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                     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, 2000

[  ]    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, 2000
were $105,736.00. At March 1, 2001, 16,737,238 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 March 1, 2001, ($0.51) held by non-affiliates was
approximately $6,176,871.60.
     (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:  16,737,238 shares as of March
1, 2001.
                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None.
    Transitional Small Business Disclosure Format (check one): Yes[ ] No[X]

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<PAGE>

                               GEO PETROLEUM, INC.

                                      Index
<TABLE>
<CAPTION>

                                                                                                             Page
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<S>             <C>                                                                                      <C>
PART I.          BUSINESS INFORMATION
Item 1.          Description of Business...................................................................     3
Item 2.          Description of Property...................................................................     7
Item 3.          Legal Proceedings.........................................................................    16
Item 4.          Submission of Matters to a Vote of Security Holders.......................................    17

PART II.         OTHER INFORMATION
Item 5.          Market For Common Equity and Related Stockholder Matters..................................    18
Item 6.          Management's Discussion and Analysis or Plan of Operation.................................    19
Item 7.          Financial Statements...................................................................... 31 to 66
Item 8.          Changes in and Disagreements with Accountants on
                  Accounting and Financial Disclosure.....................................................     22

PART III.        OTHER INFORMATION
Item 9.          Directors, Executive Officers, Promoters and Control Persons; Compliance with
                 Section 16(a) of the Exchange Act.......................................................      23
Item 10.         Executive Compensation....................................................................    23
Item 11.         Security Ownership of Certain Beneficial Owners and Management............................    25
Item 12.         Certain Relationships and Related Transactions............................................    26
Item 13.         Exhibits and Reports Form 8-K.............................................................    27


SIGNATURES.................................................................................................    30

</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  formed  primarily  to  develop a large tar sand
deposit  in  Ventura  County,  California  and to engage in the oil field  waste
disposal  business.  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.

REORGANIZATION OF THE COMPANY--FAILURE TO COMPLY WITH CERTAIN FORMALITIES

    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.   Pursuant  to  the  Plan  of
Reorganization,  during  the year 2000 we issued  803,674  shares of our  common
stock to our  creditors  and we are  required to issue an  additional  1,096,326
shares to our creditors. We expect to issue such shares during the first half of
2001.  Present  management was installed as part of our  reorganization.  At the
time  of  our  bankruptcy  filing,  we  had  sold  or  otherwise  transferred  a
substantial   portion  of  our  oil  and  gas  holdings  and  had  interests  in
approximately  2,230  gross  acres  (2,030  net  acres) of oil and gas leases or
mineral rights, of which  approximately 1,630 gross acres (1,410 net acres) were
developed for oil and gas production and  approximately  600 gross and net acres
were undeveloped.  After emerging from bankruptcy, our oil and gas holdings were
approximately 2,000 gross and 1,830 net acres.

    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.  These items  resulted in the decrease in the
carrying value of these properties from approximately $6,343,000 at December 31,
1997 to $0 at December 31, 1998. The rapidly  declining  prices received for oil
and gas production caused the present value of net future cash flows to be zero.
Consequently,  even though the estimated  future cash flows from our  properties
exceed the carrying value of our  properties,  the properties are carried on our
books at nominal value.

    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
2000,  the Company would not be able to continue  operating.  At year-end  2000,
only our waste disposal facility was producing significant revenues.

    We filed our first annual report on form 10KSB (for the year ended  December
31, 1999) during the third quarter of 2000,  and our  quarterly  reports for the
first three quarters of the year 2000, during the last quarter of 2000. Prior to
those filings we had made no public  reports under the  Securities  Exchange Act
since filing a report on Form 10-Q for the third  quarter of the  calendar  year
1998 and a report on Form 8-K regarding our petition in bankruptcy.

    We have not held a meeting of our  shareholders  since 1997.  California law
permits a shareholder to obtain an order of Court requiring us to hold a meeting
of shareholders. No shareholder has demanded that we hold such a meeting, and we
anticipate holding our annual meeting during the second half of 2001.

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.


<PAGE>

    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.

    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:

       *   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:

       *   expectations,

       *   anticipations,

       *   beliefs,

       *   estimations,

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

           *   future capital,

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

           *   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),


<PAGE>

           *   future production of oil and gas,

           *   repayment of debt,

           *   business strategies,

           *   oil and gas prices and demand,

           *   exploitation and exploration prospects,

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

           *   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:

       *   the financial environment,

       *   general economic, market and business conditions,

       *   the regulatory environment,

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

       *   changes in laws or regulations

       *   exploitation and exploration successes,

       *   availability of additional financing on favorable conditions,

       *   trend projections, and

       *   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:

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

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

       *   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

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 During the
year 2000, we produced and sold small  amounts of oil from our Vaca  properties,
none from our Rosecrans  properties and steadily increased our revenues from our
Waste Disposal operations.
<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 will
amount to 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 Angeles and $10,000  with  Ventura  County,  for the purposes of
paying for any future environmental  liabilities that could arise. See Note 3 to
Financial  Statements.  In addition, we carry $3,000,000 in pollution insurance,
which covers many, but not all, sources of pollution.


<PAGE>

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, we
began  production  and sales of oil from our Vaca Tar Sands  Property  to Equiva
Trading Co.  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
transported  to the  purchaser by truck,  which reduces the net price we receive
for our oil.

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:

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

       *   market uncertainty;

       *   political conditions in international oil producing regions;

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

       *   the level of consumer demand;

       *   weather conditions;

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

       *   the refining capacity of oil purchasers;

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

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.


<PAGE>

    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 Krummrich
Engineering's  report  regarding  a  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 negative Net Present  Value,  although  the project  cash flow,  or
Future Net Revenue, is positive.  Given these marginal economics, it is unlikely
that such a  project  would be  undertaken  until  oil  price  and/or  fuel cost
conditions improve.

    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,  1999 and 2000,  Mr.  Raydon's  net  profits  account was
negative approximately  $9,989.00 and $14,037.00  respectively.  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.




<PAGE>

    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
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  porousand  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.

    Under economic  conditions  existing on December 31, 2000, and employing the
methodology  mandated by the Securities and Exchange  Commission,  our engineers
have  estimated  the  future  net  revenues  from  our  Vaca  Properties  to  be
approximately $7.6 million, a substantial decline from the estimates at year-end
1999.  Moreover,  when  discounted to net present value,  these reserves are not
economic to produce.  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.

    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.




<PAGE>

    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
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.  During the year 2000,we billed Saba for such costs
and Saba has declined to pay the same.  During 2000, we commenced  operations to
restore two vertical wells to production and to place the production  facilities
in an operable  condition.  To date, Saba has refused to pay any of the costs or
even to discuss operations pursuant to the Operating Agreement.

    The  Operating  Agreement  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.

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


<PAGE>

    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.  Natural gas prices are  currently  very high but we
still intend to  reinstitute  steaming  and  producing  operations  during 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
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.


<PAGE>

    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 1999 and 2000,  the property was not producing oil or gas. We intend to
restore the property to production during the year 2001,  depending largely upon
the financing that we obtain,  if any. 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 this type are capable of  substantial
growth.  During the month of December,  2000 we disposed of approximately  4,496
barrels of fluids and during the last quarter of 2000disposed  of  approximately
8,997  barrels  of fluids.  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.

<PAGE>

    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.  As noted elsewhere in this
report,  at year-end  2000, our Vaca Property was not economic for us to produce
because of the high natural gas prices then prevailing and the comparatively low
price received for California  crudes.  Unless such  conditions  improve,  it is
doubtful  whether we would  restore any of the existing  wells to  production or
drill additional wells.

    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.

    For additional  information  concerning the discounted future net cash flows
to be  derived  from  these  reserves  see Note 14 to the  Financial  Statements
included elsewhere herein.

    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.

<TABLE>
<CAPTION>
ESTIMATED PROVED OIL AND GAS RESERVES

                                                                                 At December 31,
                                                                                -------------------
                                                                                  2000      1999
                                                                                --------- ---------
Net oil reserves (Mbbl):
<S>                                                                             <C>          <C>
   Proved developed producing.................................................       ---       ---
   Proved developed non-producing.............................................      1346       827
   Proved undeveloped.........................................................       ---    25,513
                                                                                --------- ---------
     Total proved oil reserves (Mbbl).........................................      1346    26,340
                                                                                ========= =========
Net natural gas reserves (MMcf):
   Proved developed producing.................................................      1338       ---
   Proved developed non-producing.............................................       ---       464
   Proved undeveloped.........................................................                 ---
                                                                                --------- ---------
     Total proved natural gas reserves (MMcf).................................      1338       464
                                                                                ========= =========
Total proved reserves (MBOE)..................................................      1587    26,423
                                                                                ========= =========
</TABLE>

    Estimates of proved  reserves vary from year to year  reflecting  changes in
the  price  of oil  and  gas and  results  of  drilling  activities  during  the
intervening period.  Reserves previously classified as proved undeveloped may be
completely removed from the proved reserves  classification in a subsequent year
as a consequence of negative  results from additional  drilling or product price
declines  which  make  such  undeveloped   reserves   non-economic  to  develop.
Conversely, successful development and/or increases in product prices may result
in additions to proved undeveloped reserves.

<TABLE>
<CAPTION>
ESTIMATED PRESENT VALUE OF FUTURE NET REVENUE

                                                                                At December 31,
                                                                              ---------------------
                                                                                2000       1999
                                                                              ---------  ----------
                                                                                 (in thousands)
PV-10 Value:
<S>                                                                           <C>        <C>
   Proved developed producing...............................................       ---         ---
   Proved developed non-producing...........................................    $3,934   $   5,352
   Proved undeveloped.......................................................             $ 130,042
                                                                              ---------  ----------
     Total..................................................................    $3,934   $ 135,393
                                                                              =========  ==========
</TABLE>

    As used herein,  the terms "proved oil and gas reserves,"  "proved developed
oil and gas  reserves,"  and "proved  undeveloped  reserves"  have the  meanings
defined  by the SEC as set forth in the  forepart  of this  document.  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.

    The following table summarizes sales volume, sales price and production cost
information  for our net oil and gas  production  for  each of the  years in the
two-year period ended December 31, 1999.

                                                               Year Ended
                                                              December 31,
                                                           -------------------
                                                             2000      1999
                                                           ---------  --------
Production Data:
   Oil (MBbls)...........................................     1,200       ---
   Gas (MMcf)............................................         0       ---
                                                           ---------  --------
     Total (MBOE)........................................     1,200       ---
                                                           =========  ========

Average Sales Price Data (Per Unit):
   Oil (Bbls)............................................  $26.67         ---

   Gas (Mcf).............................................     ---         ---
                                                           ---------  --------
     BOE.................................................  $26.67         ---
                                                           =========  ========

Selected Data per BOE:
   Production costs (1)..................................  $180           ---
   General and administrative............................  $225           ---
   Depletion, depreciation and amortization..............  $  6           ---
--------------
  (1) Production costs include production taxes. Because the year 2000
  represented our first year of operations after emerging from bankruptcy, our
  production costs included significant remediation expenses necessary to resume
  production, and our start-up production was limited.


DRILLING ACTIVITY

    The following tables set forth certain  information for each of the years in
the two-year period ended December 31, 2000,  relating to our  participation  in
the drilling of exploratory and development  wells,  all of which are located in
California:
<TABLE>
<CAPTION>

                                                                    Year Ended December 31,
                                                              -------------------------------------
                                                                    2000                1999
                                                              ------------------  -----------------
                                                               Gross(1)    Net(2)   Gross(1)  Net(2)
                                                              ---------   -------  --------  -------
<S>                                                            <C>       <C>        <C>       <C>
Exploratory Wells:
   Oil......................................................      0         0         0        0
   Gas......................................................      0         0         0        0
   Dry (3)..................................................      0         0         0        0

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

Total Wells:
   Oil......................................................      0         0         0        0
   Gas......................................................      0         0         0        0
   Dry (3)..................................................      0         0         0        0
--------------
  (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.
</TABLE>
<PAGE>

PRODUCTIVE OIL AND GAS WELLS

    The following table sets forth information at December 31, 2000, 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:
<TABLE>
<CAPTION>

                                                    Oil                Gas              Total
                                              -----------------  ----------------- ----------------
                                               Gross     Net      Gross     Net     Gross     Net
                                              -------- --------  --------- ------- --------  ------
<S>                                               <C>      <C>         <C>     <C>     <C>     <C>
California.................................       57       57          0       0       57      57

</TABLE>
At year-end 2000, none of the wells listed were producing oil or gas.

OIL AND GAS ACREAGE

    The  following  table sets forth certain  information  at December 31, 2000,
relating to oil and gas acreage (all of which is located in California) in which
Geo owned a working interest:
<TABLE>
<CAPTION>

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

</TABLE>
RECENT ACTIVITIES

    Since year-end 1999, we have not  participated in the drilling of any oil or
gas wells. We have restored to production two wells at our Vaca property (which,
because of high gas prices,  we ceased  producing)  and have restored one of our
waste disposal wells to active service. We are attempting to reattract customers
to our waste  disposal  facility  and are meeting with  moderate  success in our
efforts.

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,  such as a profit a
prendre.   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.

AVERAGE SALES PRICE AND PRODUCTION COST

    The following table sets forth information concerning average per unit sales
price  and  production  cost  for our oil and  gas  production  for the  periods
indicated:

                                                            Year Ended
                                                           December  31,
                                                        --------------------
                                                          2000        1999
                                                        ---------   ---------
     Average sales price per BOE....................     $ 26.67     $ 13.03
     Average production cost per BOE................        $180        N/A


MARKETS

    The market for oil and natural gas produced by us depends on factors  beyond
our control,  including the extent of domestic production and imports of oil and
natural  gas, the  proximity  and  capacity of natural gas  pipelines  and other
transportation  facilities,  demand for oil and natural  gas,  the  marketing of
competitive  fuels and the  effects of state and federal  regulation  of oil and
natural  gas  production  and sales.  The oil and gas  industry  as a whole also
competes with other industries in supplying the energy and fuel  requirements of
industrial, commercial and individual consumers.

    During the latter  part of 1999 and  continuing  into the year 2000,  prices
increased significantly.  We anticipate that favorable prices will continue over
the long run, but that periods of unstable pricing may occur. We will be subject
to  variations  in cash flow  depending  upon changes in prices paid for oil and
gas.

COMPETITION

    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.

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.

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.
<PAGE>

    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.

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

    No matters were submitted for a vote of Security Holders during 2000.


<PAGE>

                                     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 traded on the
Electronic  Bulletin Board of the National  Association  of Securities  Dealers,
Inc. In December 1999, the common stock was removed from the Electronic Bulletin
Board  by  action  of  the  manager  thereof,   and  commenced  trading  in  the
over-the-counter  market (pink sheets); on November 30, 2,000 our shares resumed
trading on the  Electronic  Bulletin  Board.  We believe  that at March 1, 2001,
there were at least ten firms making a market in our common stock. The following
table sets forth the high and low bid prices of the common stock for the periods
indicated as reported by the National  Association of Securities  Dealers,  Inc.
for periods prior to December 10, 1999 and after  November 30, 2000,  and by the
National Quotation Service for periods after December 9, 1999 and until November
29, 2000. The prices set forth below reflect inter-dealer prices, without retail
mark-up, mark-down or commission, and may not represent actual transactions.

                                                   High Bid     Low Bid
                                                   ----------  ----------
Year Ended 2000:

   First Quarter................................      1.80         .38
   Second Quarter...............................      1.00         .51
   Third Quarter................................       .96         .84
   Fourth Quarter...............................       .87         .49

Year Ended 1999:
   First Quarter................................       .08         .02
   Second Quarter...............................       .08         .02
   Third Quarter................................       .50         .06
   Fourth Quarter...............................       .55         .27

       On March 1 2001, the reported closing price per share was $0.51.

HOLDERS OF COMMON EQUITY

    At December 31,2000, 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  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.


<PAGE>

    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 $0.30 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 $0.70
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 $0.30per 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 ($0.20 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 ($0.15 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
the  transfer  thereof and stop orders were placed  against the  transfer of the
certificates. Out of the proceeds, T.D. & Associates received $50,000.

    In March  and May  1998,  we  issued  48,200  shares  of  common  stock  for
commissions  incurred in  connection  with debt  financing  obtained in previous
years. The value  attributed to the shares issued was $19,700.  The issuance was
exempt under section 4(2) of the Securities Act.  Certificates  bore restrictive
legends and  appropriate  stop  transfer  orders  were placed with our  transfer
agent.

    In 1998, we issued 133,000 shares of common stock in a private placement for
cash  proceeds of $116,500.  The  issuance was to some of our existing  security
holders and the issuance was exempt under Section 4(2) of the Securities Act. In
June 1998, we issued  100,000  shares of our common stock to Drake Capital Corp.
in  exchange  for  an  overriding   royalty  burdening  our  Vaca  Property  and
cancellation  of  indebtedness  of an  affiliate.  The value  attributed to this
acquisition  was $28,000.  The  transaction was exempt under section 4(2) of the
Securities Act.

    In June 1998, we issued 347,991 units,  each unit consisting of one share of
common stock and one common stock  purchase  warrant,  exercisable  at $2.50 per
share with a three year exercise period.  The issuance was to a group of private
investors,  each of whom represented that he was an accredited investor, as that
term  is  defined  in  Rule  501 of  Regulation  D.  The  shares  issued  bore a
restrictive  legend and stop  transfer  orders were  placed on the  shares.  The
issuance was exempt under  Regulation D and Rule 506  thereunder.  In connection
with that  issuance,  we issued to the  placement  agent,  a securities  firm, a
warrant to purchase  52,000 shares of common stock at a price of $2.65 per share
for a period of five  years  from the date of  issuance.  This  transaction  was
exempt under section 4(2) of the Securities Act.

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, 2000
and  December  31,  1999  should  be  read in  conjunction  with  the  Financial
Statements of the Company and the Notes thereto.

    During 1998 we filed a petition  for relief  under  Chapter 11 of the United
States  Bankruptcy  Code.  As a result of the  proceedings  under Chapter 11, we
continued operations as Debtor-in-possession and the court ultimately approved a
Plan of Reorganization in December 1999. The Plan of Reorganization includes the
compromise of most of our liabilities and the infusion of $500,000 of additional
capital from the sale of 4,500,000 shares of our common stock. In addition,  new
management  has  replaced  the former  President  and Chief  Executive  Officer,
Secretary/Treasurer and other members of management.


<PAGE>

    During  1998  and  1999 we  disposed  of  significant  assets  by sale or by
transfer  as  part  of the  bankruptcy  proceedings.  Also,  the  operations  of
remaining  oil and gas  properties  as well as waste  disposal  operations  were
curtailed during 1998 and ultimately ceased during 1999. However,  despite these
constrictions  of our asset base and  operations,  significant  assets have been
retained and we are pursuing  development of these assets. An immediate priority
is the restoration of the waste disposal  operations and some of the oil and gas
operations  to  provide  an  internal  source  of  cash  flow.  Further,  we are
continuing  efforts  to  obtain  additional  funds  so  that  we  can  meet  our
obligations, resume operations and develop our oil and gas properties. Potential
opportunities  for  additional  funds  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 certain oil and
gas  properties,  and/or entering into joint ventures or partnerships to develop
oil and gas properties.

    The year 2000  represented  the  Company's  first year of  operations  after
emerging from Bankruptcy in December 1999.  During the year the Company was able
to raise  additional  equity to provide the funds necessary to begin the process
of restoring the assets of the Company and,  thereby,  generating cash flow from
operations.  This  equity was also used to pay  remaining  expenses  incurred in
connection with the Bankruptcy and to fund current administrative costs incurred
by the Company.

    During 2000 the Company was able to restore its income stream from the waste
disposal  operations  and generated  $40,899 of gross income from this activity.
Based upon current  income and expected new customers,  Management  expects this
income to increase  substantially in 2001. In addition,  the Company was able to
begin  limited  production  from the Vaca Tar Sands Unit.  Oil was produced from
this  property  during the last  quarter of the year;  however,  production  was
ceased in December due to poor economics.  Because the oil produced from Vaca is
very thick,  it requires  heating and mixing with diluents.  The cost of natural
gas required to run the heaters is currently very high. This cost along with the
cost of diluents and other  operating  costs  rendered  this limited  production
operation unprofitable.  Because of this disappointment,  Management has altered
its  priorities  and  strategy  for  restoring  the  assets of the  Company  and
generating  positive cash flow from operations.  Future investments will be made
in the Rosecrans  property and other oil & gas  properties  until such time that
the economics improve on the Vaca Tar Sands Unit.

    The Company is currently  attempting to raise additional  capital to restore
the Rosecrans  property to full operation.  It is anticipated that this property
has the potential to produce  sufficient  income to generate positive cash flow.
The cash  flow  from  this  property  in  combination  with the  waste  disposal
operations  should result in Geo Petroleum,  Inc. having positive cash flow from
operations  sometime during 2001. In addition,  Management is considering  other
possible  acquisitions  or joint  ventures  to  acquire  additional  oil and gas
properties. Further, Management is continuing efforts to obtain additional funds
so that the Company can meet its obligations,  fund operating  expenses and make
additional  investments in oil and gas properties.  Potential  opportunities for
additional funds include,  among other things, private placement of debt, and/or
equity securities, bank loans using oil and gas properties as collateral, and/or
sale of the interests in certain oil and gas  properties,  and/or  entering into
joint ventures or partnerships to develop oil and gas properties.

RESULTS OF OPERATIONS

    During the year ended  December 31, 2000, the Company had a loss of $743,257
and  negative  cash flow  from  operations  of  $893,126  compared  to a loss of
$1,028,762 and negative cash flow of $69,945 in 1999.

    Revenues  from  the  sale of oil and gas in 2000  were  $40,901.  There  was
effectively  no income from these  sources in 1999 because all  operations  were
ceased while the Company was in Bankruptcy.  All production during 2000 was from
the Vaca Tar Sands Unit.

    Industrial  waste  disposal  revenues  decreased  from  $157,529  in 1999 to
$40,899 in 2000.  The decrease is due to the fact that this  operation  was also
disrupted by the Bankruptcy  proceedings.  The  operations  ceased in the latter
part of 1999 resulting in a new start-up  period  required to restore  revenues.
Operations  were  restored in September  2000.  Now that  operation of the waste
disposal property has been restored,  it is expected that revenues will increase
substantially as customer relations are re-established.

    Lease operating  expenses  increased from $204,336 to $323,023 in 2000. This
increase is due primarily to the restoration of limited production  capabilities
on the Vaca Tar Sands Unit. Because of the nature of this property,  significant
operating costs were required to produce the first oil quantities when the wells
resumed  production.  Further,  the cost of natural gas required to heat the oil
produced went up significantly in 2000 causing increased production costs.


<PAGE>

    Expenses  incurred for environmental  remediation  decreased from $42,832 in
1999 to $6,607 in 2000.  The decrease is due to the fact that the Company had no
costs for oil spill clean up in 2000. Generally, such costs are incurred after a
period  of oil and gas  production.  However,  since  there  was no  significant
production in 1999, there were no spills requiring clean up.

    Professional  fees  increased  from $76,911 in 1999 to $292,443 in 2000. The
increase is due primarily to the cost of outside accounting firms and attorneys.
In  order  to  restore  Geo to  compliance  with  the  Securities  and  Exchange
Commission  regulations,  the  accounting  records  for  1998 and 1999 had to be
reconstructed and the resulting financial  statements  audited.  Legal fees were
incurred to comply with SEC documentation requirements.

    General  and  administrative  expenses  increased  from  $122,858 in 1999 to
$195,228 in 2000. The increase is due to the increase in activity of the Company
as the restoration of properties progressed. Additionally, the cost of corporate
promotion increased  significantly as the Company began to operate in the public
market.

    Reorganization items represent costs incurred during 1999 in connection with
the Bankruptcy proceedings. No additional costs were incurred in 2000.

CAPITAL RESOURCES AND LIQUIDITY

    As of December 31, 2000,  the Company's  total assets were  $996,641.  Total
assets  increased  from  $729,896 at December 31,  1999.  The increase in assets
represents the Company's  investment in its' waste disposal operations and oil &
gas operations.

    Current  assets  decreased from $559,619 in 1999 to $245,462 at December 31,
2000. Cash was used to finance  operations,  invest in the Company's  properties
and reduce debt.  Consequently,  cash decreased from $436,916 as of December 31,
1999 to $70,173 as of  December  31,  2000.  During  2000 the  Company  expended
$893,126 to fund  operations.  Another  $461,786  was spent for  facilities  and
capitalized  costs  incurred  on oil and gas  properties.  The  additional  cash
required for these expenditures was provided from the issuance of stock totaling
$929,573.

    Prepaid legal and consulting fees as of December 31, 2000 totaled  $125,228.
This asset  represents  prepayment  of certain  attorneys  and  consultants  for
services to be rendered to the Company.  Payment to these professionals was made
in common stock.

    Total  liabilities  decreased from $721,554 at December 31, 1999 to $425,237
at December  31,  2000.  This  decrease is a result of the Company  paying debts
approved by the Bankruptcy  court.  The only new source of debt financing during
2000 was a line of credit for $85,000 from a related party.

    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 restoring  operation of the waste disposal  facility and selected
oil and gas  wells  in  order  to  reestablish  sources  of cash  flow.  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.


ITEM 7.       FINANCIAL STATEMENTS

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


<PAGE>

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.

    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.



<PAGE>
                                    PART III

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

<TABLE>
<CAPTION>
DIRECTORS AND EXECUTIVE OFFICERS

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

<S>                                     <C>     <C>                                              <C>
Name of Individual                       Age     Position Held with Company                     Director Since
------------------                       ------  --------------------------                        --------------
Dennis Timpe (1)......................    53     President and director                                1999
Lori Timpe-Long (1)...................    32     Chief Financial Officer and director                  1999
Christian M. Dillon (1)...............    55     director and general counsel                          1999
--------------
(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.
</TABLE>
    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.

    Mr. 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  have been the subject
of administrative  orders issued by the securities  administrators of the States
of  Pennsylvania,  Montana and Wisconsin,  the effect of which is to require Mr.
Timpe and such  companies  to refrain  from  selling  securities  or acting as a
broker in such states unless  appropriate  registration or  qualification  is in
effect. In addition,  Mr. Timpe has been  preliminarily  enjoined from violating
the Pennsylvania Securities Laws by selling unregistered securities and has been
found  by a  State  Court,  in an  uncontested  matter,  to  have  violated  the
Pennsylvania  Securities laws by selling unregistered securities in the State of
Pennsylvania. A petition for a permanent injunction against Mr. Timpe is pending
in  that  proceeding.   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.

    Mrs.  Long has been the Treasurer of TD & Associates  since 1986.  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.

    Christian  M. Dillon 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.

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

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
                             ----------------------------------  -----------------------  -----------------------
                                                        Other   Restrict    Securities
                                                        Annual   Stock      Underlying      LTIP      All Other
         Name and                    Salary    Bonus    Comp.    Awards    Options/SARs   Payouts   Compensation
    Principal Position        Year     ($)       ($)     ($)      ($)          (#)           ($)         ($)
---------------------------  ------ ---------  ------- --------  -------- --------------  -------- --------------
<S>                           <C>          <C> <C>      <C>      <C>       <C>            <C>      <C>
Dennis Timpe, CEO.........    1999         0
Dennis Timpe, CEO             2000         0                                 400,000(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 $0.20 and $0.15 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
       ($0.47 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 $0.20 per share. Ansbacher Ltd. paid $0.15 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 a price of
       $0.56 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 $0.56 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. Except for the Company's stock option plan
       specified above, the Company has no option or other incentive
       compensation plans.


                      OPTION/SAR GRANTS IN LAST FISCAL YEAR
                               (INDIVIDUAL GRANTS)

<TABLE>
<CAPTION>

                                                         NUMBER OF            PERCENT OF TOTAL
                                                   SECURITIES UNDERLYING      OPTIONS/SARS
                                                       OPTIONS/SARS            GRANTED TO         EXERCISE OR
                                                          GRANTED             EMPLOYEES IN        BASE PRICE     EXPIRATION
NAME                                                        (#)                   2000             ($/SHARE)        DATE
----                                               --------------------      ---------------     -----------    ----------

<S>                                                       <C>                      <C>                <C>          <C>
Dennis Timpe1...............................              4,000,000                100%               0.56         9/30/05


(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.
</TABLE>

<TABLE>
<CAPTION>

             AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES

                                                                                                             Value of
                                                                                 No. of Unexercised         Unexercised
                                                                                Securities Underlying       In-the-Money
                                           Shares Acquired                         Options/SARs             Options/SARs
                                              on Exercise       Value Realized      at FY-End                at FY-End
Name                                             (#)                ($)                (#)                      ($)
                                           ----------------    --------------  - -------------------      ----------------
                                                                               (Exerciseable/Unexerciseable)
<S>                                        <C>                  <C>              <C>                      <C>
Dennis Timpe....................                         0                           4,000,0001                  0

(1) SEE FOOTNOTE 2 ABOVE.

</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, 2000, 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; (ii)
each  director;  (iii) each of the Chief  Executive  Officer  and any  executive
officer that received  $100,000 or more in compensation  during the fiscal year.
This table does not take into  account the  additional  1,096,326  shares we are
still   obligated   to  issue  to  our   creditors   pursuant  to  our  Plan  of
Reorganization.

<TABLE>
<CAPTION>
                                                                           Amount and
                                                                            Nature of
  Title of                                   Name and Address of           Beneficial       Percent of
   Class                                      Beneficial Owner              Ownership          Class
-------------                         ----------------------------------  --------------    -----------
<S>                                   <C>                                  <C>               <C>
                                      Ansbacher, Ltd. (1)
                                      36568 Mojave Sage Street
Common Stock                          Palm Desert, California 92211           3,395,725        21.0%


                                      Dennis Timpe (2)(3)
                                      18281 Lemon Drive
Common Stock.......................   Yorba Linda, California 92886           1,232,600          7.6%
</TABLE>

<PAGE>
--------------
  (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)  In addition to the shares specified on the table above which Mr. Timpe
       beneficially owns, Mr. Timpe has options to purchase an additional
       4,000,000 shares of our common stock; provided, however, that the stock
       option plan under which those options were issued has not yet been
       approved by our shareholders. Moreover, Mr. Timpe holds a proxy to vote
       3,395,725 of Ansbacher Ltd.'s shares; 2,000 of Mr. Raydon's shares; 8,006
       shares held jointly in the name of Mr. Raydon and his spouse; and 2,938
       shares held in the name of Mr. Raydon's spouse. Mr. Timpe therefore
       currently has the power to vote 4,641,269 shares, or 28.75% of the issued
       and outstanding voting shares. The proxy grants Mr. Timpe and his
       nominees the right to vote all shares subject to such proxy on all
       matters for a period of two years expiring on December 20, 2001.
  (3)  Does not include options to purchase 4 million shares at $.56 per share,
       which are fully vested; however, the stock option plan under which such
       options were granted has not yet been approved by our shareholders. If
       such options were exercisable immediately, Mr. Timpe's beneficial
       ownership of our common stock would be 5,232,600 shares(25.98%) and he
       would control the voting power of 42.84% of our common stock .

ITEM 12.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    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 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.
<PAGE>

    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 stockout of our sale of4,500,000  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.

    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,  subject to shareholder
ratification, and granted such options to Mr. Timpe.

    In 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.

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.**

<PAGE>

       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 assignnors,  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.

<TABLE>
<CAPTION>
                                                              GEO PETROLEUM INC.

<S>                                                        <C>
Dated: April 13, 2001                                       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 13, 2001                                                /s/  Dennis Timpe
                                                              ------------------------------------------------------
                                                              Dennis Timpe
                                                              Chairman of the Board of Directors/C.E.O.


April 13, 2001                                                /s/  Lori Timpe-Long
                                                              ------------------------------------------------------
                                                              Lori Timpe-Long
                                                              Secretary/Treasurer/Director
                                                              Principal Financial and Accounting Officer


April 13, 2001                                                /s/  Christian M. Dillon
                                                              ------------------------------------------------------
                                                              Christian M. Dillon
                                                              Director


</TABLE>

<PAGE>
                               GEO PETROLEUM, INC.

                        INDEX TO THE FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000


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





 Report of Independent Auditors ...............................................1



 Financial Statements of Geo Petroleum, Inc.:



   Balance Sheets, December 31, 2000 and 1999..................................2



   Statements of Operations For Each of the Two Years in the Period Ended
       December 31, 2000.......................................................4



   Statements  of  Shareholders'  Equity For Each of the Two Years in the Period
       Ended December 31, 2000.................................................5



   Statements  of Cash  Flows  For  Each of the Two  Years in the  Period  Ended
       December 31, 2000.......................................................6



 Notes to the Financial Statements.............................................9






<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,  2000  and  1999,  and  the  related   statements  of  operations,
shareholders'  equity  and cash  flows for each of the two  years in the  period
ended December 31, 2000. These financial  statements are the  responsibility  of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the 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 2000 and 1999 financial statements referred to above present
fairly, in all material respects, the financial position of Geo Petroleum,  Inc.
as of December 31, 2000 and 1999, and the results of its operations and its cash
flows  for each of the two years in the  period  ended  December  31,  2000,  in
conformity with generally accepted accounting principles.

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 in regard to 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
March 20, 2001
<PAGE>
<TABLE>
<CAPTION>
                               GEO PETROLEUM, INC.

                                 BALANCE SHEETS
                           DECEMBER 31, 2000 AND 1999

                                     ASSETS

                                                                                              2000                    1999
                                                                                         ----------               ---------
Current assets:
<S>                                                                                      <C>         <C>
     Cash and equivalents                                                                $   70,173  $            $ 436,916
     Accounts receivable, net of allowance for
       doubtful  accounts of $29,944 in 1999.                                                33,961                   4,069
     Joint interest and other receivable, net of allowance for
       doubtful accounts of $131,508 in 1999.                                                     -                  70,000
     Prepaid legal and consulting fees                                                      125,228                       -
     Other prepaid expenses                                                                   9,000                   3,634
     Note receivable                                                                          7,100                  45,000
                                                                                         ----------               ---------
Total current assets                                                                        245,462                 559,619
                                                                                         ----------               ---------
Restoration and utility deposits                                                            290,936                 160,592
                                                                                         ----------               ---------

Property and equipment:
     Oil and gas properties                                                                 261,311                       -
     Vehicles                                                                                36,884                  20,884
     Facilities and equipment                                                               184,475                       -
                                                                                         ----------               ---------
                                                                                            482,670                  20,884
     Less: accumulated depreciation and depletion                                           (22,427)                (11,199)
                                                                                         ----------               ---------
                                                                                            460,243                   9,685
                                                                                         ----------               ---------
Total assets                                                                             $  996,641               $ 729,896
                                                                                         ==========               =========

</TABLE>

    The accompanying notes are an integral part of the financial statements.
                                       2
<PAGE>
<TABLE>
<CAPTION>

                               GEO PETROLEUM, INC.

                                 BALANCE SHEETS

                           DECEMBER 31, 2000 AND 1999

                      LIABILITIES AND SHAREHOLDERS' EQUITY
                                                                                             2000                    1999
                                                                                         ----------               ---------
Current liabilities:
     Accounts payable:
<S>                                                                                       <C>                      <C>
         Trade                                                                            $ 160,901                $ 29,912
         Related party                                                                       54,805                  14,149
     Accrued expenses                                                                        91,635                 220,408
     Income tax payable                                                                           -                   3,039
     Installment obligation, current maturity                                                     -                  48,000
     Line of credit - related party                                                          85,000                       -
     Other liabilities                                                                        4,300                 255,046
     Note payable, current maturity                                                          28,596                  26,404
                                                                                         ----------               ---------
         Total current liabilities                                                          425,237                 596,958
Installment obligation, net of current maturity                                                   -                  96,000
Note payable, net of current maturity                                                             -                  28,596
                                                                                         ----------               ---------

TOTAL LIABILITIES                                                                           425,237                 721,554
                                                                                         ----------               ---------

Commitments and contingencies

Shareholders' equity:
     Preferred stock; no par value; 100,000 shares authorized; no
         shares issued and outstanding at December 31, 2000
         and 1999, respectively                                                                   -                       -
     Common stock; no par value; 50,000,000 shares authorized;
         18,177,805 and 15,215,995 shares issued and outstanding at
         December 31, 2000 and 1999, repectively                                         11,225,293               9,918,974
Accumulated deficit                                                                     (10,653,889)             (9,910,632)
                                                                                         ----------               ---------
Total shareholders' equity                                                                  571,404                   8,342
Total liabilities and shareholders' equity                                                $ 996,641               $ 729,896
                                                                                         ==========               =========



</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, 2000


                                                                                             2000                   1999
                                                                                         ----------               ---------
Revenues:
<S>                                                                                      <C>                  <C>
      Oil and gas sales                                                                  $   40,901             $       872
      Waste water disposal services                                                          40,899                       -
      Waste water disposal services, related party                                                -                 157,529
      Other revenue                                                                               -                   4,000
                                                                                         ----------             -----------
            Total revenues                                                                   81,800                 162,401
Expenses:
      Lease operating expenses                                                              323,023                 204,336
      Lease environmental remediation expenses                                                6,607                  42,832
      Depreciation                                                                           11,228                  23,194
      Professional fees                                                                     292,443                  76,911
      General and administrative                                                            195,228                 122,858
                                                                                         ----------             -----------
            Total expenses                                                                  828,529                 470,131
                                                                                         ----------             -----------
Loss from operations                                                                       (746,729)               (307,730)
                                                                                         ----------             -----------
Reorganization items:
      Loss on disposal of equipment                                                               -                  (5,228)
      Professional fees                                                                           -                (226,883)
      Capitan and other settlements                                                               -                (648,248)
                                                                                         ----------             -----------
            Total reorganization items                                                            -                (880,359)
                                                                                         ----------             -----------
Other income (expense):
      Interest income                                                                        10,249                   5,225
      Interest expense (contractual interest of $75,883 in 1999)                             (5,977)                   (865)
                                                                                         ----------             -----------
                                                                                              4,272                   4,360
                                                                                         ----------             -----------
Loss before provision for income taxes and extraordinary
  item                                                                                     (742,457)             (1,183,729)
Provision for income taxes                                                                     (800)                   (800)
                                                                                         ----------             -----------
Loss before extraordinary item                                                             (743,257)             (1,184,529)
Extraordinary gain from claims discharged in bankruptcy,
  net of application income taxes of $0                                                           -                 155,767
                                                                                         ----------             -----------
Net loss                                                                                 $ (743,257)            $(1,028,762)
                                                                                         ==========             ===========
Net loss per share, basic and diluted                                                    $    (0.04)                $ (0.11)
                                                                                         ==========             ===========


</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, 2000


                                                           Common           Common           Accumulated
                                                           Shares           Stock              Deficit                Total
                                                       -------------    -------------       -------------        -------------
<S>                                                       <C>            <C>                 <C>                 <C>
BALANCE, DECEMBER 31, 1998                                8,815,995      $ 7,276,413         $(8,881,870)        $  (1,605,457)

 Common shares issued to unsecured creditors
   pursuant to the confirmed plan of reorganization       1,900,000        2,142,561                -                2,142,561
 Common shares issued for cash                            4,500,000          500,000                -                  500,000
 Net loss                                                      -                -             (1,028,762)           (1,028,762)
                                                       -------------    -------------       -------------        -------------

BALANCE, DECEMBER 31, 1999                               15,215,995        9,918,974          (9,910,632)                8,342

 Common shares issued in settlement of liabilities          402,967          169,246                -                  169,246
 Common shares and warrants issued for services             150,000          207,500                -                  207,500
 Common shares issued for cash                            2,408,843          929,573                -                  929,573
 Net loss                                                      -                -               (743,257)             (743,257)
                                                       -------------    -------------       -------------        -------------

BALANCE, DECEMBER 31, 2000                               18,177,805     $ 11,225,293        $(10,653,889)            $ 571,404
                                                       =============    =============       =============        =============


</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, 2000




                                                                                           2000                    1999
                                                                                     --------------           --------------
Cash flows from operating activities:
<S>                                                                                    <C>                    <C>
      Net loss                                                                         $ (743,257)            $ (1,028,762)
      Adjustments to reconcile net loss to net cash used in
        operating activities:
            Depreciation                                                                   11,228                   23,194
            Issuance of common stock and warrants
              for services                                                                 81,875                        -
            Loss on settlement with Capitan Resources Inc.                                      -                  503,248
            Extraordinary gain from claims discharged in
              bankruptcy                                                                        -                 (155,767)
            Loss on disposal of equipment                                                       -                    5,228
Decrease (increase) in assets:
            Accounts receivable trade                                                      40,108                   (4,069)
            Due from Capitan Resources, Inc., net                                               -                   53,255
            Due from a related party                                                       37,900                        -
            Prepaid expenses                                                               (4,969)                  (3,634)
            Restoration and utility deposits                                             (130,344)                       -
Increase (decrease) in liabilities:
            Accounts payable, trade                                                       130,989                   29,912
            Accounts payable, related party                                                40,656                   14,149
            Accrued expenses                                                             (128,772)                 268,816
            Income tax payable                                                             (3,039)                   3,039
            Other liabilities                                                            (160,746)                 221,446
            Installment obligation                                                        (64,755)                       -
                                                                                     --------------           --------------
NET CASH USED IN OPERATING ACTIVITIES                                                    (893,126)                 (69,945)
                                                                                     --------------           --------------

</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, 1999


                                                                                          2000                      1999
                                                                                     --------------           --------------
Cash flows used in investing activities
<S>                                                                                    <C>
      Purchases of facilities and equipment                                            $ (184,475)                       -
      Purchase of vehicles                                                                (16,000)                       -
      Capital expenditures on oil and gas properties                                     (261,311)                       -
                                                                                     --------------           --------------
NET CASH USED IN INVESTING ACTIVITIES                                                    (461,786)                       -
                                                                                     --------------           --------------
Cash flows provided by (used in) financing activities:
      Proceeds from line of credit, related party                                         110,000                        -
      Payment on line of credit, related party                                            (25,000)                       -
      Payment on note payable.                                                            (26,404)                       -
      Net proceeds from the issuance of common stock                                      929,573                $ 500,000
                                                                                     --------------           --------------
CASH PROVIDED BY FINANCING ACTIVITIES                                                     988,169                  500,000
                                                                                     --------------           --------------
NET INCREASE (DECREASE) IN CASH                                                          (366,743)                 430,055
CASH AND EQUIVALENTS AT BEGINNING OF YEAR                                                 436,916                    6,861
                                                                                     --------------           --------------
CASH AND EQUIVALENTS AT END OF YEAR                                                      $ 70,173                $ 436,916
                                                                                     ==============           ==============


               Supplemental Disclosures of Cash Flow Information

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

      Supplemental Schedule of Non-Cash Investing and Financing Activities

Satisfaction of federal bankruptcy proceedings allowed claims
  through issuance of common stock:
      Allowed claims satisfied                                                                  -              $ 2,142,561
      Shares issued                                                                             -             $ (2,142,561)

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



</TABLE>
    The accompanying notes are an integral part of the financial statements.
                                        7

<PAGE>
<TABLE>
<CAPTION>
                               GEO PETROLEUM, INC.
                            STATEMENTS OF CASH FLOWS
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 1999



Supplemental Schedule of Non-Cash Investing and Financing Activities, Continued



                                                                                     2000                       1999
                                                                                ---------------           ---------------

Issuance of common stock to pay federal bankruptcy proceeding expenses:
<S>                                                                                 <C>
      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.
                                        8
<PAGE>


                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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



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 waste
     water disposal  services.  During the year ended  December 31, 1999,  these
     disposal  operations  were  conducted by a related party (see Note 10), and
     the Company had a 75% revenue interest in such operations.  During the year
     ended  December 31,  2000,  the Company  directly  operated its waste water
     disposal  wells,  and as a result of the Plan,  received all of the revenue
     related to this  activity.

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 $743,257 and $1,028,762  and negative cash flows from  operations
     of $893,126  and $69,945  for the years ended  December  31, 2000 and 1999,
     respectively.  At December 31, 2000 the Company had an accumulated  deficit
     of $10,653,889,  and its current  liabilities  exceed its current assets by
     $179,775.  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 waste water 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  waste  water  disposal  operations.  In  December  1999,  the
     bankruptcy  court confirmed the Plan (see Note 5) 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 oil
     production  and  waste  water  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
     inordinately  high  natural  gas  costs,  the  Company  curtailed  its  oil
     production efforts.

     The Company's continuation as a going concern is dependent upon its ability
     to repair and modify  equipment and commence  production from its Rosecrans
     oil and gas properties,  generate  sufficient cash flow to meet its current
     obligations  on  a  timely  basis,  to  obtain  additional  financing,  and
     ultimately  to  attain  profitable  oil and gas and  waste  water  disposal
     operations.   In  2000,  management  obtained   approximately  $930,000  in
     additional  equity financing  through private placement of its common stock
     and is  continuing  its  efforts  to  obtain  additional  funds so that the
     Company can meet




                                       9
<PAGE>

                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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


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

     Basis of Presentation, Continued

     its obligations,  commence oil and gas operations,  and develop its oil and
     gas properties.  These potential  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  assurance  that  any of  these
     potential  alternatives will materialize.  The financial  statements do not
     include  any  adjustments  that  might  result  from  the  outcome  of this
     uncertainty.

     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.

     Facilities and Equipment

     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


                                       10
<PAGE>

                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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



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

     Facilities and Equipment, Continued


     unit-of-production method using only estimated proved oil and gas reserves,
     excluding  future  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 2000 relate to
     improvements  to waste water disposal  wells,  facilities and equipment and
     development costs associated with its Vaca Tar Sands properties. There were
     no additions in 1999.

     The  Company's  oil and  gas  producing  properties  are  estimated  by the
     Company's independent petroleum engineers to have remaining producing lives
     ranging  from  6 to 30  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.

     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.

     Revenue Recognition

     Revenue from oil and gas sales is  recognized  upon delivery of the oil and
     gas to the  Company's  customer.  Such revenue is recorded net of royalties
     and certain  other  costs that the Company  incurs to bring the oil and gas
     into salable condition.

     During  1999,  all of the  Company's  revenue  from  waste  water  disposal
     services and a portion of its gas revenues  arose from  operating and sales
     agreements with a related party (see Note 10), which operated the Company's
     waste water  disposal  well and sold gas  produced  from wells owned by the
     Company.  The Company  accrued its share of waste water  disposal  revenues
     when payment for services was received by the related  party.  As described
     in Note 5, under the Plan the rights to the operation and sales  agreements
     were transferred to the Company.



                                       11
<PAGE>

                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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

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

     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, 2000 and 1999,
     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.

     Earnings (Loss) per Common Share

     Basic earnings (loss) per common share is computed by dividing net earnings
     (loss) applicable to common shareholders by the weighted-average  number of
     common shares  outstanding  during the period.  Diluted earnings (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 Option Plans

     Financial Accounting Standards Board ("FASB") Statement No. 123, Accounting
     for  Stock-Based  Compensation,  ("FAS No. 123")  encourages,  but does not
     require, companies to record



                                       12
<PAGE>

                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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


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

     Stock Option Plans, Continued

     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 FAS
     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.

     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 1998, the FASB issued Statement No. 133,  Accounting for Derivative
     Instruments and Hedging  Activities,  as amended by FASB Statements No. 137
     and 138.  The new  statement  requires  companies  to report,  among  other
     things,  the fair market  value of  derivatives  on the  balance  sheet and
     record in income or other comprehensive income, as appropriate, any changes
     in the fair value



                                       13
<PAGE>

                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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

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

     New Pronouncements, Continued

     of the  derivatives.  FASB  Statement  No.  133,  as  amended,  will become
     effective with respect to the Company for the fiscal year beginning January
     1, 2001.

     The Company is currently evaluating the effect of this new statement, but
     does not believe it will have a material impact on the Company's financial
     statements.

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

     The Company has deposits with a utility that supplies  natural gas, as well
     as 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.  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, 2000 and 1999 are as
     follows:
<TABLE>
<CAPTION>


                                                                                            2000              1999
                                                                                      -------------      ------------

<S>                                                                                   <C>               <C>
           Utility                                                                    $      18,800              -
           State of California                                                              211,495      $    100,387
           County of Ventura                                                                 10,641            10,205
           City of Los Angeles                                                               50,000            50,000
                                                                                      -------------      ------------

           TOTAL RESTORATION AND UTILITY DEPOSITS                                     $     290,936      $    160,592
                                                                                      =============      ============

</TABLE>

                                       14
<PAGE>

                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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

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

                                                                                           2000                1999
                                                                                      -------------         -------------
     Line of Credit

       Line of credit payable to TD & Associates, Inc., a related
         party. Borrowings under the line bear interest at prime
         plus 2%, payable monthly, with the principal due in full
         on September 7, 2001. The line is not collateralized, and
         no amounts remain available under the line. The weighted
         average interest rate on borrowings under the line was 11.5%.                $    85,000                 -
                                                                                      =============         =============

     Note Payable

       Note payable to shareholders, with an interest rate of 8% per annum,
         payable in monthly installments of principal and interest of $2,487,
         due in December 2001 and collateralized by 33% net revenue interest
         in the Company's Vaca Tar Sands oil and gas properties                       $     28,596            $ 55,000

       Total note payable                                                                   28,596              55,000
         Less: current maturities                                                          (28,596)            (26,404)
                                                                                      -------------         -------------

       LONG-TERM PORTION OF NOTE PAYABLE                                                      -                 28,596
                                                                                      =============         =============


     Future maturities of long-term debt are as follows at December 31, 2000:
           2001                                                                        $    28,596
                                                                                     --------------
           Total maturities of long-term debt                                          $    28,596
                                                                                      =============
</TABLE>

5.   PLAN OF 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.  The Debtor  determined  that there was  insufficient
     collateral  to cover the  interest  portion of  scheduled  payments  on its
     prepetition debt



                                       15
<PAGE>

                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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



5.   PLAN OF REORGANIZATION, CONTINUED
     ---------------------------------

     obligations.  Therefore, the debtor discontinued accruing interest on these
     obligations.  Contractual  interest on those obligations for the year ended
     December  31,  1999,  amounted  to  $75,883,  which is $75,018 in excess of
     reported interest expense.

     On December 15, 2000, the bankruptcy court confirmed the Plan under which:

     a.   The Company  consummated a stock  purchase and sale  agreement with an
          investor and sold 4,500,000  shares of the Company's  common stock for
          $500,000  in  cash.  Of this  amount,  $300,000  was  used to fund the
          payments  required under the Plan and the balance was used for working
          capital.

     b.   Certain  controversies  with Capitan Resources,  Inc.  ("Capitan") and
          related  parties were settled and (a)  Capitan,  a related  party (see
          Note 10)  transferred  to the  Company  all of its  rights  under  its
          operating  and sales  agreements  with the  Company and  withdrew  all
          claims it may have had against the Company,  (b) a former  officer and
          major  shareholder of the Company released his rights to reimbursement
          for his stock sold by a creditor  to satisfy a debt  incurred  for the
          benefit  of  the  Company  and  to his  stock  incentive  compensation
          totaling  1,390,000 shares of the Company's common stock and agreed to
          only  serve as  consultant  to the  Company at the  discretion  of new
          management on a fee for service basis,  (c) all deeds of trust held by
          the   former    officer    and   major    shareholder,    the   former
          Secretary/Treasurer,  who is the wife of the former  officer and major
          shareholder,   and  other   insiders   of  the  Company  on  the  East
          L.A./Bandini properties were assigned to the Company, and all deeds of
          trust held by insiders on property of the Company  were  released  and
          (d) the  Company  released  and waived all claims and other  causes of
          action it may have had against  Capitan  Resources,  Inc.,  the former
          officer and major shareholder, and the former Secretary/Treasurer, who
          is the wife of the former officer and major shareholder.

     c.   The Company assumed certain  executory  contracts and unexpired leases
          and paid "executory Contract Cure Amounts" totaling $39,004.

     d.   The  remaining   unsecured   creditor  claims  totaled   approximately
          $2,375,000  and  were  satisfied   generally  through  cash  payments,
          issuance of a note payable,  and a pro rata  distribution of 1,900,000
          shares of the Company's common stock.  Also, after payments of allowed
          administrative   expenses,  tax  priority  payroll  amounts,  Class  2
          creditor claims and Executory  Contract Cure amounts,  these unsecured
          creditors  were  entitled  to receive a pro rata  distribution  of any
          amounts  remaining  from the $300,000 in funds  available for required
          payments under the Plan and $195,000 to be paid over  approximately 12
          quarters from up to 30% of future quarterly



                                       16
<PAGE>

                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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


5.   PLAN OF REORGANIZATION, CONTINUED
     ---------------------------------

          net  income,  if  any  (as  defined).  As the  allowed  administrative
          expenses,   taxes,  priority  payroll,  and  other  allowable  amounts
          exceeded the $495,000  total of these amounts at December 31, 2000, no
          further   amounts  are  due  under  this   provision.   As  a  result,
          approximately  $65,000 of 2000 expenses were offset against previously
          recorded liabilities.

     e.   The  creditors'  claims  submitted  during  the  bankruptcy  that were
          objected to by the Company were all resolved by November  2000.  These
          settlements  pertained  primarily to two of the leases associated with
          the Company's oil and gas  production  and to two waste water disposal
          agreements.  In general, these settlements resulted in obligations for
          payments  by the  Company and  increased  royalty  rates from 12.5% to
          16.67% on one of its leases and an increase of 1.04% on another lease.
          The settlements provided for a decrease in disposal royalties on solid
          wastes  from 12.5% to 10%.  The  Company  also  agreed to pay  minimum
          royalties  totaling  approximately  $36,000  annually.  Royalties paid
          during the course of operations  will be credited  against the minimum
          royalty  payments.  One of  these  settlements  also  resulted  in the
          termination  of the  Company's  oil and gas lease rights  representing
          approximately  8.87%  of the  Vaca  Tar  Sands  property  oil  and gas
          reserves.

     Fresh-Start Reporting

     Because  the  holders  of  existing   voting  shares   immediately   before
     confirmation of the Plan maintain more than 50% of the voting shares of the
     reorganized  Company, the Company has not adopted  "Fresh-start"  reporting
     upon its emergence from the federal bankruptcy proceeding. Accordingly, the
     historical cost basis of accounting has been continued by the Company.


                                       17
<PAGE>

                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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




6.   INCOME TAXES
     ------------

<TABLE>
<CAPTION>
     The components of the provision for income taxes are as follows:
                                                                                                December 31,
                                                                                      ---------------------------------

                                                                                           2000                1999
                                                                                    ---------------       ---------------
         Current tax expense:
         <S>                                                                      <C>                      <C>
              Federal                                                                        -                   -
              State                                                                 $           800       $         800
                                                                                    ---------------       ---------------

                                                                                                800                 800
                                                                                    ---------------       ---------------

          Deferred tax expense:
              Federal                                                                        -                   -
              State                                                                          -                   -
                                                                                    ---------------       ---------------


         TOTAL PROVISION                                                            $           800       $         800
                                                                                    ===============       ===============


     Significant  components  of the  Company's  deferred  income tax assets and
     liabilities  at December  31, 2000 and 1999 are as  follows:  December  31,


                                                                                           2000                1999

         Deferred income tax assets:
              Net operating loss carryforward                                       $     2,970,630    $     2,523,507
              Allowance for doubtful accounts                                                 -                 67,403
              Differences between book and tax basis of property                             35,831               -
              Other                                                                             272                272
                                                                                    ---------------     ---------------

         NET DEFERRED INCOME TAX ASSET                                                    3,006,733           2,591,182
                                                                                    ---------------     ---------------
         Deferred income tax liability:
              Differences between book and tax basis of property                              -                 76,718
                                                                                    ---------------     ---------------
         TOTAL DEFERRED INCOME TAX LIABILITY                                                  -                 76,718
                                                                                    ---------------     ---------------
              Net                                                                         3,006,733           2,514,464
              Valuation allowance                                                        (3,006,733)         (2,514,464)
                                                                                    ----------------    ----------------

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

</TABLE>

                                       18
<PAGE>

                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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



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

     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,
                                                                                            ------------------------------
                                                                                               2000                  1999
                                                                                            ------------         ------------

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

           EFFECTIVE INCOME TAX RATE                                                            0.1    %               -
                                                                                            ============         ============
</TABLE>

     At December 31, 2000,  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>
                                2001                                     -                       $         310,900
                                2002                                     -                                 523,848
                                2003                                     -                                 826,296
                                2004                                     -                                 524,454
                                2005                                     -                                 581,535
               Thereafter up to 2020                         $     8,017,720                                 -
                                                              --------------                     -----------------

                               TOTAL                         $     8,017,720                     $       2,767,033
                                                             ===============                     =================

</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.



                                       19
<PAGE>

                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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



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

     Concentration of Credit Risk

     Financial   instruments,   which   potentially   subject   the  Company  to
     concentrations  of  credit  risk,   consist  primarily  of  cash  and  cash
     equivalents and accounts  receivable.  The Company places its cash and cash
     equivalents with high quality financial institutions. Exposure to losses on
     accounts receivable 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 significant customer
     for its oil and gas production in 2000 that accounted for approximately 99%
     of gross oil and gas  sales.  This  customer  accounted  for  $4,878 of the
     Company's  accounts  receivable at December 31, 2000. The Company had three
     significant  customers for its waste water  disposal  services in 2000 that
     accounted for approximately  46%, 15% and 13% of gross waste water disposal
     services  revenue,  respectively.  At December  31,  2000,  the Company had
     accounts  receivable due from two of these  customers for $13,200.

     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, 2000, the Company had approximately  $103,526 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.


                                       20
<PAGE>

                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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



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

     Risks of the Industry in Which the Company Operates, Continued

     The Company does not have any commitments for future minimum lease payments
     at December 31, 2000.  Rental expense recorded for the years ended December
     31, 2000 and 1999 was $60,000 and $6,667, respectively.

     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,  notes  receivable,  accounts payable,  and notes payable.  The
     recorded values of cash and cash equivalents,  accounts  receivable,  notes
     receivable,  accounts  payable,  and notes payable  approximate  their fair
     values  based on their  short-term  nature.  The  recorded  values of notes
     receivable  and notes payable  approximate  their fair values,  as interest
     approximates market value.

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.


                                       21
<PAGE>

                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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



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

     This  agreement  was  assumed as an  executory  contract  under the Plan as
     described in Note 5. 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,
     2000,  the  portion of these  expenditures  that  management  believes  are
     reimbursable  by  Saba  under  the  Farm-Out   agreement  are  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.

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

     Capitan Resources, Inc.

     Until the confirmation of the Plan of  Reorganization on December 15, 1999,
     the Company had certain  agreements  with Capitan to sell gas produced from
     wells owned by the Company  and to offer waste water  disposal  services on
     sites owned by the Company.  A former officer and major  shareholder of the
     Company was also the principal  officer and  shareholder of Capitan.  Under
     the  agreements,  the Company was to receive 70% of Capitan's  net revenues
     from gas sales and 75% of Capitan's net revenues from waste water  disposal
     services.

     In connection with the Plan of Reorganization, Capitan's rights under these
     agreements were transferred to the Company,  and controversies  between the
     Company and Capitan were  settled.  As a result,  the Company  recognized a
     Capitan  settlement  loss of  $418,703,  which is included in the  $648,248
     Reorganization  Settlement  Loss  recorded in the year ended  December  31,
     1999.

     Other

     The Company's  former officer and 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,  2000,   the  former   officer  and  major
     shareholder's   proportionate   share  of  the  cumulative  losses  totaled
     approximately $14,000.

     In  addition,  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 a major shareholder.


                                       22
<PAGE>

                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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



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

     Basic and diluted loss per common share have 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,
                                                                                     -----------------------------------
                                                                                           2000               1999
                                                                                     ---------------     ---------------
         Numerator:
<S>                                                                                 <C>                   <C>
              Loss before extraordinary item                                           $  (743,257)      $  (1,184,529)
              Extraordinary item                                                              -                155,767
                                                                                     ---------------     ---------------
              Net loss and the numerator for basic and diluted loss
                per common share                                                       $  (743,257)      $   (1,028,762)
                                                                                     ===============     ===============
         Denominator:

              Weighted-average shares basic and diluted                                 16,691,576            9,034,899
                                                                                     ===============     ===============
         Basic and diluted loss per common share:
              Loss before extraordinary item                                           $      (.04)       $      (0.13)
              Extraordinary gain from debt discharged in bankruptcy                           -                   0.02
                                                                                     ---------------     ---------------
         Net loss per common share                                                     $      (.04)       $      (0.11)
                                                                                     ===============     ================

</TABLE>


     The potentially  dilutive  securities that were outstanding during 2000 and
     1999 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,
                                                                                     ---------------------------------
                                                                                        2000                   1999
                                                                                     ---------------   ---------------
         Shares of common stock issuable under:
<S>                                                                                  <C>                 <C>
              Warrants                                                                      756,821           856,821
              Options                                                                     4,000,000              -
                                                                                     ---------------   ---------------

         TOTAL                                                                            4,756,821           856,821
                                                                                    ===============    ================
</TABLE>

12.  STOCK OPTIONS
     -------------

     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. The



                                       23
<PAGE>

                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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



12.  STOCK OPTIONS, CONTINUED
     --------------------------

     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, 2000, there were no shares available for future grants under the Option
     Plan. Under the Option Plan, the option exercise price is 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
                                                                                    ----------------      -------------
<S>                                                                                <C>                 <C>
         Outstanding at December 31, 1999                                                  -                   -
            Granted                                                                       4,000,000               $.56
            Exercised                                                                      -                   -
            Cancelled                                                                      -                   -
                                                                                    ----------------      -------------
         Outstanding at December 31, 2000                                                 4,000,000               $.56
                                                                                    ================      =============

         Options exercisable at December 31, 2000                                         4,000,000               $.56
                                                                                    ================      =============

</TABLE>

     The following tables summarize  information about stock options outstanding
     and exercisable at December 31, 2000:

<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        4.75 years           $    .56                  4,000,000      $     .56
      ------------       ----------------      ----------------       -----------         ---------------      -----------

                                4,000,000        4.75 years           $    .56                  4,000,000      $     .56
                         ================      ================       ===========         ===============      ===========

</TABLE>

                                       24
<PAGE>

                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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




12.  STOCK OPTIONS, CONTINUED
     ------------------------

     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:



                                                                     2000
                                                                --------------
         Net loss:

              As reported                                       $   (743,257)
                                                                ==============

              Pro forma                                         $ (2,783,257)
                                                                ==============

         Basic and diluted loss per share:

              As reported                                       $       (.04)
                                                                ==============
              Pro forma                                         $       (.17)
                                                                ==============



     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  option.  The  assumptions  used  in the
     Black-Scholes model were as follows for stock options granted in 2000:


                                                                      2000
                                                               -----------------
        Risk-free interest rate                                       6.17%
        Expected volatility of common stock                           5.918
        Dividend yield                                                 0%
        Expected life of options                                     5 years


                                       26
<PAGE>


                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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



12.  STOCK OPTIONS, CONTINUED
     -------------------------

     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.

     Common Shares Issued for Services

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

     In August 2000,  the Company issued 100,000 common shares for certain legal
     services for the period June 1, 2000  through June 1, 2001.  The shares and
     therefore the services were valued at the market price of the stock at June
     1,  2000,  the date at which  the  services  were  agreed  to be  provided.
     Accordingly,  at December 31, 2000,  the Company has $37,500 of unamortized
     prepaid legal fees and has recognized $52,500 in legal expense for the year
     relating to this transaction.

     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 are exercisable any time prior to their  expiration on
     December 31, 2001.  The Company  recorded the  transaction  based on market
     value of the shares  issued and the fair value of the  warrants  granted on
     the date the  transaction  was entered into.  The closing  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.  No  value  was  ascribed  to  the  contingently   issuable  shares.
     Accordingly, the Company recognized consulting




                                       27
<PAGE>

                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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



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

     Common Shares Issued for Services, Continued


     expense  associated with this transaction of $29,375 for the year 2000, and
     has unamortized prepaid consulting expense of $88,125 at December 31, 2000.

     Common Stock Reserved for Future Issuance


     At December  31, 2000 and 1999,  the Company  has  reserved  the  following
     numbers of shares of its authorized but unissued  common stock for possible
     future issuance in connection with the following:

<TABLE>
<CAPTION>

                                                         2000                   1999
                                                         ----                   ----

<S>                                                   <C>                 <C>
         Exercise of stock purchase warrants                 756,821            856,821
         Exercise of stock options                         4,000,000               -
                                                     ---------------     ---------------
         TOTAL                                             1,756,821            856,821
                                                     ===============     ===============
</TABLE>


     Warrants Activity for the Period and Summary of Outstanding Warrants


     A summary of warrant  activity for the years  ending  December 31, 2000 and
     1999 is as follows:

<TABLE>
<CAPTION>
                                                                      Weighted                           Weighted
                                                                       Average                            Average
                                                      Number of       Exercise          Warrants         Exercise
                                                      Warrants          Price          Exercisable         Price

<S>                                                     <C>          <C>                 <C>            <C>
           Outstanding, December 31, 1998               1,449,352    $    2.65           1,449,352      $   2.65
                Granted                                          -
                Exercised                                       -
                Expired                                  (592,531)   $    2.50
                                                   ---------------
           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
                                                   ==============

</TABLE>
     At December 31, 2000,  warrants had exercise  prices  ranging from $1.25 to
     $3.00 and a weighted average remaining contractual life of 1.17 years.




                                       28
<PAGE>

                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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



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

     At December 31, 2000,  the Company had all of its  interests in oil and gas
     properties located in California.

     Costs Incurred in Oil and Gas Producing Activities


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

<TABLE>
<CAPTION>

                                                             For the Years Ended December 31,

                                                                2000                   1999
                                                                ----                   ----
                                                             (Unaudited)             (Unaudited)
                                                             -----------             -----------
         Property acquisition costs:
<S>                                                       <C>                            <C>
              Proved properties                                  -                        -
              Exploration costs                                  -                        -
              Development costs                             $       261,311               -
                                                            ---------------
         Total costs                                        $       261,311               -
                                                            ================         =============

</TABLE>
     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.


                                       29
<PAGE>

                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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




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

     Net  quantities  of crude oil and  natural  gas for the  Company  as of the
     beginning  and the end of the years ended  December  31, 2000 and 1999,  as
     well as the changes in proved reserves during such years,  are set forth in
     the following tables:

<TABLE>
<CAPTION>


                                                                                            For the Year Ended
                                                                                             December 31, 2000
                                                                                             -----------------
                                                                                                 Unaudited
                                                                                                 ---------
                                                                                          Oil                      Gas
                                                                                         Bbls                      MCF
                                                                                         ----                      ---
           Proved developed reserves, net:
 <S>                                                                                 <C>                 <C>
              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
                                                                                    ===============     ===============

           Proved undeveloped reserves, net:
              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>

                                       30
<PAGE>

                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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




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

     Estimated Quantities of Proved Oil and Gas Reserves, Continued
<TABLE>
<CAPTION>

                                                                                            For the Year Ended
                                                                                             December 31, 1999
                                                                                                 Unaudited
                                                                                          Oil                      Gas
                                                                                         Bbls                      MCF
                                                                                         ----                      ---
           Proved developed reserves, net:
<S>                                                                                   <C>                    <C>
              January 1, 1999                                                                     -                   -
              Revisions of previous estimates                                               827,000             464,000
              Purchase of reserves in place                                                       -                   -
              Production                                                                          -                   -
              Sale of reserves in place                                                           -                   -
                                                                                    ---------------     ---------------


              December 31, 1999                                                             827,000             464,000
                                                                                    ===============     ===============

           Proved undeveloped reserves, net:
              January 1, 1999                                                                     -                   -
              Revisions of previous estimates                                            25,513,000                   -
              Purchase of reserves in place                                                       -                   -
              Sale of reserves in place                                                           -                   -
                                                                                    ---------------     ---------------
              December 31, 1999                                                          25,513,000                   -
                                                                                    ===============      ==============
</TABLE>

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


                                       32
<PAGE>

                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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





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

     Estimated Quantities of Proved Oil and Gas Reserves, Continued


     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, 2000 and 1999. The costs related to
     the Vaca Tar Sands reserves,  including future  development  costs that now
     are estimated to be approximately  $57,216,000 for facilities and 209 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, 2000 and 1999,  respectively.  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.

                                       33
<PAGE>


                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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




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

     Standardized Measure of Discounted Future Net Cash Flows Relating to Proved
     Reserves, Continued



     The  standardized  measure of discounted  future net cash flows relating to
     proved  developed and undeveloped oil and gas reserves at December 31, 2000
     and 1999 are summarized below:
<TABLE>
<CAPTION>

                                                                                     For the Years Ended December 31,
                                                                                     --------------------------------
                                                                                          2000               1999
                                                                                    ----------------    ----------------

<S>                                                                                 <C>                  <C>
         Future cash inflows                                                        $    25,869,000     $   577,474,000
         Future production and development costs                                        (16,156,000)       (332,855,000)
         Future income tax expenses                                                      (3,886,000)        (97,848,000)
                                                                                    ----------------    ----------------

         Future net cash flows                                                            5,827,000         146,771,000
         10% annual discount for estimated timing of cash flows                          (3,512,000)        (65,535,000)
                                                                                    ----------------    ----------------

         Standardized measure of discounted future net cash flows                   $     2,315,000     $    81,236,000
                                                                                    ================    ===============

</TABLE>

     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 $23.50 and $23.73 per barrel at December 31, 2000 and
     1999,  respectively,  and the average  natural gas price,  a combination of
     spot gas prices and contract prices, was $0.62 and $0.62 per thousand cubic
     feet at December 31, 2000 and 1999, respectively.


                                       33
<PAGE>



                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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




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

     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,
     2000 and 1999 is set forth below:

<TABLE>
<CAPTION>

                                                                                     For the Years Ended December 31,
                                                                                     --------------------------------
                                                                                          2000                1999
                                                                                    ----------------    ----------------
        <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                                                    $   (235,886,000)         $ 244,619,000
           Changes in estimated future development costs                                  -                       -
           Development costs incurred during the period, which were
              previously estimated                                                        -                       -
           Revisions of previous quantity estimates                                         980,000               -
           Sale of reserves in place                                                      -                       -
           Accretion of discount                                                         62,023,000           (65,535,000)
           Net change in income taxes                                                    93,962,000           (97,848,000)
           Other, principally changes in timing of estimated production                   -                       -
                                                                                    ----------------    ----------------


           Net (decrease) increase                                                      (78,921,000)           81,236,000
           Beginning of year                                                             81,236,000                -
                                                                                    ----------------    ----------------
           End of year                                                             $      2,315,000          $ 81,236,000
                                                                                    ================    =================

</TABLE>

15. SUBSEQUENT EVENTS
    -----------------

     In 2001,  the Company sold  225,000  shares of its common stock at $.50 per
     share and received net proceeds of $112,500.

                                       34
<PAGE>



                               GEO PETROLEUM, INC.

                          NOTES TO FINANCIAL STATEMENTS

                      AS OF DECEMBER 31, 2000 AND 1999 AND
         FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

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




16.  UNAUDITED QUARTERLY FINANCIAL DATA
     ----------------------------------

     The  reconciliations  of the interim results of operations for 2000,  which
     were impacted by the effect of year-end adjustments, are as follows:
<TABLE>
<CAPTION>



                                                Quarter Ended                          Quarter Ended
                                               March 31, 2000                          June 30, 2000
                                       ---------------------------------     --------------------------------
                                         As Reported In              As        As Reported in              As
                                           Form 10Q-SB        Adjusted           Form 10Q-SB            Adjusted
                                       ----------------   --------------     ---------------     ----------------

<S>                                    <C>                <C>                 <C>                  <C>
           Revenues                    $         11,695   $    14,889         $       258          $       258
                                       ================   ================    ================    ================

           Costs and expenses (1)      $        187,917   $    154,039        $   177,948          $    103,992
                                       ================   ================    ================    ================

           Net income (loss)           $       (176,222)  $   (139,150)       $  (177,690)         $    (103,734)
                                       ================   ================    ================    ================

           Net loss per common
            share, basic and
             diluted                   $          (0.01)     $  (0.01)        $      (0.01)             $  (0.01)
                                       ================   ================    ================    ================



           Weighted average
           shares outstanding               15,483,795      15,483,795            16,561,414          16,561,414
                                       ================   ================    ================    ================


                                                Quarter Ended                          Quarter Ended
                                             September 30, 2000                      December 31, 2000
                                       ---------------------------------     --------------------------------
                                         As Reported In         As
                                           Form 10Q-SB        Adjusted                  Actual
                                       ----------------   --------------           ----------------

           Revenues                    $         13,405    $     13,405            $      64,113
                                       =================  ==============         =================
           Costs and expenses1         $        262,764    $    294,821            $     283,070
                                       =================  ==============         =================
           Net income (loss)           $       (249,359)   $   (281,416)           $    (218,957)
                                       =================  ==============         =================
           Net loss per common
            share, basic and
             diluted                   $          (0.01)   $      (0.02)           $       (0.01)
                                       =================  ==============         =================
           Weighted average
            shares outstanding                17,401,314     17,401,314                18,011,806
                                       =================  ==============         =================

</TABLE>

     (1) Costs and  expenses  incurred  that  were  allowable  under the Plan of
     Reorganization as offsets of unsecured creditor claims.