may not be publicly
resold unless  registered for resale with appropriate  governmental  agencies or
unless exempt from any applicable registration requirements.

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.


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.  We  anticipate  that this
acquisition  will be  completed in mid August  2002,  subject to the  successful
completion of the Company's financing efforts.

         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.

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.



                                      -15-
<PAGE>


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 2, 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











                                      -16-