SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

       [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

     [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                         Commission file number: 0-26321

                               GASCO ENERGY, INC.
                     (formerly San Joaquin Resources, Inc.)
                 (Name of small business issuer in its charter)

                   NEVADA                                    98-0204105
        (State or other jurisdiction of                   (I.R.S. Employer
         incorporation or organization)                  Identification No.)

14 Inverness Drive East, Building H, Suite 236, Englewood, CO       80112
          (Address of principal executive offices)                (Zip Code)

         Issuer's telephone number, including area code: (877) 627-8637

       Securities registered under Section 12(b) of the Exchange Act: NONE

         Securities registered under Section 12(g) of the Exchange Act:

                         COMMON STOCK, $0.0001 PAR VALUE
                                (Title of Class)

 Check whether the issuer (1) filed all reports required to be filed by Section
 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
       period that the registrant was required to file such reports), and
     (2) has been subject to such filing requirements for the past 90 days.

                                 Yes [X] No [ ]

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

          Issuer's revenues for its most recent fiscal year. $ 8,832.00

        Aggregate market value of the voting and non-voting common equity
       (12,146,080 shares) held by non-affiliates of the registrant as of
                          March 28, 2001: $ 46,276,564

        Number of shares outstanding of Gasco's Common Stock, $0.0001 par
                 value, as of March 28, 2001: 12,488,930 shares

                     Documents incorporated by reference: NO

    Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]

Exhibit index on consecutive page ____                      Page 1 of ____ Pages

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PART I

ITEM 1.       DESCRIPTION OF BUSINESS.

HISTORY

Gasco Energy, Inc. ("Gasco", "we" or "us", as the context requires) was
incorporated on April 21, 1997 under the laws of the State of Nevada as "LEK
International, Inc." We operated as a "shell" company until December 31, 1999,
when a change in control occurred in conjunction with closing under an Agreement
and Plan of Reorganization with San Joaquin Oil & Gas Ltd., a Nevada corporation
("Oil & Gas"). Prior to closing under this Agreement and Plan of Reorganization,
we had a total of 3,700,000 shares of common stock issued and outstanding. We
issued 8,069,000 new shares of common stock in exchange for all of the issued
and outstanding common stock of Oil & Gas Ltd. As a result of that transaction,
Oil & Gas Ltd. became a wholly-owned subsidiary of Gasco.

We changed our name to San Joaquin Resources, Inc. in connection with this
December 1999 transaction, and the resulting stock ownership in Gasco was
8,069,000 shares, or approximately 68.56%, owned by persons who were previously
shareholders of Oil & Gas, and 3,700,000 shares, or approximately 31.44 %, owned
by persons who were previously shareholders of Gasco (then known as "LEK
International, Inc.)

Effective March 5, 2001, we again changed our name to "GASCO ENERGY, INC.", and
on March 28, 2001 we obtained a new trading symbol and recognition of the new
name on the NASDAQ Bulletin Board: GASE.

THE PANNONIAN MERGER TRANSACTION

On February 1, 2001, Gasco signed a definitive agreement to acquire Pannonian
Energy, Inc., a Delaware corporation, in a transaction whereby Pannonian will
merge with a wholly owned subsidiary of Gasco and will thereby become a wholly
owned subsidiary of Gasco. The Pannonian merger transaction is expected to close
before March 31, 2001, contingent on approval by Pannonian shareholders and
certain other contingencies, including the change of our name to "Gasco Energy,
Inc." and the presence of at least $1.5 million in cash in Gasco at the time of
closing. We have agreed to issue 14,000,000 new shares of Gasco common stock to
the shareholders of Pannonian as part of the merger. Depending on the results of
an ongoing offering of common stock to raise up to $7.2 million, the Pannonian
shareholders will own between 54% and approximately 60% of the total outstanding
shares of Gasco at or immediately after the closing of the Pannonian merger. Of
course if the current offering is oversubscribed, or Gasco requires additional
funding in the future, which it will, the relative ownership percentage of the
Pannonian shareholders, as any shareholder, will be reduced.

NEW MANAGEMENT

Based on the signing of the definitive Pannonian merger agreement, and the
receipt of proxies representing a majority of the issued and outstanding shares
of Pannonian, Gasco underwent a change in management on February 1, 2001.
Messrs. Nick DeMare and Colin S. McNeil resigned as officers and directors, and
Mr. Tim Bowes resigned as President. The following new management was elected
for Gasco effective February 1, 2001:

         Marc Bruner            Director and Chairman of the Board of Directors
         Mark Erickson          Director and President and Treasurer
         Howard Sharpe          Vice President and Secretary
         Tim Bowes              Director (continuing)
         Carl Stadelhofer       Director

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Information about this new management for Gasco is provided later in this report
under Item 9.

BUSINESS OF GASCO

Gasco has  acquired  interests  in  petroleum  and natural gas leases in the San
Joaquin  Basin  of  California.  We  have  expended,  net  of  cost  recoveries,
approximately  $258,431 to date in oil and gas prospect development  activities.
Under the Pannonian merger agreement,  mentioned  earlier in this report,  Gasco
will acquire  significant  new lease acreage known as the Riverbend  prospect in
the Uintah basin in Eastern  Utah.  Gasco  intends to continue to search for and
acquire potentially valuable oil and gas prospects in the Western United States.

AGREEMENTS

         Davis & Namson Agreement.

On September 20, 1999, Gasco entered into an agreement (the "Consulting and
Overriding Royalty Agreement") covering exploration activity principally in the
San Joaquin Basin and, to a lesser extent, in the Sacramento Basin, located in
southern California. The Consulting and Overriding Royalty Agreement had an
initial term of four months, and renews automatically for four month periods.
The Consulting and Overriding Royalty Agreement may be terminated by giving
notice 45 days prior to the end of any four month period. The Consulting and
Overriding Royalty Agreement provides for Gasco retaining the consulting
services of Jay S. Davis and Thomas L. Namson (collectively "Davis & Namson")
pursuant to a set fee structure in order to generate petroleum and natural gas
prospects. As part of the retainer, Gasco agreed to compensate Davis & Namson
for a minimum of 120 man days during the initial four month term of the
agreement, at the following rates: $750/day for Partners, $275/day for
Geological Technicians and $750/day for the Travel Day Rate for Partners. These
rates and hours are no longer in effect.

Gasco has also agreed to compensate Davis & Namson for its reasonable expenses
incurred in connection with the performance of services following the initial
term of the agreement, discussed above. For each prospect Davis & Namson
generates Gasco has the right to accept or reject the prospect. With respect to
prospects Gasco accepts, any petroleum and natural gas leases acquired by Gasco,
within the boundary of the prospect, are subject to a royalty to Davis & Namson,
the amount of which is determined in accordance with the Consulting and
Overriding Royalty Agreement, but is substantially as follows:

         ROYALTY PERCENTAGE          IF THE NET REVENUE INTEREST IS:

                 3.0%                     Greater than 87.5%
                 2.5%                     84% to 87.5% inclusive
                 2.0%                     81% to 83.99% inclusive
                 1.5%                     Less than 81%

To date Gasco has accepted the following prospects from Davis & Namson:

                Willow Springs
                Crocker Canyon
                Bitterwater Creek
                Midway Peak
                Orchard Peak

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Davis & Namson is not affiliated with Gasco.

Should Gasco reject a prospect Davis & Namson has the right, after four months,
to locate a third party to acquire the prospect. During this four month period
Gasco can elect to accept the prospect and fund the acquisition of petroleum and
natural gas leases. Gasco still has the right for seven months after the
aforesaid four months to acquire a 50% interest in the prospect. As of April 10,
2000, Gasco had not rejected any prospects presented by Davis & Namson.

         CONSOLIDATED EARTH STEWARDS AGREEMENT

Pursuant to an agreement,  dated  November 16, 1999, the Company agreed to grant
Consolidated Earth Stewards Inc. ("CEW") a right of first refusal ("ROFR") until
October 1, 2001 to participate in a 19% working  interest in certain oil and gas
prospects  to be  identified,  acquired,  or generated by the Company in the San
Joaquin and Sacramento Basins,  located in California.  CEW had agreed to pay an
initial $150,000 for the ROFR and provide an initial advance of $200,000 to fund
exploration  costs.  As at December 31, 1999, CEW had paid the Company  $70,000.
During the year  ended  December  31,  2000,  CEW paid a further  $8,000 and the
agreement was subsequently cancelled.

CEW is a public company trading on the Canadian Venture Exchange. CEW is not
affiliated with Gasco.

         Canyon Oil Agreement.

On December 1, 1999, the Company and Canyon Oil & Gas ("Canyon") entered into an
agreement  whereby the Company paid an initial  $70,000 to Canyon for  technical
information  provided by Canyon on certain oil and gas  prospects  (the  "Canyon
Prospects")  located in the San Joaquin and Sacramento  Basins.  The Company was
also  required  to pay a renewal  payment of $70,000  every  four  months  until
termination of the agreement by either party. During the year ended December 31,
2000, the agreement was terminated without any further payments made.

         Hilton LLC Investment

In 1999, Gasco acquired four membership interests in Hilton Petroleum Greater
San Joaquin Basin Joint Venture LLC. These interests were exchanged for 314,907
shares of Hilton Petroleum, Ltd, a Canadian public company traded on the CDNX,
in 2000, and these shares were subsequently sold in 2000 and early 2001 for
cash.

Mr. Nick DeMare, a former officer and director of Gasco, was also a director of
Hilton Petroleum Ltd., the manager of Hilton LLC. The terms upon which Gasco
acquired and then sold its membership interests in Hilton LLC were the same as
those offered to non-affiliated purchasers.

         PANNONIAN MERGER TRANSACTION

On February 1, 2001, Gasco's board of directors approved and Gasco signed a
definitive agreement whereby Pannonian Energy, Inc., a privately held Delaware
corporation headquartered in Denver, Colorado, will merge with a wholly owned
subsidiary of Gasco and will thereby become a wholly owned subsidiary of Gasco.
The Pannonian merger agreement is set to close on or before March 31, 2001. The
closing is conditioned on certain conditions and covenants, including approval
of the transaction by Pannonian shareholders, the name change to "Gasco Energy,
Inc.", and the presence in Gasco at closing of at least $1.5 million in cash.

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         FINANCING AGREEMENT WITH WET COAST MANAGEMENT CORP.

On January 12, 2001, Wet Coast Management Corp., a Vancouver-based investor
relations and venture capital firm, signed a Financing Agreement with Gasco
whereby Wet Coast agreed to undertake a Regulation S offshore financing for
Gasco whereby 2,400,000 shares of Gasco common stock would be placed at $3.00
per share. Closings on the financing are to take place (a) $1,200,000 at or
before February 12, 2001, another $1,500,000 at or before May 1, 2001 and
another $4,500,000 at or before August 1, 2001. The first tranche of $2,000,000
was received by Gasco in March, 2001. A condition of the Financing Agreement is
the closing of the Pannonian merger transaction, which is scheduled to take
place on or before March 31, 2001. Under the Financing Agreement, Gasco is
required to use 70% of the funding from Wet Coast for the development of oil and
gas assets in Pannonian, with the remaining 30% able to be used for general
corporate purposes. Gasco also committed to register for resale under the
Securities Act of 1933 all of the shares of its common stock sold through the
Wet Coast Regulation S offering. Wet Coast also obtained the first right to
provide additional funding needed by Gasco. The full text of the Financing
Agreement is an Exhibit to this Report.

         CONSULTING AGREEMENT WITH WET COAST MANAGEMENT CORP.


Concurrently with the Financing Agreement, Gasco entered into a Consulting
Agreement with Wet Coast Management Corp. on effective January 12, 2001. Under
the terms of the Consulting Agreement, Gasco will pay to Wet Coast Management
Corp. a consulting fee of $5000 per month during the 12-month term of the
Agreement. Wet Coast was also issued 20,000 shares under a stock option issued
at $3.00 per share. In return, Wet Coast will provide venture capital advice,
public relations services, and investor relations services for Gasco, including
the Financing Agreement and the funding raised thereunder. The full text of the
Consulting Agreement is an exhibit to this Report.

         FINANCING AGREEMENT WITH CANACCORD INTERNATIONAL, LTD.

As of March 15, 2001, Gasco entered into a Financing Agreement with Canaccord
International, Ltd., an investment banking firm, to raise up to $4.2 million of
the $7.2 million covered by the Wet Coast Financing Agreement. Canaccord was
referred to San Joaquin by Wet Coast in connection with Wet Coast's activities
under its Financing Agreement. For its services in connection with raising the
needed funds, Canaccord will be paid a $25,000 retainer, a 5% cash commission on
its sale of Gasco shares in the private placement, and a $5,000 per month
corporate services fee for the 12 months beginning April 2001. Gasco will also
reimburse Canaccord for its expenses. Gasco also gave Canaccord a first right to
participate in future financing transactions desired by Gasco. (In this regard,
Wet Coast has agreed to amend its Financing Agreement to eliminate the first
right given to Wet Coast in favor of Canaccord.)

         FINANCIAL ADVISORY AGREEMENT WITH CANACCORD INTERNATIONAL, LTD.

Also as of March 15, 2001, Gasco entered into a Financial Advisory Agreement
with Canaccord International Ltd., under which Canaccord will advise Gasco and
provide referrals for acquisitions and other investment banking needs. For these
services Canaccord will be paid $10,000 as a retainer, a "work fee" of $10,000
per month for five months, and a commission on transactions originated by
Canaccord (not including the share sales covered by the Canaccord Financing
Agreement) equal to 5% of the value, payable in registered shares of Gasco
common stock valued at the prevailing market price. The agreement is terminable
on 30 days notice, although the transaction fee is payable on any transaction
referred by Canaccord taking place within 12 months of the termination of the
agreement.

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         MEMORANDUM OF UNDERSTANDING WITH NEW ENERGY WEST CORPORATION

On March 26, 2001 Gasco entered into a binding Memorandum of Understanding for
its acquisition of New Energy West Corporation, an Alberta corporation with
shares traded on the CDNX in Canada under the symbol NEC.V. Under the terms of
the Memorandum of Understanding, Gasco will exchange 5,000,000 shares of its
common stock for all of the issued and outstanding shares of New Energy West
through arrangements called for under Alberta and British Columbia laws
applicable to the transaction. The parties have agreed to negotiate a definitive
agreement on or before April 20, 2001 and to refrain from contacts with other
potential transaction partners pending that agreement. Subject to reaching a
definitive agreement and approval by the New Energy West shareholders, the
parties contemplate closing of the acquisition before the end of the second
quarter of 2001. New Energy West holds oil and gas leases on acreage in the San
Joaquin Basin in California.

ACQUISITION, EXPLORATION AND DEVELOPMENT EXPENSES

During the fiscal year ended December 31, 2000, Gasco spent $125,878 in costs
(net of $33,000 in cost recoveries) in identifying and acquiring petroleum and
natural gas leases and prospect rights, compared with $122, 590 (net of $70,000
in cost recoveries) expended in 1999. At December 31, 2000, Gasco had acquired
direct interests in 3990 acres covered by petroleum and natural gas leases. See
"Item 2. Description of Properties".

PRINCIPAL PRODUCTS OR SERVICES AND MARKETS

Gasco is participating in exploration activities to locate crude petroleum and
natural gas. The principal markets for these commodities are refining companies,
natural gas transmission pipeline companies, utilities and private industry
end-users.

COMPETITIVE BUSINESS CONDITIONS, COMPETITIVE POSITION IN THE INDUSTRY AND
METHODS OF COMPETITION

Gasco's petroleum and natural gas exploration activities will be undertaken in a
highly competitive and speculative business atmosphere. In seeking suitable
petroleum and natural gas properties for acquisition, Gasco will be competing
with a number of other companies operating in its areas of interest, including
large oil and gas companies and other independent operators with greater
financial resources. Management does not believe that Gasco's competitive
position in the petroleum and natural gas industry will be significant.

Management anticipates a tight market for obtaining drilling rigs and services,
and the manpower to run them. The current high level of drilling activity in our
areas of exploration may have a significant adverse impact on the timing and
profitability of Gasco's operations. In addition, as discussed under RISKS,
Gasco will be required to obtain drilling permits for its wells, and there is no
assurance that such permits will be available timely or at all.

The prices of Gasco's products are controlled by domestic and world markets.
However, competition in the petroleum and natural gas exploration industry also
exists in the form of competition to acquire the most promising acreage blocks
and obtaining the most favorable prices for transporting the product. Gasco, and
ventures in which it participates, is relatively small compared to other
petroleum and natural gas exploration companies and may have difficulty
acquiring additional acreage and/or projects, and may have difficulty arranging
for the transportation of product, in the event Gasco, or a venture in which it
participates, is successful in its exploration efforts.

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GOVERNMENTAL REGULATIONS AND ENVIRONMENTAL LAWS

At this time, Gasco does not offer or sell any products or services; however it,
or any venture in which it participates, is required to obtain local government
and other permits for drilling oil or gas wells.

Exploration and production activities relating to oil and gas leases are subject
to numerous environmental laws, rules and regulations. The Federal Clean Water
Act requires Gasco to construct a fresh water containment barrier between the
surface of each drilling site and the underlying water table.

Various federal, state and local laws and regulations covering the discharge of
materials into the environment, or otherwise relating to the protection of the
environment, may affect Gasco's operations and costs through their effect on oil
and gas exploration, development and production operations. Environmental laws
and regulations have changed substantially and rapidly over the last 30 years,
and Gasco anticipates that there will be continuing changes. Laws and
regulations protecting the environment have generally become more stringent in
recent years, and may in certain circumstances impose "strict liability,"
rendering a corporation liable for environmental damages without regard to
negligence or fault on the part of such corporation. Such laws and regulations
may expose Gasco to liability for the conduct of operations or conditions caused
by others, or for acts of Gasco which were in compliance with all applicable
laws at the time such acts were performed. Increasingly strict environmental
restrictions and limitations have resulted in increased operating costs for
Gasco and other businesses throughout the United States, and it is possible that
the costs of compliance with environmental laws and regulations will continue to
increase. The modification of existing laws or regulations or the adoption of
new laws or regulations relating to environmental matters could have a material
adverse effect on Gasco's operations. In addition, Gasco's existing and proposed
operations could result in liability for fires, blowouts, oil spills, discharge
of hazardous materials into surface and subsurface aquifers and other
environmental damage, any one of which could result in personal injury, loss of
life, property damage or destruction or suspension of operations.

The Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), also known as the "Superfund" law, requires payments for cleanup of
certain abandoned waste disposal sites, even though such waste disposal
activities were undertaken in compliance with regulations applicable at the time
of disposal. Under the Superfund law, one party may, under certain
circumstances, be required to bear more than its proportional share of cleanup
costs at a site where it has responsibility pursuant to the legislation, if
payments cannot be obtained from other responsible parties. Other legislation
mandates cleanup of certain wastes at facilities that are currently being
operated. States also have regulatory programs that can mandate waste cleanup.
CERCLA authorizes the Environmental Protection Agency ("EPA") and, in some
cases, third parties to take actions in response to threats to the public health
or the environment and to seek to recover from the responsible classes of
persons the costs they incur. The scope of financial liability under these laws
involves inherent uncertainties.

It is not anticipated that Gasco will be required in the near future to expend
material amounts by reason of environmental laws and regulations, but inasmuch
as such laws and regulations are frequently changed, Gasco is unable to predict
the ultimate future cost of compliance.

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Gasco believes it is presently in compliance with all applicable federal, state
or local environmental laws, rules or regulations; however, continued compliance
(or failure to comply) and future legislation may have an adverse impact on
Gasco's present and contemplated business operations.

The foregoing is only a brief summary of some of the existing environmental
laws, rules and regulations to which Gasco's business operations are subject,
and there are many others, the effects of which could have an adverse impact on
Gasco. Future legislation in this area will no doubt be enacted and revisions
will be made in current laws. No assurance can be given as to what effect these
present and future laws, rules and regulations will have on Gasco's current and
future operations.

NUMBER OF TOTAL EMPLOYEES AND NUMBER OF FULL-TIME EMPLOYEES

Gasco presently has no full-time employees. The officers and directors of Gasco
have agreed to allocate a portion of their time to the activities of Gasco. If
we commence full-scale oil and gas operations, as we expect to do following the
Pannonian merger transaction, Gasco will add full-time and part-time employees
and contractors as needed.

Gasco's officers and directors are involved with other companies, some of which
now have, or may in future have, a business plan involving the oil and gas
business. As a result, potential conflicts of interest may arise. If an officer
or director of Gasco is presented with business opportunities under
circumstances where there may be a doubt as to whether the opportunity should
belong to Gasco or another company with which he is affiliated, that officer or
director is under legal duty to disclose the opportunity to all such companies
simultaneously, and that officer or director may not participate in the decision
of any such company to pursue or attempt to pursue any such opportunity.

RISK FACTORS

Due to the nature of Gasco's business and the present stage of exploration on
its oil and gas prospects, the following risk factors apply to Gasco's
operations:

         ACCUMULATED LOSSES

During the year ended December 31, 2000, Gasco incurred a loss of $(254,458),
and has an accumulated loss of $(402,062) since inception. Pannonian has
operated at a loss from its inception as well.

To date Gasco's operations have not generated sufficient operating cash flows to
provide working capital for Gasco's ongoing overhead, the funding of its lease
acquisitions and the exploration and development of these properties. There can
be no assurances that Gasco will be able to successfully develop any prospects
that it acquires or that it will achieve profitability from its operations.

         ABSENCE OF A MATURE PUBLIC MARKET

Gasco's common stock has only been trading in the public markets since December
2000, and such trading has been sporadic and erratic. A holder of Gasco's common
stock may not be able to liquidate his or her investment in the event of an
emergency and shares of Gasco's common stock may not be accepted as collateral
for loans.

Gasco intends to apply for listing on the American Stock Exchange and believes
that it will meet the American Exchange's listing requirements in the second
quarter of 2001. Listing on the American Stock Exchange is discretionary with
the Exchange, however, and there is no assurance that Gasco will be accepted for
AMEX listing, or that such a listing will result in an active trading market.

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         EXPLORATION AND PRODUCTION RISKS

The business of exploring for and producing oil and gas involves a substantial
risk of investment loss that even a combination of experience, knowledge and
careful evaluation may not be able to overcome. Drilling oil and gas wells
involves the risk that the wells will be unproductive or that, although
productive, the wells do not produce oil and/or gas in economic quantities.
Other hazards, such as unusual or unexpected geological formations, pressures,
fires, blowouts, loss of circulation of drilling fluids or other conditions may
substantially delay or prevent completion of any well. Adverse weather
conditions can also hinder drilling operations. A major risk affecting drilling
is the need to obtain drilling permits from local authorities. Delays in
obtaining drilling permits, the failure to obtain a drilling permit for a well,
or a permit with unreasonable conditions or costs could have a materially
adverse effect on Gasco's ability to effectively develop its properties.

A productive well may become uneconomic in the event water or other deleterious
substances are encountered, which impair or prevent the production of oil and/or
gas from the well. In addition, production from any well may be unmarketable if
it is impregnated with water or other deleterious substances.

As with any petroleum property, there can be no assurance that oil and gas will
be produced from the properties in which Gasco, or any venture in which we
participate, may obtain an interest. In addition, the marketability of oil and
gas which may be acquired or discovered will be affected by numerous factors
beyond the control of Gasco. These factors include the proximity and capacity of
oil and gas pipelines and processing equipment, market fluctuations of prices,
taxes, royalties, land tenure, allowable production and environmental
protection. The extent of these factors cannot be accurately predicted, but any
one or a combination of these factors may result in Gasco not receiving an
adequate return on invested capital. There is no assurance that crude oil or
natural gas in commercial quantities will be discovered by Gasco, or any venture
in which Gasco participates.

         FINANCING RISKS

Gasco has relied on the sale of its equity capital to fund working capital and
the acquisition of its prospects and related leases. We have no assurance that
additional funding will be available to fund the acquisition, exploration or
development of any additional properties, including the Riverbend prospect to be
acquired from Pannonian. There can be no assurance that Gasco will be able to
obtain adequate financing in the future or that the terms of such financing will
be favorable. Failure to generate operating cash flow or to obtain additional
financing could result in substantial dilution of Gasco's property interests, or
delay or cause indefinite postponement of further exploration and development of
its prospects with the possible loss of such properties.

In this regard, Pannonian has entered into an agreement with Phillips Petroleum
to conduct drilling operations on Pannonian's Riverbend prospect. While Phillips
will fund drilling and completion to the Mesaverde depth, Pannonian must fund
its own drilling and completion at the higher Wasatch depth in order to maximize
its interests in the Riverbend wells being drilled by Phillips. The Riverbend
prospect alone will call for significant new funding that may not be available
within a reasonable time or on terms acceptable to Gasco. During fiscal 2001,
Pannonian will be required to expend approximately $5,000,000 to meet its
Riverbend drilling obligations.

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         UNINSURABLE RISKS

Although management believes the operator of any properties in which Gasco may
acquire interests, will acquire and maintain appropriate insurance coverage in
accordance with standard industry practice, Gasco may suffer losses from
uninsurable hazards or from hazards which the operator or Gasco has chosen not
to insure against because of high premium costs or other reasons. Gasco intends
to engage in participating in the drilling of both exploratory and development
wells. Exploratory wells have much greater dry hole risk than do wells which are
drilled offsetting established production. Gasco may become subject to liability
for pollution, fire, explosion, blow-outs, cratering and oil spills against
which we cannot insure or against which we may elect not to insure. Such events
could result in substantial damage to oil and gas wells, producing facilities
and other property and personal injury. The payment of any such liabilities may
have a material, adverse effect on Gasco's financial position.

         NO ASSURANCE OF TITLES

It is Gasco's practice, in acquiring petroleum and natural gas leases, or
undivided interests in petroleum and natural gas leases, not to undergo the
expense of retaining lawyers to examine the title to the mineral interest to be
placed under lease or already placed under lease. Rather, Gasco will rely upon
the judgment of petroleum and natural gas lease brokers or landsmen who perform
the field work in examining records in the appropriate governmental office
before attempting to place under lease a specific mineral interest. This
practice is widely followed in the petroleum and natural gas industry.

Prior to the drilling of a petroleum and natural gas well, however, it is the
normal practice in the petroleum and natural gas industry for the person or
company acting as the operator of the well to obtain a preliminary title review
of the spacing unit within which the proposed petroleum and natural gas well is
to be drilled to ensure there are no obvious deficiencies in title to the well;
however, neither Gasco or companies in which we invest, nor the person or
company acting as operator of the well will obtain counsel to examine title to
such spacing unit until the well is about to go into production. It frequently
happens, as a result of such examinations, that certain curative work must be
done to correct deficiencies in the marketability of the title, and such
curative work entails expense. The work might include obtaining affidavits of
heirship or causing an estate to be administered.

FROM TIME TO TIME, THE EXAMINATION MADE BY TITLE LAWYERS REVEALS THAT A
PETROLEUM AND NATURAL GAS LEASE OR LEASES IS WORTHLESS, HAVING BEEN PURCHASED IN
ERROR FROM A PERSON WHO IS NOT THE OWNER OF THE MINERAL INTEREST DESIRED. IN
SUCH INSTANCES, THE AMOUNT PAID FOR SUCH PETROLEUM AND NATURAL GAS LEASE OR
LEASES IS GENERALLY LOST.

To date Gasco has not lost title to any of its petroleum and natural gas leases,
nor is Gasco aware that any of its currently held properties is subject to being
lost as a result of faulty titles.

         ENVIRONMENTAL REGULATIONS

In general, as noted above, the exploration and proposed production activities
of Gasco are subject to certain federal, state and local laws and regulations
relating to environmental quality and pollution control. Such laws and
regulations increase the costs of these activities and may prevent or delay the
commencement or continuance of a given operation. Compliance with these laws and
regulations has not had a material effect on Gasco's operations or financial
condition to date. Specifically, Gasco is subject to legislation regarding
emissions into the environment, water discharges, and storage and disposition of
hazardous wastes. In addition,

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legislation has been enacted which requires well and facility sites to be
abandoned and reclaimed to the satisfaction of state authorities. However, such
laws and regulations are frequently changed and Gasco is unable to predict the
ultimate cost of compliance. Generally, environmental requirements do not appear
to affect Gasco any differently or to any greater or lesser extent than other
companies in the industry.

Gasco believes that its operations comply, in all material respects, with all
applicable environmental regulations.

         GOVERNMENTAL REGULATIONS

Petroleum and natural gas exploration, development and production are subject to
various types of regulation by local, state and federal agencies. Legislation
affecting the petroleum and natural gas industry is under constant review for
amendment and expansion. Also, numerous departments and agencies, both federal
and state, are authorized by statute to issue and have issued rules and
regulations binding on the petroleum and natural gas industry and its individual
members, some of which carry substantial penalties for failure to comply. The
regulatory burden on the petroleum and natural gas industry increases Gasco's
cost of doing business and, consequently, affects its profitability. There is no
assurance that laws and regulations enacted in the future will not adversely
affect the petroleum and natural gas industry. However, since these regulations
generally apply to all petroleum and natural gas producers, management of Gasco
believes that these regulations should not put Gasco at a material disadvantage
with respect to other petroleum and natural gas producers.

Most states in which Gasco may own and/or operate properties have statutes,
rules and regulations governing conservation matters including the unitization
or pooling of petroleum and natural gas properties, establishment of maximum
rates of production from petroleum and natural gas wells and the spacing of such
wells.

Petroleum and natural gas mineral rights may be held by individuals or
corporations and, in certain circumstances, by governments having jurisdiction
over the area in which such mineral rights are located. As a general rule,
parties holding such mineral rights grant licenses or leases to third parties to
facilitate the exploration and development of these mineral rights. The terms of
the leases and licenses are generally established to require timely development.
Notwithstanding the ownership of mineral rights, the government of the
jurisdiction in which mineral rights are located generally retains authority
over the manner of development of those rights.

In addition to royalties paid to freehold owners, each state generally imposes a
production or severance tax with respect to production and sale of crude oil,
natural gas and natural gas liquids within their respective jurisdictions. For
the most part, state production taxes are applied as a percentage of production
or sales. Payment of these taxes are in the normal course of operations in the
petroleum and natural gas industry and should not have a material impact on
Gasco's financial condition.

         NATURAL GAS AND OIL PRICES

In recent decades, there have been periods of both worldwide overproduction and
underproduction of hydrocarbons and periods of both increased and relaxed energy
conservation efforts. Such conditions have resulted in periods of excess supply
of, and reduced demand for, crude oil on a worldwide basis and for natural gas
on a domestic basis. These periods have been followed by periods of short supply
of, and increased demand for, crude oil and natural gas. The excess or short
supply of crude oil has placed pressures on prices and has resulted in dramatic
price fluctuations even during relatively short periods of seasonal

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market demand. While the price of natural gas has exhibited somewhat fewer
historical market demand fluctuations than oil, recently natural gas prices have
increased significantly over historical levels, largely associated with the
demands of the Winter season of 2000-2001 and limited pipeline capacity to meet
high demand from coastal population centers. Gasco cannot predict how long the
current relatively high prices for natural gas will continue.

         COMPETITION

The petroleum and natural gas industry is intensely competitive and Gasco
competes with other companies which have greater resources. Many of such
companies not only explore for and produce crude petroleum and natural gas but
also carry on refining operations and market petroleum and other products on a
regional, national or worldwide basis. Such companies may be able to pay more
for productive petroleum and natural gas properties and exploratory prospects to
define, evaluate, bid for and purchase a greater number of properties and
prospects than Gasco's financial or human resources permit. Gasco's ability to
acquire additional properties and to discover reserves in the future will be
dependent upon its ability to evaluate and select suitable properties and to
consummate transactions in a highly competitive environment. There is also
competition between the petroleum and natural gas industry and other industries
with respect to the supply of energy and fuel to industrial, commercial and
individual customers. There is no assurance that Gasco will be able to
effectively compete against such companies.

         RISKS ASSOCIATED WITH MANAGEMENT OF GROWTH

Because of its small size, Gasco's growth will be seen as rapid, as we seek to
acquire a critical mass of assets and capacities through mergers or
acquisitions. These growth steps are aimed at improving the value of Gasco and
to achieve certain economies of scale. Although there is no assurance that this
rapid growth will occur, to the extent that it does occur, it will place a
significant strain on Gasco's financial, technical, operational and management
resources. As Gasco expands its activities and increases the number of projects
we are evaluating or in which we are participating, there will be additional
demands on Gasco's financial, technical and management resources. The failure to
continue to upgrade Gasco's technical, administrative, operating and financial
control systems or the occurrence of unexpected expansion difficulties,
including the recruitment and retention of experienced managers, geoscientists
and engineers, could have a material adverse effect on Gasco's business,
financial condition and results of operations.

         DEPENDENCE UPON KEY PERSONNEL

The success of Gasco's operations and activities is dependent to a significant
extent on the efforts and abilities of its management. The loss of services of
any of its key managers could have a material adverse effect on Gasco. Gasco has
not obtained "key man" insurance for any of its management.

Mr. Erickson is the President of Gasco, and Mr. Bruner is the Chairman of the
Board. The loss of the services of Messrs. Bruner or Erickson may adversely
affect the business and prospects of Gasco.

         ADEQUATE LABOR

In the event Gasco needs to employ additional personnel, we will need to recruit
qualified personnel to staff our operations. Gasco believes that such personnel
currently are available at reasonable salaries and wages in the geographic areas
in which Gasco operates. There can be no assurance, however, that such personnel
will be available in the future. In addition, we

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cannot predict whether the labor staffing at any of Gasco's projects will be
unionized, which may result in potentially higher operating costs.

         DIVIDEND RISKS

Gasco has not paid any dividends on its common shares and does not intend to pay
dividends on its common shares in the immediate future. Any decision to pay
dividends on its common shares in the future will be made by the board of
directors of Gasco on the basis of earnings, financial requirements and other
such conditions that may exist at that time.

CONFLICTS OF INTEREST

Certain of the officers and directors will also serve as directors of other
companies or have significant shareholdings in other companies. To the extent
that such other companies participate in ventures in which Gasco may
participate, or compete for prospects or financial resources with Gasco, these
officers and directors of Gasco will have a conflict of interest in negotiating
and concluding terms relating to the extent of such participation. In the event
that such a conflict of interest arises at a meeting of the board of directors,
a director who has such a conflict must disclose the nature and extent of his
interest to the board of directors and abstain from voting for or against the
approval of such a participation or such terms.

In accordance with the laws of the State of Nevada, the directors of Gasco are
required to act honestly and in good faith with a view to the best interests of
Gasco. In determining whether or not Gasco will participate in a particular
program and the interest therein to be acquired by it, the directors will
primarily consider the degree of risk to which Gasco may be exposed and its
financial position at that time.

PENNY STOCK REGULATION

The SEC has adopted rules that regulate broker-dealer practices in connection
with transactions in "penny stock". Generally, "penny stocks" are equity
securities with a price of less than $5.00 (other than securities registered on
certain national securities exchanges or quoted on the NASDAQ system). If
Gasco's shares are traded for less than $5 per share, as they currently are, the
shares will be subject to the SEC's penny stock rules unless (1) Gasco's net
tangible assets exceed $5,000,000 during Gasco's first three years of continuous
operations or $2,000,000 after Gasco's first three years of continuous
operations; or (2) Gasco has had average revenue of at least $6,000,000 for the
last three years.

The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document prescribed by the SEC that provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customer's account. In addition, the penny
stock rules require that prior to a transaction in a penny stock not otherwise
exempt from those rules, the broker-dealer must make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. These
requirements may have the effect of reducing the level of trading activity in
the secondary market for a stock that becomes subject to the penny stock rules.
Should a trading market for Gasco's Common Stock commence and should Gasco's
Common Stock become subject to the penny stock rules, the holders of the Common
Stock may find it difficult to sell the Common Stock of Gasco.

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         ENFORCEMENT OF LEGAL PROCESS

Some of the directors of Gasco reside outside the United States. A substantial
portion of the assets of such persons are located outside the United States. As
a result it may be difficult or impossible to effect service of process within
the United States upon such persons, to bring suit in the United States or to
enforce, in the U.S. courts, any judgment obtained there against such persons
predicated upon any civil liability provisions of the U.S. federal securities
laws.

Canadian or Swiss courts may not entertain original actions against Gasco's
directors or officers predicated solely upon U.S. federal securities laws.
Furthermore, judgments predicated upon any civil liability provisions of the
U.S. federal securities laws may not be directly enforceable in foreign
countries.

ITEM 2.       DESCRIPTION OF PROPERTY.

PETROLEUM AND NATURAL GAS PROPERTIES

Gasco's principal business is the acquisition of leasehold interests in
petroleum and natural gas rights, either directly or indirectly, and the
exploration for and development of petroleum and natural gas. All of Gasco's
properties are located in the continental United States.

As of December 31, 2000, Gasco had acquired the following petroleum and natural
gas leases under the Consulting and Overriding Royalty Agreement with Davis &
Namson, described earlier in Item 1:

         WILLOW SPRINGS PROSPECT

Location: West side of the San Joaquin Basin in Townships 29 and 30 South, Range
21 East, Kern County, California.

Leases: To date Gasco acquired one petroleum and natural gas lease containing 65
acres from the United States Department of the Interior, Bureau of Land
Management, and thirteen freehold private petroleum and natural gas leases
totaling 659 net acres.

Ownership: Gasco has a 100% working interest in the leases it has acquired on
the Willow Springs Prospect and net revenue interests of 77% to 84.5% in those
leases. Gasco may sell all or a portion of this prospect to fund its further
activities.

Access and Topography: The Willow Springs Prospect is situated in low hills with
some small ravines. The proposed surface location of an exploration well is
accessible by paved and well graded dirt roads.

Geological Description: The Willow Springs Prospect is a four way closed
anticline defined by well data including stratigraphic correlation, dip meter
and core dip. The primary reservoir targets are the Phacoides sandstone, Oceanic
sandstone, and Point of Rocks sandstone. The Phacoides and Point of Rocks
sandstones are trapped by four way closure whereas the Oceanic sandstone is
trapped by a combination structure and stratigraphic trap. The seal with respect
to the prospect is over 6,000 feet of shale dominated by Monterey and Temblor
formation. The prospect size is approximately 550 acres for the Phacoides
sandstone, 320 acres for the Oceanic sandstone, and 600 acres for the Point of
Rocks sandstone. An exploration well to test this prospect would be roughly
8,000 feet (MD). It is expected that the gravity of the oil, should it be found,
will be in the range of 35(degree) to 50(degree) API (a

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measurement of the density of liquid petroluem). Light crude oil generally has
an API of between 35(degree) and 45(degree); therefore, management believes the
API of the oil is economical to produce. This range was obtained from offsetting
fields.

         CROCKER CANYON PROSPECT

Location: The Crocker Canyon Prospect is located on the west side of the San
Joaquin Basin in Townships 30 and 31 South, Range 21 East in Kern and San Luis
Obispo Counties, California.

Leases: Gasco acquired on March 16, 2000 two United States Department of the
Interior, Bureau of Land Management petroleum and natural gas leases totaling
2,732 net acres, and nine freehold private oil and gas leases totaling 534 net
acres, which cover the prospect. These leases are for between three-to-ten year
terms with a lessor royalty of between 12.5% and 20%.

Ownership: Gasco has acquired a 100% working interest in the Canyon Creek
Prospect, with a net revenue interest in the prospect of between 77% and 84.5%.
We may sell all or a portion of this prospect to fund further activities.

Access and Topography: The surface area is mountainous with steep ravines. The
proposed exploration well drill site is accessible by paved and well graded dirt
roads.

Geological Description: The Canyon Creek prospect is a four way closed anticline
defined by well data including stratigraphic correlation; dip meter and core
dip. The primary reservoir targets are the Carneros sandstone, Phacoides
sandstone, Oceanic sandstone and the Point of Rocks. For the Carneros sandstone
the closure area prospect size is between 2,150 to 3,400 acres with the
remaining three reservoirs having a closure area (prospect size) of between
1,300 to 2,300 acres. The seal for this prospect is over 8,000 feet of shale
dominated Monterey and Temblor formations. An exploration well to test this
prospect would be drilled to approximately 10,000 feet (MD). It is expected that
the gravity of the oil would range between 35(degree) to 50(degree); therefore,
management believes the API of the oil is economical to produce. API based upon
the gravity of oil in offsetting fields.

         BITTERWATER CREEK, ORCHARD PEAK & MIDWAY PEAK PROSPECTS

         Exploration prospects were generated by Davis & Namson for the
Bitterwater Creek and Midway Peak prospects. A large percentage of these
prospects are owned (but not leased) by the United States Department of the
Interior, Bureau of Land Management. Gasco requested that leases covering these
prospects be tendered for sale at the March 16, 2000 competitive lease sale.
After due consideration of Gasco's request the Bureau of Land Management
declined to tender these leases for sale given that a large portion of the
requested leases were located within the Carrizo Plain Natural Area which is
currently subject to review for creation of a restricted surface access area.
Given that a large proportion of these three prospects are covered by old
natural gas rights owned by the Bureau of Land Management Gasco has elected not
to further pursue these prospects until the Bureau of Land Management agrees to
tender the rights for lease sale.

         Management is still evaluating whether to attempt to acquire leases in
the Orchard Peak prospect.

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         LEASE RENTALS

         During 2001, Gasco is obligated to pay lease rentals on its oil and gas
prospect acreage as follows:

                  March              $ 3914.60          July               0.00
                  April                 374.20          August          4097.39
                  May                     0.00          September       2400.00
                  June                 4195.50          October         3200.02
                  December             1147.24

                                          TOTAL $19,328.95

Gasco is continuing with the negotiation, acquisition and registration of
additional petroleum and natural gas leases.

         RIVERBEND AND PHILLIPS PETROLEUM AGREEMENT

As a result of the planned acquisition of Pannonian Energy, Inc., discussed
earlier in this Report, San Joaquin will acquire the Riverbend prospect, a
leasehold interest in over 30,000 acres in the Uintah Basin located in Utah.
Riverbend contains up to 90 shallow development well locations in the Wasatch
Formation plus an additional 40 Wasatch development locations that can be earned
through an agreement with Phillips Petroleum Company. This agreement allows
Phillips to drill and complete approximately four to five wells to the deeper
Mesaverde Formation. Pannonian will retain 20% of the interests in these wells
and in the remaining Phillips agreement lands. Pannonian will also retain 20%
interest in up to 200 additional well locations for the Mesaverde Formation and
75% interest in the 130 anticipated locations within the Wasatch development
area. Initial Mesaverde development is expected to take place on 80-acre spacing
per well.

Drilling commenced in Riverbend under the Phillips agreement in March 2001.
Pannonian intends to commence its own drilling in Riverbend starting in the
second quarter, assuming adequate funding can be obtained. Pannonian's plan is
to drill 10 Wasatch wells in Riverbend during the next 12 months, thereby
potentially proving an additional 40 locations for development thereafter.

A Wasatch well in the Riverbend area takes approximately ten days to drill to
8,000 feet. The major costs are in equipping and completing the well due to
large fracture stimulation required. Estimated investment for drilling and
completing a single Wasatch well is $500,000.

The Riverbend lands were obtained by Pannonian through lease acquisitions and
farmin agreements. Should the initial wells required to be drilled by Phillips,
pursuant to its agreement with Pannonian, prove up the Mesaverde formation, then
full development should commence on 80 acre spacing per well. The agreement
provides for Phillips to commence the first well by March 1, 2001, which it did,
with the last well to be drilled by April 2, 2002.

PRINCIPAL OFFICES

Until February 1, 2001, Gasco operated from offices at 53 Stratford Place, S.W.,
Calgary, Alberta T3H 1H7 Canada. That space was provided to Gasco on a rent free
basis by Mr. J. Timothy Bowes, an officer, director and principal shareholder of
Gasco. As of February 1, 2001, Gasco began operating out of offices we will
share with Pannonian Energy, Inc. at 14 Inverness Drive East, Building H, Suite
236, Englewood, Colorado 80112.

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ITEM 3.       LEGAL PROCEEDINGS.

Not Applicable.


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

Not applicable.


PART II

ITEM 5.       MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Our common stock was initially listed for trading on the NASDAQ Bulletin Board
on August 25, 2000 under the trading symbol "SJQR". Trading did not commence
until January 2001, and trading has been sporadic. Trading during the 1st
quarter of 2001 ranged from $0.03 per share to $3.50 per share. The last sale
price as of March 28, 2001 was $3.81 per share.

As of March 28, 2001, there were 83 record holders of Gasco's Common Stock.

During the last two fiscal years, no cash dividends have been declared on
Gasco's common stock and management does not anticipate that dividends will be
paid in the foreseeable future.

RECENT SALES OF UNREGISTERED SECURITIES

Gasco commenced an offering under Regulation S of up to 2,400,000 shares of its
common stock in February 2001, and the offering is ongoing. Under the terms of
the Financing Agreement with Wet Coast Management Corp., tranches of the
offering are expected to close in May and August 2001. They may close earlier
depending on the acceptance of the offering by investors. Gasco has received
$2,000,000 of these funds in March, 2001.

ITEM 6.       MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

The following discussion of the results of operations of Gasco for the period
ended December 31, 2000 should be read in conjunction with the consolidated
financial statements of Gasco and related notes included therein.

BUSINESS COMBINATIONS

         LEK International, Inc. (our former name)

LEK International, Inc. ("LEK") was incorporated under the laws of the State of
Nevada on April 21, 1997, for the purpose of evaluating, structuring and
completion of a merger with, or acquiring a privately owned corporation. LEK had
no operations. On December 31, 1999, LEK completed an agreement (the "Agreement
and Plan of Reorganization") whereby it issued 8,069,000 shares of its common
stock to acquire all of the shares of Oil & Gas, a private corporation
incorporated on September 14, 1999, under the laws of the State of Nevada. Oil &
Gas is an independent energy company engaged in the exploration, development and
acquisition of crude oil and natural gas reserves in the western United States
and is considered a development stage company as defined by Statement of
Financial Accounting Standards (SFAS) No. 7. Oil & Gas is an exploration stage
oil and gas company and as of December 31,

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                                    Page 17
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2000, has not earned any production revenue, nor found proved resources on any
of its properties. Oil & Gas's principal activities had been raising capital
through the sale of its securities, identifying and evaluating potential oil and
gas property acquisitions, and acquiring an interest in a limited liability
company.

As a result of this transaction, Oil & Gas became a wholly-owned subsidiary of
LEK, and effective January 17, 2000, LEK changed its name to San Joaquin
Resources Inc. Since this transaction resulted in the former shareholders of Oil
& Gas acquiring control of LEK, for financial reporting purposes the business
combination was accounted for as an additional capitalization of LEK (a reverse
acquisition with Gasco as the accounting acquirer). In accounting for this
transaction:

i)       Oil & Gas was deemed to be the purchaser and parent company for
         financial reporting purposes. Accordingly, its net assets were included
         in the consolidated balance sheet at their historical book value;

ii)      control of the net assets and business of LEK was acquired effective
         December 31, 1999, for no consideration; and

iii)     the consolidated financial statements of operations, stockholders'
         equity and cash flow include Oil & Gas's results of operations and
         changes in cash flow for the period from inception, September 14, 1999,
         to December 31, 1999.

         Pannonian Energy, Inc.

On February 1, 2001, we entered into an Agreement and Plan of Reorganization
(the "Pannonian Agreement") whereby we agreed to issue up to 14,000,000 shares
of our common stock to acquire all of the outstanding shares of Pannonian
Energy, Inc. ("Pannonian"), a private corporation incorporated under the laws of
the State of Delaware. Pannonian is an independent energy company engaged in the
exploration, development and acquisition of crude oil and natural gas reserves
in the western United States and is considered a development stage company as
defined by Statement of Financial Accounting Standards (SFAS) No. 7. Pannonian
is an exploration stage oil and gas company and, as of December 31, 2000, had
earned no production revenue from its properties.

Certain shareholders of Gasco agreed to surrender for cancellation 2,438,930 of
our common shares in connection with the transaction contemplated by the
Pannonian Agreement.

The transaction with Pannonian is expected to close on or before March 31, 2001,
with Pannonian becoming a wholly-owned subsidiary of the Gasco (through a merger
into a wholly-owned subsidiary of Gasco). However, since this transaction will
result in the existing shareholders of Pannonian acquiring control of Gasco, for
financial reporting purposes the business combination will be accounted for as
an additional capitalization of Gasco (a reverse acquisition with Pannonian as
the accounting acquirer).

Since we signed the definitive Pannonian merger agreement, we have advanced
$2,250,000 to Pannonian.

Overview

Gasco, through its subsidiaries, Oil & Gas and, following the closing of the
Pannonian merger transaction, Pannonian, is engaged in the business of acquiring
and exploring for petroleum and natural gas prospects. At December 31, 2000, Oil
& Gas was Gasco's only subsidiary.

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Gasco follows the full cost method of accounting for oil and gas operations.
Under this method all costs related to the exploration for and development of
oil and gas reserves are capitalized on a country-by-country basis. Costs
include lease acquisition costs, geological and geophysical expenses, overhead
directly related to exploration and development activities and costs of drilling
both productive and non-productive wells. Proceeds from the sale of properties
are applied against capitalized costs, without any gain or loss being
recognized, unless such a sale would significantly alter the rate of depletion
and depreciation.

Depletion of exploration and development costs and depreciation of production
equipment is provided using the unit-of-production method based upon estimated
proven oil and gas reserves. The costs of significant unevaluated properties are
excluded from costs subject to depletion. For depletion and depreciation
purposes, relative volumes of oil and gas production and reserves are converted
at the energy equivalent conversion rate of six thousand cubic feet of natural
gas to one barrel of crude oil.

In applying the full cost method, we perform a ceiling test whereby the carrying
value of oil and gas properties and production equipment, net of recorded future
income taxes and the accumulated provision for site restoration and abandonment
costs, is compared annually to an estimate of future net cash flow from the
production of proven reserves. Costs related to undeveloped oil and gas
properties are excluded from the ceiling test. Discounted net cash flow is
estimated using year end prices, less estimated future general and
administrative expenses, financing costs and income taxes. Should this
comparison indicate an excess carrying value, the excess is charged against
earnings. At December 31, 2000, there were no reserves.

Results of Operations for Fiscal Year Ended December 31, 2000

During 1999, we changed our fiscal year from March 31 to December 31. Due to the
change in our fiscal year, and the acquisition of Oil & Gas, which was
incorporated on September 14, 1999, the fiscal period ending December 31, 1999,
consists of only 109 days, or approximately three and a half months.
Accordingly, no comparative figures are presented.

During the year ended December 31, 2000, we recorded a net loss of $254,458
($0.02 per share).

During the year ended December 31, 2000, we received interest of $8,832 on cash
deposits. During 2000, cash deposits consisted of funds received from the sale
of stock during 1999, plus funds received from the sale of the shares of Hilton
stock that we received in upon exchange for our interests in Hilton LLC.

During the year ended December 31, 2000, our operating expenses were $204,627.
The majority of our operating expenses ($120,491) consisted of professional fees
charged to us by our officers and directors for services. Included in
professional fees was $72,000 paid to Mr. Bowes, $16,086 paid to Chase
Management Ltd. (a company controlled by Mr. Nick DeMare, a former officer and
director of Gasco) and $9,844 paid to Colin McNeil and Associates (a company
controlled by Colin McNeil, a former director of Gasco). During the year ended
December 31, 2000, we incurred $49,611 in legal and audit fees in connection
with the acquisition of Oil & Gas and the filing of reports with the Securities
and Exchange Commission.

During the year ended December 31, 2000, we recognized a loss on the sale of
marketable securities in the amount of $36,157, relating to the sale of the
shares of Hilton stock. We also recorded an unrealized loss on marketable
securities in the amount of $22,506 relating to the decline in value of the
shares of Hilton stock we held at December 31, 2000. Subsequent to December 31,
2000, all of the remaining shares of Hilton stock were sold.

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                                    Page 19
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Financial Condition

At December 31, 2000, we had total assets of $658,361, compared to total assets
of $912,458 at December 31, 1999. During the year we capitalized an additional
$135,843 towards oil and gas properties. During fiscal 2000, we received an
$8,000 payment from CEW in connection with our agreement with CEW, and payment
of $25,000 from Lucre Venture Ltd. as recovery of costs incurred. Both payments
were credited to the oil and gas full cost pool during the year.

In connection with the exchange of our interests in Hilton LLC for shares of
Hilton, our investment in oil and gas venture was reduced from $391,670 at
December 31, 1999, to zero at December 31, 2000. In addition, marketable
securities increased from zero at December 31, 1999 to $146,948 at December 31,
2000.

Liquidity and Plan of Operations

At December 31, 2000, we had cash of $247,822 compared to $387,160 at December
31, 1999. The decrease in cash is attributable to our net loss for the year
ended December 31, 2000, and payments related to oil and gas properties during
the year. Our decrease in cash was partially offset by the cash received from
the sale of Hilton shares during the year ended December 31, 2000. During the
year, we received $193,787 from the sale of Hilton shares.

Our working capital increased slightly from $324,035 at December 31, 1999 to
$335,369 at December 31, 2000.

In management's view, given the nature of our operations, which consist of the
acquisition, exploration and evaluation of petroleum and natural gas properties
and participation in drilling activities on these properties, the most
meaningful information relates to current liquidity and solvency. Our financial
success will be dependent upon the extent to which we can discover sufficient
economic reserves and successfully develop and produce from the properties
containing those reserves. Such development may take years to complete and the
amount of resulting income, if any, is difficult to determine with any
certainty. The sales value of any petroleum or natural gas that we discover is
largely dependent upon other factors beyond our control.

To date, our capital needs have been met by equity financings and the sale of
the Hilton shares. Taking into account the funding to be raised under our
agreements with Wet Coast Management and Canaccord International, over
$2,000,000 having been received already as of the date of this report,
management believes we have sufficient cash to fund our anticipated operations
until May 31, 2001. Of course, we could exist as a company longer than May 31,
2001 on the expected funding we have and will soon receive, but drilling and
moving forward with our business plan will call for significant additional
capital beginning in June 2001.

As at December 31, 2000, we had $247,822 in cash which management has allocated
for working capital purposes. Subsequent to December 31, 2000, we received over
$2,000,000 in new equity funding under our Wet Coast Management Financing
Agreement, and approximately $300,000 from the sale of assets. We have advanced
$2,250,000 to Pannonian in connection with the acquisition agreement.

During the next twelve months the operational plans for Gasco entail conducting
the following:

         a.       Close the acquisition of Pannonian Energy, Inc. with its
                  accompanying Rocky Mountain lease acreage

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         b.       Drill and complete 16 wells in our Rocky Mountain region
                  prospects and 1 well in our California prospects.

         c.       Complete our acquisition of New Energy West

         d.       Pay leasehold rentals and other expenses to preserve our
                  acreage positions.

Gasco has entered into a Financing Agreement as of January 12, 2001 with Wet
Coast Management, a Vancouver-based investment banking entity, to raise up to
$7.2 million. Closings under the Financing Agreement are to occur as follows:
(a) $1,200,000 on or before February 12, 2001, (b) $1,500,000 on or before May
1, 2001 and (c) $4,500,000 on or before August 1, 2001. We received $2,000,000
of this funding in March, 2001. The funds received from the Financing Agreement
will be used two-thirds for drilling and other development activities on
Pannonian's Rocky Mountain prospects and one-third for working capital and
further development work on the California prospects.

As of March 15, 2001, Gasco entered into a Financing Agreement with Canaccord
International, Ltd., an investment banking firm, to raise up to $4.2 million of
the $7.2 million covered by the Wet Coast Financing Agreement. Canaccord was
referred to San Joaquin by Wet Coast in connection with Wet Coast's activities
under its Financing Agreement. For its services in connection with raising the
needed funds, Canaccord will be paid a $25,000 retainer, a 5% commission on its
sale of Gasco shares in the private placement, and a $5,000 per month corporate
services fee for the 12 months beginning April 2001. Gasco will also reimburse
Canaccord for its expenses. Gasco also gave Canaccord a first right to
participate in future financing transactions desired by Gasco. (In this regard,
Wet Coast has agreed to amend its Financing Agreement to eliminate the first
right given to Wet Coast in favor of Canaccord.)

In order to earn interests in additional acreage and depths in Riverbend, we
will need to expend significant additional capital to drill and complete wells.

To fully develop its current prospects, additional fund raising will be
necessary. Such funding will most likely be required during 2001 and may come
from additional equity financing activities, from debt secured by assets, from
farm-out activities and/or from the possible sale of one or more of the
California prospects. As of the date of this report, we have not entered into
any agreements for additional financing nor have we entered into any agreements
to farm-out or sell any of the California prospects. There are no assurances
that any such funding will be available to us, or if available that the terms
will be favorable to us.

As we grow in size with the Pannonian merger transaction and the expected
acquisition of New Energy West, we will hire additional personnel to provide
administrative and management support. These personnel will likely include a
chief financial officer, a controller, and one or more office assistants. The
resulting higher payroll expense will affect 2001 results.

As stated in the auditors' report on the financial statements, we have incurred
losses from our initial operations and have not earned revenues from our
principal operations. These factors, among others, raise substantial doubt about
our ability to continue as a going concern. See the Note 2 in the notes to the
financial statements.

Gasco's ability to continue as a going concern is dependent upon its ability to
generate sufficient cash flow to meet its obligations on a timely basis, to
obtain additional financing (through the sale of its equity interests or
interests in its properties) or refinancing as may be required, and ultimately
to attain profitability. There are no assurances that Gasco will be able to
obtain any such financing or, if Gasco is able to obtain additional financing,
that such financing will be on

--------------------------------------------------------------------------------
                                    Page 21
<PAGE>

favorable terms. The inability to obtain additional financing when needed will
have a material adverse effect on Gasco's operating results, and could
materially reduce the value of the existing oil and gas prospects, including
Riverbend.

ITEM 7.       FINANCIAL STATEMENTS.

Please refer to the pages beginning with F-1.

ITEM 8.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.

Not applicable.


PART III

ITEM 9.       DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

The directors of Gasco are elected to serve until the next annual shareholders'
meeting or until their respective successors are elected and qualified. Officers
of Gasco hold office until the meeting of the Board of Directors immediately
following the next annual shareholders' meeting or until removal by the Board of
Directors. Interim replacements for resigning directors and officers are
appointed by the Board of Directors. As of March 30, 2001, directors of Gasco
received no compensation solely for their service as directors.

To date the Board of Directors has not established committees of directors as is
permitted by the bylaws.

Set forth below are the names and other material information about the executive
officers and directors of Gasco, including their recent employment and business
experience.

         Marc Bruner (51), Chairman of the Board of Directors and Strategic
         Consultant (since February 1, 2001): Mr. Bruner is founding Chairman of
         Pannonian (since 1998) and was the founding Chairman of the Board of
         Ultra Petroleum (1996-98), a TSE & AMEX listed natural gas company with
         a current market capitalization of $198,000,000. Ultra is focused on
         tight sand development in the Green River Basin of Wyoming.
         Additionally, Mr. Bruner was one of the founders of Pennaco Energy,
         Inc. which started in 1998. Pennaco recently received a purchase offer
         exceeding $500 million from Marathon Oil Company. Mr. Bruner was also
         one of the founders of RIS Resources International, a natural gas
         company founded in 1996.

         Mark A. Erickson (41), President, Treasurer, and a Director (since
         February 1, 2001): Mr. Erickson is a Director and President of
         Pannonian (since 1998), a past President and a Director of RIS
         Resources (USA)(1997), and one of the founders, a past senior officer
         and director of Pennaco Energy, Inc. (1997-98), a coalbed methane
         company focused in the Powder River Basin of Wyoming. Mr.

--------------------------------------------------------------------------------
                                    Page 22
<PAGE>

         Erickson is a Registered Petroleum Engineer with 17 years of
         diversified experience in business development, finance, strategic
         planning, marketing, project management and petroleum engineering. Mr.
         Erickson received his MS in Mineral Economics from Colorado School of
         Mines.

         J. Timothy Bowes (44), Continuing Director (director since December 31,
         1999): Mr. Bowes holds a Bachelor of Commerce degree and a Masters of
         Business Administration degree, both from the University of British
         Columbia. Mr. Bowes was President of Gasco from December 1999 to
         February 1, 2001, and is President, Chief Executive Officer, and a
         director of Lucre Ventures Ltd., a public petroleum and natural gas
         company listed on the Canadian Venture Exchange. Prior to joining Gasco
         and Lucre Ventures Ltd., he was primarily engaged as a self-employed
         consultant involved in the structuring of mergers and acquisitions of
         petroleum and natural gas companies. Prior to his consulting business,
         Mr. Bowes was employed by Yorkton Securities Inc. as an analyst and
         manager from 1994-March 1999.

         Carl Stadelhofer, 48, Director (director since February 1, 2001) is a
         partner with the law firm of Rinderknecht Klein & Stadelhofer in
         Zurich, Switzerland, where he has practiced law for over ten years. He
         is a French and Swiss citizen; admitted to the practice of law in
         Switzerland in 1982. He took his law degree in 1979 in Switzerland, and
         studied law in the United States at Harvard Law School and at
         Georgetown University Law School. His practice specializes in banking
         and financing, mergers and acquisitions, investment funds, and
         international securities transactions

         Howard O. Sharpe, 56, Vice President and Secretary (since February 1,
         2001), is a Director and Executive Vice President of Pannonian (since
         1998). He has significant management experience in oil and gas
         development in the United States. Mr. Sharpe served as a fighter pilot
         in the U.S. Air Force, retiring as a full Colonel with extensive
         logistic and organizational skills. Mr. Sharpe has an advanced degree
         in management with hands-on experience in the development of tight
         natural gas sands, basin-centered natural gas exploration and
         production in Wyoming. For the past seven years Mr. Sharpe has also
         served as Executive Vice President of Alpine Gas Company in Denver,
         Colorado, and holds a Master of Business Administration degree.

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                                    Page 23
<PAGE>

CONFLICTS OF INTEREST

Members of Gasco's management are associated with other firms involved in a
range of business activities, including oil and gas exploration and development.
For example, in accordance with the Pannonian merger agreement, Pannonian spun
off all of its oil and gas properties other than Riverbend to new companies
formed by the shareholders of Pannonian. Messrs. Bruner, Erickson and Sharpe
will continue to manage these new oil and gas entities at the same time as they
provide management to Gasco. Consequently, there are potential inherent
conflicts of interest in their acting as officers and directors of Gasco.
Insofar as the officers and directors are engaged in other business activities,
management anticipates they will devote as much time to Gasco's affairs as is
reasonably needed.

The officers and directors of Gasco are now and may in the future become
shareholders, officers or directors of other companies that may be formed for
the purpose of engaging in business activities similar to those conducted by
Gasco. Accordingly, additional direct conflicts of interest may arise in the
future with respect to such individuals acting on behalf of Gasco or other
entities. Moreover, additional conflicts of interest may arise with respect to
opportunities which come to the attention of such individuals in the performance
of their duties or otherwise. Gasco does not currently have a right of first
refusal pertaining to opportunities that come to management's attention insofar
as such opportunities may relate to Gasco's business operations.

The officers and directors are, so long as they are officers or directors of
Gasco, subject to the restriction that all opportunities contemplated by Gasco's
plan of operation which come to their attention, either in the performance of
their duties or in any other manner, will be considered opportunities of, and be
made available to Gasco and the companies that they are affiliated with on an
equal basis. A breach of this requirement will be a breach of the fiduciary
duties of the officer or director. If Gasco or the companies in which the
officers and directors are affiliated with both desire to take advantage of an
opportunity, then said officers and directors would abstain from negotiating and
voting upon the opportunity. However, all directors may still individually take
advantage of opportunities if Gasco should decline to do so. Except as set forth
above, Gasco has not adopted any other conflict of interest policy with respect
to such transactions. Interested directors in such a business opportunity would
be recused from participating in any vote to enter into or decline the
opportunity. For example, in the event of an opportunity that could involve one
of the Pannonian spin-off companies, both Messrs. Bruner and Erickson would be
so recused.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires Gasco's officers
and directors, and persons who own more than 10% of a registered class of
Gasco's equity securities, to file reports of ownership and changes in ownership
with the SEC. Officers, directors and greater than 10% percent shareholders are
required by SEC regulation to furnish Gasco with copies of all Section 16(a)
forms they file. To the best knowledge and belief of Gasco, all such persons
made timely filings during 2000.

ITEM 10.      EXECUTIVE COMPENSATION.

The following table sets forth information with respect to compensation of the
executive officers of Gasco during the fiscal year ended December 31, 2000.
Other than the required disclosure with respect to Mr. Bowes, who served as
Chief Executive Officer during 2000, no officer or director of Gasco was
compensated at or above the $100,000 level in 1999 or 2000.

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                                    Page 24
<PAGE>
<TABLE>
<CAPTION>
                                                          SUMMARY COMPENSATION TABLE
                                               ========================== ================================
                                                  Annual Compensation         Long-Term Compensation
                                                                                      Awards
------------------------------------ --------- ------------ ------------- ----------------- -------------- ----------------------
             Name and                  Year      Salary        Bonus         Restricted       Options/           All Other
        Principal Position                         ($)          ($)            Stock            SARs           Compensation
                                                                              Award(s)           (#)                ($)
                                                                                ($)
------------------------------------ --------- ------------ ------------- ----------------- -------------- ----------------------
<S>                                    <C>       <C>           <C>             <C>              <C>                <C>
J. Timothy Bowes                       2000      72,000          0               0                0                  0
Chief Executive Officer (December      1999      18,000          0               0                0                  0
31, 1999-January 31, 2001)             1998           0          0               0                0                  0
------------------------------------ --------- ------------ ------------- ----------------- -------------- ----------------------
</TABLE>

Gasco does not have any employment contracts with any of its officers or
directors, although we are under contract to negotiate such contracts with
Messrs. Bruner and Erickson as required in the Pannonian merger agreement.
Currently there are no employees of Gasco, and the officers serve at the
pleasure of the Board of Directors, and the Directors serve at the pleasure of
the shareholders, acting according to Nevada law and the bylaws.

STOCK OPTION PLAN

By written consent dated December 15, 1999, the shareholders of Gasco adopted
Gasco's 1999 Stock Option Plan to be effective January 17, 2000.

Pursuant to the 1999 Stock Option Plan (the "Plan") an aggregate of 1,176,900
shares of Gasco's common stock (the "Available Shares") has been reserved for
issuance pursuant to the exercise of stock options ("Options") which may be
granted to Gasco employees, officers, directors and consultants. The Plan also
provides for annual adjustment in the number of Available Shares, commencing
January, 2001, to a number equal to 10% of the number of shares outstanding as
of the end of the preceding fiscal year or 1,176,900 shares, whichever is
greater.

The Plan is designed to (i) induce qualified persons to become employees,
officers, or directors of Gasco; (ii) reward such persons for past services to
Gasco; (iii) encourage such persons to remain in the employ of Gasco or
associated with Gasco; and (iv) provide additional incentive for such persons to
put forth maximum efforts for the success of business of Gasco. No stock options
have been granted under this Plan.

The Plan will be administered by the Board of Directors (the "Board").
Transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 under the Securities Exchange Act of 1934, as amended
(the "1934 Act"). In addition to determining who will be granted Options, the
Board has the authority and discretion to determine when Options will be granted
and the number of Options to be granted. The Board may determine which Options
may be intended to qualify ("Incentive Stock Option") for special treatment
under the Internal Revenue Code of 1986, as amended from time to time (the
"Code") or Non-Qualified Options ("Non-Qualified Stock Options") which are not
intended to so qualify. The Board also may determine the time or times when each
Option becomes exercisable, the duration of the exercise period for Options and
the form or forms of the instruments evidencing Options granted under the Plan.
The Board may adopt, amend, and rescind such rules and regulations as in its
opinion may be advisable for the administration of the Plan. The Board may amend
the Plan without shareholder approval where such approval is not required to
satisfy any statutory or regulatory requirements.

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                                    Page 25
<PAGE>

Grants to employee directors and officer/directors can be either Non-Qualified
Stock Options or Incentive Stock Options, to the extent that they do not exceed
the Incentive Stock Option exercise limitations, and the portion of an option to
an employee director or officer/director that exceeds the dollar limitations of
Code Section 422 will be treated as a Non-Qualified Stock Option.

The Board also may construe the Plan and the provisions in the instruments
evidencing options granted under the Plan to employee and officer participants
and is empowered to make all other determinations deemed necessary or advisable
for the administration of the Plan. The Board may not adversely affect the
rights of any participant under any unexercised option or any portion thereof
without the consent of such participant. This Plan will remain in effect until
it is terminated by the Board, except that no Incentive Stock Option will be
granted after December 15, 2009.

The Plan contains provisions for proportionate adjustment of the number of
shares for outstanding options and the option price per share in the event of
stock dividends, recapitalizations resulting in stock splits or combinations or
exchanges of shares.

Participants in the Plan may be selected by the Board from employees and
officers of Gasco and its subsidiaries and consultants to Gasco and its
subsidiaries. In determining the persons to whom options will be granted and the
number of shares to be covered by each option, the Board will take into account
the duties of the respective persons, their present and potential contributions
to the success of Gasco, and such other factors as the Board deems relevant to
accomplish the purposes of the Plan.

Only employees of Gasco and its subsidiaries, as the term "employee" is defined
for the purposes of the Code, and consultants to Gasco will be entitled to
receive Incentive Stock Options. Incentive Stock Options granted under the Plan
are intended to satisfy all requirements for incentive stock options under
Section 422 of the Code and the Treasury Regulations thereunder.

Each option granted under the Plan will be evidenced by a written option
agreement between Gasco and the optionee. The option price of any Incentive
Stock Option may be not less than 100% of the Fair Market Value per share on the
date of grant of the option; provided, however, that any Incentive Stock Option
granted under the Plan to a person owning more than ten percent of the total
combined voting power of the common stock will have an option price of not less
than 110% of the Fair Market Value per share on the date of grant of the
Incentive Stock Option. Each Non- Qualified Stock Option granted under the Plan
will be at a price no less than 85% of the Fair Market Value per share on the
date of grant thereof. "Fair Market Value" per share as of a particular date is
defined in the Plan as the last sale price of Gasco's common stock as reported
on a national securities exchange or on the NASDAQ System or, if none, the
average of the closing bid and asked prices of Gasco's common stock as reported
by NASDAQ or, if such quotations are unavailable, the value determined by the
Board in its discretion in good faith.

The exercise period of options granted under the Plan may not exceed ten years
from the date of grant thereof. Incentive Stock Options granted to a person
owning more than ten percent of the total combined voting power of the common
stock of Gasco will be for no more than five years. The Board will have the
authority to accelerate or extend the exercisability of any outstanding option
at such time and under such circumstances as it, in its sole discretion, deems
appropriate. However, no exercise period may be extended to increase the term of
the option beyond ten years from the date of the grant.

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                                    Page 26
<PAGE>

To exercise an option, the optionee must pay the full exercise price in cash, in
shares of common stock having a Fair Market Value equal to the option price or
in property or in a combination of cash, shares, and property and, subject to
approval of the Board. The Board has the sole and absolute discretion to
determine whether or not property other than cash or common stock may be used to
purchase the shares of common stock thereunder and, if so, to determine the
value of the property received.

An option may not be exercised unless the optionee then is an employee, officer,
or director of Gasco or its subsidiaries, and unless the optionee has remained
continuously as an employee, officer, or director of Gasco since the date of
grant of the option. If the optionee ceases to be an employee, officer, or
director of Gasco or its subsidiaries other than by reason of death, disability,
or for cause, all options granted to such optionee, fully vested to such
optionee but not yet exercised, will terminate three months after the date the
optionee ceases to be an employee, officer or director of Gasco. All options
which are not vested to an optionee, under the conditions stated in this
paragraph for which employment ceases, will immediately terminate on the date
the optionee ceases employment or association.

If an optionee dies while an employee, officer or director of Gasco, or if the
optionee's employment, officer, or director status terminates by reason of
disability, all options theretofore granted to such optionee, whether or not
otherwise exercisable, unless earlier terminated in accordance with their terms,
may be exercised at any time within one year after the date of death or
disability of said optionee, by the optionee or by the optionee's estate or by a
person who acquired the right to exercise such options by bequest or inheritance
or otherwise by reason of the death or disability of the optionee.

Options granted under the Plan are not transferable other than by will or by the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined by the Code or Title I of the Employee Retirement Income
Security Act of 1974, or the rules thereunder. Options may be exercised, during
the lifetime of the optionee, only by the optionee and thereafter only by his
legal representative. An optionee has no rights as a shareholder with respect to
any shares covered by an option until the option has been exercised.

As a condition to the issuance of shares upon the exercise of an option, Gasco
will require the optionee to pay to Gasco the amount of Gasco's tax withholding
liability required in connection with such exercise. Gasco, to the extent
permitted or required by law, may deduct a sufficient number of shares due to
the optionee upon exercise of the option to allow Gasco to pay such withholding
taxes. Gasco is not obligated to advise any optionee of the existence of any tax
or the amount that Gasco will be so required to withhold.

                  FEDERAL INCOME TAX ASPECTS OF STOCK OPTIONS UNDER THE PLAN

The federal income tax discussion set forth below is included for general
information only. Optionees are urged to consult their tax advisors to determine
the particular tax consequences applicable to them, including the application
and effect of foreign, state, and local income and other tax laws.

                  INCENTIVE STOCK OPTIONS.

No income results to the holder of an Incentive Stock Option upon the grant
thereof or issuance of shares upon exercise thereof. The amount realized on the
sale or taxable exchange of the Option Shares in excess of the option exercise
price will be considered a capital gain, except that, if a sale, taxable
exchange, or other disposition occurs within one year after exercise of the
Incentive Stock Option or two years after the grant of the Incentive Stock
Option (generally considered to be a "disqualifying

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                                    Page 27
<PAGE>

disposition"), the optionee will realize compensation, for federal income tax
purposes, on the amount by which the lesser of (i) the fair market value on the
date of exercise or (ii) the amount realized on the sale of the shares, exceeds
the exercise price. Any appreciation on the shares between the exercise date and
the disposition will be taxed to the optionee as capital gain. The difference
between the exercise price and the fair market value of the shares acquired at
the time of exercise is a tax preference item for the purpose of calculating the
alternative minimum tax on individuals under the Code. This preference amount
will not be included again in alternative minimum taxable income in the year the
taxpayer disposes of the stock.

                  NON-QUALIFIED STOCK OPTIONS.

No compensation will be realized by the optionee of a Non-Qualified Stock Option
at the time it is granted. Upon the exercise of a Non-Qualified Stock Option, an
optionee will realize compensation for federal income tax purposes on the
difference between the exercise price and the fair market value of the shares
acquired at the time of exercise. If the optionee exercises a Non-Qualified
Stock Option by surrendering shares of Gasco's common stock, the optionee will
not recognize income or gain at the time of exercise.

                  CONSEQUENCES TO GASCO.

Gasco recognizes no deduction at the time of grant or exercise of an Incentive
Stock Option and recognizes no deduction at the time of grant of a Non-Qualified
Stock Option. Gasco will recognize a deduction at the time of exercise of a
Non-Qualified Stock Option on the difference between the option price and the
fair market value of the shares on the date of grant. Gasco also will recognize
a deduction to the extent the optionee recognizes income upon a disqualifying
disposition of shares underlying an Incentive Stock Option.

         VESTING

Unless otherwise specified in an optionee's agreement, options granted under the
Plan will become vested with the optionee over a two-year period, with one-sixth
of the options vesting every four months, in addition to any other vesting
requirements determined by the Board at the time of grant.

         OPTION/SAR/LTIP AWARDS

Gasco has never used Stock Appreciation Rights, Incentive Stock Options or Long
Term Incentive Awards. To date only 20,000 shares under option have been granted
under the Plan. These were granted on February 7, 2001 to Wet Coast Management
pursuant to the Management Agreement

NON PLAN STOCK OPTIONS

We have granted Stock Options outside of the Plan as follows:

         1,000,000 share options granted to Mr. Erickson in January 2001
         50,000 share options to Mr. Bruner on February 8, 2001
         200,000 share options to Mr. Bowes on February 8, 2001
         250,000 share options to Mr. Erickson on February 8, 2001
         250,000 share options to Mr. Sharpe on February 8, 2001
         50,000 share options to Mr. Stadelhofer on February 8, 2001
         300,000 share options to two consultants on February 8, 2001

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                                    Page 28
<PAGE>

DIRECTORS' COMPENSATION

Gasco does not compensate directors for services in their capacities as
directors. Gasco compensates directors for services in other capacities.

During 2000, Mr. Bowes was paid a consulting fee of $6,000 per month. During the
period ended December 31, 1999, Gasco paid Mr. Bowes a total of $18,000 for
services to Gasco and/or Gasco.

Chase Management Ltd., a private company indirectly wholly owned by Nick DeMare,
an officer and director of Gasco until January 31, 2001, provided management and
accounting services to Gasco during 2000 and was compensated for such services
at its usual rate. During the period ended December 31, 1999, Gasco paid Chase a
total of $2,341 for services to Gasco.

Mr. McNeil, a former director of Gasco (resigned February 1, 2001), provided
consulting services to Gasco during 2000. Mr. McNeil received a combination of
stock and cash in payment for his services. During the year ended December 31,
2000, Mr. McNeil billed Gasco for $9844 for technical services rendered. Mr.
McNeil was issued 19,930 shares of Gasco common stock in satisfaction of the
accumulated debt owed to Mr. McNeil.


ITEM 11.         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth information, as of March 28, 2001, with respect
to the beneficial ownership of Gasco's common stock by each person known by
Gasco to be the beneficial owner of more than five percent of the outstanding
common stock and by directors and executive officers of Gasco, both individually
and as a group:

                         [See Table on Following Page]


<PAGE>
<TABLE>
<CAPTION>
    -------------------------------- ------------------------------ --------------------- --------------------
                 Name                      Position (if any)          Number of Shares      Percent of All
                                                                           Owned(1)       Outstanding Shares(2)
    -------------------------------- ------------------------------ --------------------- --------------------
         <S>                         <C>                                <C>                    <C>
             Marc Bruner(4)              Chairman and Director           3,836,700(4)           13.75%
             29 Blauenweg
            Metzerlen 4116
              Switzerland
    -------------------------------- ------------------------------ --------------------- --------------------
             Mark Erickson             President, Treasurer, and         3,555,640(3)           12.74%
        14 Inverness Drive East                Director
         Building H, Suite 236
          Englewood, CO 80112
    -------------------------------- ------------------------------ --------------------- --------------------
             Howard Sharpe           Vice President and Secretary         424,000(5)            1.34%
        14 Inverness Drive East
         Building H, Suite 236
          Englewood, CO 80112
    -------------------------------- ------------------------------ --------------------- --------------------
             Timothy Bowes                     Director                   342,850(7)             1.22%
         53 Stratford Place SW
           Calgary, Alberta
            T3H 1H7 Canada
    -------------------------------- ------------------------------ --------------------- --------------------
           Carl Stadelhofer                    Director                   50,000(6)              0.18%
           Beethovenstrasse 7,
             Postfach 4451,
           CH - 8022 Zurich
             Switzlerland
    -------------------------------- ------------------------------ --------------------- --------------------
        Resource Venture Mgt.4                                           3,836,700              13.75%
             29 Blauenweg
               Metzerlen
              Switzerland
                 4116
    -------------------------------- ------------------------------ --------------------- --------------------
      All Executive Officers and                                         8,159,190              30.32%
        Directors as a group (6
               persons)
    -------------------------------- ------------------------------ --------------------- --------------------
</TABLE>

1 For Messrs, Bruner, Erickson and Sharpe, the shares shown are based on their
ownership of Pannonian shares and the operation of the Pannonian merger
agreement resulting in Pannonian shares being exchanged for approximately 1.74
shares of the Registrant, with warrants being converted into the right to
receive the Gasco's shares at .01 and .10 Pannonian share equivalents.

2 The percentages shown are based on the approximately 27,900,000 shares to be
issued and outstanding upon completion of the Pannonian merger transaction and
the completion of the current private placement through Wet Coast Management and
Canaccord International, on a fully diluted basis to include 2.2 million options
now outstanding.

3 Mr. Erickson's shares include 1,250,000 shares of Gasco's common stock covered
by options issued to Mr. Erickson in January and February 2001.

4 The shares of Mr. Bruner include 50,000 shares of Gasco's common stock covered
by an option issued in February 2001. Mr. Bruner's shares are attributed to RVM
and the shares of RVM are attributed to Mr. Bruner. Mr. Bruner is a control
person of RVM.

5 Mr. Sharpe's shares include 250,000 shares of Gasco's common stock covered by
an option issued in February 2001.

6 Mr. Stadelhofer's shares include 50,000 shares of Gasco's common stock
covered by an option issued in February 2001.

7 Mr. Bowes' shares include 200,000 shares of Gasco's common stock covered by an
option issued in February 2001.

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                                    Page 29
<PAGE>

CHANGES OF CONTROL

As of the date of this annual report, there are no arrangements known to Gasco
which may at a subsequent date result in a change of control of Gasco.

ITEM 12.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Other than as disclosed below, during 2000, and without giving effect to the
Pannonian merger transaction, none of the directors, officers or principal
shareholders of Gasco, nor any family member of the foregoing, nor, to the best
of the information and belief of the present management, any of the former
directors, senior officers or principal shareholders of Gasco, nor any family
member of such former directors, officers or principal shareholders, have or
have had any material interest, direct or indirect, in any transaction, within
the two years prior to the date of this report, or in any proposed transaction
which has materially affected or will materially affect Gasco. Management
believes the following transactions are as fair to Gasco and similar to terms
which could be obtained from unrelated third parties.

         1. On June 15, 1999, Hilton Petroleum Ltd., indirectly through a
         subsidiary, entered into an agreement with Berkley and acquired a
         further net 4% capital interest (2.25% working interest) in the San
         Joaquin Joint Venture for $1,400,000. Hilton LLC used the proceeds from
         the sale of its membership units to purchase from Hilton Petroleum Ltd.
         a 2.25% working interest in the San Joaquin Joint Venture for
         $1,550,000. Hilton LLC is required to pay 4% of the costs to drill the
         initial wells on each of the initial three prospects in the San Joaquin
         Joint Venture, as discussed below. Hilton Petroleum Ltd. is the manager

--------------------------------------------------------------------------------
                                    Page 30
<PAGE>

         and operator of Hilton LLC. Gasco acquired four membership interests in
         Hilton LLC for an initial purchase price of $390,000. Hilton LLC
         members, including Gasco, are required to fund their pro-rata share of
         all the capital requirements of Hilton LLC. See "Item 1. Description of
         Business."

         As part of the acquisition of the 4% capital interest which was
         subsequently sold to Hilton LLC, Hilton Petroleum Ltd. also acquired,
         as part of the $1,400,000 purchase price, an additional 0.7% (4% of
         17.5%) reversionary interest in the East Lost Hills Joint Venture. The
         0.7% interest was not sold to Hilton LLC with the 4% capital interest.

         Mr. Nick DeMare, a former officer and director of Gasco, is also a
         director of Hilton Petroleum Ltd., the manager of Hilton LLC. However,
         the terms upon which Gasco acquired its membership interests in Hilton
         LLC were the same as those offered to non-affiliated purchasers.

         As noted earlier, Gasco exchanged its interests in Hilton LLC for
         Hilton Ltd. Stock, and sold those shares in 2000 and 2001 for
         approximately $300,000 in cash net of expenses at a time when Mr.
         DeMare was an officer and director.

         2. Chase Management Ltd., a private company indirectly wholly owned by
         Nick DeMare, a former officer and director of Gasco, has provided
         management and accounting services to Gasco and was compensated for
         such services at its usual rate. During the period ended December 31,
         2000, Gasco paid Chase a total of $16,086 for services to Gasco.

         3. Mr. McNeil, a former director of Gasco, provides consulting services
         to Gasco. Mr. McNeil received a combination of stock and cash. During
         the year ended December 31, 2000, Mr. McNeil billed Gasco for $9844 for
         technical services rendered. Mr. McNeil was issued 19,930 shares of
         Gasco common stock in satisfaction of the accumulated debt owed to Mr.
         McNeil.

         4. During September 1999, Mr. Bowes and Mr. DeMare purchased shares of
         Oil & Gas Series A Convertible Preferred Stock ("Gasco Ltd. Convertible
         Preferred Stock"). Mr. Bowes, through Bowesco Incorporated, a company
         owned and controlled by Mr. Bowes, purchased 15,330 shares of Gasco
         Ltd. Convertible Preferred Stock. DNG Capital Corp., a wholly owned
         United States affiliate of Mr. DeMare, purchased 1,350 shares of Gasco
         Ltd. Convertible Preferred Stock. Mr. Bowes and Mr. DeMare purchased
         their shares of Gasco Ltd. Convertible Preferred Stock at a price of
         $0.50 per share, which was the same price offered to non-affiliates.
         During October 1999, all outstanding shares of Gasco Ltd. Convertible
         Preferred Stock were converted into shares of Gasco Ltd. common stock
         at the ratio of 100 shares of common stock for each share of Gasco
         Convertible Preferred Stock. Subsequent to the conversion, Mr. Bowes
         owned 1,533,000 shares of Gasco Ltd. common stock and Mr. DeMare owned
         135,000 shares of Gasco Ltd. common stock. Mr. Bowes and Mr. DeMare
         exchanged their shares of Gasco Ltd. common stock for shares of Gasco's
         common stock in connection with the December 31, 1999 share exchange
         with Oil & Gas.

         5. During the fiscal year ended December 31, 1999, a related entity
         paid expenses of $17,257 on behalf of Gasco. Upon consummation of the

--------------------------------------------------------------------------------
                                    Page 31
<PAGE>

         acquisition of Oil & Gas. by Gasco, the related entity waived payment
         of all amounts that was owed to it by Oil & Gas, and since Oil & Gas
         was the accounting acquirer, the December 31, 1999, financial
         statements were not affected by the transaction.

         6. Mr. Bowes, Mr. DeMare and Mr. McNeil are "founders" of Gasco Ltd.,
         and except as disclosed above, have not received anything of value from
         Gasco for that service.



ITEM 13.           EXHIBITS AND REPORTS ON FORM 8-K.

(a)   Exhibits:

REGULATION                                                           CONSECUTIVE
S-B EXHIBIT NUMBER                                                   PAGE NUMBER
------------------                                                   -----------

2.1      December 31, 1999 Agreement and Plan of Reorganization
         with San Joaquin Oil & Gas, Ltd.(1)                               N/A

2.2      February 1, 2001 Agreement and Plan of Merger with
         Pannonian Energy, Inc. (2)                                        N/A

3.1      Amended and Restated Articles of Incorporation (January 1999)(1)  N/A

3.2      Amended Articles of Incorporation (March 2001)(5)                 N/A

3.3      Bylaws (3)                                                        N/A

4.1      1999 Stock Option Plan(4)                                         N/A

10.1     Operating Agreement of Hilton Petroleum Greater San Joaquin
         Basin Joint Venture LLC(4)                                        N/A

10.2     Consulting and Overriding Royalty Agreement with
         Davis & Namson (4)                                                N/A

10.3     Agreement with Canyon Oil (4)                                     N/A

10.4     Agreement with Consolidated Stewards Inc.,
         as amended (4)                                                    N/A

10.5     Financing Agreement with Wet Coast Management Corp.

10.6     Consulting Agreement with Wet Coast Management Corp.

10.7     Acquisition Agreement with Phillips Petroleum Company
         and Pannonian Energy, Inc. dated December 18, 2000

--------------------------------------------------------------------------------
                                    Page 32
<PAGE>

10.8     Financing Agreement with Canaccord International Ltd.
         and Gasco Energy, Inc. dated March 15, 2001

10.9     Financial Services Agreement with Canaccord International Ltd.
         and Gasco Energy, Inc. dated March 15, 2001

10.10    Memorandum of Understanding Between Gasco Energy, Inc.
         and New Energy West dated March 26, 2001 (included in Exhibit 3.4)

11       Statement re: Computation of Per Share Earnings           See Financial
                                                                   Statements

21       List of Subsidiaries

(1)  Incorporated by reference to the exhibits filed with Gasco's Form 8-K dated
     December 31, 1999.

(2)  Incorporated by reference to the exhibits filed with Gasco's Form 8-K/A
     dated February 16, 2001.

(3)  Incorporated by reference to the exhibits filed with San Joaquin's Form
     10SB filed June 10, 1999.

(4)  Incorporated by reference to the exhibits filed with Gasco's Form 10-KSB
     filed April 14, 2000.

(5)  Incorporated by reference to the exhibit filed with Gasco's Form 8-K/A
     filed March 16, 2001.

(b)  The following reports on Form 8-K were filed during the last quarter of the
period covered by this report: and thereafter through the date of this report:

      1.  Form 8-K dated October 18, 2000      Informing the public of the
                                               listing of Gasco common stock for
                                               trading through the NASDAQ
                                               Bulletin Board system under the
                                               symbol SJQR.OB

      2.  Form 8-K dated February 2, 2001      Announcing the Pannonian
                                               merger agreement and filing the
                                               Pannonian merger agreement

      3.  Form 8-K/A dated February 16, 2001   Filing the Certificate of
                                               Amendment to the Articles of
                                               Incorporation changing the
                                               name of the corporation.

      4.  Form 8-K/A dated February 20, 2001   Filing Pannonian 12/31/99
                                               Audited Financial Statements

      5.  Form 8-K/A dated February 23, 2001   Filing Pannonian 9/30/00
                                               Financial Statements

--------------------------------------------------------------------------------
                                    Page 33
<PAGE>

SIGNATURES

In accordance  with Section 13 or 15(d) of the Exchange Act, the  registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

GASCO ENERGY, INC.                                     Dated: March 28, 2001



By /s/ Mark Erickson
   ---------------------------------------
   Mark Erickson, President and Treasurer

In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated.

SIGNATURE                          TITLE                              DATE

/S/ Mark Erickson           President, Treasurer and            March 28, 2001
-----------------           Director (Principal Executive
Mark Erickson               And Accounting and Financial
                            Officer)

/S/ Marc Bruner             Director                            March 28, 2001
---------------
Marc Bruner

/S/ J. Timothy Bowes        Director                            March 28, 2001
--------------------
J. Timothy Bowes

/S/ Carl Stadelhofer        Director                            March 28, 2001
--------------------
Carl Stadelhofer

--------------------------------------------------------------------------------
                                    Page 34
<PAGE>

--------------------------------------------------------------------------------

                           SAN JOAQUIN RESOURCES INC.
                          (A Development Stage Company)

                    CONSOLIDATED FINANCIAL STATEMENTS FOR THE
                   PERIOD FROM INCEPTION (SEPTEMBER 14, 1999)
                          TO DECEMBER 31, 1999 AND THE
                          YEAR ENDED DECEMBER 31, 2000


--------------------------------------------------------------------------------

<PAGE>

                           SAN JOAQUIN RESOURCES INC.
                          (A Development Stage Company)

                                    I N D E X

        Independent Auditor's Report                                 F-2

         Consolidated Balance Sheets December 31, 1999 and 2000      F-3

         Consolidated Statements of Operations Period from
           Inception to December 31, 1999, Year Ended December
           31, 2000, and Cumulative Amounts from Inception to
           December 31, 2000                                         F-4

         Consolidated Statements of Stockholders' Equity Period
           from Inception to December 31, 1999 and Year Ended
           December 31, 2000                                         F-5

         Consolidated Statements of Cash Flows Period from
           Inception to December 31, 1999, Year Ended December
           31, 2000, and Cumulative Amounts from Inception to
           December 31, 2000                                         F-6 to F-7

         Notes to Consolidated Financial Statements                  F-8 to F-18

                                       F-1
<PAGE>

                  INDEPENDENT AUDITOR'S REPORT

To The Board of Directors and Stockholders
San Joaquin Resources Inc.

We have  audited the  accompanying  consolidated  balance  sheets of San Joaquin
Resources  Inc. (a  development  stage company) as of December 31, 1999 and 2000
and the related consolidated statements of operations,  stockholders' equity and
cash flows for the period from  inception to December  31, 1999,  the year ended
December 31, 2000 and  cumulative  amounts from  inception to December 31, 2000.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial  position of San
Joaquin  Resources  Inc. as of December  31, 1999 and 2000 and the  consolidated
results of its  operations  and its cash flows for the period from  inception to
December 31, 1999,  year ended  December  31, 2000 and  cumulative  amounts from
inception to December 31, 2000, in conformity with generally accepted accounting
principles.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated  financial  statements,  the Company has  incurred  losses from its
initial  operations  and has not earned  revenues from its principal  operations
which raise  substantial doubt about its ability to continue as a going concern.
Management's  plans in regard to these matters are also described in Note 2. The
consolidated  financial  statements  do not include any  adjustments  that might
result from the outcome of this uncertainty.

                            WHEELER WASOFF, P.C.

Denver, Colorado
February 21, 2001,
except for Note 10(e), as to which
the date is March 5, 2001

                                       F-2
<PAGE>
<TABLE>
<CAPTION>
                           SAN JOAQUIN RESOURCES INC.
                          (A Development Stage Company)
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1999 AND 2000

                                                                                       1999                  2000
                                     ASSETS
CURRENT ASSETS
<S>                                                                                 <C>                   <C>
   Cash                                                                             $ 387,160             $ 247,822
   Accounts receivable and prepaids                                                     1,038                 3,879
   Advance                                                                             10,000                 1,279
   Marketable securities                                                                    -               146,948
                                                                                    ---------             ---------
   Total current assets                                                               398,198               399,928

INVESTMENT IN OIL AND GAS VENTURE (Note 4)                                            391,670                     -

OIL & GAS PROPERTIES (Note 3)                                                         122,590               258,433
                                                                                    ---------             ---------
                                                                                    $ 912,458             $ 658,361
                                                                                    =========             =========


                       LIABILITIES & STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable and accrued liabilities (Note 6)                                $  74,163              $ 64,559
                                                                                    ---------             ---------
   Total current liabilities                                                           74,163                64,559
                                                                                    ---------             ---------

COMMITMENTS AND CONTINGENCIES (Notes 4 and 9)

STOCKHOLDERS' EQUITY (Note 5)
   Preferred stock, $0.001 par value;
     Authorized - 5,000,000 shares
     Issued and outstanding - none                                                          -                     -
   Common stock, $0.0001 par value;
     Authorized - 100,000,000 shares
     Issued and outstanding - 11,769,000 shares (1999)
     and 11,788,930 shares (2000)                                                       1,177                 1,179
   Additional paid-in capital                                                         984,722               994,685
   (Deficit) accumulated during the development stage                                (147,604)             (402,062)
                                                                                    ---------             ---------
                                                                                      838,295               593,802
                                                                                    ---------             ---------
                                                                                    $ 912,458             $ 658,361
                                                                                    =========             =========
</TABLE>
        The accompanying notes are an integral part of these consolidated
                             financial statements.

                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                           SAN JOAQUIN RESOURCES INC.
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               FOR THE PERIOD FROM INCEPTION TO DECEMBER 31, 1999,
            YEAR ENDED DECEMBER 31, 2000 AND CUMULATIVE AMOUNTS FROM
                         INCEPTION TO DECEMBER 31, 2000

                                                                 Inception to        Year Ended        Cumulative
                                                                 December 31,       December 31,          from
                                                                     1999               2000           Inception to
                                                                                                       December 31,
                                                                                                           2000

REVENUE
<S>                                                                <C>                <C>               <C>
     Interest                                                      $    5,784         $    8,832        $   14,616
                                                                   ----------         ----------        ----------
OPERATING EXPENSES
     Administration and accounting                                      2,341             16,086            18,427
     Audit and legal                                                   21,148             49,611            70,759
     Office and miscellaneous                                           2,995              8,349            11,344
     Professional fees                                                 95,362            120,491           215,853
     Transfer agent                                                         -              1,748             1,748
     Travel                                                            33,212              8,342            41,554
                                                                   ----------         ----------        ----------
                                                                      155,058            204,627           359,685
                                                                   ----------         ----------        ----------
(LOSS) FROM OPERATIONS                                               (149,274)          (195,795)         (345,069)

REALIZED (LOSS) ON SALE OF MARKETABLE SECURITIES                            -            (36,157)          (36,157)

UNREALIZED (LOSS) ON MARKETABLE SECURITIES                                  -            (22,506)          (22,506)

EQUITY IN INCOME OF AFFILIATE                                           1,670                  -             1,670
                                                                   ----------         ----------        ----------
NET (LOSS)                                                         $ (147,604)        $ (254,458)       $ (402,062)
                                                                   ==========         ==========        ==========

NET (LOSS) PER COMMON SHARE - BASIC
  AND DILUTED                                                      $    (0.03)        $    (0.02)       $    (0.04)
                                                                   ==========         ==========        ==========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
  OUTSTANDING - BASIC AND DILUTED                                   5,874,429         11,775,228        10,790,883
                                                                   ==========         ==========        ==========
</TABLE>
        The accompanying notes are an integral part of these consolidated
                             financial statements.

                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                           SAN JOAQUIN RESOURCES INC.
                          (A Development Stage Company)
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
               FOR THE PERIOD FROM INCEPTION TO DECEMBER 31, 1999
                        AND YEAR ENDED DECEMBER 31, 2000


                                                                                                        (Deficit)
                                                                                                       Accumulated
                                        Preferred Stock             Common Stock         Additional     During the
                                    ----------------------      -----------------------   Paid-In     Developmental
                                       Shares       Amount          Shares      Amount    Capital         Stage
                                    ----------   ---------      ----------   ----------  ----------   -------------
<S>                                 <C>              <C>        <C>            <C>        <C>           <C>
Inception, September 14, 1999             -          $  -              -       $  -       $     -       $     -

Sale of Series A Preferred
shares at $0.50 per share              61,490           615            -          -          30,130           -

Conversion of Series A
Preferred Shares into
common stock                          (61,490)         (615)     6,149,000       6,149       (5,534)          -

Sale of common stock at
$0.50 per share                           -             -        1,920,000       1,920      958,080           -

Costs of offerings                        -             -              -           -         (4,846)          -

Issuance of common stock for
acquisition of San Joaquin                -             -              -        (7,262)       7,262           -

Recapitalization of shares
issued by LEK prior to merger             -             -        3,700,000         370         (370)          -

Net (loss)                                -             -              -           -            -        (147,604)
                                     --------        ------     ----------     -------    ---------    ----------
Balance, December 31, 1999                -             -       11,769,000       1,177      984,722      (147,604)

Issuance of common stock
for services rendered at
$0.50 per share                           -             -           19,930           2        9,963          -

Net (loss)                                -             -              -           -            -       (254,458)
                                     --------        ------     ----------     -------    ---------    ----------
Balance, December 31, 2000                -          $  -       11,788,930     $ 1,179    $ 994,685    $ (402,062)
                                     ========        ======     ==========     =======    =========    ==========
</TABLE>
        The accompanying notes are an integral part of these consolidated
                             financial statements.

                                      F-5
<PAGE>
<TABLE>
<CAPTION>
                           SAN JOAQUIN RESOURCES INC.
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE PERIOD FROM INCEPTION TO DECEMBER 31, 1999,
            YEAR ENDED DECEMBER 31, 2000 AND CUMULATIVE AMOUNTS FROM
                         INCEPTION TO DECEMBER 31, 2000

                                                                                                       Cumulative
                                                                  Inception to        Year Ended          from
                                                                  December 31,       December 31,     Inception to
                                                                     1999               2000          December 31,
                                                                                                           2000

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                <C>                <C>               <C>
     Net (loss)                                                    $(147,604)         $(254,458)        $(402,062)
     Adjustments to reconcile net (loss) to net cash
       (used) by operating activities
     Equity in income of affiliate                                    (1,670)               -              (1,670)
     Realized (loss) on sale of marketable securities                    -               36,157            36,157
     Unrealized (loss) on marketable securities                          -               22,506            22,506
     Changes in assets and liabilities
          (Increase) in accounts receivable and prepaids              (1,038)            (2,841)           (3,879)
          (Increase) decrease in advance                             (10,000)             8,721            (1,279)
          Increase (decrease) in accounts payable and
              accrued liabilities                                      74,163            (9,604)           64,559
                                                                   ---------          ---------         ---------
     Net cash (used) by operating activities                         (86,149)          (199,519)         (285,668)
                                                                   ---------          ---------         ---------

CASH FLOWS FROM  INVESTING ACTIVITIES
     Investment in oil and gas venture                              (390,000)            (7,728)         (397,728)
     Cash paid for oil and gas properties                           (192,590)          (158,878)         (351,468)
     Proceeds from sale of participation agreement                    70,000             33,000           103,000
     Proceeds from sale of marketable securities                         -              193,787           193,787
                                                                   ---------          ---------         ---------
     Net cash (used) by investing activities                        (512,590)            60,181          (452,409)
                                                                   ---------          ---------         ---------
CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from sale of preferred stock                            30,745                -              30,745
     Proceeds from sale of common stock                              960,000                -             960,000
     Cash paid for offering costs                                     (4,846)               -              (4,846)
                                                                   ---------          ---------         ---------
     Net cash provided by financing activities                       985,899                -             985,899
                                                                   ---------          ---------         ---------
NET INCREASE (DECREASE) IN CASH                                      387,160           (139,338)          247,822

CASH - BEGINNING OF PERIOD                                               -              387,160                 -
                                                                   ---------          ---------         ---------
CASH - END OF PERIOD                                               $ 387,160          $ 247,822         $ 247,822
                                                                   =========          =========         =========
</TABLE>
        The accompanying notes are an integral part of these consolidated
                             financial statements.

                                      F-6
<PAGE>

                         SAN JOAQUIN RESOURCES INC.
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE PERIOD FROM INCEPTION TO DECEMBER 31, 1999
                        AND YEAR ENDED DECEMBER 31, 2000

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

During the period from  inception to December  31, 1999 and year ended  December
31, 2000, the Company did not incur any short-term borrowings.

SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES

In October 1999,  6,149,000 shares of common stock of San Joaquin Oil & Gas Ltd.
were issued on the conversion of 61,490 Series A Preferred Shares.

In  December  1999,  8,069,000  shares  of  common  stock  were  issued  for the
acquisition  of 100% of the  outstanding  common  stock of San Joaquin Oil & Gas
Ltd.   These  shares  were  issued   pursuant  to  an  agreement   and  plan  of
reorganization effective December 31, 1999. (Note 1)

In September 2000, 19,930 shares of common stock were issued for $9,965 accounts
payable due to a director of the Company for consulting services rendered.

In December 2000, the Company  received 314,907 shares of common stock of Hilton
Petroleum  Ltd. In exchange for the  Company's  investment  in Hilton  Petroleum
Greater San Joaquin Basin LLC.



        The accompanying notes are an integral part of these consolidated
                             financial statements.

                                      F-7
<PAGE>

                           SAN JOAQUIN RESOURCES INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE PERIOD FROM INCEPTION TO DECEMBER 31, 1999
                        AND YEAR ENDED DECEMBER 31, 2000


1.       ORGANIZATION AND BUSINESS COMBINATION

         LEK International,  Inc. ("LEK") was incorporated under the laws of the
         State of Nevada on April  21,  1997,  for the  purpose  of  evaluating,
         structuring  and  completion of a merger with, or acquiring a privately
         owned corporation.  LEK is a public company that  had no operations. On
         December 31, 1999, LEK completed an agreement (the  "Agreement and Plan
         of  Reorganization")  whereby it issued  8,069,000 shares of its common
         stock to acquire all of the shares of San Joaquin Oil & Gas Ltd.  ("San
         Joaquin"),  a private  corporation  incorporated on September 14, 1999,
         under the laws of the State of Nevada.  San  Joaquin is an  independent
         energy company engaged in the exploration,  development and acquisition
         of crude oil and natural gas reserves in the western  United States and
         is  considered a  development  stage company as defined by Statement of
         Financial  Accounting  Standards  (SFAS)  No.  7.  San  Joaquin  is  an
         exploration  stage oil and gas company and as of December 31, 2000, has
         not earned any production revenue, nor found proved resources on any of
         its  properties.  San Joaquin's  principal  activities had been raising
         capital through the sale of its securities,  identifying and evaluating
         potential oil and gas property acquisitions,  and acquiring an interest
         in a limited liability company. See Notes 3 and 4.

         As a result of this  transaction,  San  Joaquin  became a  wholly owned
         subsidiary of LEK, and effective January 17, 2000, LEK changed its name
         to San Joaquin  Resources Inc. (the "Company").  Since this transaction
         resulted in the former shareholders of San Joaquin acquiring control of
         LEK, for  financial  reporting  purposes the business  combination  was
         accounted  for  as an  additional  capitalization  of  LEK  (a  reverse
         acquisition with San Joaquin as the accounting acquirer). In accounting
         for this transaction:

         i)       San Joaquin was deemed to be the purchaser and parent  company
                  for financial reporting purposes.  Accordingly, its net assets
                  were  included  in the  consolidated  balance  sheet  at their
                  historical book value;

         ii)      control  of the net assets and  business  of LEK was  acquired
                  effective December 31, 1999, for no consideration; and

         iii)     the   consolidated   financial   statements   of   operations,
                  stockholders'  equity  and cash  flow  include  San  Joaquin's
                  results of operations  and changes in cash flow for the period
                  from inception, September 14, 1999, to December 31, 1999.

         The Company's fiscal year end is December 31.

         Subsequent to December 31, 2000, the Company entered into an agreement,
         as described in Note 10, to acquire an oil and gas company.

                                       F-8
<PAGE>

                           SAN JOAQUIN RESOURCES INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE PERIOD FROM INCEPTION TO DECEMBER 31, 1999
                        AND YEAR ENDED DECEMBER 31, 2000


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         BASIS OF ACCOUNTING

         The accompanying  financial  statements have been prepared on the basis
         of  accounting  principles   applicable  to  a  going  concern,   which
         contemplates   the   realization  of  assets  and   extinguishment   of
         liabilities in the normal course of business.

         The Company is in the development  stage and has not realized  revenues
         from its planned  operations.  At December  31,  2000,  the Company had
         accumulated a deficit of $402,062.  Additional funding will be required
         for the Company to  participate  in the  acquisition,  exploration  and
         development  of interests in oil and gas  properties.  In order to meet
         the Company's  continuing  financing  needs,  management of the Company
         intends to raise  working  capital  through the sale of common stock or
         other securities, or merge with industry partners.

         The  Company's  financial  statements  do not include  any  adjustments
         related  to the  realization  of the  carrying  value of  assets or the
         amounts  and  classification  of  liabilities  that might be  necessary
         should the Company be unable to continue in existence.

         The ability of the Company to continue operations as a going concern is
         dependent upon its success in obtaining  capital through sale of common
         stock  or  other   securities  and  ultimately   achieving   profitable
         operations. In January 2001, the Company entered into an agreement with
         Pannonian  Energy Inc., a private oil and gas company,  as described in
         Note 10 (a). Management believes this merger will enable the Company to
         continue as a going concern.

         BASIS OF CONSOLIDATION

         The  consolidated  financial  statements  include  the  accounts of the
         Company and its wholly owned  subsidiary,  San Joaquin. All significant
         intercompany   accounts  and  transactions   have  been  eliminated  in
         consolidation.

         OIL AND GAS PROPERTIES

         Capitalized Costs

         The Company  follows the full cost method of accounting for oil and gas
         operations.  Under this method all costs related to the exploration for
         and   development  of  oil  and  gas  reserves  are  capitalized  on  a
         country-by-country   basis.  Costs  include  lease  acquisition  costs,
         geological  and  geophysical  expenses,  overhead  directly  related to
         exploration  and  development  activities  and costs of  drilling  both
         productive  and  non-productive   wells.  Proceeds  from  the  sale  of
         properties are applied against  capitalized costs,  without any gain or
         loss being recognized, unless such a sale would significantly alter the
         rate of depletion and depreciation.

                                       F-9
<PAGE>

                           SAN JOAQUIN RESOURCES INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE PERIOD FROM INCEPTION TO DECEMBER 31, 1999
                        AND YEAR ENDED DECEMBER 31, 2000


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         Depletion and Depreciation

         Depletion of exploration  and  development  costs and  depreciation  of
         production  equipment is provided using the  unit-of-production  method
         based  upon  estimated  proven  oil  and gas  reserves.  The  costs  of
         significant  unevaluated  properties are excluded from costs subject to
         depletion. For depletion and depreciation purposes, relative volumes of
         oil and  gas  production  and  reserves  are  converted  at the  energy
         equivalent conversion rate of six thousand cubic feet of natural gas to
         one barrel of crude oil.

         Ceiling Test

         In applying the full cost method,  the Company  performs a ceiling test
         whereby the carrying  value of oil and gas  properties  and  production
         equipment,  net of recorded  future  income  taxes and the  accumulated
         provision  for site  restoration  and  abandonment  costs,  is compared
         annually to an estimate of future net cash flow from the  production of
         proven  reserves.  Costs related to undeveloped  oil and gas properties
         are  excluded  from the  ceiling  tests.  Discounted  net cash  flow is
         estimated  using year end prices,  less  estimated  future  general and
         administrative expenses,  financing costs and income taxes. Should this
         comparison  indicate an excess  carrying  value,  the excess is charged
         against earnings. At December 31, 2000 there were no reserves.

         MARKETABLE SECURITIES

         Marketable  securities  which are classified as trading  securities are
         carried at fair value, as determined by quoted published market prices,
         with  unrealized  losses  and gains to be  charged  to  operations.  In
         addition,  net realized gains and losses on security  transactions  are
         determined  on the specific  identification  cost basis and included in
         the  determination  of earnings for the year. At December 31, 2000, the
         Company  recorded an unrealized  loss of $22,506 on trading  securities
         having a historical cost of $169,454.

         INVESTMENTS

         Investments in affiliated  companies (20% to 50% owned),  are accounted
         for by the equity method. Under this method, the Company recognizes its
         share of income (loss) in the investee  company.  Where, in the opinion
         of management, there has been a loss in value of long-term investments,
         which is other than a temporary decline,  the carrying value is reduced
         to estimated realizable value.

         REVENUE RECOGNITION

         The Company will  recognize  oil and gas revenues from its interests in
         producing wells as oil and gas is produced and sold from these wells.

                                      F-10
<PAGE>

                           SAN JOAQUIN RESOURCES INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE PERIOD FROM INCEPTION TO DECEMBER 31, 1999
                        AND YEAR ENDED DECEMBER 31, 2000


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         IMPAIRMENT

         The Company has adopted SFAS No. 121  "Accounting for the Impairment of
         Long-Lived  Assets and for  Long-Lived  Assets to be Disposed of" which
         requires  that  long-lived  assets to be held and used be reviewed  for
         impairment  whenever events or changes in  circumstances  indicate that
         the  carrying  amount of an asset may not be  recoverable.  Oil and gas
         properties  accounted for using the full cost method of  accounting,  a
         method utilized by the Company, are excluded from this requirement, but
         will continue to be subject to the ceiling test limitations.

         INCOME TAXES

         The Company has adopted the provisions of SFAS No. 109, "Accounting for
         Income   Taxes".   SFAS  109  requires   recognition  of  deferred  tax
         liabilities  and assets for the  expected  future tax  consequences  of
         events  that have been  included  in the  financial  statements  or tax
         returns.  Under this method,  deferred tax  liabilities  and assets are
         determined based on the difference between the financial  statement and
         tax basis of assets and  liabilities  using enacted tax rates in effect
         for the year in which the differences are expected to reverse.

         At December 31, 2000, the Company had a net operating loss carryforward
         of  approximately  $391,000 that may be offset  against  future taxable
         income through 2020.

         The  Company has fully  reserved  the tax  benefits of these  operating
         losses because the likelihood of realization of the tax benefits cannot
         be determined.

         The tax benefit of the loss  carryforward of approximately  $85,000 has
         been offset by a valuation  allowance of the same amount.  Of the total
         tax  benefit,  approximately  $46,000 is  applicable  to the year ended
         December 31, 2000.

         Temporary  differences  between the time of reporting certain items for
         financial and tax reporting  purposes consist  primarily of exploration
         costs on oil and gas properties, and equity income (loss) in affiliated
         companies.

         USE OF ESTIMATES

         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 and disclosure of contingent  assets and liabilities at the
         date of the financial  statements and reported  amounts of revenues and
         expenses during the reporting period.  Actual results could differ from
         those estimates.

                                      F-11
<PAGE>

                           SAN JOAQUIN RESOURCES INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE PERIOD FROM INCEPTION TO DECEMBER 31, 1999
                        AND YEAR ENDED DECEMBER 31, 2000


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         The oil and gas industry is subject,  by its nature,  to  environmental
         hazards  and  clean-up  costs.  At this  time,  management  knows of no
         substantial costs from environmental  accidents or events for which the
         Company may be currently liable. In addition, the Company's oil and gas
         business makes it vulnerable to changes in wellhead prices of crude oil
         and natural gas.  Such prices have been volatile in the past and can be
         expected to be volatile in the future.  By definition,  proved reserves
         are based on current oil and gas prices and estimated  reserves.  Price
         declines reduce the estimated  quantity of proved reserves and increase
         annual amortization expense (which is based on proved reserves).

         FOREIGN CURRENCY TRANSLATION

         The assets and  liabilities  of the Company's  foreign  operations  are
         generally  translated into US dollars at current  exchange  rates,  and
         revenues and expenses are translated at average  exchange rates for the
         year.  Resulting  translation  adjustments,  if any, are reflected as a
         separate component of stockholders' equity.

         Transaction gains and losses that arise from exchange rate fluctuations
         on  transactions  denominated  in a currency  other than the functional
         currency are included in the results of operations as incurred.

         (LOSS) PER COMMON SHARE

         (Loss) per  common  share is  computed  based on the  weighted  average
         number of common shares  outstanding  during the period.  Common shares
         issued upon conversion of Series A convertible preferred stock (Note 5)
         are considered outstanding for all periods presented.

         CASH EQUIVALENTS

         For purposes of  reporting  cash flows,  the Company  considers as cash
         equivalents  all highly  liquid  investments  with a maturity  of three
         months or less at the time of purchase.  On  occasion,  the Company has
         cash in banks in excess of federally insured amounts.

         CONCENTRATION OF CREDIT RISK

         Financial  instruments,   which  potentially  subject  the  Company  to
         concentrations  of credit risk,  consist of cash. The Company maintains
         cash accounts at one financial  institution.  The Company  periodically
         evaluates  the  credit  worthiness  of  financial   institutions,   and
         maintains   cash  accounts   only  in  large  high  quality   financial
         institutions.

                                      F-12
<PAGE>

                           SAN JOAQUIN RESOURCES INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE PERIOD FROM INCEPTION TO DECEMBER 31, 1999
                        AND YEAR ENDED DECEMBER 31, 2000


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         FAIR VALUE

         The carrying  amount  reported in the balance sheet for cash,  accounts
         receivable and prepaids,  advances,  marketable securities and accounts
         payable and accrued liabilities  approximates fair value because of the
         immediate or short-term maturity of these financial instruments.

         As at  December  31,  2000,  the  estimated  fair  value of  marketable
         securities was $146,948.

         NEW TECHNICAL PRONOUNCEMENTS

         The  Financial  Accounting  Standards  Board has issued  SFAS No. 138 -
         "Accounting  for Certain  Derivative  Instruments  and Certain  Hedging
         Activities",  effective for fiscal years beginning after June 15, 2000;
         and SFAS No. 139 -  "Rescission  of SFAS No. 53".  Adoption of SFAS No.
         138 is not  expected  to  have an  impact  on the  Company's  financial
         statements, and SFAS No. 139 is not applicable to the Company.

3.       OIL & GAS PROPERTIES

         Pursuant to an agreement,  dated  November 16, 1999, the Company agreed
         to grant  Consolidated  Earth  Stewards  Inc.  ("CEW") a right of first
         refusal  ("ROFR") until October 1, 2001 to participate in a 19% working
         interest in certain oil and gas prospects to be  identified,  acquired,
         or generated by the Company in the San Joaquin and  Sacramento  Basins,
         located in  California.  CEW had agreed to pay an initial  $150,000 for
         the ROFR and provide an initial advance of $200,000 to fund exploration
         costs.  As at December  31,  1999,  CEW had paid the  Company  $70,000.
         During the year ended  December 31, 2000, CEW paid a further $8,000 and
         the agreement was subsequently cancelled.

         On  December  1, 1999,  the  Company  and  Canyon Oil & Gas  ("Canyon")
         entered into an agreement  whereby the Company paid an initial  $70,000
         to Canyon for technical  information  provided by Canyon on certain oil
         and gas prospects (the "Canyon  Prospects")  located in the San Joaquin
         and Sacramento  Basins.  The Company was also required to pay a renewal
         payment of $70,000 every four months until termination of the agreement
         by either party. During the year ended December 31, 2000, the agreement
         was terminated without any further payments made.

         As at December 31, 2000, the Company has acquired  direct  interests in
         oil and gas  prospects  covering  3,990  net  acres in the San  Joaquin
         Basin.

                                      F-13
<PAGE>

                           SAN JOAQUIN RESOURCES INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE PERIOD FROM INCEPTION TO DECEMBER 31, 1999
                        AND YEAR ENDED DECEMBER 31, 2000


4.       INVESTMENT IN OIL AND GAS VENTURE

         During the period ended December 31, 1999,  the Company  purchased four
         units,  representing  a 20%  ownership  interest,  in Hilton  Petroleum
         Greater San Joaquin Basin LLC ("Hilton LLC") for $390,000.  Hilton LLC,
         a Colorado limited  liability  company  organized on June 4, 1999, is a
         development  stage  company as defined by SFAS No. 7. During the period
         December 31, 1999,  Hilton LLC paid Hilton  Petroleum  Ltd.  ("Hilton")
         $1,550,000  for a  2.25%  working  interest  in the San  Joaquin  Joint
         Venture and agreed to pay 4% of the costs to drill the initial wells on
         each of the initial three prospects in the San Joaquin Basin.

         As a member of Hilton  LLC,  the  Company  was  required to provide its
         pro-rata share of all capital  requirements of Hilton LLC. In the event
         that  a  member  failed  to  pay  its  additional   cash  call  capital
         contributions  within a specified time period,  then,  that  defaulting
         member's  interest in Hilton LLC would revert to Hilton. If the default
         occurred  within 24  months of the  initial  capital  contribution  the
         member would, no sooner than 12 months,  if the default occurred before
         12  months,  receive  common  stock of Hilton,  at the then  prevailing
         prices,  for the defaulting  member's  investment cost. If such failure
         occurred   after  24  months,   then  Hilton  would  fund  the  capital
         contribution of the defaulting member and retain that member's share of
         cash flow until 300% of the defaulted cash was repaid to Hilton.

         During the year ended  December 31, 2000,  the Company funded a further
         $7,728 in cash call contributions.

         On April 4, 2000,  the Company  notified  Hilton and Hilton LLC that it
         would no longer fund any further  capital  contributions.  Accordingly,
         the Company  received  314,907  common  shares of Hilton,  based on the
         trading value price of Hilton  common stock,  in an amount equal to the
         Company's  capital  contributions.  During the year ended  December 31,
         2000, the Company sold 181,300 common shares of Hilton for net proceeds
         of $193,787,  realizing a loss of $36,157. As at December 31, 2000, the
         Company held 133,607 common shares of Hilton,  which were  subsequently
         sold in January 2001, for net proceeds of $140,850.

         Hilton is a Canadian  public  company  listed on the  Canadian  Venture
         Exchange  and  is  engaged  in  the  business  of  acquiring  leasehold
         interests  in oil  and gas  properties  and the  exploration  for,  and
         development,  production and sale of oil and gas,  predominantly in the
         United States through its wholly owned subsidiaries.  A director of the
         Company is also a director of Hilton.

                                      F-14
<PAGE>

                           SAN JOAQUIN RESOURCES INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE PERIOD FROM INCEPTION TO DECEMBER 31, 1999
                        AND YEAR ENDED DECEMBER 31, 2000


5.       STOCKHOLDERS' EQUITY

         Effective  December 31, 1999,  LEK  completed  the  acquisition  of San
         Joaquin (Note 1). In conjunction  with the  acquisition,  LEK exchanged
         8,069,000 shares of its common stock for 100% of the outstanding common
         shares of San  Joaquin.  The  3,700,000  shares of common  stock of LEK
         outstanding at the date of acquisition  were  recapitalized  at the net
         asset value of LEK that as of that date was $0. For financial statement
         reporting   purposes  this   transaction   was  treated  as  a  reverse
         acquisition  whereby San  Joaquin  was  considered  the  surviving  and
         reporting  entity.  For legal  purposes,  LEK remained as the surviving
         entity; therefore, the capital structure of the Company was accordingly
         restated.  In December 1999, the Board of Directors and shareholders of
         LEK  approved  a 3.7  to 1  stock  split.  All  common  shares  of  LEK
         outstanding   prior  to  the  acquisition  of  San  Joaquin  have  been
         retroactively restated.

         In  September  1999,  San  Joaquin  designated  70,000  shares  of  its
         1,000,000 authorized preferred stock, as Series A convertible preferred
         stock (the "Series A Preferred Shares").  San Joaquin subsequently sold
         61,490 Series A Preferred Shares, at $0.50 per share, for cash proceeds
         of  $30,745.  In October  1999,  the  Series A  Preferred  Shares  were
         converted by the holders into 6,149,000 common shares of San Joaquin.

         In October  1999,  San Joaquin  completed  the sale of an  aggregate of
         1,920,000 shares of common stock, at a price of $0.50 per common share,
         for cash  proceeds of  $960,000.  The shares of common  stock were sold
         pursuant to the exemptions from registration contained in Sections 3(b)
         and 4(2) of the  Securities  Act of 1933 and Rule 504 of  Regulation  D
         promulgated thereunder.

         The cost of San Joaquin's  preferred and common stock  offerings was an
         aggregate $4,846.

         On December 15, 1999,  the Board of Directors of LEK approved,  subject
         to completion of the Agreement and Plan of  Reorganization  between LEK
         and San Joaquin,  a stock option plan (the "Plan"),  which  reserved an
         aggregate of 1,176,900 shares of common stock for issuance  pursuant to
         the  exercise  of stock  options  which may be  granted  to  employees,
         officers and directors of the Company and  consultants  to the Company.
         The Plan also provides for annual  adjustments  in the number of shares
         available  under  the  Plan  equal  to  10%  of the  number  of  shares
         outstanding.  No stock  options have been granted  under the Plan.  The
         Company will measure  compensation for options  utilizing the intrinsic
         value approach under Accounting Principles Board Opinion No. 25.

         On January 17, 2000,  the Company  amended and restated its Articles of
         Incorporation  to authorize  additional  capital  stock  consisting  of
         5,000,000 shares of Preferred Stock with $0.001 par value per share and
         changed the name of the Company to San Joaquin Resources Inc.

                                      F-15
<PAGE>

                           SAN JOAQUIN RESOURCES INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE PERIOD FROM INCEPTION TO DECEMBER 31, 1999
                        AND YEAR ENDED DECEMBER 31, 2000


5.       STOCKHOLDER'S EQUITY (continued)

         On September 8, 2000, the Company issued 19,930 shares of common stock,
         at a price of $0.50 per  common  share,  in  satisfaction  of $9,965 of
         accounts  payable  due to a  director  of the  Company  for  consulting
         services rendered.

         See also Note 10.

6.       RELATED PARTY TRANSACTIONS

         During the year ended  December  31,  2000,  the  Company  was  charged
         $16,086 (1999 - $2,341) for accounting  services  rendered by a company
         owned by a  director  of the  Company,  $72,000  (1999 -  $18,000)  for
         professional  fees rendered by the  President of the Company,  $788 for
         management  services to a company  owned by a director of the  Company,
         and $9,844  (1999 -  $14,439)  for  technical  services  rendered  by a
         director of the Company.  At December 31, 2000, $15,202 remained unpaid
         and has been included in accounts payable and accrued liabilities.

         See also Notes 4 and 5.

7.       SEGMENT REPORTING

         The Company has one reportable segment, the exploration and development
         of oil and gas properties. The Company has concentrated its oil and gas
         exploration  and  development  activities in the western United States,
         primarily  California.  All  activities  in this segment have been with
         industry partners.

8.       COMPREHENSIVE INCOME

         There are no  adjustments  necessary  to the net (loss) as presented in
         the accompanying statement of operations to derive comprehensive income
         in accordance with SFAS No. 130, "Reporting Comprehensive Income".

9.       COMMITMENTS AND CONTINGENCIES

         The Company may be subject to various possible  contingencies that  are
         derived  primarily from  interpretations  of federal and state laws and
         regulations  affecting  the oil and gas industry.  Although  management
         believes it has  complied  with the various laws and  regulations,  new
         rulings  and  interpretations  may  require  the Company to make future
         adjustments.

                                      F-16
<PAGE>

                           SAN JOAQUIN RESOURCES INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE PERIOD FROM INCEPTION TO DECEMBER 31, 1999
                        AND YEAR ENDED DECEMBER 31, 2000


9.       COMMITMENTS AND CONTINGENCIES (continued)

         The Company is obligated to pay approximately  $19,000 in delay rentals
         during the fiscal year ended December 31, 2001 to maintain the right to
         explore its oil and gas prospects.

10.      SUBSEQUENT EVENTS

         a)       On February 1, 2001, the Company entered into an Agreement and
                  Plan of Reorganization (the "Pannonian Agreement") whereby  it
                  agreed to issue up to 14,000,000 shares of its common stock to
                  acquire all of the  outstanding  shares of  Pannonian  Energy,
                  Inc. ("Pannonian"),  a private corporation  incorporated under
                  the laws of the State of Delaware. Pannonian is an independent
                  energy company  engaged in the  exploration,  development  and
                  acquisition  of crude  oil and  natural  gas  reserves  in the
                  western  United States and is  considered a development  stage
                  company  as  defined  by  Statement  of  Financial  Accounting
                  Standards (SFAS) No. 7. Pannonian is an exploration  stage oil
                  and gas company and, as of December 31, 2000,  earned  minimal
                  production  revenue and found minimal  proved  reserves on its
                  properties.

                  Certain  shareholders  of the Company have agreed to surrender
                  for  cancellation  2,438,930  common  shares of the  Company's
                  capital stock on completion of the transaction contemplated by
                  the Pannonian Agreement.

                  On  completion  of the  transaction,  Pannonian  will become a
                  wholly-owned  subsidiary of the Company.  However,  since this
                  transaction  will  result  in  the  existing  shareholders  of
                  Pannonian  acquiring  control of the  Company,  for  financial
                  reporting purposes the business  combination will be accounted
                  for as an additional  capitalization of the Company (a reverse
                  acquisition with Pannonian as the accounting acquirer).

                  On  February  14,  2001,  the  Company  advanced  $250,000  to
                  Pannonian.

         b)       Effective   January  12,  2001,   the  Company   entered  into
                  agreements with Wet Coast Management  Corp.  ("Wet Coast"),  a
                  private  corporation  incorporated  under the laws of  British
                  Columbia, Canada, whereby Wet Coast:

                  i)       agreed to arrange  financing for the Company to raise
                           $7,200,000  through the issuance of 2,400,000  common
                           shares at $3.00 per share; and

                  ii)      agreed to provide consulting  services to the Company
                           for a term of twelve months,  commencing  February 1,
                           2001, at a rate of $5,000 per month. The Company also
                           agreed  to  grant  stock  options  to  Wet  Coast  to
                           purchase 20,000 common shares at $3.00 per share.

                                      F-17
<PAGE>

                           SAN JOAQUIN RESOURCES INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE PERIOD FROM INCEPTION TO DECEMBER 31, 1999
                        AND YEAR ENDED DECEMBER 31, 2000


10.      SUBSEQUENT EVENTS (continued)

         c)       In January 2001, a  non-qualified  stock option was granted to
                  the President of Pannonian to purchase up to 1,000,000  shares
                  of the Company's common stock at $1.00 per share until January
                  2, 2011. The option was fully vested as of the date of grant.

         d)       In February 2001,  non-qualified stock options were granted to
                  seven  officers,  directors  and  consultants  of San  Joaquin
                  covering a total of 1,100,000  shares of the Company's  common
                  stock at $3.00 per share until  February 8, 2011.  The options
                  have varying vesting provisions.

         e)       Effective March 5, 2001 the Company amended its Articles of
                  Incorporation to change the name of the Company to Gasco
                  Energy, Inc.

                                      F-18