================================================================================
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                 --------------

                                   FORM 10-KSB
                                 --------------
(Mark One)

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

                   For the fiscal year ended December 31, 2001

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

              For the transition period from ________ to _________

                                     0-20915
                            (Commission file number)
                                 --------------

                               GEO PETROLEUM, INC.
                 (Name of small business issuer in its charter)
                                 --------------

                California                               33-0328958
      (State or other jurisdiction of       (I.R.S. Employer Identification No.)
       incorporation or organization)

            18281 Lemon Drive,
          Yorba Linda, California                           92886
 (Address of principal executive offices)                (Zip Code)

                                 (714) 779-9897
                           (Issuer's telephone number)




         Securities registered under Section 12(g) of the Exchange Act:
                           Common Stock, no par value

       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 there is no 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 registrant'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. | |
       The registrant's revenues for its fiscal year ended December 31, 2001
were $294,407.. At April 1, 2002, 19,471,128 shares of common stock (the
registrants only class of voting stock) were outstanding. The aggregate market
value of the common stock on that date (based upon the closing price on the
over-the-counter market on April 2, 2002 ($0.21) held by non-affiliates was
approximately $4,088,936.80.

     (ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE PAST FIVE YEARS)

       Check whether the issuer has filed all documents and reports  required to
be filed by Section 12, 13 or 15(d) of the Exchange  Act after the  distribution
of securities under a plan confirmed by a court. Yes |X| No | |
                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)
       State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
                                                 ---------
shares as of April 1, 2002.
                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None.
Transitional Small Business Disclosure Format (check one): Yes | | No |X|

================================================================================

<PAGE>

                               GEO PETROLEUM, INC.


                                      Index

<TABLE>
<CAPTION>
                                                                                                             Page
                                                                                                           ---------
PART I.          BUSINESS INFORMATION
<S>              <C>
Item 1.          Description of Business...................................................................
Item 2.          Description of Property...................................................................
Item 3.          Legal Proceedings.........................................................................
Item 4.          Submission of Matters to a Vote of Security Holders.......................................

PART II.         OTHER INFORMATION
Item 5.          Market For Common Equity and Related Stockholder Matters..................................
Item 6.          Management's Discussion and Analysis or Plan of Operation.................................
Item 7.          Financial Statements......................................................................
Item 8.           hanges in and Disagreements with Accountants on
                 C Accounting and Financial Disclosure.....................................................

PART III.        OTHER INFORMATION
Item 9.           irectors, Executive Officers, Promoters and Control Persons; Compliance with
                 D Section 16(a) of the Exchange Act.......................................................
Item 10.         Executive Compensation....................................................................
Item 11.         Security Ownership of Certain Beneficial Owners and Management............................
Item 12.         Certain Relationships and Related Transactions............................................
Item 13.         Exhibits and Reports Form 8-K.............................................................


SIGNATURES.................................................................................................
</TABLE>

<PAGE>

                                     PART I

ITEM 1.       DESCRIPTION OF BUSINESS

(A) BUSINESS DEVELOPMENT

Geo Petroleum, Inc. is a California corporation formed in 1986 by Gerald T.
Raydon, who, until December 15, 1999, was our chief executive officer and
majority shareholder. We were originally organized to develop and operate oil
and gas wells on leased properties and to take advantage of the
"non-conventional fuels credit", which is a tax credit allowed under Section 29
of the Internal Revenue Code to producers of non-conventional fuels. Our oil and
gas leases are operated pursuant to a 1987 pooling agreement by which the
lessors jointly reserve an average royalty of 12% gross revenues. One 230 acre
parcel is subject to a 12.5% royalty. We hold a 100% working interest and a
related average 88% net revenue interest in these properties, subject to a 5%
net profit interest retained by an individual.

In 1998, we filed for protection under Chapter 11 of the U.S. Bankruptcy Code.
In December, 1999 we emerged from bankruptcy under a plan which, among other
things, provided for the issuance of approximately 1,900,000 shares of our
common stock to our creditors, relinquishment by Mr. Raydon and certain
affiliates of claims to 1.39 million shares of common stock in favor of our
creditors, and a change in our management. On November 29, 2001, having
completed all the requirements of our Plan of Reorganization, we were released
from the jurisdiction of the U.S. Bankruptcy Court.

Shortly before filing the petition for reorganization in the bankruptcy court,
we sold for cash, and relief of indebtedness and other obligations, all of our
interests in our Bandini and East Los Angeles oil and gas properties. Such
properties had produced approximately 89% of our oil production and 95% of our
production of natural gas during the calendar year 1998 (the year during which
such properties were sold). We also reduced the carrying cost of our remaining
oil and gas properties.

In our reorganization, we settled some lessors' claims by increasing the royalty
on some properties to 15.6% and by making certain cash payments. In late 1999,
we released one of our leases covering approximately 170 acres, reducing our
Vaca Tar Sands (a large tar sand deposit in Ventura County, California) acreage
to approximately 465 acres. We also operate "disposal" properties, which means
we have a permit to dispose of liquids found in the bottom of storage tanks down
disposal wells. Oil operators pay us to dispose of these waste liquids.

We are currently operating a waste disposal well and we have two conditional use
permits from Ventura County, California allowing us to drill up to 120 wells on
part of our leased property, and additional wells on the balance of our leased
property. We also purchased 30 wells in the Rosecrans Oil Field in Los Angeles
County in 1994. These wells are not currently producing, but we intend to return
some of these wells to production by bleeding down excessive casing pressure on
the idle wells and upsizing the pumping equipment capacity, using existing or
reconditioned pumping equipment wherever possible.

RECENT EVENTS. Beginning in the first quarter of 2001, we began preparations to
bring approximately 12 formerly revenue producing wells in the Rosecrans Oil
Field back on line. This will require, among other things, that we conduct idle
well mechanical integrity testing, repair and upgrade pumping units on the
wells, pay permit fees, pressure test existing pipelines and pipelines we
acquire for feeding into an oil/gas/water separation system consisting of a gas
separator, a wash tank, a stock tank and a water separator (we have applied to
permit a new oil and gas production facility located at 552 West 127th Street,
Los Angeles, California known as the Marmac tank farm), and pay surface clean-up
costs.

In December, 2001, we entered into a lease extension and amendment with the
Thomas O. Hunsucker Trust by which we extended the primary term of our oil and
gas lease in Ventura County until December 26, 2006.

<PAGE>

In January, 2002, we agreed to purchase a 50% working interest in the J.H.
Brooks #1 oil and gas lease (with an existing oil well on the lease) located in
Hart County, Kentucky. With our partners, we have funded the completion of the
first deep test well on the property, which is located in the southern part of
the Illinois Basin. The J.H. Brooks No. 1 was drilled to a total depth of 8,250
feet. The well is on Geo-Petroleum's (Hammonville-Magnolia) lease block, which
extends over a fifty thousand acre area of interest. Geo has earned a 40% Net
Revenue Interest in the lease block and expects to participate in another deep
location in mid-year 2002. Geo has also taken an option on an additional fifty
thousand acres, which joins its present position to the west.

Similar Kentucky wells drilled to test the deeper zones in the Rome and pre-Knox
formations have been successful and are producing 5-10 MCF of natural gas per
day with estimated reserves of 5-bcf to 10-bcf.

Our principal place of business is located at 18281 Lemon Drive, Yorba Linda,
California 92886. Our telephone number is (714) 779-9897 and our facsimile
number is (714) 779-0814.

Since we emerged from bankruptcy, our income from operations has not been
sufficient to maintain the Company. Our president does not receive cash
compensation. Were it not for the fact that we have sold equity during the year
2001, the Company would not be able to continue operating. At year-end 2001,
only our waste disposal facility was producing significant revenues.

GLOSSARY OF TERMS USED IN THIS REPORT

The terms below are used in this document and have specific SEC definitions as
follows:

Proved oil and gas reserves. Proved oil and gas reserves are the
estimated quantities of crude oil, natural gas and natural gas liquids which
geological and engineering data demonstrate with reasonable certainty to be
recoverable in future years from known reservoirs under existing economic and
operating conditions, i.e., prices and costs as of the date the estimate is
made. Prices include consideration of changes in existing prices provided only
by contractual arrangements, but not on escalations based upon future
conditions.

Proved developed oil and gas reserves. Proven developed oil and gas reserves are
reserves that can be expected to be recovered through existing wells with
existing equipment and operating methods. Additional oil and gas expected to be
obtained through the application of fluid injection or other improved recovery
techniques for supplementing the natural forces and mechanisms of primary
recovery should be included as "proved developed reserves" only after testing by
a pilot project or after the operation of an installed program has confirmed
through production response that increased recovery will be achieved.

Proved undeveloped reserves. Proved undeveloped oil and gas reserves are
reserves that are expected to be recovered from new wells on undrilled acreage,
or from existing wells where a relatively major expenditure is required for
recompletion. Reserves on undrilled acreage shall be limited to those drilling
units offsetting productive units that are reasonably certain of production when
drilled. Proved reserves for other undrilled units can be claimed only where it
can be demonstrated with certainty that there is continuity of production from
the existing productive formation. Under no circumstances should estimates for
proved undeveloped reserves be attributable to any acreage for which an
application of fluid injection or other improved recovery technique is
contemplated, unless such techniques have been proved effective by actual tests
in the area and in the same reservoir.

As used in this Form 10-KSB:

"Mcf" means thousand cubic feet, "MMcf" means million cubic feet, "Bcf" means
billion cubic feet, "Bbl" means barrel, "MBbls" means thousand barrels, "MMBbls"
means million barrels, "BOE" means equivalent barrels of oil, "MBOE" means
thousand equivalent barrels of oil .

Unless otherwise indicated in this Form 10-KSB, gas volumes are stated at the
legal pressure base of the state or area in which the reserves are located and
at 60 degrees Fahrenheit. Equivalent barrels of oil are determined using the
ratio of 5.56 Mcf of gas to 1 Bbl of oil.

<PAGE>

The term "gross" refers to the total acres or wells in which we have a working
interest, and "net" refers to gross acres or wells multiplied by the percentage
working interest owned by us. "Net production" means production that is owned by
us less royalties and production due others.

CAUTIONARY INFORMATION ABOUT FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act. All statements,
other than statements of historical facts, included in or incorporated by
reference into this Form 10-KSB which address activities, events or
developments, which we expect, believe, or anticipate will or may occur in the
future are forward-looking statements. The words "believes," "intends,"
"expects," "anticipates," "projects," "estimates," "predicts" and similar
expressions are also intended to identify forward-looking statements. These
forward-looking statements include, among others, statements concerning:

       o   the benefits expected to result from implementation of our proposed
           development of our Vaca Tar Sands property, discussed below,
           including increased revenues and oil production, other statements of:

       o   expectations,

       o   anticipations,

       o   beliefs,

       o   estimations,

       o projections, and other similar matters that are not historical facts,
including such matters as:

           o      future capital,

           o      development and exploration expenditures (including the
                  timing, amount and nature thereof),

           o      drilling and reworking of wells, reserve estimates (including
                  estimates of future net revenues associated with such reserves
                  and the present value of such future net revenues),

           o      future production of oil and gas,

           o      repayment of debt,

           o      business strategies,

           o      oil and gas prices and demand,

           o      exploitation and exploration prospects,

           o      expansion and other development trends of the oil and gas
                  industry, and

           o      expansion and growth of business operations.

These statements are based on certain assumptions and analyses made by the
management of Geo in light of our experience and our perception of historical
trends, current conditions and expected future developments as well as other
factors we believe are appropriate in the circumstances.

These forward-looking statements are subject to risks and uncertainties,
including those associated with:

       o   the financial environment,

       o   general economic, market and business conditions,

       o   the regulatory environment,

       o   business opportunities that may be presented to and pursued by Geo,

       o   changes in laws or regulations

       o   exploitation and exploration successes,

       o   availability of additional financing on favorable conditions,

<PAGE>

       o   trend projections, and

       o   other factors, many of which are beyond our control that could cause
           actual events or results to differ materially from those expressed or
           implied by the statements. Such risks and uncertainties include those
           risks and uncertainties identified in the Description of the Business
           and Management's Discussion and Analysis sections of this document
           and risk factors discussed from time to time in our filings with the
           Securities and Exchange Commission. In addition, the reserve
           estimates contained herein are based upon assumptions as to prices,
           timing of operations and other factors. To the extent that any of
           such assumptions prove to be inaccurate, the quantities of oil and
           gas and the timing of production may vary from those contained in
           this report. See "Description of Properties--Cautionary Note."

Significant factors that could prevent us from achieving our stated goals
include:

       o   the inability of Geo to obtain financing for capital expenditures and
           acquisitions,

       o   declines in the market prices for oil, gas and asphalt, and

       o   adverse changes in the regulatory environment affecting us.

The cautionary statements contained or referred to in this document should be
considered in connection with any subsequent written or oral forward-looking
statements that may be issued by us or persons acting on our behalf. We
undertake no obligation to release publicly any revisions to any forward-looking
statements to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.

(B) BUSINESS OF ISSUER

BACKGROUND OF THE COMPANY

We were originally organized to develop and operate oil and gas wells on leased
properties and to take advantage of the "non-conventional fuels credit", which
is a tax credit allowed under Section 29 of the Internal Revenue Code to
producers of non-conventional fuels. Our oil and gas leases are operated
pursuant to a 1987 pooling agreement by which the lessors jointly reserve an
average royalty of 12% gross revenues. One 230 acre parcel is subject to a 12.5%
royalty. We hold a 100% working interest and a related average 88% net revenue
interest in these properties, subject to a 5% net profit interest retained by an
individual.

In our reorganization, we settled some lessors' claims by increasing the royalty
on some properties to 15.6% and by making certain cash payments. In late 1999,
we released one of our leases covering approximately 170 acres, reducing our
Vaca Tar Sands acreage to approximately 465 acres. We also operate "disposal"
properties, which means we have a permit to dispose of liquids found in the
bottom of storage tanks down disposal wells. Oil operators pay us to dispose of
these waste liquids.

COMPETITION AND POSITION IN THE INDUSTRY. We are a minor factor in the
California oil and gas industry and face competition from numerous companies,
which have considerably more financial resources, property and manpower, than do
we. We are in a weak financial condition and must rely upon third party sources
of funds to conduct our proposed operations. Essentially, our only revenue
producing operations are expected to be our Vaca Tar Sands, Rosecrans and Waste
Disposal properties, each of which require significant cash expenditures to
operate and develop

The oil and gas industry is highly competitive. Competitors include major oil
companies, other independent oil and gas companies, and individual producers and
operators, many of which have financial resources, staffs and facilities
substantially greater than ours. The Company faces intense competition for the
acquisition of producing oil and gas properties that are being divested by major
and independent oil and gas companies.

<PAGE>

REGULATION

Our operations are regulated by certain federal and state agencies. In
particular, oil and natural gas production and related operations are or have
been subject to price controls, taxes and other laws relating to the oil and
natural gas industry. We cannot predict how existing laws and regulation may be
interpreted by enforcement agencies or court rulings, whether additional laws
and regulations will be adopted, or the effect such changes may have on our
business or financial condition.

All of our operations are subject to extensive federal, state and local laws and
regulations relating to the generation, storage, handling, and transportation of
materials and their potential discharge into the environment. Permits are
required for all of our operations, and these permits are subject to revocation,
modification and renewal by issuing authorities.

Governmental authorities have the power to enforce compliance with their
regulations, and violators are subject to fines, injunctions or both. It is
possible that increasingly strict requirements will be imposed by environmental
laws and enforcement policies thereunder. We do not anticipate that we will be
required in the near future to expend amounts that are material to the Company's
financial position or results of operations by reason of environmental laws and
regulations, but because such laws and regulations are frequently changed, we
are unable to predict the ultimate cost of such compliance.

It is our belief that the oil and gas industry may experience increasing
liabilities and risks under the Comprehensive Environmental Response,
Compensation and Liability Act, as well as other federal, state and local
environmental laws, as a result of increased enforcement of environmental laws
by various regulatory agencies. As an "owner" or "operator" of property where
hazardous materials may exist or be present, we, like all others engaged in the
oil and gas industry, could be liable for the release or remediation of any
hazardous substances. Under previous management, we have been subject to
imposition of "clean-up" orders by the government for accidental spillage of
oil, but have not been subject to hazardous waste removal orders, but the
potential for sudden and unpredictable liability for environmental problems is a
consideration of increasing importance to us and to the oil and gas industry as
a whole. We have suffered some oil spills, in amounts which we consider to have
been minor and have cleaned up such spills. At times we have been supervised in
so doing by governmental agencies.

During 1997, regulatory agencies of the State of California and Los Angeles
County cited us for an accidental oil spill at a property which we no longer
own. We complied with the citation requirements and were required to pay fines
and fees (approximately $28,000) that were discharged in bankruptcy. As a result
of the citation, we were placed on a probationary status. In 1999, while we were
in bankruptcy, local agencies alleged that we had violated various environmental
and other regulatory requirements in failing to clean up a small oil spill and
to maintain our Rosecrans properties in compliance with applicable regulations.
During and after our bankruptcy, we were able to obtain funds enabling us to
remedy the asserted violations. In addition, on November 22, 1999, the District
Attorney of Los Angeles County, California filed information accusing us and
certain of our former officers of violating certain provisions of the County
Health Code and various provisions of the fire protection ordinances as a result
of the allegations described above. All proceedings and our probationary status
were terminated without fines being assessed on October 24, 2000, and we were
not subjected to any additional penalties; however, a former officer was
compelled to accept performance of 100 hours of community service. The Company
estimates that costs of compliance with environmental laws and regulations in
1999 was negligible; was approximately $23,800 during the year 2000; and
approximately $29,000 during 2001.

We are required to comply with various federal and state regulations regarding
plugging and abandonment of oil and gas wells. We provide a reserve for the
estimated cost of plugging and abandoning our wells on a unit of production
basis. We maintain a $160,000 certificate of deposit for State of California
authorization purposes to perform additional oil and gas well recompletions and
a $50,000 certificate of deposit covering our disposal well. These funds are
subject to withdrawal restrictions. We also have $50,000 with the City of Los

<PAGE>

Angeles and $10,000 with Ventura County, for the purposes of paying for any
future environmental liabilities that could arise. In addition, we carry
$3,000,000 in pollution insurance, which covers many, but not all, sources of
pollution.

PRINCIPAL PURCHASERS AND MARKETING OF PRODUCTION

During the calendar year 2000 we produced and sold insignificant amounts of oil
and no gas. The principal purchaser of our oil and gas during such period was
Equiva Trading Co. We produced very small amounts of oil and gas during the
first three quarters of the year 2000. Commencing in the third quarter 2000 and
continuing through 2001, we produced and sold oil from our Vaca Tar Sands
Property using steam injection recovery techniques to Equiva Trading Co. We also
sold waste water disposal services at our Vaca Tar Sands properties. Due to
inordinately high natural gas costs for the steam injection process, the Company
curtailed its oil production efforts.

Despite our current sale to only one purchaser, we believe that multiple
purchasers of any oil produced by us exist and that the loss of any one
purchaser would not have a material effect on our ability to sell our oil and
gas. Alternative purchasers are available for all of our production, except for
gas production at the Rosecrans field where there is currently only one
purchaser who has completed a gas processing facility that is now connected by
pipeline to our wells.

Essentially all of the oil that may be produced from our properties is currently
transported to the purchaser by truck, which reduces the net price we receive
for our oil. However, we intend to connect some wells directly to a pipeline
system. We are in the process of bringing approximately 12 formerly revenue
producing wells in the Rosecrans Oil Field back on line. This will require,
among other things, that we conduct idle well mechanical integrity testing,
repair and upgrade pumping units on the wells, pay permit fees, pressure test
existing pipelines and pipelines we acquire for feeding into an oil/gas/water
separation system consisting of a gas separator, a wash tank, a stock tank and a
water separator (we have applied to permit a new oil and gas production facility
located at 552 West 127th Street, Los Angeles, California known as the Marmac
tank farm), and pay surface clean-up costs.

VOLATILITY OF COMMODITY PRICES AND MARKETS

Oil and gas prices have been and are likely to continue to be volatile and
subject to wide fluctuations in response to the following and other factors:

       o   changes in the supply of and demand for oil and gas;

       o   market uncertainty;

       o   political conditions in international oil producing regions;

       o   the extent of domestic production and importation of oil in certain
           relevant markets;

       o   the level of consumer demand;

       o   weather conditions;

       o   the competitive position of oil or gas as a source of energy as
           compared with other energy sources;

       o   the refining capacity of oil purchasers;

       o   the effect of regulation on the production, transportation and sale
           of oil and natural gas, and other factors beyond our control.

<PAGE>

Through the first nine months of 2001, increased customer spending contributed
to higher levels of worldwide drilling activity, especially gas drilling in the
United States. In the latter part of the third quarter of 2001 and continuing
into early 2002, drilling activity levels in the United States declined as
prices for oil and natural gas decreased due to decreased economic activity.
Softening industrial use and reduced power generation over the summer months
resulted in higher gas storage levels which placed downward pressure on natural
gas prices. Internationally, crude oil prices have remained at levels
satisfactory to provide increasing levels of capital spending and drilling,
primarily by major oil and gas companies, including national oil companies.
Generally, international oil and gas field development projects have longer lead
times, economics based on longer-term commodity prices and are less likely to be
delayed due to fluctuating short-term prices.

EMPLOYEES AND CONSULTANTS

We have 5 full time employees, 3 of whom are professional or technical and 2 who
are management. 2 of our employees are located at our executive offices at Yorba
Linda, California, 2 are engaged full time at our Vaca facility and 1, our Vice
President in charge of disposal operations, typically works in the field. In
addition, we retain two engineering consultants at our Vaca facility on an
almost full time basis.

ITEM 2.       DESCRIPTION OF PROPERTY

CAUTIONARY NOTE

Reserve information presented herein is based upon reports prepared by our
independent petroleum reservoir engineers, Krummrich Engineering and Stan Brown,
P.E. Reserve estimates are inherently imprecise and estimates of new discoveries
are more imprecise than those of producing oil and gas properties. Accordingly,
these estimates are expected to change as future information becomes available.

Proved oil and gas reserves are the estimated quantities of crude oil, natural
gas and natural gas liquids which geological and engineering data demonstrate
with reasonable certainty to be recoverable in future years from known
reservoirs under existing economic and operating conditions. Proved developed
oil and gas reserves are those expected to be recovered through existing wells
with existing equipment and operating methods.

Although we believe that our expectations are based upon reasonable assumptions,
we can give no assurance that our goals will be achieved. Important factors that
could cause actual results to differ materially from those in the
forward-looking statements contained in this report include, but are not limited
to: the time and extent of changes in commodity prices for oil and gas;
increases in the cost of conducting operations, including remedial operations;
the extent of our success in discovering, developing and producing reserves;
political conditions; condition of capital and equity markets; changes in
environmental laws and other laws affecting our ability to explore for and
produce oil and gas and the cost of so doing; and other factors which are beyond
our control.

The proved developed and undeveloped oil and gas reserve figures presented in
this report are estimates based on reserve reports prepared by independent
petroleum engineers. The estimation of reserves requires substantial judgment on
the part of the petroleum engineers, resulting in imprecise determinations,
particularly with respect to new discoveries. Estimates of reserves and of
future net revenues prepared by different petroleum engineers may vary
substantially, depending, in part, on the assumptions made, and may be subject
to material adjustment. Estimates of proved undeveloped reserves are, by their
nature, much less certain than proved developed reserves. According to the most
recent reserves estimate at our Vaca Tar Sand Reservoir, under current oil price
and fuel cost conditions, development and production of the proved undeveloped
reserves in the Vaca Tar Sand Reservoir results in a positive Net Present Value.

<PAGE>

The accuracy of any reserve estimate depends on the quality of available data as
well as engineering and geological interpretation and judgment. Results of
drilling, testing and production or price changes subsequent to the date of the
estimate may result in changes to such estimates. The estimates of future net
revenues in this report reflect oil and gas prices and production costs as of
the date of estimation, without escalation, except where changes in prices were
fixed under existing contracts. There can be no assurance that such prices will
be realized or that the estimated production volumes will be produced during the
periods specified in such reports. Proven reserves are estimates of hydrocarbons
to be recovered in the future.

Reservoir engineering is a subjective process of estimating the sizes of
underground accumulations of oil and gas that cannot be measured in an exact
way. The accuracy of any reserve estimate is a function of the quality of
available data and of engineering and geological interpretation and judgment.
Reserve reports of other engineers might differ from the reports contained
herein. Results of drilling, testing, and production subsequent to the date of
the estimate may justify revision of such estimate. Future prices received for
the sale of oil and gas may be different from those used in preparing these
reports. The amounts and timing of future operating and development costs may
also differ from those used. Accordingly, reserve estimates are often different
from the quantities of oil and gas that are ultimately recovered.

OXNARD FIELD

       General

Geo and Gerald T. Raydon (as to a 25% interest), former president and a major
shareholder of Geo, purchased the Vaca property from Sun Oil Company in 1990,
for a total cost of $150,000. Mr. Raydon subsequently transferred the property
to us in two transactions for consideration consisting solely of the common
stock of the Company. In addition, Mr. Raydon retained a five percent net
profits interest in the income or sales proceeds from the property. We believe
that at December 31, 2000 and 2001, Mr.Raydon's net profits account was negative
approximately $14,037.00 . During October, 2000, we released one parcel of
approximately 160 acres of land to settle a dispute with the lessor of such
parcel. We have been informed that Sun Oil Company purchased the property in
1984 for $14 million and had invested some $3.9 million in attempting to
establish economic production before selling the property to us. We produced the
Vaca using conventional methods, including cyclic steaming operations, in the
wells drilled by Sun Oil Company and its predecessor, and achieved a production
rate of 275 barrels of oil per day from a total of eleven vertically drilled
wells. Production steadily declined from its maximum to a point at which the
wells were non-producing at year-end 1999. We attribute the decline in
production to a combination of factors existing at that time, including
relatively low prices for the high gravity oil these wells were producing and
the high cost of natural gas, which was needed to steam treat the wells.

Our Vaca property is fully equipped for the transportation, processing, storage,
and sale of oil, the separation and disposal of wastewater, and for the
injection of high pressure steam into the wells. The equipment, in general,
consists of: heated and insulated oil flow lines; gas and water pipelines; an
automatic well tester; 9,600 barrels of oil storage capacity in three insulated,
heated tanks; waste water disposal tanks; two steam generators capable of
producing high quality steam at rates of 24,000,000 BTU per hour; tank heaters;
a water treatment plant; a vapor recovery system; oil shipping equipment; a
fresh water well to provide what appears to be sufficient amounts of good
quality water for steam generation; and an injection well to dispose of all
wastewater produced with the oil. The property is also in close proximity to
several oil pipelines and a rail line. At year-end 1999, a substantial portion

<PAGE>

of the equipment was in a deteriorated state because of a lack of maintenance.
We commenced the repair and maintenance of this equipment during 2000.

The production in this field is from the prolific and massive Vaca Tar Sands
that are found at depths of between 1,950 and 2,400 feet. In 325 acres of the
leases, the thickness of the oil-saturated sand averages 225 feet. The reservoir
is highly porous and permeable. The oil is heavy, approximately 6 - 8 degrees
specific gravity measured in degrees on the American Petroleum Institute scale,
of high sulfur content (6-7% by weight) and is highly viscous. Consequently,
steam injection is necessary to heat the oil and reduce its viscosity,
permitting it to flow readily through the well bores and pipelines into storage
tanks. In previous operations, we generated steam at the surface and injected it
into the producing formation through vertical wells. The heat permeates that
portion of the formation adjacent to the well bore, rendering it more mobile
than in its natural state. To increase mobility and lower the gravity and
viscosity of the crude, we inject diluent (a light crude oil) into the well
bore, after which the oil is pumped in a conventional manner. Because of the use
of steam and diluent, operations are comparatively expensive while the price
received for the oil is relatively low compared to better grades of crude.
Increasing costs for natural gas, which is used to fire the steam generators,
which are an integral element of producing oil from this property, have
increased the operating costs of producing the Vaca. At year-end 2000, we
essentially curtailed our Vaca operations, since the combination of very high
natural gas prices, with a concomitant high operating cost, and reduced oil
sales prices, rendered operation of the property uneconomic.

Development of the Vaca Property carries with it the risk that removal of the
tar may create a void, which will result in subsidence of the surface of the
property. Presently, the surface is used for agricultural purposes. We do not
believe that subsidence is a high risk, since the reservoir is 1,500 to 2,000
feet below the surface. Additionally, we have not seen any evidence of
subsidence either in our leased area or in adjacent areas, which have been
developed for oil and gas purposes. We do not carry insurance, which would
protect us from claims resulting from subsidence.

       Saba Agreement

In 1996 and 1997, we entered into a series of agreements with Saba Petroleum
Company for the joint development of the Vaca Tar Sands. As last amended, the
agreements provide that we, as operator with a 2/3 interest, and Saba, as a
non-operating farm-in participant with the right to earn a 1/3 interest, will
commence development of the Vaca Tar Sand with a "SAGD" well by 1999. SAGD is a
process which consists of drilling two parallel horizontal wells, with one
spaced approximately 15 feet above the other, with the lower well located at the
bottom of the producing zone. The wells extend horizontally for as far as 2,600
feet. Steam is injected into the upper well at a temperature of approximately
500 degrees Fahrenheit. The steam lowers the viscosity of the oil so that it
becomes substantially more mobile than in its natural state. The oil then
gravitates to the lower horizontal well, and then flows with high temperatures
(above 400 degrees Fahrenheit) and pressures to the surface through the lower
well. The well production rates are assumed to increase each year until the
tenth year, and then gradually decline after achieving a productive life of
approximately 17 years. We understand that the SAGD process has been used with
success in Canada on accumulations, which are similar to the Vaca Tar Sand, but
such process has not been widely accepted in the United States. An alternative
SAGD method employs a single horizontal well bore into which steam is cyclically
injected and from which production is obtained through gravity drainage much as
is described above.

The agreement provides that Saba and we will share equally in the cost of
operations and development until Saba has invested $5,000,000. Thereafter, Saba
is to pay one-third of the costs and receive one-third of the revenues, and we
are to pay two-thirds of the costs and receive two-thirds of the revenues. As to
the wells for which Saba pays a disproportionately higher share of the costs,
Saba can recover its costs out of one-half of production revenues, after which
its interest in these wells will be reduced to one-third. Since we do not

<PAGE>

believe that Saba has earned its interest in the property, our reserves as
reported herein do not take into account Saba's potential interest.

The agreement provides that the first well to be drilled on the property shall
be a SAGD well. However, because of the deteriorated economics of drilling oil
wells, neither Saba nor we attempted to commence operations for such a well. It
is our interpretation that Saba is responsible for payment of fifty percent of
all costs properly chargeable under an Operating Agreement, which is in effect
between the parties.

       Non-Conventional Fuels Credit

Under Sec. 29 of the Internal Revenue Code, a tax credit is allowed to producers
of "Non-Conventional Fuels." The tax credit for 1999 was $6 per barrel and is
subject to annual increases with inflation. The tax credit is applicable to
production from all redrilled Vaca Tar Sands wells. The previous owners of our
property, and the owners of offsetting leases, have taken the tax credit on
production from the Vaca Tar Sands since 1980, the first year of the credit. The
tax credit expires at the end of 2002.

We treat the production from existing wells in the Oxnard Field as oil from
"non-conventional" sources, which thus qualifies for tax credits provided under
Section 29 of the Internal Revenue Code. At this time, we do not pay federal
income taxes and the credit is not currently available for use by us. We have,
in the past, secured funds for operations on this lease by entering into
transactions designed to provide these credits to investors in exchange for
payments. We intend to continue seeking such funding on an ad hoc basis. Funding
from such sources would not, however, be sufficient to develop the property to
any material extent.

       Status of Leases and Current Permits

Except for one 230-acre lease, our leases have no current drilling obligations
nor do they require the payment of rentals to keep the leases in good standing.
All of our leases, however, require continuous production or producing
operations to maintain the leases in effect. We ceased producing operations on
our Vaca Property in December 2000, because of economic conditions. We resumed
operations during March 2001. A significant portion of the leases are subject to
a Pooling Agreement executed in 1987, which created the Vaca Tar Sands Unit and
essentially combined the leases for operating and royalty purposes, which
reserve an average royalty of 12% of gross revenues to the lessors. One 230-acre
parcel is outside the Vaca Tar Sands Unit and is subject to a 12.5% royalty and
an annual delay rental in the amount of $5,225. We hold a 100% working interest
and a related average 80.557% net revenue interest in these properties, subject
to any right that Saba may have to acquire a portion of our interest and to the
five percent net profits interest held by Mr. Raydon. Vertical wells cost
approximately $265,000 to drill and complete for production. In connection with
our Reorganization Proceedings, certain lessors asserted claims to the effect
that our leases had terminated because production had ceased for extended
periods of time. Rather than litigating the issue, we settled the matter by
agreeing to an increase of the royalty on certain of our leases to an average of
15.6% and by agreeing to make an annual minimum royalty payment to the lessor.
The property covers some 635 acres of land. In addition, subsequent to year-end
1999, we released one of our leases, which had covered approximately 160 acres
of land and lay on the periphery of our holdings, reducing our holdings to
approximately 465 acres.

We have two conditional use permits from Ventura County, allowing us to drill up
to120 wells on part of our property and a sufficient number of wells to develop
the balance of our property. Steaming operations require compliance with various
environmental regimes, including those designed to protect air quality. The
Ventura Air Pollution Control District has permitted our operations and has
found them to be in compliance with relevant requirements. Emission limits under
existing permits are sufficient to allow the drilling and steaming of a number
of wells on the property, but are not sufficient to permit a full development of
the property. We intend to apply for amendments to existing or additional
permits to allow full-scale development when economic conditions justify that

<PAGE>

action. There is no assurance that such operations will remain in compliance or
that necessary amendments or additional permits will be obtained.

During the calendar year 2000, we produced approximately 1,200 barrels of oil
from our Vaca Property.. In the third quarter of 2000, we restored two vertical
wells to production on our Vaca Tar Sands property. We used two different
methods to see which method would produce the more favorable results. We
restored one well using conventional steaming and diluent infusion. We steam
soaked the well for a period of ten days, pumped diluent down the well bore and
then began pumping the well. Results of this procedure were that the well
produced approximately 1,200 barrels of oil over a period of 75 days. We intend
to stimulate this well again by steam injection in the hopes that increased
production will result. The well cost approximately $10,000 to restore to
production, and our income from the operation was approximately $34,000 over a
period of two and one-half months. We believe that continued steaming will
stimulate production.

The second well, which we restored to production, employed the same process
described above with the addition of a purchased chemical (which was contributed
by the manufacturer as a test) to the reservoir through the well bore. The
addition of the chemical would have increased the cost of the operation had we
been charged for the chemical, but resulted in better well performance than was
experienced in the untreated well. We will be evaluating the use of the chemical
additive during the coming months and may employ it on our horizontal well
operations which we hope to institute in the future, assuming financing and
moderating natural gas prices. The well cost approximately $10,000 to restore to
production and our income from the operations should approximate that of the
other well over the same period of time.

We ceased production on the two wells during December, 2000 and resumed
production in March, 2001 .Should we permit production to cease for a period of
time which a court would feel is unreasonable, we might suffer the loss of our
Vaca leases. However, we believe that we have satisfied all of the minimum
production requirements provided in our Vaca leases.

Wells drilled into the Vaca Tar Sand have relatively high operating costs
because of a number of factors, which include the viscosity and low gravity of
the oil, the fact that the oil must be pumped, higher gravity oil must be mixed
down-hole with native oil to produce the wells, and the fact that the wells must
be periodically steamed to produce the oil. Purchasing natural gas to fire the
steam generator boilers is an integral element of producing the Vaca wells. In
recent months the cost of natural gas has increased significantly, which has had
a negative economic affect on the Vaca wells. Operating costs will vary directly
with the cost of natural gas. The increased cost of natural gas, reduces the
profitability of Vaca wells.

When sales prices for native oil are relatively high wells drilled into the Vaca
Tar Sand may be profitably operated; however, when oil prices are low, as they
were during early in 1999 and for several years prior thereto, the Vaca Tar
Sands wells may be uneconomical to operate.

There are 22 inactive vertically drilled wells on that property, some of which
are capable of being redrilled horizontally, which we believe can be operated
lower per unit production cost than vertical wells. However, although we
presently we lack sufficient funds to drill such horizontal wells, we are
investigating possible sources of funding for such redrillings.

Rosecrans Field

There are 18 wells in the Rosecrans Oil Field located in Los Angeles County,
California, which we are planning to rework. Wells in this field were drilled
during a period of between ten and fifty years ago. The royalty amounts to
16.67% of gross revenues. There are seven principal producing zones of Miocene

<PAGE>

and Pliocene age in the Field, ranging from depths of 4,500 to 8,400 feet. The
wells have been drilled through these zones, but have not produced from all of
them. This provides the opportunity to commence production from bypassed zones
in the future. During 1999, the property produced no oil and an insignificant
amount of gas.

The property consists of five "community" oil and gas leases. The average
royalty burden on the property is 16.67% and we have a 100% working interest and
an 83.33% related net revenue interest. The property covers approximately 800
acres of land in a semi-industrialized and low-income residential area. At
year-end 2000 and 2001, the property was not producing oil or gas. We intend to
restore the property to production. We believe such restoration will require
approximately $400,000, much of which will be used to replace and repair
equipment sold or damaged since 1998. Since significant production has ceased
for a considerable period of time, there is a considerable risk that the leases
have terminated or are subject to termination by action of the lessors. We
intend to attempt to secure appropriate documentation from as many of the
lessors as is practicable in an effort to validate or confirm our title to the
oil and gas leases. It is not certain that we will be able to obtain such
documentation and in lieu thereof may assume a business risk and pursue
restoration of production without all such documentation. Moreover, we have not
been notified by any lessor that our leases have terminated.

Environmental Services

In September 1996, the California Division of Oil and Gas granted us a permit
for the disposal of liquids containing various solids in suspension, including
"tank bottoms", drilling mud, water softener wastes, and other oilfield waste
materials in our wells, in addition to produced wastewater. Tank bottoms consist
of the mud, paraffin and sand, which accumulate at the bottom of oil production
tanks and must be periodically removed and disposed. The past primary method for
handling such wastes is an expensive surface disposal process. We can offer
substantial savings to oil operators by disposing of the waste in our disposal
well.

We own two commercial Class II (as designated by the Environmental Protection
Agency) disposal facilities at which waste fluids and solids produced in oil
field operations conducted by ourselves and by other operators are injected into
the subsurface for disposal. Such facilities are located at our Oxnard property
and cover approximately four acres of land. Lessors are compensated by sharing
in ten percent or twelve and one-half percent of gross revenues from the
operations depending on the type of substance disposed. In late 1999, we
obtained a new contract with a lessor authorizing the use of a second disposal
well, and settled a dispute with the lessor of the first disposal site. We
commenced disposal operations in the second well in August, 2000 and intend to
repair the first well. Until our financial condition and disputes with lessors
resulted in a discontinuance of operations in 1999, the waste disposal
operations were becoming an increasing source of revenues for Geo.

Water and other wastes produced by other oil operators are hauled to our
disposal sites, treated, stored, screened, and injected into our disposal wells

The price received for Class II fluids averages about $0.60 per barrel for water
and $6.50 for tank bottoms. In 1999 we had arrangements to dispose of wastes
from, among others, AERA Energy L.L.C. (a consortium owned by Shell& Mobil),
POPCO, Exxon Corporation, Chevron Corporation, Southern California Gas Company,
Rincon Island L.P., Torch Operating Company, and several other independent oil
companies. During the first half of 1999, our financial condition and regulatory
compliance problems led to the curtailment of our waste disposal operations and
disputes with our lessors. At year-end 1999, the facility was not operating.
During late July 2000, we reinstituted operations at the facility. We currently
receive and dispose of wastes from Beneco, Pacific Offshore Operations, Torch
Operating Company, and other independent oil companies. Because there are few
high-capacity waste disposal wells permitted by the California Division of Oil &
Gas, and an expanding need by operators to dispose of their waste water and tank
bottoms, we believe that operations of

<PAGE>

this type are capable of substantial growth. We believe that this operation is
now marginally profitable and expect it to become increasingly profitable in the
future.

Estimated Oil and Gas Reserves

At December 31, 2000, our net proved oil and gas reserves, as estimated by our
independent petroleum engineers, Krummrich Engineering (as to the Oxnard Field
Properties) and Stan W. Brown, Consulting Petroleum Engineer, (as to the
Rosecrans properties) amounted to 1,346,000 barrels of oil and 1,338,000 Mcf of
natural gas, of which 1,346,000 barrels and 1,338,000Mcf were classified as
proved developed. Future cash flows attributable to such proved developed
reserves (before income taxes) are estimated to be $9,713,000 at December 31,
2000 and the discounted value thereof, at 10% (before income taxes), is
estimated to be $3,934,000. Essentially all of the proven developed reserves are
not producing.

On February 18, 2002, Stan W. Brown again evaluated the reserves and the revenue
stream associated with the Rosecrans and Howard Townsite operations, located in
Los Angeles County, California. The reserves and valuation were as of January 1,
2002. The analysis employed the methodology acceptable to the Securities and
Exchange Commission and the Society of Petroleum Engineers. The total remaining
Proved Developed Non-Producing, Shut-In Reserves to our net revenue interest
were calculated by the production projection method to be 722,000 barrels of oil
and 1,237,400 MCF of gas with a net undiscounted value of $4,896,800 and a net
present value discounted at 10% of $1,468,600, over a project life in excess of
31 years. The estimated total investment required for such production was
$572,000.

On February 27, 2002, Stan W. Brown also re-evaluated the reserves and revenue
stream associated with the Oxnard Field operations of the Company in Ventura
County, California, specifically the Vaca Tar Sand Reservoir on the Vaca Tar San
Unit and Hunsaker leases located in Oxnard, California. . The reserves and
revenue stream valuation were as of January 1, 2002. The analysis employed the
methodology acceptable to the Securities and Exchange Commission and the Society
of Petroleum Engineers. The total remaining Proved Developed Non-Producing
Reserves and Proved Undeveloped Reserves to the Company's net revenue interest
were calculated to be 32.6 million barrels of oil with a net undiscounted value
of $41.43 million and a net present value discounted at 10% of $8.51 million,
over a project life in excess of 14 years. The estimated total investment
required for such production was $60.86 million.

A major portion of our oil reserves is comprised of heavy crude. This portion is
highly price sensitive, costs more to produce than lighter crudes, and receives
a lower price in the market. Accordingly, a price at or above 1999 levels is
needed in order to cover operating costs and yield a profit utilizing
conventional completion and production techniques.

Therefore, when discounted to net present value, these reserves are not economic
to produce at our expected rate of return. The decline is attributable primarily
to the significant increase in the price we must pay for natural gas (used to
fire our steam generators) which has not been offset by the prices paid for
heavier California crudes. Therefore, the viability of our Vaca Properties is in
substantial doubt.

In general, the volume of production from oil and gas properties declines as
reserves are depleted. The SAGD process, which is described above, if
successfully deployed, has an opposite effect until exhaustion of the reserves.
Except to the extent we acquire properties containing proved reserves or conduct
successful exploration and development activities, or both, our proven reserves
will decline as reserves are produced. Our future oil and gas production is,
therefore, highly dependent upon our level of success in acquiring or developing
additional reserves.

The Company's estimates of reserves have not been filed with or included in
reports to any federal agency other than the Securities and Exchange Commission.

<PAGE>

Reservoir engineering is a subjective process of estimating the sizes of
underground accumulations of oil and gas that cannot be measured in an exact
way. The accuracy of any reserve estimate is a function of the quality of
available data and of engineering and geological interpretation and judgment.
Reserve reports of other engineers might differ from the reports contained
herein. Results of drilling, testing and production subsequent to the date of
the estimate may justify revision of such estimate. Future prices received for
the sale of oil and gas may be different from those used in preparing these
reports. The amounts and timing of future operating and development costs may
also differ from those used. Accordingly, reserve estimates are often different
from the quantities of oil and gas that are ultimately recovered.

TITLE TO PROPERTIES

Many of our oil and gas properties are held in the form of mineral leases,
licenses and similar agreements. In general, these agreements do not convey a
fee simple title to us, but rather create lesser interests. As is customary in
the oil and gas industry, a preliminary investigation of title is made at the
time of acquisition of undeveloped properties. Title investigations are
generally completed, however, before commencement of drilling operations or the
acquisition of producing properties. Because most of our oil and gas leases
require continuous production beyond the primary term, it is always possible
that a cessation of producing or operating activities could result in the loss
of one or more leases. Prior to and during our bankruptcy proceedings, most of
our properties did not produce oil or gas on a continuous basis. We have taken
steps to cure deficiencies in our title at our Vaca facility, but have not yet
done so with respect to any other property.

Assignments of interest to and/or from us may not be publicly recorded. While we
have been in possession of our two major properties (Oxnard--approximately 10
years, and Rosecrans--approximately 6 years) a number of years and have not
received notice of a third-party adverse claim, we have not obtained title
insurance or a title opinion covering such properties, but have relied upon
title abstracts of the public records and the apparently unchallenged possession
of our predecessors in interest. Consequently, while we believes that title to
our properties is satisfactory, we would be unable to demonstrate such fact
without obtaining title insurance or opinions that we believe is not
cost-effective or otherwise warranted under the circumstances. Generally, once
production has been established on an oil and gas lease, production must be
maintained in quantities sufficient to pay the costs of operations, or the lease
will terminate of its own accord. Because there have been interruptions in
continuous production at various times in both of our significant oil
properties, we cannot give any assurance that a claim will not be asserted that
one or more of such leases have terminated.

Title to our properties is, in addition, subject to royalty and overriding
royalty interests and to contractual arrangements customary in the oil and gas
industry, to liens for work and materials, current taxes not yet due and to
other minor encumbrances. We have not encumbered any of our properties to secure
bank indebtedness. Our working interest in properties may be subject to liens
for non-payment of labor or services provided to us. In the event of our
non-payment or untimely payment of our obligations, we expect liens to be filed
against our assets and to be subject to lawsuits. Oil and gas leases in which we
have an interest may be deficient, require ratifications and be subject to
action by us. We will be subject to variations in cash flow depending upon
changes in prices paid for oil and gas.

OFFICES

       We lease approximately 5,000 square feet of office space in Yorba Linda,
California, on a month-to-month tenancy from an affiliate for a monthly rental
of $5,000.00.

<PAGE>

DRILLING ACTIVITY

       The following tables set forth certain information for each of the years
in the two-year period ended December 31, 2001, relating to our participation in
the drilling of exploratory and development wells, all of which are located in
California:

                                  Year Ended December 31,
                            -------------------------------------
                                  2001                2000
                            ------------------  -----------------
                            Gross      Net      Gross     Net
                              (1)       (2)       (1)      (2)
                            ---------  -------  --------- -------
Exploratory Wells:
   Oil......................
   Gas......................
   Dry (3)..................      --       --         --      --

Development Wells:
   Oil......................                           0       0
   Gas......................      --       --         --      --
   Dry (3)..................      --       --         --      --

Total Wells:
   Oil......................                           0       0
   Gas......................      --       --         --      --
   Dry (3)..................      --       --         --      --
--------------
  (1)  A gross well is a well in which a working interest is owned. The number
       of gross wells is the total number of wells in which a working interest
       is owned.
  (2)  A net well is deemed to exist when the sum of fractional ownership
       working interest in gross wells equals one. The number of net wells is
       the sum of fractional working interests owned in gross wells expressed as
       whole numbers and fractions thereof.
  (3)  A dry hole is an exploratory or development well found to be incapable of
       producing either oil or gas in sufficient quantities to justify
       completion as an oil or gas well. A productive well is an exploratory or
       a development well that is not a dry well.

PRODUCTIVE OIL AND GAS WELLS

       The following table sets forth information at December 31, 2001, relating
to the number of productive oil and gas wells (producing wells and wells capable
of production, including wells that are shut in or suspended) in which we owned
a working interest:

                             Oil                Gas              Total
                       -----------------  ----------------- ----------------
                        Gross     Net      Gross     Net     Gross     Net
                       -------- --------  --------- ------- --------  ------
California..........        57       57          0       0       57      57

At year-end 2000, none of the wells listed were producing oil or gas. At year
end 2001, none of the wells listed were producing oil or gas.

OIL AND GAS ACREAGE

       The following table sets forth certain information at December 31, 2001,
relating to oil and gas acreage (all of which is located in California) in which
Geo owned a working interest:

                              Developed (1)           Undeveloped
                           ---------------------  --------------------
                            Gross        Net        Gross       Net
                           ---------   ---------  ----------   -------
United States.......           1290        1070         600       600
--------------
  (1)  Developed acreage is acreage assigned to productive wells.

<PAGE>

ITEM 3.       LEGAL PROCEEDINGS

From time to time, we may be involved in legal proceedings, including those
arising from our operations and the amounts due suppliers or royalty owners.
None of such proceedings are generally considered material to our operations or
financial condition. During the course of our bankruptcy proceedings, entitled
In re Geo Petroleum, Inc., Debtor, U. S. Bankruptcy Court for the Central
District of California, Santa Barbara Division, number 98-15477-RR, we were
involved in several adversary proceedings, all of which were settled as part of
the bankruptcy proceedings, except for Bud Antle, Inc. v. Geo Petroleum, Inc. In
that adversary proceeding, the lessor of a 160-acre tract assertedly not part of
the Vaca Tar Sands Unit, claimed that our lease had terminated by reason of
non-production of oil or gas. The lessor sought a declaration that the lease had
terminated and an order requiring us to abandon three wells located on the
lease. During the year 2000, we settled this dispute, which resulted in our
quitclaiming the lease and agreeing to the abandonment of the three wells.

In 2000, we settled a matter entitled People v. Geo Petroleum, Inc., et al,
Inglewood Municipal Court No.W86529 in which an action was brought against us
and several former officers and employees for violation of fire and
environmental regulations. The matter was settled with a former officer agreeing
to perform community service; the action was dismissed against the Company and
no penalty was assessed.

In 1996 and 1997, we entered into a series of agreements with Saba Petroleum
Company for the joint development of the Vaca Tar Sands. As last amended, the
agreements provide that we, as operator with a 2/3 interest, and Saba, as a
non-operating farm-in participant with the right to earn a 1/3 interest, will
commence development of the Vaca Tar Sand with a "SAGD" well by 1999. The
agreement provides that Saba and we will share equally in the cost of operations
and development until Saba has invested $5,000,000. Thereafter, Saba is to pay
one-third of the costs and receive one-third of the revenues, and we are to pay
two-thirds of the costs and receive two-thirds of the revenues. We may be
required to sue Saba because it has refused to pay certain costs and expenses
required by our Operating Agreement, which provides that should Saba fail to
perform its material obligations, we may terminate Saba's interest in the joint
property. During February 2001, we notified Saba that it had defaulted in its
obligations under the agreement and that we had elected to terminate its
interest in the joint property. Saba has been uncommunicative and we intend to
sue Saba to clear title to the property. While litigation is always risk
attendant, we believe that we will prevail in the litigation.

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

On August 29, 2001, we held our annual meeting of shareholders. Matters
submitted for a vote of our security holders were: the election of four (4)
members to the Board of Directors of the Company; the approval and adoption of
the Company's Stock Option Plan and the issuance of stock options to Dennis
Timpe; the approval, adoption and ratification of the actions taken by the
Company's officers and directors during the last fiscal year; the approval of
the selection of Kelly & Company to audit the financial statements of the
Company for the fiscal year ended December 31, 2000; and the approval of the
selection of Kelly & Company to audit the financial statements of the Company
for the fiscal year beginning January 1, 2001.

Proxies for the meeting were solicited pursuant to Regulation 14A under the
Exchange Act, there was no solicitation in opposition to the management's
nominees as listed in the proxy statement, and all of such nominees were
elected; specifically, Lori Timpe-Long, Dennis Timpe, Greg Tolleson and
Christian Dillon. The number of votes cast for, against or withheld, and the
number of abstentions and broker non-votes, for each matter, and for each
director nominee individually, are as follows:

Lori Timpe-Long     FOR: 14,232,961    AGAINST:  0     WITHHELD:  49,230
ABSTENTIONS: N/A  BROKER NON-VOTES:  N/A

<PAGE>

Dennis Timpe        FOR: 14,251,961     AGAINST:  0     WITHHELD:  30,230
ABSTENTIONS:    N/A BROKER NON-VOTES:  N/A

Greg Tolleson       FOR: 14,236,961     AGAINST:  0     WITHHELD:  45,230
ABSTENTIONS:  N/A  BROKER NON-VOTES:  N/A

Christian Dillon    FOR: 14,236,961     AGAINST:  0     WITHHELD:  45,230
ABSTENTIONS:  N/A  BROKER NON-VOTES:  N/A

The approval and adoption of the Company's Stock Option Plan and the issuance of
stock options to Dennis Timpe:

FOR:   9,550,736     AGAINST: 980,468   WITHHELD:  N/A
ABSTENTIONS: 33,374    BROKER NON-VOTES:  3,717,613

The approval, adoption and ratification of the actions taken by the Company's
officers and directors during the last fiscal year:

FOR:  13,427,961     AGAINST: 694,230   WITHHELD:  N/A
ABSTENTIONS: 160,000   BROKER NON-VOTES:  N/A

The approval of the selection of Kelly & Company to audit the financial
statements of the Company for the fiscal year ended December 31, 2000:

FOR:   14,247,561    AGAINST: 19,630    WITHHELD:  N/A
ABSTENTIONS:  15,000   BROKER NON-VOTES:  N/A

The approval of the selection of Kelly & Company to audit the financial
statements of the Company for the fiscal year beginning January 1, 2001:

FOR:  14,261,061     AGAINST: 21,130    WITHHELD:  N/A
ABSTENTIONS:  N/A      BROKER NON-VOTES:  N/A

The total number of shares present in person and by proxy equaled 80% of the
total shares issued and outstanding, thereby constituting quorum for purposes of
the meeting. The total number of shares represented and voting in person or by
proxy at the meeting was 14,282,191.

The annual meeting of shareholders was held in Newport Beach, California. It was
the first time we had convened an annual meeting of stockholders since 1997.

                                     PART II

ITEM 5.       MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

       Since August 1996, the shares of our common stock have been quoted on the
Over-The-Counter (OTC) Bulletin Board of the National Association of Securities
Dealers, Inc under the trading symbol GOPL.OB. In December 1999, the common
stock was removed from the Electronic Bulletin Board and began being quoted on
the Pink Sheets. On November 30, 2,000 our shares were again quoted on the OTC
Bulletin Board. We believe that at December 1, 2001, there were at least ten
firms making a market in our common stock.

<PAGE>

The following table sets forth the high and low bid prices of the common stock
for the monthly periods ended on specific dates (the first or second of each
month) as indicated as reported on Yahoo!Finance. The prices set forth below
reflect inter-dealer prices, without retail mark-up, mark-down or commission,
and may not represent actual transactions.

<TABLE>
<CAPTION>
               Date           Open          High          Low            Close             Volume                Adj.
                                                                                                                Close*
           -------------    ----------   -----------  --------------  -------------    --------------        -----------
              <S>              <C>           <C>          <C>             <C>               <C>                 <C>
              Apr 02           0.22          0.27         0.20            0.22               2,000              0.22
              Mar 02           0.18          0.23         0.17            0.22               3,500              0.22
              Feb 02           0.18          0.26         0.15            0.18              37,900              0.18
              Jan 02           0.14          0.29         0.13            0.20              16,000              0.20
              Dec 01           0.31          0.31         0.13            0.14                 500              0.14
              Nov 01           0.19          0.34         0.18            0.28              10,000              0.28
              Oct 01           0.17          0.19         0.11            0.19               1,000              0.19
              Sep 01           0.25          0.27         0.14            0.17               1,000              0.17
              Aug 01           0.33          0.43         0.16            0.21              26,000              0.21
              Jul 01           0.44          0.44         0.26            0.38                 500              0.38
              Jun 01           0.52          0.53         0.35            0.44                 500              0.44
              May 01           0.48          0.52         0.34            0.52                 500              0.52
              Apr 01           0.48          0.55         0.26            0.48               1,000              0.48
              Mar 01           0.52          0.63         0.44            0.48               1,500              0.48
              Feb 01           0.55          0.75         0.41            0.50              55,500              0.50
              Jan 01           0.42          0.73         0.28            0.66               8,000              0.66
              Dec 00           0.91          0.91         0.33            0.52              20,900              0.52
</TABLE>

HOLDERS OF COMMON EQUITY

At December 31,2001, there were approximately 308 holders of record known to us
of our common equity. Based on a broker count, we believe at least an additional
268 persons are shareholders with street name positions.

DIVIDENDS

Holders of our common stock are entitled to receive such dividends as may be
declared by our board of directors. We have never paid dividends on our common
equity and have no plans to do so in the foreseeable future. There are no
agreements to which we are a party or by which our property is bound which
restricts the payment of dividends. However, because our present operations are
not profitable, our board of directors presently intends to pursue a policy of
retaining earnings, if any, for use in our operations and to finance expansion
of our business.

SALES OF UNREGISTERED SECURITIES

During the period February 15, 2001 through April 12, 2001, we sold 322,500
shares of our common stock at $0.50 per share to 8 investors from 7 different
states in a series of transactions which were not registered under the federal
securities laws nor qualified under any state securities laws. In each of these
transactions, we were represented by our general counsel who advised us that the
transaction was exempt from the registration and prospectus delivery

<PAGE>

requirements of the Securities Act of 1933, by reason of section 4(2) thereof or
the provisions of Regulation D or by section 1145 of the Bankruptcy Code. In
each sale, no underwriter was engaged by us to effect the sale and each sale was
made by an officer of the company who was not compensated for effecting such
sale. We received total proceeds of $161,250.

During the period September 26, 2001 through January 25, 2002, we sold 1,014,666
shares of our common stock at $0.15 per share to 14 investors from 8 different
states in a series of transactions which were not registered under the federal
securities laws nor qualified under any state securities laws. In each of these
transactions, we were represented by our general counsel who advised us that the
transaction was exempt from the registration and prospectus delivery
requirements of the Securities Act of 1933, by reason of section 4(2) thereof or
the provisions of Regulation D or by section 1145 of the Bankruptcy Code. In
each sale, no underwriter was engaged by us to effect the sale and each sale was
made by an officer of the company who was not compensated for effecting such
sale. We received total proceeds of $152,200.

During the calendar year 2000, we sold shares of our common stock in a series of
transactions which were not registered under the federal securities laws nor
qualified under any state securities laws. In each of these transactions, we
were represented by our general counsel who advised us that the transaction was
exempt from the registration and prospectus delivery requirements of the
Securities Act of 1933, by reason of section 4(2) thereof or the provisions of
Regulation D or by section 1145 of the Bankruptcy Code. In each sale, no
underwriter was engaged by us to effect the sale and each sale was made by an
officer of the company who was not compensated for effecting such sale. No sales
commissions or other compensation was paid in respect of any sale other than
indicated below in the instance of the original issuance authorized by the
Bankruptcy Court. Each sale was made to an individual or entity that the Company
believes was an accredited investor, as that term is defined in Rule 501
promulgated pursuant to Regulation D or to an aggregate of not more than 35
persons who were not accredited investors. All certificates representing shares
of stock sold in these transactions bear a restrictive legend prohibiting the
transfer of such shares and stop transfer orders have been placed with the
Company's transfer agent on such shares. Each sale was made for cash.

During the first quarter of 2000, we sold 416,600 shares to 14 persons, eight of
whom were purchasers in the Bankruptcy Court authorized sale described in the
following paragraph and one of whom was an officer of the Company, for a total
consideration of $124,980 or 30(cent) per share. During such quarter we also
sold 300,000 shares of our common stock to our existing shareholders plus an
additional two purchasers for an aggregate consideration of $210,000 or 70(cent)
per share. Each of the foregoing sales initially involved the purchase of stock
in an affiliate for the consideration stated, which was thereafter converted to
stock of Geo Petroleum, Inc., which received the gross proceeds described above.
No compensation was paid to the affiliate. During such quarter we also sold
833,400 shares to 20 individuals and affiliated trusts for a total consideration
of $250,020 or 30(cent) per share of common stock.

During the calendar year 2000, we issued 803,674 shares of our common stock to
our creditors pursuant to our Plan of Reorganization and we will issue an
additional 1,096,326 shares to our creditors pursuant to our Plan of
Reorganization. Our Plan of Reorganization also provided for the issuance of an
additional 4.5 million shares for a gross consideration of $500,000 to TD &
Associates. Two million of the shares so issued were ultimately acquired by 27
persons introduced to the Company by Mr. Timpe or Mr. Raydon for a gross
consideration of $400,000 (20(cent) per share), 1.5 million shares were acquired
by Mr. Timpe as compensation for his services to TD & Associates, and 1 million
shares were acquired by Ansbacher, Ltd, an Isle of Man corporation,, for a
consideration of $150,000 (15(cent) per share). The shares issued pursuant to
the plan were exempt from the registration and prospectus delivery requirements
of the Securities Act by reason of section 1145 of the Bankruptcy Code; shares
subsequently transferred were exempt by reason of Section 4(2) of the Securities
Act and Regulation D thereunder. All certificates contained legends restricting

<PAGE>

the transfer thereof and stop orders were placed against the transfer of the
certificates. Out of the proceeds, T.D. & Associates received $50,000.

ITEM 6.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
              RESULTS OF OPERATIONS

The following discussion and analysis for the years ended December 31, 2001 and
December 31, 2000 should be read in conjunction with the Consolidated Financial
Statements of the Company and the Notes thereto and the Selected Financial Data
included elsewhere in this statement.

During the year 2001, the Company was able to fully restore operations of its
waste disposal operation resulting in significantly increased revenues exceeding
$350,000 for the fiscal year. In addition, the Company continued progress toward
restoration of operations of its Rosecrans property while shifting emphasis away
from the Vaca Tar Sands Unit. Although the cost of natural gas decreased from
its high in 2000, the overall operating costs of the Vaca property remained
prohibitive. Currently, Management estimates that an additional $500,000 to
$1,000,000 will be required to begin production on the Rosecrans property.
Although some of this investment may be provided by future operations,
Management expects that additional capital will be necessary.

As a result of Managements' persistent efforts during 2001 to find other
opportunities for Geo, a joint venture arrangement was entered in November
allowing Geo to participate in the exploration and development of oil and gas
properties located along the Rough Creek Graben in central Kentucky. Geo and its
partners have funded the completion of a deep test well located in the southern
part of the Illinois Basin. This test well, the J.H. Brooks No. 1, was drilled
in 1998 to a total depth of 8,250 feet. Although completion of the well has been
delayed by severe weather in the area, Management expects production to begin in
May 2002. Geo owns a 25% carried working interest in the J.H. Brooks #1.The well
is located on the Hammonville-Magnolia lease block, which extends over a fifty
thousand acre area of interest. Geo has earned a 50% working interest (40% net
revenue interest) in this lease block and expects to participate in another deep
gas well later in 2002. Similar wells drilled to the deeper gas zones in the
Rome and pre-Knox formations have been successful and are producing 5-10 MCF of
natural gas with estimated reserves of 5-10 BCF. Cash flow from these wells
combined with the continued successful operation of its waste disposal
operations will provide Geo necessary operating capital during 2002.

RESULTS OF OPERATIONS

During the year ended December 31, 2001, the Company had a loss of $738,804 and
negative cash flow of $382,826 compared to a loss of $743,257 and negative cash
flow of $893,126 in 2000.

Revenues from the sale of oil and gas in 2001 fell to $6,742 compared to oil and
gas revenues of $40,901 in 2000. Oil and gas revenue in 2001 was primarily from
limited production of the Rosecrans property with some minor sales of oil from
Vaca required to hold the leases.

<PAGE>

Industrial waste disposal revenues increased from $40,899 in 2000 to $351,465 in
2001. This substantial increase was due primarily to the fact that the waste
disposal property was operated for the full year in 2001. As consistent
operations of the waste disposal property were maintained in 2001, Geo was able
to regain some of its customers that had been lost due to the prior bankruptcy
and several new customers were acquired. Management expects this property to
continue operations at its current level with the possibility of additional
increases in revenue during 2002.

Lease operating expenses increased from $323,023 in 2000 to $422,065 in 2001.
This increase is due primarily to the fact that the waste disposal property was
operated for the full twelve months of 2001 compared to only four months of full
operations in 2000. In addition, operating expenses on the Rosecrans property
increased by approximately $70,000 as Management gave emphasis to restoration of
this asset.

Depreciation expense increased from $11,228 in 2000 to $22,336 in 2001. This
increase is due to the fact that depreciable assets placed in service during
2000 were depreciated for the full year in 2001.

Expenses incurred for environmental remediation were minimal in 2001. These
expenses decreased from $6,607 in 2000 to $2,528 in 2001. Generally, such costs
are incurred after a period of oil and gas production. However, since there was
no significant production in 2001 or 2000, these costs were insignificant.

Professional fees decreased from $292,443 in 2000 to $256,881 in 2001. Although
this decrease was significant, the cost for accounting and legal services
remained high due to the ongoing compliance requirements of the Securities and
Exchange Commission regulations. Legal fees were incurred to comply with SEC
documentation requirements. In the future, Management intends to continue
efforts to minimize these compliance costs.

General and administrative expenses increased from $195,228 in 2000 to $286,153
in 2001. This increase is due primarily to increases in the cost of corporate
promotion and outside consulting services required to operate in the public
market and comply with SEC regulations.

Reorganization costs were incurred in 2001 to finalize the bankruptcy
proceedings that began in 1999. The U.S. Bankruptcy Court granted the final
decree on in November 2001. Management does not expect to incur significant
reorganization costs in the future. Capital Resources and Liquidity

As of December 31, 2001, the Company's total assets were $834,030. Total assets
decreased from $996,641 at December 31, 2000. The decrease in assets is
primarily the result of decreased cash and amortization of prepaid assets. No
significant investments were made in 2001.

Current assets decreased from $245,462 in 2000 to $120,557 at December 31, 2001.
Cash was used to partially fund the 2001 operating loss. During 2001 Geo
expended $382,826 to fund operations. The additional cash required was primarily
provided from the issuance of stock totaling $308,889.

<PAGE>

Prepaid legal and consulting fees as of December 31, 2000 totaled $125,228. This
amount was fully amortized in 2001. Near the end of 2001, Geo paid $45,000 on a
contract to plug a well located on the Rosecrans property. Plugging was
completed in 2002.

Total liabilities increased from $425,237 at December 31, 2000 to $559,541 at
December 31, 2001. This increase is primarily the result of deferring payment to
vendors required to conserve cash resources. Additionally, Geo borrowed another
$36,802 on its line of credit with a related party and paid off the balance of
notes payable in the amount of $28,596.

The Company's primary sources of liquidity and capital resources in the near
term will consist of the working capital on hand and funds derived from oil and
gas production and waste disposal operations. The Company intends to concentrate
its efforts on maintaining and increasing the operations of the waste disposal
facility along with restoration of selected oil and gas wells in order to
increase cash flow. Further, Management intends to pursue development of its
deep gas prospects in Kentucky. Capital resources will be augmented by the sale
of equity in the Company and transfer of partial interests in its properties in
exchange for development capital.

INFLATION. In recent years inflation has not had a significant impact on the
Company, its operations or financial condition.

TRENDS

During 2001, oil prices declined to a low of $17.48 per barrel (West Texas
Intermediate spot price) in November 2001. Although recent spot prices for WTI
have recovered to approximately $26 per barrel, they have not approached the
high price of $34.12 experienced in March 2000. This decrease has affected the
operational viability of Geo's existing oil properties. In addition, 2001 saw
the average price of natural gas fall from $6.37 per MCF in the first quarter of
2001 to $2.51 by the end of the year. Despite these downward trends, prices seem
to have stabilized and it is unlikely that they will fall to former lows seen in
earlier years. Forecasts published by the DOE Energy Information Administration
project prices for WTI to range between $25 and $29 per barrel while natural gas
prices are projected to range between $2.37 and $3.06 per MCF during the next
twelve months.


ITEM 7.       FINANCIAL STATEMENTS

Please see accompanying Index to Financial Statements commencing on page F-1.

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

(a) On January 18, 2000, we engaged Kelly & Company to replace Ernst & Young,
LLP, who declined to stand for reelection as our independent accountants on
November 11, 1999. Such firm did not issue an opinion on our 1998 financial
statements. Our Board of Directors approved the change in our independent
accountant.

The independent auditor's report of Ernst & Young, LLP for our financial
statements for the year ended December 31, 1997 contained a going concern
qualification but otherwise did not contain an adverse opinion or a disclaimer
of opinion, and was not modified as to uncertainty, audit scope, or accounting
principles. The report of Kelly & Company contains a similar going concern
qualification.

<PAGE>

During our two most recent fiscal years and through the date of the resignation
of Ernst & Young, LLP, We did not have any disagreements with Ernst & Young, LLP
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure.

       (b) Inapplicable.

                                    PART III

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


EXECUTIVE OFFICERS AND DIRECTORS. The Company is dependent on the efforts and
abilities of certain of its senior management. The interruption of the services
of key management could have a material adverse effect on our operations,
profits and future development, if suitable replacements are not promptly
obtained. We anticipate that the Company will enter into employment agreements
with each of its key executives; however, no assurance can be given that each
executive will remain with the Company during or after the term of his or her
employment agreement. In addition, our success depends, in part, upon our
ability to attract and retain other talented personnel. Although we believe that
our relations with our personnel are good and that we will continue to be
successful in attracting and retaining qualified personnel, there can be no
assurance that the Company will be able to continue to do so. All officers and
directors of the Company will hold office until their resignation or removal.

The following table sets forth information regarding the executive officers and
directors of the Company as well as other key members of the Company's
management.

DIRECTORS AND EXECUTIVE OFFICERS

Our directors were elected at our annual meeting of shareholders.

The following table lists the directors, executive officers and key employees of
the Company.

<TABLE>
<CAPTION>
Name of                                  Age     Position Held with                                Director
Individual                                       Company                                           Since
------------------                       ------  --------------------------                        --------------
<S>                                       <C>    <C>                                                   <C>
Dennis Timpe (1)......................    54     President and director                                1999
Lori Timpe-Long (1)...................    33     Chief Financial Officer and director                  1999
Christian M. Dillon (1)...............    56     director and general counsel                          1999
Greg S. Tolleson                          46     Director                                              2001
</TABLE>

--------------
  (1)
Messrs. Timpe and Dillon and Mrs. Timpe-Long were appointed to the Board and
elected to their current positions in December 1999 in accordance with our Plan
of Reorganization.

The following is a brief description of the business experience during the
preceding five years of each of our directors and executive officers indicating
their principal occupation and employment during that period.

DENNIS TIMPE joined the Company in December 1999, pursuant to our Plan of
Reorganization. Mr. Timpe is the founder of TD & Associates and has been its
chief executive officer since 1986. TD & Associates provides services to
companies engaged in the exploration and development of oil and gas. Mr. Timpe
and certain companies with which he was or is affiliated, including T.D. and
Associates, Inc., a California corporation controlled by Mr. Timpe and
affiliated with the Company, have been the subject of administrative orders
issued by the securities administrators of the States of Pennsylvania, Indiana,
Minnesota, Maine, Montana and Wisconsin, the effect of which is to require Mr.

<PAGE>

Timpe and such companies to refrain from selling securities or acting as a
broker in such states. In addition, an order was entered against Mr. Timpe,
among others, by the Indiana Securities Commissioner on May 6, 1999 prohibiting
Mr. Timpe from transacting business in Indiana as a broker-dealer or agent for
the offer or sale of securities, and imposing a civil penalty. In addition, an
injunction is currently in force against Mr. Timpe in the Commonwealth Court of
Pennsylvania restraining him from violating an order issued by the Pennsylvania
Securities Commission on October 15, 1990 prohibiting him from selling
unregistered securities in the State of Pennsylvania. Mr. Timpe is the father of
Lori Timpe-Long,

the Secretary--Treasurer of the Company who was appointed to such office
pursuant to our Plan of Reorganization.

LORI TIMPE-LONG. Mrs. Long has been the Treasurer of TD & Associates since 1986
and is presently a director of the Company. Mrs. Long has a Bachelor of Arts
degree from California State University, Long Beach and a Master of Arts degree
in Psychology from California Graduate Institute. Mrs. Long was appointed as the
Secretary and confirmed as the Treasurer of the Company pursuant to our Plan of
Reorganization.

CHRISTIAN M. DILLON. Mr. Dillon is a director of the Company. He is an attorney
in private practice and acts as counsel to the Company and to TD & Associates.
Mr. Dillon received his J.D. degree from Western State University, College of
Law in 1979; he is a member of the State Bar of California and is admitted to
practice in various federal courts.

GREG S. TOLLESON is a director of the Company. He is a Certified Public
Accountant with over 22 years' experience in public accounting, including eleven
years with the firm Deloitte & Touche. He is currently a partner in the Orange
County accounting firm of Tolleson & Associates, LLP. During his tenure with
Deloitte & Touche, he served a variety of clients and was designated by the firm
as a specialist in the areas of oil and gas operations, partnerships and joint
ventures, closely-held corporations, real estate and oil and gas syndications,
and international income tax matters. He was the lead specialist in Southern
California in income taxation of oil and gas operations. He was also responsible
for leading the international tax practice in the Orange County office of
Deloitte & Touche.

Approximately one-third of Mr. Tolleson's current practice concerns independent
oil and gas companies. He is a member of the American Institute of Certified
Public Accountants, the California Society of Certified Public Accountants, the
California Independent Petroleum Association (where he was formerly co-chairman
of the Tax and Accounting Practices Committee), and the Council of Petroleum
Services.

Directors of the Company are elected annually and hold office until the next
annual meeting of stockholders of the Company or until their respective
successors are elected and qualified.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

        No member of our Board of Directors nor any of our executive officers
timely filed a report with the Securities and Exchange Commission on Form 3,
initial statement of beneficial ownership of securities; on Form 4, statement of
changes of beneficial ownership of securities; or on Form 5, annual statement of
beneficial ownership of securities, for the calendar year 2000.

ITEM 10.      EXECUTIVE COMPENSATION

       Except for the stock options issued to Dennis Timpe, none of our officers
received compensation, including salary and bonus, in excess of $100,000 during
either of the two preceding years. The following tables contain information
concerning our Chief Executive Officer and any other executive officer whose
aggregate cash compensation exceeds $100,000 per year.

<PAGE>

<TABLE>
<CAPTION>
                           Summary Compensation Table

                                                                             Long-Term Compensation
                                                                 ------------------------------------------------
                                    Annual Compensation                  Awards                  Payouts
                             ----------------------------------  -----------------------  -----------------------
         Name and            Year    Salary    Bonus    Other    Restrict   Securities     LTIP      All Other
                                                        nnual     Stock     Underlying     ayouts    ompensation
                                                        Comp.     wards     ptions/SARs     ($)         ($)
    Principal Position                 ($)      ($)    A ($)     A ($)     O   (#)        P         C
---------------------------  ------  --------  ------- --------  --------  -------------  --------  -------------
<S>                           <C>          <C>                             <C>                          <C>
Dennis Timpe, CEO.........    1999         0
Dennis Timpe, CEO             2000         0                               4,000,000(2)                 (1)
</TABLE>
--------------

(1)    Under its Plan of Reorganization as confirmed by the Bankruptcy Court,
       the Company was authorized to issue 4.5 million shares of its common
       stock for an aggregate consideration of $500,000 to TD & Associates, a
       company owned by Timpe. In January 2000, the Company issued such stock;
       the ultimate recipients of such stock were various persons (see "Recent
       Sales of Unregistered Securities"). Mr. Timpe received 1.5 million shares
       of the Company's common stock from TD & Associates as compensation for
       his services to TD & Associates. The compensation received by Mr. Timpe
       by reason thereof, if the price paid by other issuees is regarded as the
       purchase price, is between 20(cent)and 15(cent) per share or an aggregate
       of $300,000 or $225,000. If the closing price of the common stock in the
       over-the-counter market is employed as the value of the shares issued
       (47(cent) per share), the compensation is $705,000. In addition, TD &
       Associates received $50,000 more than the proceeds to the Company from
       such share issuance. All of such persons, save Ansbacher Ltd. and Mr.
       Timpe , paid 20(cent)per share. Ansbacher Ltd. paid 15(cent) per share
       for 1 million shares, an aggregate of $150,000. The aggregate price paid
       by all purchasers was $550,000, of which the Company received $500,000.
       To the extent that the purchase price is less than that paid by others or
       the market price, the difference may be regarded as compensation. On
       December 21, 1999, the issuance date, the closing price of the common
       stock was $0.47 per share.

(2)    In December 1999, the Board authorized the issuance to Mr. Timpe of an
       option to purchase four million shares of common stock at a price of
       56(cent)per share. No issuance was effected at such time and in October
       2000, the Board adopted, subject to ratification by the shareholders, a
       Stock Option Plan. Pursuant to such plan, the Option Committee,
       consisting of all members of the Board with Mr. Timpe not acting, issued
       to Mr. Timpe an option to purchase four million shares of the common
       stock at a price of 56(cent)per share, payable in cash, notes or
       services, or any combination of the foregoing. The term of such options
       expires on September 30, 2005. The options are fully vested and may be
       exercised at any time during their term. Issuance of the options is
       subject to ratification by the shareholders of the Company's stock option
       plan at its 2001 annual meeting.

(2)    Except for the Company's stock option plan specified above, the Company
       has no option or other incentive compensation plans.


<TABLE>
<CAPTION>
                      Option/SAR Grants In Last Fiscal Year
                               (Individual Grants)

                                                         Number of         Percent of     Exercise    Expiration
                                                        Securities           Total            or         Date
                                                        Underlying        Options/SARs    Ease Price
                                                       Options/SARs        Granted to     ($/share)
                                                          Granted         Employees in
Name                                                        (#)               2000
--------------------------------                    -------------------- ---------------  ----------- -----------
<S>                                                           <C>                   <C>         <C>      <C>  <C>
Dennis Timpe 1....................................            4,000,000             100%        0.56     9/30/05
</TABLE>


1      Subject to ratification by the shareholders of the Company's Option Plan.
       The Company intends to seek such ratification at its next shareholders'
       meeting. See footnote (2) above.

<PAGE>

<TABLE>
<CAPTION>
                Aggregated Option/SAR Exercises In Last Fiscal Year And Fiscal Year-End Option/SAR Values

                                                                            No. of Unexercised       Value of
                                                                                Securities         Unexercised
                                                                            Nnderlying Options     In-the-Money
                                           Shares Acquired       Value             SARs            Options/SARs
                                             on Exercise       Realized          at FY-End          at FY-End
Name                                             (#)              ($)               (#)                ($)
------------------------------------       ----------------  -------------- --------------------  ---------------
                                                                               (Exerciseable/Unexerciseable)
<S>                                                      <C>                         <C>                  <C>
Dennis Timpe....................                         0                           4,000,000 1          0
</TABLE>

LONG TERM INCENTIVE PLANS

The Company has no long-term incentive plans.

COMPENSATION OF DIRECTORS

Directors currently receive an annual issuance of 1,000 shares of common shares
as compensation. Directors do not receive reimbursement for their out of pocket
costs in attending board meetings.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT, AND CHANGE-IN CONTROL
ARRANGEMENTS

Except for the stock option plan which has not yet been approved by our
shareholders, we have no benefit plans and no employment agreements, other than
at will agreements, with any of our employees.

In 1996, the Board authorized the Company to enter into employment contracts for
periods of five years with each of Mr. Gerald T. Raydon, Mrs. Alyda Raydon and
Mr. Eric J. Raydon. Such agreements were executed in August 1997 and provided
for annual compensation of $120,000, $39,000 and $52,000, respectively, all
subject to escalation on an annual basis as approved by the Board. The
agreements did not contain provisions restricting a change of control in the
Company. As a consequence of our Plan of Reorganization, all such contracts were
terminated without payment of accrued but unpaid portions of salaries in
December 1999, other than an allowance to each of Mr. and Mrs. Raydon of $4,300
as priority wage claims. During the pendancy of the bankruptcy proceedings, Mr.
Raydon received $5,000 per month and Mrs. Raydon received $3,250 per monthly.

ITEM 11.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information, as of December 31, 2001, with
respect to the beneficial ownership of our Common Stock by: (i) each stockholder
known to us to be the beneficial owner of more than 5% of our Common Stock; and
(ii) each officer and director.

Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission ("Commission") and generally includes voting
or investment power with respect to securities. In accordance with Commission
rules, shares of Common Stock which may be acquired upon exercise of stock
options or warrants which are currently exercisable or which become exercisable
within 60 days of this Proxy Statement are deemed beneficially owned by the
optionees. The Stock Option Plan pursuant to which Mr. Timpe's options were
granted was approved by the shareholders at the 2001 annual meeting.

<PAGE>

<TABLE>
<CAPTION>
Title of                              Name and Address of                 Amount and      Percent of
Class                                 Beneficial Owner                    Nature of         Class
                                                                          Beneficial
                                                                          Ownership
-------------                         ----------------------------------  --------------  -----------

<S>                                   <C>                                  <C>              <C>
                                      Ansbacher, Ltd. (1)                  3,395,725        19.0%
                                      36568 Mojave Sage Street
Common Stock                          Palm Desert, California 92211

                                      Lori Timpe-Long(2)
                                      18281 Lemon Drive
Common Stock                          Yorba Linda, California 92886           40,000         0.2%

                                      Christian Dillon
                                      18281 Lemon Drive
Common Stock                          Yorba Linda, California 92886          100,000         0.6%

                                      Dennis Timpe (2)(3)
                                      18281 Lemon Drive
Common Stock                          Yorba Linda, California 92886        5,232,600        28.6%

                                      Greg Tolleson
                                      18281 Lemon Drive
Common Stock                          Yorba Linda, California 92886           90,000         0.5%
</TABLE>

--------------
(1)  In December 1999, Mr. Raydon resigned as an officer and director of the
     Company. In November and December 1999, most of Mr. Raydon's shares were
     transferred to Ansbacher, Ltd.

(2)  Includes 1,232,600 shares of common stock and options to purchase an
     additional 4,000,000 shares of our common stock.

ITEM 12.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

RELATED PARTY TRANSACTIONS.

NON-ARM'S LENGTH AGREEMENTS. Certain contemplated agreements and arrangements,
including those relating to indemnification, compensation and payments between
the Company and the officers and directors of the Company, will not be the
result of arm's length negotiations.

OUR BANKRUPTCY PROCEEDINGS. In 1998, we filed a voluntary petition for
Reorganization under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy
Court, Central District of California, Santa Barbara Division (No. ND
98-15477-RR). In December 1999, our Third Amended Plan of Reorganization was
confirmed by the Court.

Until December 1999, Capitan Resources, Inc. owned an undivided 25% interest in
the waste disposal facilities owned and operated by us at our Oxnard properties.
Gerald T. Raydon and his family own all of the stock of Capitan Resources, Inc.
As part of our Reorganization, we acquired all of the interests of Capitan
Resources in the jointly owned properties and terminated the agreement pursuant
to which Capitan operated such properties. Relations between the Company and
Capitan Resources were governed by an agreement, which provides for a
proportionate sharing of costs and revenues.

During 1996, affiliates of Drake Investment Securities, Inc. invested $50,000 in
Capitan in exchange for an undivided 25% share of profits in the disposal of
solid wastes by Capitan. This interest was subsequently acquired by the Company.

Capitan Resources, Inc. was the purchaser of natural gas from our Bandini-East
Los Angeles properties, which were sold during 1998. Capitan purchased the
natural gas under a contract dated June 30, 1991, which provides for a payment

<PAGE>

to Capitan of 30% of gross sales in exchange for advancing capital and other
costs of gas processing and transportation. Capitan then resold the natural gas
to other purchasers. This contract was terminated as part of our reorganization.

From time to time there were outstanding balances and credits between Capitan
and us pursuant to the agreements above mentioned. Credits and balances were
outstanding from time to time with respect to the Bandini-East Los Angeles
properties and Vaca properties; during the two years ended December 1999, the
largest balance receivable from Capitan was approximately $1 million and on
December 31, 1999, the receivable balance was $0 as a consequence of our Plan of
Reorganization which provided for the release of all claims of Capitan against
us and all of our claims against Capitan in exchange for the conveyance to us of
Capitan's interest in the waste disposal project and termination of its
operating contract.

The Harriman affiliated group currently owns approximately 365,576 shares or
2.27% of our outstanding common stock. In 1992, members of the group provided
collateral to a bank for a loan to us in the principal amount of $1,200,000
($650,000 as of June 30, 1997). The group received 273,669 shares of our common
stock as partial consideration for providing such collateral. The loan was
extended to January 15, 1998 on the condition that it be reduced by one-half,
which we did by making a $750,000 payment in December, 1996. We paid the
Harriman group 51,010 shares of the common stock in 1996 as consideration for
retaining the use of their collateral for the loan through the period of
extension. In 1998, a further extension was granted in exchange for an
additional 25,000 shares of common stock. The indebtedness was discharged in our
reorganization and the Harriman affiliated group received $664,990 in allowed
claims as a creditor.

In 1998, Drake Energy Company, an affiliate of Drake Securities Corporation,
loaned us $16,500 and purchased 33,000 shares of common stock for $16,500. The
note was discharged in the bankruptcy and Drake Energy received an allowed
unsecured claim for $16,500.

Under our Plan of Reorganization, which was confirmed on December 15, 1999, the
following transactions, among others, occurred:

         1. TD & Associates, a company owned by Mr.Dennis Timpe received
1,500,000 shares of our common stock out of our sale of 4,500,000 common shares
in exchange for $550,000, of which TD & Associates retained $50,000. Those
shares were thereafter transferred to Mr. Timpe as compensation for services
which he provided to TD & Associates.

         2. Capitan Resources, Inc., a company owned by Mr. G. T. Raydon,
relinquished all of its rights under agreements with us by which Capitan
operated certain of our properties, acted as natural gas reseller for us, and
released any claims it may have had against us. We released Capitan and Mr.
Raydon from any claims we may have had against either. We asserted claims of
approximately $1 million against Capitan.

         3. Mr. Raydon released claims for 1,390,000 shares of our common stock
as replacement for shares owned by him lost through sale by a third party, which
were provided by Mr. Raydon as collateral for an indirect loan to us.

         4. Mr. Raydon released certain collateral and claims secured thereby on
certain of our properties.

         5. The Harriman affiliated group released its claims against us,
including that for repayment of $652,000, in exchange for the payment of
$25,000, a two year installment ($2,487.50 monthly) note bearing 8% interest,
principal amount of $55,000, and a general unsecured claim of $584,990 for which
they have received 210,595 shares of common stock and will receive a maximum of
497,978 additional shares.

         6. Unsecured notes in the amount of $185,000 held by Mr. and Mrs.
Raydon are to be discharged and various liens of the Raydons on our properties
were released.

<PAGE>

         7. Advances in the amounts of $33,000 from Mr. Eric Raydon, son of Mr.
and Mrs. G. T. Raydon and a former employee of Geo, were discharged in exchange
for an allowed claim of $33,919 for which he received shares of the Common Stock
on the same basis as other creditors of his class.

As a condition to investing in our common stock, Mr. Timpe required that Mr. G.
T. Raydon grant Mr. Timpe a proxy covering all of the shares owned of record by
Mr. Raydon. Such proxy was granted in December 1999, and permits Mr. Timpe and
his nominees to vote the shares subject thereto for a period ending December 20,
2001.

During December 1999, our Board of Directors authorized the grant of options to
purchase 4 million shares of our common stock to Mr. Timpe, such options being
exercisable at $.56 per share and expiring on September 30, 2005. The options
are exercisable in whole or in part at any time and are fully vested. In October
2000, the Company adopted a stock option plan (which was later approved by the
shareholders), and granted such options to Mr. Timpe.

In September, 2000, TD & Associates, a company owned by Dennis Timpe, entered
into an agreement with Geo Petroleum, Inc. pursuant to which the former agreed
to loan to the latter a maximum of $100,000 on an unsecured essentially demand
basis at an interest rate which is two percentage points over prime. At December
31, 2000, approximately $85,000 principal and interest of $1,471 had accrued. In
June, 2001, TD & Associates agreed to increase the loan, which was characterized
as a line of credit, to $150,000. In September, 2001, Geo and TD & Associates
agreed to extend the date that the balance of the loan is due from September 1,
2001 to September 7, 2002.

<PAGE>

ITEM 13.      EXHIBITS AND REPORTS ON FORM 8-K

       (a) Exhibits

     Exhibit
     Number      Description
     ------      -----------

       2.1       Agreement of Merger and Plan of Reorganization between Drake
                 Investment Corp. and Geo Petroleum, Inc. dated November 1,
                 1995.*

       2.2       Certificate of Approval of Agreement of Merger between Drake
                 Investment Corp. and Geo Petroleum, Inc., dated April 9, 1996.*

       2.3       Permit to issue stock in merger, dated March 26,1996.*

       2.4       Plan of Reorganization of Geo Petroleum, Inc. dated October 12,
                 1999, and confirmed by the U. S. Bankruptcy Court for the
                 Central District of California, Santa Barbara Division, on
                 December 15,1999.**

       3.1       Articles of Incorporation of Geo Petroleum, Inc., filed
                 November 6, 1986.*

       3.1(a)    First Amendment to Articles of Incorporation of Geo Petroleum,
                 Inc. filed June 1, 1994.*

       3.1(b)    Second Amendment to Articles of Incorporation of Geo Petroleum,
                 Inc. filed November 7, 1995.*

       3.1(c)    Third Amendment to Articles of Incorporation of Geo Petroleum,
                 Inc. filed December 5, 1995.*

       3.2       By-laws of Geo Petroleum, Inc., dated November 30, 1986.*

       4.1       Corporate Resolution establishing Rights, Preferences and
                 Privileges of Preferred Stock, Series A, dated August 23,
                 1994.*

       4.1(a)    Form of Preferred Stock Certificate.*

       4.2       Form of Common Stock Certificate.*

       4.3       Form of Promissory Note, Deed of Trust, and Assignment of Oil
                 Payment of Geo Petroleum, Inc.*

       10.3(a)   Form of Oil and Gas lease covering various lands in Oxnard
                 Field (Vaca Tar Sands Unit) (exemplar), dated January 1, 1987.*

       10.3(b)   Pooling Agreement, Vaca Tar Sands Unit, Ventura County,
                 California.*

       10.4      Form of Oil and Gas lease covering various lands in the
                 Rosecrans Oil Field, Los Angeles County, CA. (exemplar), dated
                 October 15, 1956.*

       10.5      Gas Sales Contract dated August 31, 1991, between Geo Petroleum
                 Inc. and Capitan Resources, Inc. (East Los Angeles/Bandini
                 fields).*

       10.6(a)   Gas Sales Contract dated August 9, 1991 between Pacific Tube
                 Company and Geo Petroleum, Inc.*

       10.6(b)   Assignment of Gas Sales Contract, Geo Petroleum, Inc. To
                 Capitan Resources, Inc.*

       10.7      Settlement Agreement between Geo Petroleum, Inc. and William
                 Lennox, dated February 28, 2000 (Vaca Properties)**

       10.8(a)   Oil Sales Contract dated November 22, 1994 between Geo
                 Petroleum, Inc. and Texaco Trading and Transportation Inc.
                 (Oxnard).*.

       10.8(b)   Oil Sales Contract dated July 5, 1995 between Geo Petroleum,
                 Inc. and Unocal Corp. (Rosecrans field).*

       10.9      Oil Sales Contract between Geo Petroleum, Inc. and Kern Oil &
                 Refining Co., dated July 10th, 1995 (Orcutt field).*

       10.10     Oil and Gas Lease between Gene Careaga, et al and Central
                 California Oil Co., (our predecessor in interest) (Orcutt
                 Field) dated October 3, 1972.*

<PAGE>

     Exhibit
     Number      Description
     ------      -----------

       10.11     Letter Agreement dated December 22, 1989 between Geo Petroleum,
                 Inc. and Gerald T. Raydon and Notice of Conversion pursuant
                 thereto dated January 2, 1990 (Vaca Tar Sand net profits
                 interest)**

       10.12     Agreement and Assignment among Gerald T. Raydon and Alyda L.
                 Raydon, as assignors, and Geo Petroleum, Inc., as assignee,
                 dated April 1, 1994, conveyance of interests in East Los
                 Angeles and Vaca Tar Sands properties, retaining a 5% net
                 profits interest in Vaca properties.**

       10.13     Water Disposal Agreement between J.W. Hansen and Geo Petroleum,
                 Inc. dated May 14, 1992.*.

       10.14     Water Disposal Agreement between Geo Petroleum, Inc. and
                 Capitan Resources, Inc. dated June 1, 1990.*

       10.15     Services and Drilling Master Contract (water disposal) between
                 Unocal Corporation and Geo Petroleum, Inc. dated February 3,
                 1993.*

       10.16     Term Loan Agreement, as amended and extended to June 15, 1996,
                 dated June 6, 1994, between First Los Angeles Bank (now City
                 National Bank) and Geo Petroleum, Inc.*.

       10.17     Letter Agreement between Geo Petroleum, Inc. and William Rich
                 III, as attorney in fact, (Harriman interests) dated September
                 6, 1990.*.

       10.18     Assignment and Bill of Sale, Rosecrans Area Leases, by and
                 between Kelt California, Inc., and Geo Petroleum, Inc., dated
                 December 1, 1994.*

       10.19     Consulting Agreement between Geo Petroleum, Inc. and Gerald T.
                 Raydon, dated October 1999.**

       10.20     Office Lease between TD & Associates and Geo Petroleum, Inc.
                 dated January 1, 2000**

       10.21     Agreement between Geo Petroleum, Inc. and Bud Antle, dated
                 October 24, 2000, releasing certain lands in the Oxnard Field
                 and order of the Bankruptcy Court authorizing execution
                 thereof.**

       10.22     Credit Agreement and related form of promissory note between
                 Geo Petroleum, Inc. and T.D. Associates, Inc., dated September
                 7, 2000

       10.23     Agreement for Assignment of Leases dated December 31, 1996 by
                 and between Geo Petroleum, Inc. as Assignor and Saba Petroleum,
                 Inc. as Assignee with respect to our oil properties in the
                 Oxnard Field, Ventura County, California **

       10.24     Agreement and Assignment of Leases dated November 1, 1997,
                 between Geo Petroleum, Inc. and Saba Petroleum, Inc. covering a
                 reassignment of the former's interest in the Oxnard Field,
                 California. **

       10.25     Amendment to Water Disposal Lease dated February 28, 2000
                 between Geo Petroleum, Inc. and William Lennox (Water disposal
                 facility lease)**

       16.1      Letter from Ernst & Young L.L.P. regarding no disagreement.**

       23.1      Consent of Stan Brown, Petroleum Engineer.

       23.2      Consent of Krummrich Engineering.

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

       *         Filed as an exhibit to Registrant's Form 10 Registration
                 Statement dated June 6, 1996 and incorporated herein by
                 reference thereto.

       **        Filed as an exhibit to Registrant's report on form 10KSB for
                 the year ended December 31, 1999 and incorporated herein by
                 reference thereto.

       Unless followed by one or two asterisks, documents listed above are
       filed herewith.


<PAGE>

                                   SIGNATURES

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

                                         GEO PETROLEUM INC.
Dated: April 15, 2002                 By:/s/ Dennis Timpe
                                         -----------------------------------
                                         Dennis Timpe
                                         Chairman of the Board and President

       Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.

Signatures and dates of directors.


April 15, 2002                   /s/ Dennis Timpe
                                 -----------------------------------------------
                                 Dennis Timpe
                                 Chairman of the Board of Directors/C.E.O.


April 15, 2002                   /s/ Lori Timpe-Long
                                 -----------------------------------------------
                                 Lori Timpe-Long
                                 Secretary/Treasurer/Director
                                 Principal Financial and Accounting Officer

April 15, 2002                   /s/ Christian M. Dillon
                                 Christian M. Dillon
                                 Director
                                 -----------------------------------------------
April 15, 2002
                                 /s/ Gregory Tolleson
                                 Gregory Tolleson
                                 Director


<PAGE>

                               GEO PETROLEUM, INC.
                        INDEX TO THE FINANCIAL STATEMENTS
                        As of December 31, 2001 and 2000




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<PAGE>

                               GEO PETROLEUM, INC.

                              FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2001 AND 2000 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001



<PAGE>
<TABLE>
<CAPTION>

                               GEO PETROLEUM, INC.

                        INDEX TO THE FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2001 AND 2000 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001
----------------------------------------------------------------------------------------------------------------








         <S>                                                                                           <C>
         Report of Independent Auditors ....................................................................1



         Financial Statements of Geo Petroleum, Inc.:



                  Balance Sheets, December 31, 2001 and 2000................................................2



                  Statements  of  Operations  For  Each of the Two  Years  in the  Period  Ended
                      December 31, 2001.....................................................................4



                   Statements  of  Shareholders'  Equity For Each of the Two Years in the Period
                      Ended December 31, 2001...............................................................5



                   Statements  of Cash  Flows  For  Each of the Two  Years in the  Period  Ended
                      December 31, 2001.....................................................................6



         Notes to the Financial Statements..................................................................8


</TABLE>
<PAGE>


                         REPORT OF INDEPENDENT AUDITORS


To the Board of Directors
Geo Petroleum, Inc.

We have audited the  accompanying  balance sheets of Geo  Petroleum,  Inc. as of
December  31,  2001  and  2000,  and  the  related   statements  of  operations,
shareholders'  equity  and cash  flows for each of the two  years in the  period
ended December 31, 2001. 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 auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audits 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 2001 and 2000 financial statements referred to above present
fairly, in all material respects, the financial position of Geo Petroleum,  Inc.
as of December 31, 2001 and 2000, and the results of its operations and its cash
flows  for each of the two years in the  period  ended  December  31,  2001,  in
conformity with accounting principles generally accepted in the United States of
America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial statements, the Company has suffered recurring losses from operations,
has negative working capital, filed for relief under the federal bankruptcy laws
in  November  1998 from  which it  emerged  in  December  1999,  needs to attain
positive  cash flow from  operations,  and obtain  additional  funds to commence
operations and  development of its oil and gas  properties.  These matters raise
substantial  doubt about the Company's  ability to continue as a going  concern.
Management's  plans concerning these matters are partially  described in Note 2.
The accompanying  financial statements do not include any adjustments that might
result from the outcome of this uncertainty.


Kelly & Company
Newport Beach, California
April ___, 2002

<PAGE>

<TABLE>
<CAPTION>
                                                        Geo Petroleum, Inc.
                                                           Balance Sheets
                                                     December 31, 2001 and 2000
----------------------------------------------------------------------------------------------------------------------------

                                     ASSETS
                                                                                        2001                    2000
                                                                                  ------------------     -------------------
Current assets:
<S>                                                                                        <C>                   <C>
     Cash and equivalents                                                                     $ 406                $ 70,173
     Accounts receivable - trade                                                             68,282                  33,961
     Prepaid expenses:
         Legal and consulting fees                                                                -                 125,228
         Advances on well plugging                                                           45,000                   9,000
         Other                                                                                6,869
     Note receivable                                                                              -                   7,100
                                                                                  ------------------     -------------------
Total current assets                                                                        120,557                 245,462
                                                                                  ------------------     -------------------
Restoration and utility deposits                                                            271,530                 290,936
                                                                                  ------------------     -------------------
Property and equipment:
     Oil and gas properties                                                                 264,375                 261,311
     Vehicles                                                                                36,884                  36,884
     Facilities and equipment                                                               185,447                 184,475
                                                                                  ------------------     -------------------
                                                                                            486,706                 482,670
     Less: accumulated depreciation and depletion                                           (44,763)                (22,427)
                                                                                  ------------------     -------------------
                                                                                            441,943                 460,243
                                                                                  ------------------     -------------------
Total assets                                                                              $ 834,030               $ 996,641
                                                                                  ==================     ===================
</TABLE>

    The accompanying notes are an integral part of the financial statements.
                                        2

<PAGE>

<TABLE>
<CAPTION>
                                                               Geo Petroleum, Inc.
                                                                Balance Sheets
                                                           December 31, 2001 and 2000
----------------------------------------------------------------------------------------------------------------------------

                      LIABILITIES AND SHAREHOLDERS' EQUITY


                                                                                        2001                    2000
                                                                                  ------------------     -------------------
Current liabilities:
     Accounts payable:
<S>                                                                                       <C>                     <C>
         Trade                                                                            $ 273,400               $ 160,901
         Related party                                                                       54,805                  54,805
     Accrued expenses:
         Bankruptcy settlement liability                                                     40,000                  40,000
         Property taxes payable                                                              38,409                  31,661
         Other accrued expenses                                                              26,825                  19,974
     Line of credit - related party                                                         121,802                  85,000
     Other liabilities                                                                        4,300                   4,300
     Note payable, current maturity                                                               -                  28,596
                                                                                  ------------------     -------------------
Total current liabilities                                                                   559,541                 425,237
Commitments and contingencies
Shareholders' equity:
     Preferred stock; no par value; 100,000 shares authorized; no
         shares issued and outstanding at December 31,2001 and
         2000, respectively                                                                       -                       -
     Common stock; no par value; 50,000,000 shares authorized;
         19,211,955 and 18,177,805 shares issued and outstanding
         at December 31, 2001 and 2000, respectively                                     11,667,182              11,225,293
Accumulated deficit                                                                     (11,392,693)            (10,653,889)
                                                                                  ------------------     -------------------
Total shareholders' equity                                                                  274,489                 571,404
                                                                                  ------------------     -------------------
Total liabilities and shareholders' equity                                                $ 834,030               $ 996,641
                                                                                  ==================     ===================
</TABLE>

    The accompanying notes are an integral part of the financial statements.
                                        3

<PAGE>

<TABLE>
<CAPTION>
                                                             Geo Petroleum, Inc.
                                                          Statements of Operations
                                         For Each of the Two Years in the Period Ended December 31, 2001
----------------------------------------------------------------------------------------------------------------------------

                                                                                       2001                   2000
                                                                                --------------------  ----------------------
Revenues:
<S>                                                                                         <C>                    <C>
Oil and gas sales                                                                           $ 6,742                $ 40,901
Waste water disposal services                                                               351,465                  40,899
Less: royalties                                                                             (63,800)                      -
                                                                                --------------------  ----------------------
Total revenues                                                                              294,407                  81,800
Expenses:
Lease operating expenses                                                                    422,065                 323,023
Lease environmental remediation expenses                                                      2,528                   6,607
Depreciation                                                                                 22,336                  11,228
Professional fees                                                                           256,881                 292,443
General and administrative                                                                  286,153                 195,228
                                                                                --------------------  ----------------------
Total expenses                                                                              989,963                 828,529
                                                                                --------------------  ----------------------
Loss from operations                                                                       (695,556)               (746,729)
                                                                                --------------------  ----------------------
Reorganization items:
Trustee fees                                                                                  4,675                       -
Legal fees                                                                                   37,645                       -
                                                                                --------------------  ----------------------
Total reorganization items                                                                   42,320                       -
                                                                                --------------------  ----------------------
Other income (expense):
Interest income                                                                              10,215                  10,249
Interest expense                                                                            (10,343)                 (5,977)
                                                                                --------------------  ----------------------
                                                                                               (128)                  4,272
                                                                                --------------------  ----------------------
Loss before provision for income taxes                                                     (738,004)               (742,457)
Provision for income taxes                                                                     (800)                   (800)
                                                                                --------------------  ----------------------
Net loss                                                                                $  (738,804)         $     (743,257)
                                                                                ====================  ======================
Net loss per share, basic and diluted                                                       $ (0.05)                $ (0.04)
                                                                                ====================  ======================
</TABLE>


    The accompanying notes are an integral part of the financial statements.
                                        4

<PAGE>

<TABLE>
<CAPTION>

                                                          Geo Petroleum, Inc.
                                                     Statements of Shareholders' Equity
                                    For Each of the Two Years in the Period Ended December 31, 2001
----------------------------------------------------------------------------------------------------------------------------------

                                                               Common           Common           Accumulated
                                                               Shares           Stock              Deficit             Total
                                                           --------------   ---------------   -----------------   ----------------
<S>                                                           <C>              <C>                 <C>                 <C>
Balance, December 31, 1999                                    15,215,995       $ 9,918,974         $(9,910,632)        $ 8,342
     Common shares issued in a private placement               1,916,202           584,723                 -           584,723
     Common shares issued in a private placement                 492,641           344,850                 -           344,850
     Common shares issued  for services                          402,967           169,246                 -           169,246
     Common shares issued for services                           100,000            90,000                              90,000
     Common shares and warrants issued for services               50,000           117,500                 -           117,500
     Net loss                                                        -                 -              (743,257)       (743,257)
                                                           --------------   ---------------   -----------------   ----------------
Balance, December 31, 2000                                    18,177,805        11,225,293         (10,653,889)        571,404
     Common shares issued in a private placement                 322,500           161,250                 -           161,250
     Common shares issued in a private placement                 984,259           147,639                 -           147,639
     Common shares issued for services                           399,000           133,000                             133,000
     Common shares retired that were originally issued
        pursuant to the confirmed plan of reorganization
        but that were not required.                             (671,609)              -                   -               -
     Net loss                                                        -                 -              (738,804)       (738,804)
                                                           --------------   ---------------   -----------------   ----------------
Balance, December 31, 2001                                    19,211,955      $ 11,667,182        $(11,392,693)      $ 274,489
                                                           ==============   ===============   =================   ================
</TABLE>

    The accompanying notes are an integral part of the financial statements.
                                        5

<PAGE>

<TABLE>
<CAPTION>
                                                Geo Petroleum, Inc.
                                              Statements of Cash Flows
                             For Each of the Two Years in the Period Ended December 31, 2001
-------------------------------------------------------------------------------------------------------------------------

                                                                                  2001                     2000
                                                                          ----------------------  -----------------------
Cash flows from operating activities:
<S>                                                                                  <C>                      <C>
      Net loss                                                                       $ (738,804)              $ (743,257)
      Adjustments to reconcile net loss to net cash used in
        operating activities:
            Depreciation                                                                 22,336                   11,228
            Issuance of common stock and warrants
              for services                                                                    -                   81,875
            Amortization of prepaid legal expense                                        37,500                        -
            Amortization of prepaid consulting services                                  88,125                        -
            Issuance of common stock for services                                       133,000                        -
Decrease (increase) in assets:
            Accounts receivable trade                                                   (34,321)                  40,108
            Due from a related party                                                      7,100                   37,900
            Prepaid expenses:
                 Legal and consulting fee                                                  (397)                  (1,335)
                 Advances on well plugging                                              (36,000)                       -
                 Other                                                                   (6,869)                  (3,634)
            Restoration and utility deposits                                             19,406                 (130,344)
Increase (decrease) in liabilities:
            Accounts payable, trade                                                     112,499                  130,989
            Accounts payable, related party                                                                       40,656
            Accrued expenses:
                 Bankruptcy settlement liaiblity                                              -                   40,000
                 Property taxes payable                                                   6,748                   (3,746)
                 Other                                                                    6,851                 (165,026)
            Income tax payable                                                                -                   (3,039)
            Other liabilities                                                                 -                 (160,746)
            Installment obligation                                                            -                  (64,755)
                                                                          ----------------------  -----------------------
Cash used in operating activities                                                      (382,826)                (893,126)
                                                                          ----------------------  -----------------------
Cash flows used in investing activities
      Purchases of facilities and equipment                                                (972)                (184,475)
      Purchase of vehicles                                                                    -                  (16,000)
      Capital expenditures on oil and gas properties                                     (3,064)                (261,311)
                                                                          ----------------------  -----------------------
Cash used in investing activities                                                        (4,036)                (461,786)
                                                                          ----------------------  -----------------------
</TABLE>

    The accompanying notes are an integral part of the financial statements.
                                        6

<PAGE>

<TABLE>
<CAPTION>
                                                Geo Petroleum, Inc.
                                              Statements of Cash Flows
                             For Each of the Two Years in the Period Ended December 31, 2001
-------------------------------------------------------------------------------------------------------------------------

                                                                                  2001                     2000
                                                                          ----------------------  -----------------------
Cash flows provided by (used in) financing activities:
<S>                                                                                    <C>                     <C>
      Proceeds from line of credit, related party                                      $ 40,000                $ 110,000
      Payment on line of credit, related party                                           (3,198)                 (25,000)
      Payment on note payable.                                                          (28,596)                 (26,404)
      Net proceeds from the issuance of common stock                                    308,889                  929,573
                                                                          ----------------------  -----------------------
Cash provided by financing activities                                                   317,095                  988,169
                                                                          ----------------------  -----------------------
Net increase (decrease) in cash                                                         (69,767)                (366,743)
Cash and equivalents at beginning of year                                                70,173                  436,916
                                                                          ----------------------  -----------------------
Cash and equivalents at end of year                                                       $ 406                 $ 70,173
                                                                          ======================  =======================


                                        Supplemental Disclosures of Cash Flow Information

Interest paid                                                                          $ 11,815                  $ 3,446
Income taxes paid                                                                           -                    $ 3,839


                                  Supplemental Schedule of Non-Cash Investing and Financing Activities

Issuance of common stock for prepaid legal and consulting fees:
      Prepaid legal and consulting fees                                                     -                  $ 125,625
      Issuance of common stock                                                              -                  $(125,625)

Issuance of common stock to pay federal bankruptcy proceeding expenses:
      Accrued legal fees                                                                    -                   $ 90,000
      Professional fees                                                                     -                   $ 79,246
      Issuance of common stock                                                              -                 $ (169,246)

</TABLE>

    The accompanying notes are an integral part of the financial statements.
                                        7

<PAGE>
                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2001 AND 2000 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001

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


1.   DESCRIPTION OF THE COMPANY'S BUSINESS
     -------------------------------------

     Geo Petroleum,  Inc. (the  "Company") is an oil and gas production  company
     founded in 1986 and  incorporated  in the State of California.  The Company
     engages  in the  development,  production  and  management  of oil  and gas
     properties.  All of the  Company's  properties  are located in  California.
     Certain  of the  wells  on one of the  Company's  properties  are  used for
     wastewater disposal services.


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     ------------------------------------------

     BASIS OF PRESENTATION


     The accompanying financial statements have been prepared on a going-concern
     basis, which contemplates the realization of assets and the satisfaction of
     liabilities  in the normal  course of  business.  The Company  incurred net
     losses of $738,804 and $743,257 and negative cash flows from  operations of
     $382,826  and  $893,126  for the years  ended  December  31, 2001 and 2000,
     respectively.  At December 31, 2001 the Company had an accumulated  deficit
     of $11,392,693 and, and its current  liabilities  exceed its current assets
     by $438,984.  In June 1998, the Company  decided to shut-in its oil and gas
     production at all of its property locations except certain of the oil wells
     and the wastewater  disposal wells on the Vaca Tar Sands property,  and the
     Rosecrans  Field gas  production.  It planned to focus its resources on the
     development of the Vaca Tar Sands  property.  In November 1998, the Company
     filed for protection under the federal  bankruptcy laws.  Effectively,  the
     Company  curtailed its oil and gas  production in 1999,  and  substantially
     reduced  its  wastewater  disposal   operations.   In  December  1999,  the
     bankruptcy court confirmed the Plan and the Company received  $500,000 from
     the  sale  of  4,500,000  shares  of its  common  stock  and  emerged  from
     bankruptcy.  In the fourth  quarter of 2000,  the Company began limited oil
     production  and  wastewater   disposal  services  at  its  Vaca  Tar  Sands
     properties.  The production  requires steam injection recovery  techniques.
     This process  uses  substantial  quantities  of natural gas. Due to ongoing
     inordinately  high  natural gas costs,  the Company has  curtailed  its oil
     production efforts.

     The Company's continuation as a going concern is dependent upon its ability
     to obtain  additional  debt or equity  financing,  to  acquire,  repair and
     modify  equipment and commence  production from its oil and gas properties,
     generate  sufficient cash flow to meet its current  obligations on a timely
     basis,  and  ultimately  to attain  profitable  oil and gas and waste water
     disposal operations. In 2001, management obtained approximately $309,000 in
     additional equity financing through private  placements of its common stock
     and is  continuing  its  efforts  to  obtain  additional  funds so that the
     Company can meet its  obligations,  commence  oil and gas  operations,  and
     develop its oil and gas properties.  Potential capital funding alternatives
     include,  among other  things,  private  placement  of debt  and/or  equity
     securities,  bank loans using oil and gas  properties as collateral  and/or
     the sale of the  interests in its oil and gas  properties.  There can be no

                                       8

<PAGE>

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
     -----------------------------------------------------

     BASIS OF PRESENTATION, CONTINUED

     assurance that any of these potential alternatives will materialize.  These
     matters and the Company's  ability to meet it plan raise  substantial doubt
     about the Company's  ability to continue as a going concern.  The financial
     statements  do not  include  any  adjustments  that might  result  from the
     outcome of these uncertainties. -

     USE OF ESTIMATES

     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that  affect  amounts  reported in the  financial  statements.
     Changes  in these  estimates  and  assumptions  are  considered  reasonably
     possible  and may  have a  material  impact  on the  financial  statements.

     PROPERTY AND EQUIPMENT

     OIL AND GAS PROPERTIES
     ----------------------

     The Company  follows the  full-cost  method of  accounting  for oil and gas
     properties.   Accordingly,  all  costs  associated  with  the  acquisition,
     exploration  and  development  of oil and gas reserves are  capitalized  as
     incurred.  The  Company  has not  capitalized  any  interest  or any of its
     internal costs related to its oil and gas properties.

     In addition,  the capitalized  costs are subject to a "ceiling test," which
     basically  limits such costs to the  aggregate  of the  "estimated  present
     value" of  future  net  revenues  from  proved  reserves,  discounted  at a
     10-percent   interest  rate,   based  on  current  economic  and  operating
     conditions,  plus  the  lower  of cost or fair  market  value  of  unproved
     properties.  Any unamortized costs capitalized in the cost center in excess
     of the cost  center  ceiling  are charged to expense in the period in which
     the excess occurs.

     Sales of proved and unproved properties are accounted for as adjustments of
     capitalized costs with no gain or loss recognized,  unless such adjustments
     would  significantly  alter the relationship  between capitalized costs and
     proved  reserves  of oil  and  gas,  in  which  case  the  gain  or loss is
     recognized  in  the  determination  of  income  or  loss.  Abandonments  of
     properties are accounted for as  adjustments  of capitalized  costs with no
     loss recognized.

     All capitalized  costs of oil and gas  properties,  including the estimated
     future costs to develop proved  reserves,  are amortized over the estimated
     useful lives of the  properties by  application  of the  unit-of-production
     method using only estimated proved oil and gas reserves, excluding future

                                       9

<PAGE>

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
     -----------------------------------------------------

     PROPERTY AND EQUIPMENT, CONTINUED

     OIL AND GAS PROPERTIES, CONTINUED
     ---------------------------------

     estimated  costs and related oil  reserves at the Vaca Tar Sands  property,
     which relate to a  significant  development  project  involving an enhanced
     recovery process. Evaluations of the oil and gas reserves for the Company's
     Rosecrans  and Vaca Tar  Sands  properties  were  prepared  by  independent
     petroleum engineers.  Such estimates of oil and gas reserves are inherently
     imprecise and estimates of new discoveries are more imprecise than those of
     producing oil and gas properties. As a result, these estimates are expected
     to change as future information  becomes available,  and such change can be
     significant.

     Substantially  all  additions  to oil and gas  properties  in 2001 and 2000
     relate to  improvements  to waste  water  disposal  wells,  facilities  and
     equipment  and  development  costs  associated  with  its  Vaca  Tar  Sands
     properties.

     The  Company's  oil and  gas  producing  properties  are  estimated  by the
     Company's independent petroleum engineers to have remaining producing lives
     ranging  from five to 31 years.  The  Company's  policy for  accruing  site
     restoration  and  environmental  exit  costs  related  to its  oil  and gas
     production   is  that  such  costs  are  accounted  for  in  the  Company's
     calculation of depletion expense.

     OTHER
     -----

     Property and equipment are recorded at cost and are  depreciated  using the
     straight-line   method  over  the  expected   lives  as  described   below.
     Expenditures for normal  maintenance and repairs are charged to income, and
     significant improvements are capitalized.  The cost and related accumulated
     depreciation  of assets are removed from the accounts  upon  retirement  or
     other  disposition,  and  resulting  profit  or  loss is  reflected  in the
     statement of operations.

     Depreciation of office furniture and equipment,  and vehicles,  is computed
     using  the  straight-line   method,  with  depreciation  rates  based  upon
     estimated useful lives of five years.

     Depreciation  of plant and  equipment is computed  using the  straight-line
     method,  with  depreciation  rates  based upon  estimated  useful  lives of
     fourteen years.

     Depreciation of office furniture and equipment,  and vehicles,  is computed
     using  the  straight-line   method,  with  depreciation  rates  based  upon
     estimated useful lives of five years.

                                       10

<PAGE>

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
     -----------------------------------------------------

     OTHER, CONTINUED

     Depreciation  of plant and  equipment is computed  using the  straight-line
     method,  with  depreciation  rates  based upon  estimated  useful  lives of
     fourteen years.

     REVENUE RECOGNITION

     Revenue from oil and gas sales is  recognized  upon delivery of the oil and
     gas to the Company's  customer.  Royalties and certain other costs that the
     Company incurs to bring the oil and gas into salable condition are recorded
     as a reduction of sales.

     Revenue  from  wastewater  disposal is  recognized  when the  services  are
     performed.  Royalties  related to water disposal services are recorded as a
     reduction of revenues.

     LONG-LIVED ASSETS

     Long-lived  assets held and used by the Company are reviewed for impairment
     whenever  events or changes in  circumstances  indicate  that the  carrying
     amount of an asset may not be recoverable. When circumstances indicate that
     the  carrying  amount  of a  long-lived  asset,  other  than  oil  and  gas
     properties,   is  not   recoverable,   as  demonstrated  by  the  projected
     undiscounted cash flows, an impairment loss is recognized.

     The Company  accounts  for its oil and gas  properties  under the full cost
     method and evaluates these assets  separately in accordance with applicable
     cost ceiling  limitations.  The Company's  management has  determined  that
     there was no impairment of long-lived assets at December 31, 2001 and 2000,
     respectively.

     INCOME TAXES

     The  Company  uses the asset and  liability  method to  account  for income
     taxes.  Deferred  income tax assets and  liabilities are recognized for the
     future tax  consequences  attributable to differences  between the carrying
     amounts of existing  assets and liabilities  for accounting  purposes,  and
     their respective tax bases.  Deferred income tax assets and liabilities are
     measured  using  statutory tax rates expected to apply to taxable income in
     the years in which those temporary differences are expected to be recovered
     or settled.  The effect on deferred  income tax assets and liabilities of a
     change in statutory  tax rates is  recognized  in net income in the year of
     change.  A valuation  allowance is recorded for those  deferred  income tax
     assets whose recoverability is not sufficiently likely.

                                       11

<PAGE>

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
     -----------------------------------------------------

     LOSS PER COMMON SHARE


     Basic loss per common share is computed by dividing net loss  applicable to
     common  shareholders  by  the  weighted-average  number  of  common  shares
     outstanding during the period.  Diluted loss per common share is determined
     using the  weighted-average  number of common shares outstanding during the
     period,  adjusted  for the  dilutive  effect of common  stock  equivalents,
     consisting  of shares  that might be issued upon  exercise of common  stock
     options  and  warrants.   In  periods   where  losses  are  reported,   the
     weighted-average  number of common shares outstanding excludes common stock
     equivalents,  because their inclusion would be  anti-dilutive.

     STOCK-BASED COMPENSATION

     Financial Accounting Standards Board ("FASB") Statement No. 123, Accounting
     for Stock-Based  Compensation,  ("SFAS No. 123")  encourages,  but does not
     require,  companies to record  compensation  cost for stock-based  employee
     compensation plans based on the fair value of options granted.  The Company
     has elected to continue to account for stock-based  compensation  using the
     intrinsic value method  prescribed in Accounting  Principles  Board Opinion
     No. 25, Accounting for Stock Issued to Employees ("APB No. 25") and related
     interpretations  and to provide additional  disclosures with respect to the
     pro forma effects of adoption had the Company recorded compensation expense
     as provided in SFAS No. 123. In  accordance  with APB No. 25,  compensation
     cost for stock options is  recognized in the statement of operations  based
     on the excess, if any, of the quoted market price of the stock at the grant
     date of the award or other  measurement  date over the  amount an  employee
     must pay to acquire  the stock.  Generally,  the  exercise  price for stock
     options granted to employees equals or exceeds the fair market value of the
     Company's  common  stock  at the date of  grant,  thereby  resulting  in no
     recognition of compensation expense by the Company.

     ENVIRONMENTAL COSTS

     Costs related to  environmental  remediation are charged to expense.  Other
     environmental  costs are also charged to expense  unless they  increase the
     value of the property  and/or provide future  economic  benefits,  in which
     event  they  are   capitalized.   Liabilities   are  recognized   when  the
     expenditures  are  considered  probable  and can be  reasonably  estimated.
     Measurement  of  liabilities  is  based  on  currently   enacted  laws  and
     regulations,  existing  technology,  and undiscounted  site-specific costs.
     Generally,  such recognition  coincides with the Company's  commitment to a
     formal plan of action.

                                       12

<PAGE>

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
     -----------------------------------------------------

     ENVIRONMENTAL COSTS, CONTINUED

     Accruals for environmental  matters are recorded when it is probable that a
     liability  has  been  incurred,  and the  amount  of the  liability  can be
     reasonably estimated; or if an amount is likely to fall within a Range, and
     no amount within that range can be  determined  to be the better  estimate,
     the minimum  amount of the range is recorded.  Accruals  for  environmental
     matters  exclude  claims for recoveries  from insurance  carriers and other
     third parties until it is probable that such  recoveries  will be realized.

     NEW PRONOUNCEMENTS

     In June 2001, the FASB issued SFAS No. 141,  Business  Combinations,  which
     requires all business  combinations  initiated  after June 30, 2001,  to be
     accounted for using the purchase method of accounting.  As a result, use of
     the  pooling-of-interests  method is prohibited  for business  combinations
     initiated  thereafter.  SFAS 141 also established criteria for the separate
     recognition of intangible assets acquired in a business  combination.  SFAS
     No. 141  supercedes  Accounting  Principles  Board ("APB")  Opinion No. 16,
     Business  Combinations and amends or supercedes a number of interpretations
     of that opinion.  It also amends SFAS No. 38, Accounting for Preacquisition
     Contingencies of Purchased Enterprises. The Company adopted this Statement,
     which  did  not  have  a  material  impact  on  the  Company's  results  of
     operations, financial position or cash flows.

     In June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangibles,
     which requires that goodwill and other intangible  assets having indefinite
     lives no longer be  amortized  to  earnings,  but  instead  be  subject  to
     periodic testing for impairment.  Intangible  assets,  other than goodwill,
     determined  to have  definitive  lives will  continue to be amortized  over
     their useful lives. SFAS No. 142 supercedes APB No. 17, Intangible  Assets.
     Provisions of SFAS No. 142 will be effective for all fiscal years beginning
     after December 15, 2001. This statement is effective for the Company's 2002
     fiscal  year.   The  Company  is  currently   evaluating  the  effect  that
     implementation  of the new standard  will have on its results of operations
     and financial position.  However,  adoption of SFAS No. 142 is not expected
     to have a significant effect on the Company's balance sheets, statements of
     operations, or statements of cash flows.

     In  August  2001,  the FASB  issued  SFAS No.  143,  Accounting  for  Asset
     Retirement  Obligations,  which addresses the accounting  requirements  for
     retirement  obligations  associated with tangible  long-lived assets.  This
     Statement  requires entities to record the fair value of a liability for an
     asset  retirement  obligation  in the period in which it is incurred.  This
     Statement  is  effective  for the  Company's  2003 fiscal  year,  and early
     adoption is permitted. The Company is currently evaluating

                                       13

<PAGE>

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
     -----------------------------------------------------

     NEW PRONOUNCEMENTS, CONTINUED


     the impact of SFAS No. 143 to determine the effect,  if any, it may have on
     the Company's results of operations, financial position or cash flows.

     In  October  2001,  the  FASB  issued  SFAS  No.  144,  Accounting  for the
     Impairment  or Disposal  of  Long-Lived  Assets,  which  excludes  from the
     definition of long-lived assets goodwill and other intangibles that are not
     amortized  in  accordance  with SFAS No. 142.  SFAS No. 144  requires  that
     long-lived  assets to be  disposed  of by sale be  measured at the lower of
     carrying  amount or fair  value  less  cost to sell,  whether  reported  in
     continuing  operations  or in  discontinued  operations.  SFAS No. 144 also
     expands the reporting of discontinued  operations to include  components of
     an entity that have been or will be disposed of rather than  limiting  such
     discontinuance to a segment of a business.  This Statement is effective for
     the  Company's  2003 fiscal  year,  and early  adoption is  permitted.  The
     Company is currently evaluating the impact of SFAS No. 144 to determine the
     effect,  if  any,  it may  have on the  Company's  results  of  operations,
     financial position or cash flows.

3.   RESTORATION AND UTILITY DEPOSITS
     --------------------------------

     The  Company  has  deposits  with the State of  California,  the  County of
     Ventura and the City of Los Angeles that are required by these governmental
     agencies in connection with the Company's oil and gas operations.  In 2000,
     the Company had a deposit with a utility that supplied  natural gas, which,
     during 2001,  was applied to an amount owed. The deposits with the State of
     California  and  Ventura  County are in  certificates  of deposit  that are
     subject to withdrawal  restrictions imposed by these agencies.  The deposit
     with the City of Los Angeles is in the form of a  noninterest  bearing cash
     deposit. The amounts of these deposits at December 31, 2001 and 2000 are as
     follows:
<TABLE>
<CAPTION>

                                                                    2001                   2000
                                                               ---------------       ---------------

        <S>                                                    <C>                   <C>
         Utility                                                    -                 $   18,800
         State of California                                    $  210,358               211,495
         County of Ventura                                          11,172                10,641
         City of Los Angeles                                        50,000                50,000
                                                               ---------------       ---------------


         TOTAL RESTORATION AND UTILITY DEPOSITS                 $  271,530            $  290,936
                                                               ===============       ===============
</TABLE>
                                       14

<PAGE>

<TABLE>
<CAPTION>

4.   LINE OF CREDIT AND NOTE PAYABLE
     -------------------------------
    <S>                                                                          <C>                      <C>
                                                                                              December 31,
                                                                                  -------------------------------------
                                                                                       2001                   2000
                                                                                  ---------------       ---------------
     LINE OF CREDIT


     Line of credit  payable to TD &  Associates,  Inc., a related  party with a
     maximum  credit of $150,000  and $100,000 as of December 31, 2001 and 2000,
     respectively,  for working  capital needs.  Borrowings  under the line bear
     interest at prime plus 2%, payable  monthly,  with the principal and unpaid
     interest  due in full on  September  7,  2002.  The line of  credit  is not
     collateralized  and had an effective weighted average interest rate of 9.1%
     and 11.5% for the years ended December 31, 2001 and 2000, respectively.        $  121,802           $   85,000
                                                                                  ===============       ===============




     NOTE PAYABLE


     Note  payable  to  shareholders,  with an  interest  rate of 8% per  annum,
     payable in monthly  principal  and  interest  installments  of $2,487,  and
     collateralized  by 33% net revenue interest in the Company's Vaca Tar Sands
     oil and gas properties. This note was paid in full in December 2001.                 -             $    28,596
                                                                                  ---------------       ---------------



         Total note payable                                                               -                  28,596
              Less: current maturities
                                                                                          -                 (28,596)
                                                                                  ---------------       ---------------
         Long-term portion of note payable                                                -                    -
                                                                                  ===============       ===============

</TABLE>
     Interest expense incurred during the years ended December 31, 2001 and 2000
     was $10,344 and $5,977, respectively.

5.   REORGANIZATION
     --------------

     On November 16, 1998, Geo Petroleum,  Inc. (the "Debtor")  filed a petition
     for relief under  Chapter 11 of the federal  bankruptcy  laws in the United
     States  Bankruptcy  Court for the  Central  District of  California,  Santa
     Barbara Division (the "bankruptcy court").

     During 1999, the Debtor received  approval from the bankruptcy court to pay
     or  otherwise  honor  certain  of its  prepetition  obligations,  including
     employee wages when the Company's Third Amended Plan of Reorganization (the
     "Plan") was approved and the Company emerged from bankruptcy. During fiscal

                                       15

<PAGE>

5.   REORGANIZATION, CONTINUED
     -------------------------

     year 2000,  the Company  resolved the remaining  claims  objected to in the
     bankruptcy and in 2001 incurred legal and other expense associated with the
     finalization of the Plan and issued the necessary common stock described by
     the Plan.

6.   INCOME TAXES
     ------------
<TABLE>
<CAPTION>
     The components of the provision for income taxes are as follows:
    <S>                                                                          <C>                      <C>
                                                                                              December 31,
                                                                                  -------------------------------------
                                                                                       2001                   2000
                                                                                  ---------------       ---------------
         Current tax expense:
              Federal                                                                    -                     -
              State                                                                $    800              $     800
                                                                                  ---------------       ---------------
                                                                                        800                    800
                                                                                  ---------------       ---------------
          Deferred tax expense:
              Federal                                                                    -                     -
              State                                                                      -                     -
                                                                                  ---------------       ---------------
                                                                                         -                     -
                                                                                  ---------------       ---------------
         TOTAL PROVISION                                                           $   800               $     800
                                                                                  ===============       ===============
</TABLE>

                                       16

<PAGE>

6.   INCOME TAXES, CONTINUED
     -----------------------

     Significant  components  of the  Company's  deferred  income tax assets and
     liabilities at December 31, 2001 and 2000 are as follows:

<TABLE>
<CAPTION>
                                                                                              December 31,
                                                                                  -------------------------------------
                                                                                       2001                   2000
                                                                                  ---------------       ---------------
         Deferred income tax assets:
        <S>                                                                       <C>                     <C>
              Net operating loss carryforward                                     $     3,258,139         $   2,970,630
              Differences between book and tax basis of property                                -                35,831
              Other                                                                           272                   272
                                                                                  ---------------       ---------------

         Net deferred income tax asset                                                  3,258,411             3,006,733
                                                                                  ---------------       ---------------


         Deferred income tax liability:
              Differences between book and tax basis of property                           22,405                     -
                                                                                  ---------------       ---------------

         Total deferred income tax liability                                               22,405                     -
                                                                                  ---------------       ---------------


              Net                                                                       3,236,006             3,006,733
              Valuation allowance                                                      (3,236,006)           (3,006,733)
                                                                                  ---------------       ---------------

         Net deferred income taxes                                                              -                     -
                                                                                  ===============       ===============

</TABLE>

     The  Company,  based  upon its recent  history  of losses and  management's
     assessment of when operations are  anticipated to generate  taxable income,
     has concluded that it is more likely than not that none of the net deferred
     income tax assets will be realized  through future taxable earnings and has
     established a valuation allowance for them.

     Reconciliation of the effective tax rate to the U.S. statutory rate is as
     follows:

<TABLE>
<CAPTION>
                                                                                            December 31,
                                                                                  -------------------------------------
                                                                                       2001                   2000
                                                                                  ---------------       ---------------

         <S>                                                                           <C>                   <C>
         Tax expense at U.S. statutory rate                                            (34.0)%               (34.0)%
         State tax provision                                                             0.1                   0.1
         Change in valuation allowance                                                  34.0                  34.0
                                                                                  ---------------       ---------------

         Effective income tax rate                                                       0.1%                  0.1%
                                                                                  ===============       ==============
</TABLE>

                                       17

<PAGE>

6.   INCOME TAXES, CONTINUED
     -----------------------

     At December 31, 2001,  the Company has available  unused net operating loss
     carryforwards that expire as follows:

<TABLE>
<CAPTION>
                                                              Federal Net                             State Net
                             Year of                         Operating Loss                        Operating Loss
                           Expiration                         Carryforwards                         Carryforwards
                           ----------                         -------------                         -------------
               <S>                                           <C>                                 <C>
                                2002                                     -                       $         523,848
                                2003                                     -                                 826,296
                                2004                                     -                                 524,454
                                2005                                     -                               1,005,177
                                2006                                     -                                 772,534
               Thereafter up to 2020                         $     8,633,161                                 -
                                                             ---------------                     -----------------

                               Total                         $     8,633,161                     $       3,652,309
                                                             ===============                     =================
</TABLE>

     The Company has determined  that there will be  significant  limitations on
     the future  utilization  of the net  operating  loss  carryforwards  due to
     ownership changes in the Company.

7.   COMMITMENTS AND CONTINGENCIES
     -----------------------------

     CONCENTRATIONS


     Financial   instruments,   which   potentially   subject   the  Company  to
     concentrations  of  credit  risk,   consist  primarily  of  cash  and  cash
     equivalents and accounts receivable-trade.  The Company places its cash and
     cash  equivalents  with high quality  financial  institutions.  Exposure to
     losses  on  accounts  receivable-trade  is  principally  dependent  on  the
     individual  customer's  financial  condition,   as  credit  sales  are  not
     collateralized.  The  Company  monitors  its  exposure  to credit  loss and
     reserves those accounts  receivable that it deems to be uncollectible.  The
     Company  had one  customer  for its oil  and gas  production  in 2001  that
     accounted for approximately  98% of gross oil and gas sales.  There were no
     amounts due from this  customer at December 31,  2001.  The Company had two
     customers for its wastewater  disposal  services in 2001 that accounted for
     approximately  32% and 16% of gross wastewater  disposal  services revenue,
     respectively. At December 31, 2001, the Company had accounts receivable due
     from these customers totaling $19,956.

                                       18

<PAGE>

7.   COMMITMENTS AND CONTINGENCIES, CONTINUED
     ----------------------------------------

     CASH IN EXCESS OF FEDERAL DEPOSIT INSURANCE CORPORATION INSURED LIMITS


     The Company  maintains  its cash in bank  depository  accounts,  which,  at
     times, may exceed federally insured limits.  Accounts are guaranteed by the
     Federal Deposit Insurance  Corporation ("FDIC") up to $100,000. At December
     31, 2001, the Company had  approximately  $31,950 in excess of FDIC insured
     limits. The Company has not experienced any losses in such accounts.

     RISKS OF THE INDUSTRY IN WHICH THE COMPANY OPERATES

     The  Company   participates  in  an  industry  that  is   characterized  by
     competitive pressure,  changes in the prices of oil and gas on a world-wide
     basis,  federal,  state,  and local  regulations  governing  production and
     development  of its oil and  gas  reserves,  and  compliance  with  various
     environmental laws and regulations. The Company's results of operations are
     affected by a wide  variety of factors,  including  world  events,  general
     economic conditions,  changes in average selling prices over the productive
     life of oil  and gas  reserves,  the  timing  of  production  from  new and
     existing  proved  developed and  undeveloped  reserves by the Company,  its
     competitors,  and others, the ability to produce  sufficient  quantities of
     oil and gas reserves in a timely manner,  and the timely  implementation of
     new and alternative  reserve  recovery process  technologies.  Based on the
     factors   noted   herein,   the   Company   may   experience    substantial
     period-to-period   fluctuations  in  future  operating   results.

     MINIMUM ROYALTIES

     The Company has commitments for minimum royalty  payments on certain of its
     oil  and  gas  properties,  which  total  approximately  $36,000  annually.

     PROPERTY LEASE RISKS

     The  Company's  oil and gas  leases  on its Vaca Tar  Sands  and  Rosecrans
     properties  contain  provisions,   which  provide  for  minimum  production
     requirements  and  periods.  The  Company's  failure to meet those  minimum
     requirements  could result in a termination of the lease(s) and loss of all
     its rights  thereunder.  However,  the Company believes it is in compliance
     with the lease(s) provisions and has not received  notification from anyone
     to the contrary.

8.   DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS
     ------------------------------------------------------

     The Company's financial instruments are cash and cash equivalents, accounts
     receivable,  accounts payable,  a line of credit,  and a note payable.  The
     recorded values of cash and cash equivalents,

                                       19

<PAGE>

8.   DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS, CONTINUED
     -----------------------------------------------------------------

     accounts  receivable,  accounts  payable,  the line of credit  and the note
     payable approximate their fair values based on their short-term nature.

9.   FARM-OUT OF VACA TAR SANDS PROPERTY
     -----------------------------------

     In prior years,  the Company entered into an agreement with Saba Petroleum,
     Inc.  ("Saba")  to  farm-out  for the  development  and  operations  of the
     Company's Vaca Tar Sands property.

     The agreement, as modified,  requires Saba to pay for one-half (1/2) of the
     operating  and  development  costs  until they expend  $5,000,000.  At that
     point,  Saba will have earned a one-third  (1/3)  interest  and the Company
     will  retain a  two-thirds  (2/3)  interest in the  property  and these two
     parties  will  share in the costs and  revenues  based on their  respective
     interests.

     This  agreement was assumed as an executory  contract  under the bankruptcy
     reorganization  plan.  During 1999, the Company  incurred certain costs and
     expenses in connection  with its Vaca Tar Sands  property  that  management
     believes are related to the Farm-Out  agreement.  However,  at December 31,
     2001,  the  portion of these  expenditures  that  management  believes  are
     reimbursable by Saba under the Farm-Out agreement is in dispute. Management
     intends to pursue  reimbursement  of these  amounts  from  Saba,  but it is
     uncertain  if  any  of  these   amounts  will   ultimately   be  recovered.
     Accordingly, the Company has not recorded any amounts due from Saba.

10.  RELATED PARTY TRANSACTIONS
     --------------------------

     The  Company's  former  officer who is a major  shareholder  holds a 5% net
     profit  interest  in the Vaca Tar Sands oil and gas  properties.  Under the
     terms of the Agreement,  the former officer and major  shareholder does not
     share in the net profits of the properties  until the Company has recovered
     his proportionate share of the cumulative losses previously incurred on the
     properties.   At  December   31,  2001,   the  former   officer  and  major
     shareholder's   proportionate   share  of  the  cumulative  losses  totaled
     approximately $14,000.

     The Company rents on a month-to-month basis its office facilities at $5,000
     per month from an entity that is wholly owned by a company officer,  who is
     also a major  shareholder.  Rental  expense  incurred  in each of the years
     ending December 31, 2001 and 2000 was $60,000.

     The  Company  and another  entity and its  related  partnerships  are under
     common  control.  The common control  results from a Company officer who is
     also a major  shareholder  being the sole  shareholder of the other entity,
     which is involved in oil drilling syndications. The other entity also

                                       20

<PAGE>

10.  RELATED PARTY TRANSACTIONS, CONTINUED
     -------------------------------------

     serves as the managing partner or agent of the related  partnerships  whose
     business  purpose is oil drilling.  As of December 31, 2001 and 2000, there
     were 12 and 9 of these partnerships  active,  respectively.  The Company in
     the past has not  participated  in any  ventures  with  this  entity or its
     partnerships.  As of the  report  date,  there  are  negotiations  underway
     between the Company and the related entity for venture  participation  in a
     gas exploration project in Kentucky.

11.  LOSS PER SHARE
     --------------

     Basic and diluted loss per common  share has been  computed by dividing the
     loss available to common  shareholders  by the  weighted-average  number of
     common shares for the period.

     The computations of basic and diluted loss per common share are as follows:

<TABLE>
<CAPTION>
                                                                                  For the Years Ended December 31,
                                                                                  --------------------------------
                                                                                       2001                   2000
                                                                                  ---------------       ---------------
         Numerator:
        <S>                                                                       <C>                   <C>

              Net loss and the numerator for basic and diluted loss
                per common share                                                  $    (738,804)        $      (743,257)
                                                                                  ================      ================

         Denominator:
              Weighted-average shares basic and diluted                                18,185,810            16,691,576
                                                                                  ===============       ================

         Basic and diluted loss per common share                                  $        (0.05)            $    (0.04)
                                                                                  ===============       ================
</TABLE>


     The potentially  dilutive  securities that were outstanding during 2001 and
     2000 were not  included  in the  computation  of  diluted  loss per  share,
     because to do so would have been antidilutive for the periods presented.

<TABLE>
<CAPTION>
                                                                                  For the Years Ended December 31,
                                                                                  -------------------------------------
                                                                                       2001                   2000
                                                                                  ---------------       ---------------
         Shares of common stock issuable under:
         <S>                                                                            <C>                   <C>
              Warrants                                                                    455,151               756,821
              Options                                                                   4,000,000             4,000,000
                                                                                  ---------------       ---------------

         Total                                                                          4,456,151             4,756,821
                                                                                  ===============       ===============
</TABLE>

                                       21

<PAGE>

12.  STOCK-BASED COMPENSATION
     ------------------------

     During 2000,  the Company  adopted a Stock Option Plan (the "Option  Plan")
     under which officers, key employees,  and non-employee directors and others
     may be granted options to purchase  shares of the Company's  authorized but
     unissued common stock. The maximum number of shares of the Company's common
     stock available for issuance under the Option Plan is 4,000,000  shares. In
     the year 2000,  the  Company  granted  all of the  options  provided in the
     Option Plan to purchase common shares to its president at an exercise price
     of $.56.  The options are  exercisable  at any time and expire in September
     2005.  As of December 31, 2001,  there were no shares  available for future
     grants under the Option Plan.  Under the Option Plan,  the option  exercise
     price was equal to the fair market value of the  Company's  common stock at
     the date of grant.  Options currently expire no later than 5 years from the
     grant date and are  exercisable  according to terms  provided by the option
     committee  at the date of grant.  Proceeds  received  by the  Company  from
     exercises  of stock  options  are  credited  to  common  stock.  Additional
     information  with respect to the Option Plan's stock option  activity is as
     follows:


<TABLE>
<CAPTION>
                                                                                                            Weighted
                                                                                                             Average
                                                                                     Number of              Exercise
                                                                                      Shares                  Price
                                                                                  ---------------       ---------------

         Outstanding at December 31, 1999                                                       -
         <S>                                                                            <C>              <C>
              Granted                                                                   4,000,000        $        0.56
              Exercised                                                                         -                    -
              Cancelled                                                                         -                    -
                                                                                  ---------------       ---------------

         Outstanding at December 31, 2000                                               4,000,000                 0.56
              Granted                                                                           -                    -
              Exercised                                                                         -                    -
              Cancelled                                                                         -                    -
                                                                                  ---------------       ---------------

         Outstanding at December 31, 2001                                               4,000,000        $        0.56
                                                                                  ===============       ===============

         Options exercisable at December 31, 2000                                       4,000,000        $        0.56
                                                                                  ===============       ===============
</TABLE>

                                       22

<PAGE>

12.  STOCK-BASED COMPENSATION, CONTINUED
     -----------------------------------

     The following tables summarize information about stock options outstanding
     and exercisable at December 31, 2001:

<TABLE>
<CAPTION>
                                         Stock Options Outstanding                            Stock Options Exercisable
                      -------------------------------------------------------------      ---------------------------------
                                                 Weighted
                                                  Average            Weighted               Weighted
         Range of           Number of            Remaining            Average               Number of                Average
         Exercise            Shares             Contractual          Exercise                Shares                 Exercise
          Prices           Outstanding         Life in Years          Price                Exercisable               Price
-----------------        -------------       ---------------     --------------       ------------------------    ------------
      <S>                 <C>                    <C>                  <C>                       <C>                 <C>
      $    .56            4,000,000              3.75 years           $    .56                  4,000,000           $   .56
-----------------        -------------       ---------------     --------------       ------------------------    ------------

                          4,000,000              3.75 years           $    .56                  4,000,000           $   .56
                         =============       ===============     ==============       ========================    ============
</TABLE>


     The Company has elected to follow APB Opinion No. 25,  Accounting for Stock
     Issued  to  Employees  in  accounting   for  its  employee  stock  options.
     Accordingly,  no  compensation  expense  is  recognized  in  the  Company's
     financial  statements  because the exercise price of the Company's employee
     stock options equals the market price of the Company's  common stock on the
     date of grant. If under Financial  Accounting Standards Board Statement No.
     123,  Accounting  for  Stock-Based   Compensation  the  Company  determined
     compensation  costs based on the fair value at the grant date for its stock
     options,  net loss and loss per  share  would  have been  increased  to the
     following pro forma amounts:

<TABLE>
<CAPTION>
                                                                                       2001                   2000
                                                                                  ---------------       ---------------
         Net loss:

        <S>                                                                       <C>                   <C>
              As reported                                                         $      (738,804)      $    (743,257)
                                                                                  ===============       ===============
              Pro forma                                                                         -       $  (2,783,257)
                                                                                  ===============       ===============

         Basic and diluted loss per share:

              As reported                                                         $        (0.05)       $       (0.04)
                                                                                  ===============       ===============
              Pro forma                                                                        -        $       (0.17)
                                                                                  ===============       ===============
</TABLE>

     The weighted  average  estimated fair value of stock options granted during
     2000 was $.51 per share. This amount was determined using the Black-Scholes
     option-pricing  model, which values options based on the stock price at the
     grant date,  the expected life of the option,  the estimated  volatility of
     the stock, the expected dividend payments,  and the risk-free interest rate
     over the expected life of the

                                       23

<PAGE>

12.  STOCK-BASED COMPENSATION, CONTINUED
     -----------------------------------

     option. The assumptions used in the Black-Scholes model were as follows for
     stock options granted in 2000 (There were no stock options granted in
     2001):
                                                             2000
                                                        -------------
         Risk-free interest rate                             6.17%
         Expected volatility of common stock                 5.918
         Dividend yield                                       0 %
         Expected life of options                           5 years

     The  Black-Scholes  option valuation model was developed for estimating the
     fair  value of traded  options  that have no vesting  restrictions  and are
     fully  transferable.  Because  option  valuation  models require the use of
     subjective assumptions,  changes in these assumptions can materially affect
     the fair value of the options,  and the  Company's  options do not have the
     characteristics  of traded  options,  the  option  valuation  models do not
     necessarily provide a reliable measure of the fair value of its options.

13.  STOCK AND WARRANT TRANSACTIONS
     ------------------------------

     COMMON SHARES SOLD IN PRIVATE PLACEMENT TRANSACTION


     During March through August 2000, the Company sold 1,916,202  shares of its
     common stock in a private placement at $.30 per share and received proceeds
     of $584,723.

     In October  2000,  the Company  sold an  additional  492,641  shares of its
     common  stock in a  private  placement  transaction  at $.70 per  share and
     received $344,850 in proceeds.

     During the period  from  February  through  April 2001,  the  Company  sold
     322,500  shares of its  common  stock in a private  placement  at $0.50 per
     share and received proceeds of $161,250.

     During the period from  September  through  December 2001, the Company sold
     984,259  shares of its  common  stock in a private  placement  at $0.15 per
     share and received proceeds of $147,639.

     COMMON SHARES ISSUED FOR SERVICES

     During 2000,  the Company issued 402,967 common shares for $169,246 and the
     shares were  valued  based on the  services  received  from its  bankruptcy
     counsel during the Chapter 11 proceedings.

                                       24

<PAGE>

13.  STOCK AND WARRANT TRANSACTIONS, CONTINUED
     -----------------------------------------

     COMMON SHARES ISSUED FOR SERVICES, CONTINUED


     In August  2000,  the Company  issued  100,000  common  shares for past and
     future  legal  services for the period June 1, 2000 through June 1, 2001 at
     $0.90 per share.  The shares were valued at their  market  price at June 1,
     2000, the date at which the services agreement was made.  Accordingly,  the
     Company  recognized $37,500 and $52,500 in legal fees from this transaction
     in the years ended December 31, 2001 and 2000, respectively.

     In September  2000, the Company  entered into a one-year  agreement with an
     individual  to  provide  investor  relations  consulting  services  to  the
     Company.  The Company  issued the  consultant  50,000  shares of its common
     stock and granted to him warrants to purchase  200,000  shares at $1.25 per
     share.  The warrants were exercisable any time prior to their expiration on
     December 31, 2001.  The Company  recorded the  transaction  based on market
     price of the shares  issued and the fair value of the  warrants  granted on
     the date the  transaction  was entered into.  The market price per share at
     that date was $.83 and the fair value of the warrants was  determined to be
     $.38 per share using the Black Scholes Option  Pricing Model.  Accordingly,
     the Company recognized $88,125 and $29,375 in investor relations consulting
     fees from this  transaction  during the years ended  December  31, 2001 and
     2000, respectively.

     In March 2001,  the Company  issued 100,000 and 25,000 shares of its common
     stock for legal and financial  consulting  services of $50,000 and $12,500,
     respectively, based on the value of the shares at the date of issuance.

     In April 2001,  the Company  issued  274,000 shares of its common stock for
     bookkeeping and internal accounting services of $70,500 and the shares were
     valued based on the services received.

     RETIREMENT OF COMMON SHARES

     During the year ended  December 31, 2001, the Company  determined  that the
     final number of common shares needed to be issued  pursuant to the Plan was
     671,609 less than  originally  provided  for and  therefore  retired  those
     excess common shares.

                                       25

<PAGE>

13.  STOCK AND WARRANT TRANSACTIONS, CONTINUED
     -----------------------------------------

     COMMON STOCK RESERVED FOR FUTURE ISSUANCE

     At December 31, 2001 and 2000, the Company  reserved the following  numbers
     of shares of its authorized but unissued  common stock for possible  future
     issuance in connection with the following:

                                                   2001              2000
                                              ---------------  ---------------

     Exercise of stock purchase warrants              455,151          756,821
     Exercise of stock options                      4,000,000        4,000,000
                                             ----------------  ---------------

     Total                                          4,455,151        4,756,821
                                             ================  ===============

     WARRANTS ACTIVITY FOR THE PERIOD AND SUMMARY OF OUTSTANDING WARRANTS


     A summary  of  warrant activity  for the years ending December 31, 2001 and
     2000 is as follows:

<TABLE>
<CAPTION>
                                                                      Weighted        Common Shares      Weighted
                                                                       Average          Issuable          Average
                                                      Number of       Exercise          Based On         Exercise
                                                      Warrants          Price           Warrants           Price
                                                      ------------   ------------     --------------   ------------

           <S>                                            <C>        <C>                   <C>          <C>
           Outstanding, December 31, 1999                 856,821    $    2.52             856,821      $   2.52

                Granted                                   200,000         1.25
                Exercised                                        -
                Expired                                  (300,000)   $    3.00
                                                   ---------------

           Outstanding, December 31, 2000                 756,821    $    2.26             756,821      $   2.26

                Granted                                        -
                Exercised                                        -
                Expired                                  (301,670)   $    3.00
                                                   ---------------

           Outstanding, December 31, 2001                 455,151    $    2.53  455,1512                $  2.53
                                                   ==============
</TABLE>

     At December 31, 2001,  warrants had exercise  prices  ranging from $2.50 to
     $3.00 and a weighted average remaining contractual life of 0.44 years.

                                       26

<PAGE>

14.  OIL AND GAS OPERATIONS (UNAUDITED)
     ----------------------------------

     At  December 31, 2001, the Company  had all of its interests in oil and gas
     properties located in California.

     Costs incurred in oil and gas producing activities were as follows:

                                             For the Years Ended December 31,
                                          -------------------------------------
                                               2001                   2000
                                          ---------------       ---------------
                                            (Unaudited)            (Unaudited)
                                          ---------------       ---------------
         Property acquisition costs:
              Proved properties                     -                     -
              Exploration costs                     -                     -
              Development costs           $       264,375        $      261,311
                                          ---------------       ---------------
         Total costs                      $       264,375        $      261,311
                                          ===============       ===============

     ESTIMATED QUANTITIES OF PROVED OIL AND GAS RESERVES

     Reserve information  presented herein is based upon reports prepared by the
     Company's independent petroleum engineers. Reserve estimates are inherently
     imprecise and estimates of new discoveries are more imprecise than those of
     producing oil and gas properties. Accordingly, these estimates are expected
     to change as future information becomes available.

     Proved oil and gas  reserves  are the  estimated  quantities  of crude oil,
     natural gas and natural gas liquids,  which geological and engineering data
     demonstrate  with  reasonable  certainty to be  recoverable in future years
     from known reservoirs under existing economic and operating conditions.

     Proved  developed  oil and gas reserves are those  expected to be recovered
     through existing wells with existing equipment and operating methods.

     Net  quantities  of crude oil and  natural  gas for the  Company  as of the
     beginning  and the end of the years ended  December  31, 2001 and 2000,  as
     well as the changes in proved reserves during such years,  are set forth in
     the following tables:

                                       27

<PAGE>

14.  OIL AND GAS OPERATIONS (UNAUDITED), CONTINUED
     ---------------------------------------------

     ESTIMATED QUANTITIES OF PROVED OIL AND GAS RESERVES, CONTINUED

<TABLE>
<CAPTION>
                                                                                 For the Year Ended December 31, 2001
                                                                                                (Unaudited)
                                                                                ---------------------------------------
                                                                                       Oil                    Gas
                                                                                      Bbls                    MCF
                                                                                -----------------       ---------------
           Proved developed reserves, net:
           -------------------------------
              <S>                                                                       <C>                   <C>
              January 1, 2001                                                           1,346,000             1,338,100
              Revisions of previous estimates                                            (226,000)             (100,700)
              Purchase of reserves in place                                                     -                     -
              Production                                                                        -                     -
              Sale of reserves in place                                                         -                     -
                                                                                -----------------       ---------------

              December 31, 2001                                                         1,120,000             1,237,400
                                                                                =================       ===============

           Proved undeveloped reserves, net:
              January 1, 2000                                                          32,604,000                     -
              Revisions of previous estimates                                                   -                     -
              Purchase of reserves in place                                                     -                     -
              Sale of reserves in place                                                         -                     -
                                                                                -----------------       ---------------

              December 31, 2001                                                        32,604,000                     -
                                                                                =================       ===============


                                                                                 For the Year Ended December 31, 2000
                                                                                                (Unaudited)
                                                                                ---------------------------------------
                                                                                       Oil                    Gas
                                                                                      Bbls                    MCF
                                                                                -----------------       ---------------
           Proved developed reserves, net:
              January 1, 2000                                                             827,000               464,000
              Revisions of previous estimates                                             520,200               874,000
              Purchase of reserves in place                                                     -                     -
              Production                                                                   (1,200)                    -
              Sale of reserves in place                                                         -                     -
                                                                                -----------------       ---------------

              December 31, 2000                                                         1,346,000             1,338,000
                                                                                =================       ===============
</TABLE>

                                       28

<PAGE>


14.  OIL AND GAS OPERATIONS (UNAUDITED), CONTINUED
     ---------------------------------------------

     ESTIMATED QUANTITIES OF PROVED OIL AND GAS RESERVES, CONTINUED

<TABLE>
<CAPTION>
                                                                                 For the Year Ended December 31, 2000
                                                                                                (Unaudited)
                                                                                ---------------------------------------
                                                                                       Oil                    Gas
                                                                                      Bbls                    MCF
                                                                                -----------------       ---------------
           Proved undeveloped reserves, net:
              <S>                                                                      <C>                      <C>
              January 1, 2000                                                          25,513,000               -
              Revisions of previous estimates                                         (25,513,000)              -
              Purchase of reserves in place                                                     -               -
              Sale of reserves in place                                                         -               -
                                                                                -----------------       ---------------

              December 31, 2000                                                                 -               -
                                                                                =================       ===============
</TABLE>


     The decrease in oil reserves  December  31, 2000,  is primarily  due to the
     increase in natural gas costs.

     The proved undeveloped  reserves consist  principally of the Vaca Tar Sands
     property.  The Company  has  permits  for the  drilling of 120 wells on two
     tracts of the Vaca Tar Sand Unit, and for  sufficient  wells to develop the
     remaining tracts.  The Company entered into a farm-out agreement with Saba,
     which  currently  provides  for Saba to pay for  one-half of the  operating
     costs  until  they  expend  $5  million.  At that  time,  Saba  will have a
     one-third interest in the property, and these two parties will share in the
     costs and revenues  based on their  respective  interests (see Note 9). The
     development  method  envisioned by the Company provided for the drilling of
     one or more horizontal wells extending as much as 2,600 feet  horizontally.
     Each well was to be  twinned  by a  parallel  borehole  above it into which
     steam will be injected  continuously.  The heated,  thinned oil was to flow
     from the  lower  borehole.  Alternatively,  one  horizontal  well  would be
     drilled and used for both steam injection and oil production.

     The  cost  allocated  to  the  Vaca  Tar  Sands  undeveloped  reserves  was
     insignificant,  and the  estimated  volume  of  reserves  allocated  to the
     property has been excluded from the calculation of the Company's  depletion
     expense in the years ended December 31, 2001 and 2000. The costs related to
     the Vaca Tar Sands reserves,  including future  development  costs that now
     are estimated to be approximately  $60,860,000 for facilities and 212 wells
     will be included in the Company's  calculations  of depletion  expense when
     production of those reserves commence.

     STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED
     RESERVES


     The following tables set forth the computation of the standardized  measure
     of  discounted  future  net cash flows  relating  to the  Company's  proved
     reserves at December 31, 2001 and 2000, respectively.

                                       29

<PAGE>

14.  OIL AND GAS OPERATIONS (UNAUDITED), CONTINUED
     ---------------------------------------------

     STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED
     RESERVES, CONTINUED

     The  standardized  measure is the estimated future cash inflows from proved
     reserves  less  estimated  future  production  and  development  costs  and
     estimated  future  income  taxes.  Future cash inflows  represent  expected
     revenues  from the  production of proved  reserves  based on prices and any
     fixed determinable future escalation  provided by contractual  arrangements
     in existence at fiscal year-end.

     Escalation based on inflation,  federal  regulatory  changes and supply and
     demand is not considered. Estimated future production and development costs
     related to future production of reserves are based on historical costs.

     Such costs include,  but are not limited to, drilling development wells and
     installation  of production  facilities.  Inflation and other  anticipatory
     costs are not  considered  until  the  actual  cost  change  takes  effect.
     Estimated  future  income tax expenses are computed  using the  appropriate
     year-end  statutory  tax rates.  Consideration  is given to the  effects of
     permanent differences,  tax credits and allowances.  A discount rate of 10%
     is applied to the annual future net cash flows after income taxes.

     The  methodology  and  assumptions  used in  calculating  the  standardized
     measure are those  required by FASB Statement No. 69. It is not intended to
     be  representative  of the  fair  market  value  of  proved  reserves.  The
     valuations of revenues and costs do not necessarily  reflect the amounts to
     be received or expended by the Company. In addition to the valuations used,
     numerous other factors are considered in evaluating  known and  prospective
     oil and gas reserves.

     The  standardized  measure of discounted  future net cash flows relating to
     proved  developed and undeveloped oil and gas reserves at December 31, 2001
     and 2000 are summarized below:

<TABLE>
<CAPTION>
                                                                                     For the Year Ended December 31,
                                                                                  -------------------------------------
                                                                                       2001                   2000
                                                                                  ---------------       ---------------

         <S>                                                                      <C>                   <C>
         Future cash inflows                                                      $   329,364,000       $    25,869,000
         Future production and development costs                                     (283,034,000)          (16,156,000)
         Future income tax expenses                                                   (18,532,000)           (3,886,000)
                                                                                 -----------------      ----------------

         Future net cash flows                                                         27,798,000             5,827,000
         10% annual discount for estimated timing of cash flows                       (21,814,000)           (3,512,000)
                                                                                 -----------------      ----------------

         Standardized measure of discounted future net cash flows                 $     5,984,000       $     2,315,000
                                                                                 =================      ================
</TABLE>

                                       30

<PAGE>

14.  OIL AND GAS OPERATIONS (UNAUDITED), CONTINUED
     ---------------------------------------------

     STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED
     RESERVES, CONTINUED

     For the calculations in the preceding table,  estimated future cash inflows
     from  estimated  future  production of proved  reserves were computed using
     average year-end oil and gas prices. The average oil price, primarily based
     on posted prices, was $11.95 and $17.05 at December 31, 2001 and $23.50 per
     barrel at December 31, 2001.  The average  natural gas price, a combination
     of spot gas prices and  contract  prices,  was $1.69 and $0.62 per thousand
     cubic  feet at  December  31,  2001  and  2000,  respectively.

     CHANGES IN STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS


     The changes in  standardized  measure for discounted  future net cash flows
     relating to proved  reserves  for each of the two years ended  December 31,
     2001 and 2000 is set forth below:

<TABLE>
<CAPTION>
                                                                                     For the Years Ended December 31,
                                                                                  ---------------------------------------
                                                                                           2001               2000
                                                                                  -------------------   -----------------
          <S>                                                                        <C>                  <C>
           Sales of oil and gas produced, net of production costs                                                       -
           Net changes in sales prices and production costs related to
              future production                                                       $ (63,678,000)       $ (235,886,000)
           Changes in estimated future development costs                                (13,106,000)                    -
           Development costs incurred during the period, which were
              previously estimated                                                                -                     -
           Revisions of previous quantity estimates                                      83,213,000               980,000
           Sale of reserves in place                                                              -                     -
           Accretion of discount                                                            393,000            62,023,000
           Net change in income taxes                                                    (3,153,000)           93,962,000
           Other, principally changes in timing of estimated production                           -                     -
                                                                                  -------------------   -----------------

           Net (decrease) increase                                                        3,669,000           (78,921,000)
           Beginning of year                                                              2,315,000            81,236,000
                                                                                  -----------------     -----------------

           End of year                                                                 $ 5,984,000          $   2,315,000
                                                                                  ===================   =================
</TABLE>

                                       31