U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549



                                    FORM 10-Q


                  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934



                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002



                           COMMISSION FILE NO. 0-20975



                         TENGASCO, INC. AND SUBSIDIARIES
                         -------------------------------
        (EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)


           TENNESSEE                                       87-0267438
------------------------------                 ---------------------------------
STATE OR OTHER JURISDICTION OF                 (IRS EMPLOYER IDENTIFICATION NO.)
 INCORPORATION OR ORGANIZATION



                 603 MAIN AVENUE, SUITE 500, KNOXVILLE, TN 37902
                 -----------------------------------------------
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)


                                 (865-523-1124)
                                 --------------
                (ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)


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


STATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON EQUITY, AS OF THE LATEST PRACTICABLE DATE: 11,444,779 COMMON SHARES AT
JULY 31, 2002.


     TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE): YES ___ NO _X_

                                       1
<PAGE>


                         TENGASCO, INC. AND SUBSIDIARIES

                                TABLE OF CONTENTS


PART I.            FINANCIAL INFORMATION                                    PAGE

          ITEM 1.  FINANCIAL STATEMENTS

          *        CONDENSED CONSOLIDATED BALANCE SHEETS AS OF
                   JUNE 30, 2002 AND DECEMBER 31, 2001 ...................   3-4

          *        Consolidated Statements of Loss for the three months
                   and six months ended June 30, 2002 and 2001 ...........     5

          *        Consolidated Statements of Stockholders' Equity
                   for the six months ended June 30, 2002 ................     6

          *        Consolidated Statements of Cash Flows for the
                   six months ended June 30, 2002 and 2001 ...............     7

          *        Condensed Notes to Consolidated Financial Statements ..  8-12

          ITEM 2.  MANAGEMENT'S DISCUSSION AND
                   ANALYSIS OF FINANCIAL CONDITION
                   AND RESULTS OF OPERATIONS ............................. 13-19

          ITEM 3.  QUANTITATIVE AND QUALITATIVE
                   DISCLOSURE ABOUT MARKET RISK .......................... 20-21

PART II.           OTHER INFORMATION

          ITEM 1.  LEGAL PROCEEDINGS .....................................    22

          ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS .............    23

          ITEM 3.  DEFAULTS UPON SENIOR SECURITIES .......................    23

          ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF
                   SECURITY HOLDERS ...................................... 23-24

          ITEM 5.  OTHER INFORMATION .....................................    24


          *        SIGNATURES ............................................    25

                                       2
<PAGE>


                         TENGASCO, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS
                                                      June 30,      December 31,
                                                        2002            2001
                                                    (Unaudited)
                                                    -----------      -----------
Current Assets:
  Cash and cash equivalents                         $   101,085      $   393,451
  Investments                                            75,000          150,000
  Accounts receivable, net                              685,529          661,475
  Participant receivable                                118,087           84,097
  Inventory                                             159,364          159,364
                                                    -----------      -----------

Total current assets                                  1,139,065        1,448,387

Oil and gas properties, net
 (on the basis of full cost accounting)              13,789,957       13,269,930

Completed pipeline facilities, net                   15,135,344       15,039,762

Property and equipment, net                           1,814,460        1,680,104
Restricted cash                                          75,017          120,872
Loan fees, net                                          410,216          496,577
Other                                                    94,721           72,613
                                                    -----------      -----------


                                                    $32,458,780      $32,128,245
                                                    ===========      ===========


           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       3
<PAGE>


                         TENGASCO, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                      LIABILITIES AND STOCKHOLDERS' EQUITY


                                                     June 30,       December 31,
                                                        2002            2001
                                                    (Unaudited)
                                                    -----------     -----------
Current liabilities
  Current maturities of long-term debt              $ 5,944,112     $ 6,399,831
  Loan payable to Officer                               110,000              --
  Accounts payable-trade                              1,181,919       1,208,164
  Accrued interest payable                               48,313          54,138
  Accrued dividends payable                             125,993         112,458
                                                    -----------     -----------

Total current liabilities                             7,410,337       7,774,591

Long term debt, less current maturities               3,878,224       3,902,757
                                                    -----------     -----------

Total long term debt                                  3,878,224       3,902,757
                                                    -----------     -----------

Total liabilities                                    11,288,561      11,677,348
                                                    -----------     -----------
Preferred Stock
  Cumulative convertible redeemable preferred;
    redemption value $7,072,000 and $5,622,900;
    70,720 and 56,229shares outstanding;
    respectively                                      6,787,218       5,459,050
                                                    -----------     -----------
Stockholders' Equity
  Common stock, $.001 per value,
    50,000,000 shares authorized                         10,810          10,561
   Additional paid-in capital                        40,672,925      39,242,555
   Accumulated deficit                              (26,079,847)    (24,115,382)
   Accumulated other comprehensive loss                 (75,000)             --
   Treasury stock, at cost                             (145,887)       (145,887)
                                                    -----------     -----------

Total stockholders' equity                           14,383,001      14,991,847
                                                    -----------     -----------

                                                    $32,458,780     $32,128,245
                                                    ===========     ===========


           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       4
<PAGE>


                         TENGASCO, INC. AND SUBSIDIARIES

                         CONSOLIDATED STATEMENTS OF LOSS

<TABLE>
<CAPTION>
                                                 For the Three Months Ended          For the Six Months Ended
                                                         June 30,                            June 30,
                                                -----------------------------     -----------------------------

                                                    2002             2001             2002             2001
                                                ------------     ------------     ------------     ------------
<S>                                             <C>              <C>              <C>              <C>
Revenues and other income
  Oil and gas revenues                          $  1,233,473     $  1,785,280     $  2,408,917     $  3,214,111
  Pipeline transportation revenues                    63,538           67,025          141,245           67,025
  Interest income                                        657           10,763            1,695           30,250
                                                                 ------------     ------------     ------------

Total revenues and other income                    1,297,668        1,863,068        2,551,857        3,311,386

Costs and other deductions
  Production costs and taxes                         545,505          619,095        1,269,304        1,350,930
  Depletion, depreciation and amortization           487,348          170,957          974,696          268,457
  Interest expense                                   148,297          251,090          301,664          329,014
  General and administrative costs                   646,168        1,050,245        1,286,398        1,804,307
  Professional fees                                  328,547          107,715          445,860          263,480
                                                ------------     ------------     ------------     ------------

Total costs and other deductions                   2,155,865        2,199,102        4,277,922        4,016,188
                                                ------------     ------------     ------------     ------------

Net loss                                            (858,197)        (336,034)      (1,726,065)        (704,802)
                                                ------------     ------------     ------------     ------------

Dividends on preferred stock                         125,942           87,489          238,400          166,267
                                                ------------     ------------     ------------     ------------


Net loss attributable to common shareholders    $   (984,139)    $   (423,523)    $ (1,964,465)    $   (871,069)
                                                ------------     ------------     ------------     ------------
Net loss attributable to common shareholders
  Per share basic and diluted                   $      (0.09)    $      (0.04)    $      (0.18)           (0.09)
                                                ------------     ------------     ------------     ------------
Weighted average shares outstanding               10,784,847       10,172,187       10,714,087       10,030,176
                                                ------------     ------------     ------------     ------------
</TABLE>


           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       5
<PAGE>


                         TENGASCO, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                          Accumulated
                              Common Stock                   Other
                         --------------------   Additional  Compre-                                  Treasury Stock
                                                 Paid in    hensive    Accumulated   Comprehensive ------------------
                           Shares      Amount    Capital      Loss        Deficit        Loss      Shares     Amount       Total
                         ----------   -------  -----------  --------   ------------   -----------  ------   ---------   -----------
<S>                      <C>          <C>      <C>          <C>        <C>            <C>          <C>      <C>         <C>
Balance
  December 31, 2001      10,560,605   $10,561  $39,242,555             $(24,115,382)               14,500   $(145,887)  $14,991,847
Net Loss                          0         0            0               (1,726,065)                    0           0    (1,726,065)
Comprehensive Loss

  Net Loss                                                                            $(1,726,065)


    Other
      Comprehensive
      Loss

    Net Market
      Valuation
    Adjustment on
      Securities                                            $(75,000)                     (75,000)                          (75,000)
    Available
      for Sale
                                                                                      -----------
  Comprehensive Loss                                                                   (1,801,065)
                                                                                      ===========
Common Stock Issued in
  Private Placements        200,000       200    1,111,799                        0                     0           0     1,111,999
Common Stock Issued in
  Conversion of Debt         20,592        20      119,980                        0                     0           0       120,000
Common Stock Issued on
  Purchase of Equipment      19,582        20      149,980                        0                     0           0       150,000
Common Stock Issued
  for Services                8,500         9       48,611                                                                   48,620
Dividends on
  Convertible Redeemable
  Preferred Stock                 0         0            0                 (238,400)                    0           0      (238,400)
                         ----------------------------------------------------------   ---------------------------------------------
Net loss for the
  six months ended
  June 30, 2002          10,809,279   $10,810  $40,672,925  $(75,000)  $(26,079,847)               14,500   $(145,887)  $14,383,001
                         ==========================================================   =============================================
</TABLE>

           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       6
<PAGE>


                         TENGASCO, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                      For the Six    For the Six
                                                     Months Ended   Months Ended
                                                        June 30,     June 30,
                                                          2002         2001
                                                      (Unaudited)   (Unaudited)
                                                      -----------   -----------

Operating activities
  Net loss                                            $(1,726,065)  $  (704,802)
  Adjustments to reconcile net loss to net cash
  provided by (used in) operating activities:
  Depletion, depreciation and amortization                974,696       268,457
  Compensation paid in stock options and common stock      48,621        55,200
  Changes in assets and liabilities
    Accounts receivable                                   (58,044)     (367,082)
    Other current assets                                        0       (59,223)
    Accounts payable                                      (26,245)     (164,693)
    Accrued liabilities                                         0        (2,067)
    Accrued interest payable                               (5,825)      301,596
    Accrued dividends payable                              13,535         8,711
                                                      -----------   -----------

Net cash used in operating activities                    (779,327)     (663,903)
                                                      -----------   -----------

Investing activities
    Additions to property and equipment                  (118,356)     (130,554)
    Net additions to oil and gas properties            (1,020,026)   (2,064,812)
    Net additions to pipeline facilities                 (349,918)   (3,436,777)
    Decrease in restricted cash                            45,855             0
    Other assets                                          (22,108)       41,888
                                                      -----------   -----------

Net cash used in investing activities                  (1,464,553)   (5,590,255)
                                                      -----------   -----------

Financing activities
    Repayments of borrowings                           (1,268,608)     (667,816)
    Proceeds from borrowings                            1,018,356     1,000,000
    Dividends on convertible redeemable
      preferred stock                                    (238,400)     (166,267)
    Proceeds from private placements
      of common stock                                   1,111,998     4,460,766
    Proceeds from private placements
      of preferred stock                                1,328,168     1,755,000
                                                      -----------   -----------

Net cash provided by financing activities               1,951,514     6,381,683
                                                      -----------   -----------

Net change in cash and cash equivalents                  (292,366)      127,525

Cash and cash equivalents, beginning of period            393,451     1,603,975
                                                      -----------   -----------

Cash and cash equivalents, end of period              $   101,085   $ 1,731,500
                                                      ===========   ===========

           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       7
<PAGE>


                         TENGASCO, INC. AND SUBSIDIARIES
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


(1)       BASIS OF PRESENTATION

          The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information  and with the  instructions  to Form 10-Q and Item 210 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of management,  all adjustments (consisting
of only normal recurring accruals)  considered necessary for a fair presentation
have been  included.  Operating  results for the three  months or the six months
ended June 30, 2002 are not  necessarily  indicative  of the results that may be
expected for the year ended December 31, 2002. For further information, refer to
the Company's  consolidated  financial  statements and footnotes thereto for the
year ended  December 31, 2002,  included in the Company's  annual report on Form
10-K.

(2)       GOING CONCERN UNCERTAINTY

          The accompanying condensed consolidated financial statements have been
prepared in conformity  with  accounting  principles  generally  accepted in the
United States of America,  which  contemplate  continuation  of the Company as a
going  concern  which  assumes  realization  of assets and the  satisfaction  of
liabilities in the normal course of business. The Company continues to be in the
early  stages of its oil and gas related  operating  history as it  endeavors to
expand its operations  through the  continuation of its drilling  program in the
Tennessee  Swan Creek Field.  Accordingly,  the Company has incurred  continuous
losses  through  these  operating  stages  and  has an  accumulated  deficit  of
$26,079,847  and a working capital deficit of $6,271,272 as of June 30, 2002. On
April 5, 2002, the Company was informed by its primary lender that $6,000,000 of
its outstanding  credit facility was due and payable within 30 days, as provided
for  in  the  Credit  Agreement  between  the  Company  and  its  lender.  These
circumstances raise substantial doubt about the Company's ability to continue as
a going concern.

          The Company has disputed its obligation to make this payment under the
terms of the Credit Agreement. On May 2, 2002, the Company filed suit in Federal
Court to restrain  Bank One from taking  further  action  under the terms of the
Credit Agreement.  The Company is attempting to obtain alternative  financing to
replace Bank One.  There can be no assurance that the Company will be successful
in its  plans to  obtain  the  financing  necessary  to  satisfy  their  current
obligations. The Company has deferred loan costs relative to the Bank One credit
facility  which it is  amortizing  over the 36 month  term of the loan.  If this
credit facility is terminated,  the unamortized balance of deferred loan fees of
$410,216 at June 30, 2002 would be immediately expensed.

          The Company is reducing  this loan by $200,000 per month plus interest
which the Company contends is its correct obligation to Bank One pursuant to the
Credit Agreement.

                                       8
<PAGE>


(3)       SALES OF EQUIPMENT

          During  the  third  quarter  of  2001,  the  Company  sold  two  fully
depreciated compressors to Miller Petroleum,  Inc. ("Miller"),  a joint venturer
with the Company,  for  $150,000.  In exchange for this  equipment,  the Company
agreed to accept 150,000 shares of Miller's stock which had an approximate  fair
value of $1 per share.

          These investment securities are considered  available-for-sale and are
reported at their fair value,  with  unrealized  gains and losses  reported as a
separate  component of stockholders'  equity. At December 31, 2001, the cost and
fair value of available-for-sale  securities was $150,000. At June 30, 2002, the
fair value of these  available-for-sale  securities  was  $75,000.  The  related
unrealized loss of $75,000 during the three months ended June 30, 2002, has been
reflected in the accompanying Statement of Stockholders' Equity.

(4)       EARNINGS PER SHARE

          In  accordance  with SFAS No. 128,  "Earnings  Per  Share",  basic and
diluted loss per share are based on 10,784,847 and 10,172,187  weighted  average
shares outstanding for the quarters ended June 30, 2002 and 2001,  respectively.
Basic and diluted loss per share are based on 10,714,087 and 10,030,176 weighted
average  shares  outstanding  for the first six months  ended June 30,  2002 and
2001,  respectively.  The June 30, 2001 figures have been retroactively adjusted
to reflect  the 5% stock  dividend  declared as of  September  4, 2001 which was
distributed  on October 1, 2001.  During the three  month and six month  periods
ended June 30, 2002,  potential  weighted average stock  equivalent  outstanding
were  approximately  1,102,000 during both periods.  Potential  weighted average
common shares  outstanding  for the three month and six month periods ended June
30,  2001 were  1,490,000  and  1,506,000,  respectively.  These  shares are not
included in the  computation  of the diluted loss per share  amount  because the
Company  was  in  a  net  loss   position  and  their  effect  would  have  been
antidilutive.

(5)       NEW ACCOUNTING PRONOUNCEMENTS:

          In  July  2001,  the  Financial   Accounting  Standards  Board  issued
Statement  of  Financial   Accounting   Standard   (SFAS)  No.  141,   "Business
Combinations"  and SFAS No. 142, " Goodwill and Other Intangible  Assets".  SFAS
No. 141 addresses the initial  recognition and measurement of goodwill and other
intangible assets acquired in a business  combination and SFAS No. 142 addresses
the initial recognition and measurement of intangible assets acquired outside of
a business  combination  whether acquired  individually or with a group of other
assets. These standards require all future business combinations to be accounted
for  using  the  purchase  method  of  accounting.  Goodwill  will no  longer be
amortized but instead will be subject to impairment tests at least annually. The
Company would have been required to adopt SFAS No. 141 on July 1, 2001, and SFAS
142 on a prospective basis as of January 1, 2002. The Company has not effected a
business combination and carries no goodwill on its balance sheet;  accordingly,
the  adoption  of  these  standards  did not  have an  effect  on the  Company's
financial position or results of operations.

          In June 2001, the Financial  Accounting  Standards  Board approved the
issuance of SFAS No. 143,  "Accounting for Asset Retirement  Obligations."  SFAS
143  establishes  accounting  standards for the  recognition  and measurement of
legal obligations  associated with the retirement of

                                       9
<PAGE>


tangible long-lived assets and requires  recognition of a liability for an asset
retirement  obligation in the period in which it is incurred.  The provisions of
this  statement are effective for financial  statements  issued for fiscal years
beginning after June 15, 2002. The adoption of this statement is not expected to
have a  material  impact on the  Company's  financial  position  or  results  of
operations.

          SFAS No. 144,  Accounting for the Impairment or Disposal of Long-Lived
Assets,  addresses  accounting  and reporting for the  impairment or disposal of
long-lived  assets.  SFAS No. 144 supersedes  SFAS No 121,  "Accounting  for the
Impairment of Long-Lived  Assets and for  Long-Lived  Assets to be Disposed of".
SFAS No. 144 establishes a single  accounting model for long-lived  assets to be
disposed  of by sale and expands on the  guidance  provided by SFAS No. 121 with
respect  to cash  flow  estimations.  SFAS No.  144  becomes  effective  for the
Company's fiscal year beginning  January 1, 2002. The adoption of this statement
is not expected to have a material impact on the Company's financial position or
results of operations.

          In April  2002,  the FASB issued  Statement  of  Financial  Accounting
Standards  No. 145,  "Recision  of No. 4, 44, 64,  Amendment of SFAS No. 13, and
Technical  Correction." SFAS No. 4 which was amended by SFAS No. 64 required all
gains  and  losses  from  the  extinguishment  of debt to be  aggregated  and if
material  classified in an extraordinary  item net of related income tax effect.
As a result, the criteria in Opinion 30 will now be used to classify those gains
and losses.  SFAS No. 13 was amended to eliminate an  inconsistency  between the
required accounting for sale-leaseback  transactions and the required accounting
for certain lease  modifications  that have economic effects that are similar to
sale-leaseback  transactions.  The  adoption  of SFAS  No.  145  will not have a
current impact on the Company's consolidated financial statements.

          In July 2002, The Financial  Accounting  Standards Board (FASB) issued
No. 146, Accounting for Costs Associated with Exit or Disposal  Activities.  The
standard requires  companies to recognize costs associated with exit or disposal
activities  when they are incurred  rather than at the date of  commitment to an
exit or disposal plan.  Examples of costs covered by the standard  include lease
termination costs and certain employee  severance costs that are associated with
restructuring,  discontinued operation, plant closing, or other exit or disposal
activity.  Previous  accounting  guidance  was  provided by EITF Issue No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity  (including  Certain  Costs  Incurred in a  Restructuring)."
Statement 146 replaces Issue 94-3.

          Statement  146 is to be  applied  prospectively  to exit  or  disposal
activities  initiated  after  December 31, 2002.  The Company does not currently
have any plans for exit or disposal  activities,  and therefore  does not expect
this standard to have a material effect on the Company's  consolidated financial
statements upon adoption.

(6)       STOCK OPTIONS

          For the six months ended June 30, 2002,  no stock  options were issued
or exercised.  During the six months ended June 30, 2001,  the Company  extended
the exercise period of one employee's stock option who was retiring resulting in
recorded compensation of $55,200.

                                       10
<PAGE>


(7)       LETTER OF CREDIT AGREEMENT

          On November 8, 2001,  the Company  signed a credit  facility  with the
Energy  Finance  Division of Bank One,  N.A. in Houston,  Texas whereby Bank One
extended  to the Company a revolving  line of credit of up to $35  million.  The
initial borrowing base under the facility was $10 million.  The interest rate is
the Bank One base rate plus  one-quarter  percent  which at the present  time is
5.25%.

          On  November  9, 2001,  funds from this  credit  line were used to (1)
refinance   existing   indebtedness   on   the   Company's   Kansas   properties
($1,427,309.25);  (2) to repay the internal  financing provided by directors and
shareholders on the Company's  recently  completed 65-mile Tennessee  intrastate
pipeline system ($3,895,490.83);  (3) to repay a note payable to Spoonbill, Inc.
($1,080,833.34);  (4) to repay a purchase  money note due to M.E.  Ratliff,  the
Company's chief executive officer, for purchase by the Company of a drilling rig
and related equipment in the amount of ($1,003,844.44); and (5) to repay in full
the  remaining  principal  of the working  capital loan due December 31, 2001 to
Edward W.T.  Gray III,  who at that time was a director of the  Company,  in the
amount  $304,444.44.  All  of  these  obligations  incurred  interest  at a rate
substantially  greater than the rate being  charged by Bank One under the credit
facility.

          On April 5, 2002, the Company  received a notice from Bank One stating
that it had  redetermined  and  reduced  the  borrowing  base  under the  Credit
Agreement by  $6,000,000 to  $3,101,766.  Bank One demanded that the Company pay
the $6,000,000 within thirty days of the notice. The Company has filed a lawsuit
in Federal Court to prevent Bank One from exercising any rights under the Credit
Agreement.  No  further  developments  have  occurred  since  the  filing of the
lawsuit. (See Note 2)

(8)       SALES OF PREFERRED STOCK:

          During the three months  ended June 30, 2002,  the Company sold 14,491
shares of its Series C 6% Cumulative Convertible Redeemable Preferred Stock $100
Par Value  ("Series C Shares")  pursuant to a private  placement  offering which
terminated on July 15, 2002. Net proceeds of the offering, after issuance costs,
totaled $1,328,168.

(9)       SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

          During the six months ended June 30, 2002, the Company  converted debt
of  $120,000  into  20,592  shares of common  stock.  Additionally,  during this
period,  the Company  acquired  equipment  with a fair market  value of $150,000
through an exchange of 19,582 shares of common stock.

          Cash paid for  interest  during the six months ended June 30, 2002 and
2001 was approximately $253,351 and $274,876 respectively.

          The Company  issued 8,500 shares for payment of public  relations work
performed in the amount of $48,620.

                                       11
<PAGE>


(10)      LOAN PAYABLE TO RELATED PARTY

          During the second quarter of 2002,  the Company  received a short term
loan from an officer of the  Company to fund  operating  cash  deficiencies.  No
interest was charged on the loan, and the balance of $110,000 was repaid in July
2002.

                                       12
<PAGE>


ITEM 2    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS

          RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS

          KANSAS

          During  the second  quarter of 2002,  the  Company  produced  and sold
36,318  barrels of oil and 69,884 Mcf of natural gas from its Kansas  Properties
comprised  of  149  producing  oil  wells  and 59  producing  gas  wells.  April
production  was 11,661  barrels of oil and 24,422 Mcf of gas. May production was
11,869 barrels and 20,754 Mcf. June production was 12,788 barrels and 24,708 Mcf
of gas.  The second  quarter  production  of oil of 36,318  barrels  compares to
35,806  barrels  produced  in the first  quarter  of 2002.  The  second  quarter
production  of 69,884 Mcf of gas  compares  to 76,899 Mcf  produced in the first
quarter.  In summary,  the second quarter  production  reflected expected stable
production levels as compared to first quarter  production from these properties
that have been in production for many years.

          TENNESSEE

          During the second  quarter of 2002,  the Company  produced gas from 25
wells in the Swan Creek field which it sold to its two  industrial  customers in
Kingsport,  Tennessee,  BAE  SYSTEMS  Ordnance  Systems  Inc. as operator of the
Holston Army Ammunition Plant ("BAE") and Eastman Chemical Company ("Eastman").

          Declines in production in the Swan Creek Field experienced in the last
quarter of 2001 and the first  quarter of 2002 began to  stabilize in March 2002
at  approximately  2.5 million cubic feet per day as additional work and repairs
to eliminate fluid problems in the wells which had obstructed and  significantly
reduced  the flow of gas were  completed.  Although  the  Company was capable of
continuing  to deliver this amount of gas on a daily basis,  volumes of gas sold
to BAE and  Eastman  in the  second  quarter  declined  in the first part of the
quarter primarily due to factors beyond the Company's control.  First, for three
weeks in April 2002 and the first week of May 2002, BAE did not purchase any gas
from the Company due to its own internal  production  scheduling and in order to
allow it to connect additional gas burning facilities to its operations. Second,
the  Company  was unable to  schedule  delivery  of the  volumes of gas it would
ordinarily  sell to BAE on such short notice to its other  customers,  including
Eastman. As a result of these factors,  daily average production sold to Eastman
and BAE in the second  quarter  ranged from  approximately  1,872 MCF per day in
April  2002  to  2,552  MCF per day in  June  2002.  However,  by the end of the
quarter,  the volumes of gas being sold by the  Company to BAE and Eastman  were
virtually  the same as had been  sold in  March,  2002.  Actual  volumes  of gas
produced  during the  quarter  were  58,320 Mcf in April,  68,937 Mcf in May and
76,589 Mcf in June.

          Similarly,  for a period from June 28, 2002 through July 29, 2002, the
Company's other industrial customer,  Eastman,  temporarily ceased its purchases
from the Company  because the Company was delivering  most of its then available
volumes to supply BAE's newly increased requirements.  The Company was unable to
sell all  volumes of gas  exceeding  BAE's  increased  requirements  to Eastman,
although the Company was able to produce these volumes, because Eastman requires
a minimum for its meters that  available  volumes did not exceed,  and a uniform
rate

                                       13
<PAGE>


of delivery  that taking short term  volumes  would  interrupt.  During the time
Eastman was not purchasing gas from the Company,  BAE purchased these additional
volumes until BAE  experienced a partial  equipment  outage on July 15, 2002 and
reduced its purchased  volumes.  As a result of these occurrences which were not
within the control of the Company, the Company's sales volume to BAE and Eastman
in July,  2002 was  42,382  Mcf or an  average  of  1,367  Mcf per day.  Eastman
recommenced  its purchases of gas from the Company on July 29, 2002. The Company
has utilized these respective periods of temporary reduction of sales volumes to
add additional metering and regulating  facilities to the pipeline facilities at
BAE SYSTEMS.  Together with the existing  metering and regulating  facilities at
Eastman, the Company anticipates that it will now be able to more rapidly adjust
the delivered  quantities  between its  industrial  customers in order to assure
that the gas  deliverable  on a daily  basis from the Swan Creek Field may be in
fact  delivered to at least one of its customers  despite  temporary  short-term
fluctuations in the other customer's requirements. This capability will have the
additional  beneficial  effect of more  effectively  stabilizing  the production
rates from the Company's gas wells.  The Company is presently  delivering gas to
both BAE and  Eastman  at the full  current  deliverability  from the Swan Creek
field and expects  daily  deliveries to continue at full  production  rates with
minor, if any, future interruptions as a result of fluctuation in one customer's
usage requirements.

          During the second quarter,  the Company  commenced  drilling three new
wells  in  the  Swan  Creek  field  to  increase   production   capability   and
deliverability to BAE and Eastman.

          The  Company  has  completed  redrilling  of the  Colson No. 2 well to
deepen it and recomplete it as a gas well. This well was perforated on April 26,
2002 and exhibited a 1350psi  bottom hole  pressure.  This well was brought into
production gradually to maximize the amount of gas that can be produced from the
well, and is producing  between 300,000 and 500,000 cubic feet of gas per day as
expected upon being placed into full production.

          The  Company  has  drilled  the Paul Reed No. 8 well in the Swan Creek
field.  On July 1,  2002,  this  well was  drilled  to a depth of 4600  feet and
although gas was present,  based on information  acquired during  drilling,  the
Company  determined  that it was more economical to complete this well as an oil
well in the  Murfreesboro  and Stone River  formations  at a depth of  2500-3200
feet.  The Company is in the final stages of completing  the well and thereafter
determining the level of expected oil production.

          The  Company  has  drilled  the Paul Reed No. 9 well in the Swan Creek
field to a total depth of 4860 feet and  completed  the well as a gas well.  The
well will be connected to the Company's pipeline in August, 2002 and is expected
to produce approximately 400,000 cubic feet of gas per day.

          The  Company  hopes to drill  several  more new wells  within the Knox
formation in the Swan Creek field.  Because the Knox  formation has been defined
by the accumulation of data from the previously drilled wells, new locations and
new wells are expected to  contribute  significantly  to achieving  increases to
production  totals.  The Company is hopeful that production from these new wells
will be in line with the  production  from its best  existing  wells in the Swan
Creek Field and will have a noticeable effect on increasing the total production
from the Field.  Although no assurances can be made, the Company  believes that,
once this work is completed and the new wells are drilled,  production  from the
Swan Creek Field will  substantially  increase by the end of 2002.  Although the


                                       14
<PAGE>


Company is continuing with its drilling program,  the Company currently does not
have  sufficient  funds  to  complete  its  drilling  program.  The  Company  is
attempting to obtain  financing to complete the drilling program and believes it
will be able to do so,  however,  there is no guarantee that the Company will be
able to do so.

          The wildcat well drilled by the Company in Cocke County, Tennessee, 40
miles  southeast of its producing Swan Creek oil and gas field in Hancock County
in a joint venture with Southeast Gas & Oil Corp.,  Newport,  Tennessee  reached
its  target  depth  of 3690  feet on June  30,  2002  but  failed  to  encounter
hydrocarbons in commercial quantities.  However,  indications of the presence of
oil and gas in noncommercial quantities were found, and the Company may consider
additional  exploration activities in the area based on the information acquired
from the drilling of this well.

          The Company also intends to commence  drilling in other  formations in
its Swan Creek Field.  To date,  drilling in the Swan Creek Field has focused on
production of gas primarily from the Knox formation.  This is a lower Ordovician
Dolomite,  and the heart of the  anticline  structure  at Swan  Creek.  However,
immediately  adjacent to this formation and shallower over these  formations are
other  formations  which the Company believes have potential for gas production.
The Stones River and Trenton  formations  hold the  possibility for both oil and
gas and have produced some gas to date. These Upper  Ordovician  formations have
not been a primary target for gas  production,  but the shallower  depths needed
for drilling and the moderate gas production might make a potential  significant
source for  additional gas  production.  With the completion of only one well in
the Trenton  formation  which is  producing  approximately  100 Mcf per day, the
impact of these targets is has not yet been  defined.  The Company also plans to
drill a 12,000 to 15,000 feet deep test well in the Company's  Swan Creek field,
which the Company  believes may have high potential for  significant  additional
volumes of natural  gas. The current  wells in this field are all  approximately
5,000 feet deep.  Although the Company had  expected to commence  drilling on or
before  December 31, 2002,  the Company now  anticipates  that  drilling will be
postponed until  additional  funds become  available and the dispute between the
Company and its primary lender Bank One are resolved.  See Liquidity and Capital
Resources, below.

          COMPARISON OF THE QUARTERS ENDING JUNE 30, 2002 AND 2001

          The Company  recognized  $1,233,473  in oil and gas revenues  from its
Kansas  Properties  and the Swan Creek Field  during the second  quarter of 2002
compared to $1,785,280 in the second  quarter of 2001.  The decrease in revenues
was due to the  following  reasons:  Swan  Creek  Field gas prices in the second
quarter  of 2001  averaged  $4.36 per Mcf and only  $3.39 per Mcf in the  second
quarter of 2002.  Production  was  approximately  the same  during the  quarters
ending June 30, 2002 and 2001.  The Swan Creek  Field  produced  192,960 Mcf and
212,401  Mcf in the  second  quarter of 2002 and 2001,  respectively.  The price
decrease also affected  Kansas gas sales.  In total gas sales decreased for both
Kansas and Swan Creek Field by approximately $400,000. Swan Creek oil production
decreased  from 6,667  Bbls in the  second  quarter of 2001 to 600 Bbls in 2002.
This was due to the Company's  best oil wells being  shut-in  during the quarter
while the  Company  was in the  process  of  performing  well  work-overs.  This
resulted  in an  additional  decrease in  revenues  of  approximately  $112,000.
Revenues  during  this  period  were  affected  by losses on hedging  activities
totaling $120,000 during the three months ended June 30, 2002.

                                       15
<PAGE>


          The Company realized a net loss attributable to common shareholders of
$984,139  ($0.09 per share of common stock) during this period compared to a net
loss in the second quarter of 2001 to common shareholders of $423,523 ($0.04 per
share of common stock).

          Production  costs and taxes in the second  quarter of 2002 of $545,505
were lower when compared to $619,095 in the second quarter of 2001. The decrease
is due primarily to lower  maintenance costs in the Kansas  operations,  as only
necessary maintenance procedures were performed.

          Depreciation,  Depletion,  and  Amortization  expense  for the  second
quarter of 2002 was $487,348 compared to $170,957 in the second quarter of 2001.
This increase is primarily  due to  significant  increases in depletion  expense
during the second quarter of 2002 ($250,000) as a result of decreases in reserve
estimates on oil and gas properties arising from declining  commodity prices and
certain of the Company's gas wells had decreased  production  levels at year-end
due to problems encountered with liquids in the wells. This decreased production
level at  year-end  was  factored  into the  estimated  future  proved  reserves
calculation  performed on December 31, 2001,  resulting in a lower future proved
reserve estimate. The December 31, 2001 Ryder Scott reserve report was used as a
basis for the 2002  estimate.  The Company  reviews its  depletion  analysis and
industry  oil and gas prices on a quarterly  basis to ensure that the  depletion
estimate is  reasonable.  Additionally,  the Company  took  depreciation  on its
pipeline in the second quarter of 2002 of $127,168,  while in the second quarter
of 2001 the depreciation was only $63,584 as the Company only used one-half year
depreciation in the first year of service. The Company also amortized $43,180 of
loan fees relating to the Bank One note.

          Interest  expense  for the  second  quarter  of 2002 was  $148,297  as
compared  to  $251,090 in the second  quarter of 2001.  This  decrease is due to
reduced  interest  rates on the Bank One debt compared to the interest  rates on
debt  associated  with financing for the completion of Phase II of the Company's
65-mile pipeline.

          During the second  quarter  the  Company  has  reduced its general and
administrative  costs significantly from 2001.  Management has made an effort to
control costs in every aspect of its  operation.  Some of these cost  reductions
included the closing of the New York office and a reduction  in  personnel  from
2001  levels.  The second  quarter  of 2001 was higher  than usual due to public
relations  cost  associated  with producing the Company's  annual report,  proxy
statement  and  press  releases.   The  Company  also  incurred  a  compensation
adjustment of $55,200 in the second quarter of 2001 resulting from the extension
of the exercise period for options granted to an employee.

          Professional fees have increased dramatically due to cost incurred for
legal and accounting  services as a result of the Bank One lawsuit.  Recovery of
these fees will be included as part of Tengasco's lawsuit against Bank One.

          Dividends on preferred  stock have  increased  from $87,489 in 2001 to
$125,942 in 2002 as a result of the  increase in the amount of  preferred  stock
outstanding from new private  placements  occurring during the second quarter of
2002.  Additionally,  the Series B private placement was not outstanding  during
the entire second quarter of 2001.

                                       16
<PAGE>


          COMPARISON OF THE SIX MONTH PERIODS ENDING JUNE 30, 2002 AND 2001

          The Company  recognized  $2,408,917  in oil and gas revenues  from the
Kansas and Swan Creek oil and gas  fields  during the six months  ended June 30,
2002  compared  to  $3,214,111  for the six  months  ended June 30,  2001.  This
$805,194 decrease in revenues was due to the following reasons: Kansas gas sales
decreased  approximately $490,000 due to price decreases in the first six months
of 2002. Gas production  volumes in Kansas remained constant as 146,783 Mcf were
produced in 2002  compared to 157,710 Mcf in 2001.  Also oil  revenues in Kansas
decreased by approximately $170,000 due to price decreases,  whereas the volumes
remained consistent. The Kansas oil field produced 78,256 Bbls of oil in 2001 as
compared to 72,124 in 2002.  The third  reason for the  decrease in revenues was
due to a decrease in Swan Creek oil production from 20,582 Bbls in 2001 to 5,063
Bbls in 2002. This resulted in  approximately a $290,000  decrease in oil sales.
The  decrease  in  production  was  because  the  Company  was in the process of
performing well work-overs on its best wells in Swan Creek. During the first six
months of 2002,  the  Company  produced  408,593  Mcf of gas from its Swan Creek
Field as compared to 212,401 Mcf in 2001, which partially offset the decrease in
revenues.  The increase in production  from the previous year is attributable to
production  not  beginning  until April 2001,  when the pipeline was  completed.
Revenues   were  also  affected  by  losses  on  hedging   activities   totaling
approximately $160,000 during the six month period ended June 30, 2002.

          The  Company  incurred  a net loss  attributable  to holders of common
stock of  $1,964,465  ($0.18 per share) in the first six months of 2002 compared
to a net loss of $871,069 ($0.09 per share) in 2001.

          Depletion,  Depreciation  and  Amortization  costs  have  dramatically
increased from $268,457 in 2001 to $974,696 in 2002 due to  depreciation  on the
pipeline  and an increase in the  depletion  estimate as  explained in the three
month  comparison.  The Company also amortized  $86,360 of loan fees relating to
the Bank One note.

          Interest  costs for 2002 decreased  slightly from 2001 levels,  due to
reduced interest rates with Bank One.  However,  interest costs of approximately
$148,000 were capitalized in the first three months of 2001 during  construction
of the pipeline which resulted in lower interest expenses during that period.

          General and Administrative Costs have been reduced  significantly from
2001 levels as the Company has made an effort to control  levels as explained in
the three month comparison.

          Professional fees have increased dramatically due to cost incurred for
legal and  accounting  services as a result of the Bank One lawsuit.  These fees
will be included as part of Tengasco's lawsuit against Bank One.

          Dividends on preferred  stock has  increased  from $166,267 in 2001 to
$238,400 in 2002 as a result of the  increase in the amount of  preferred  stock
outstanding.

                                       17
<PAGE>


          LIQUIDITY AND CAPITAL RESOURCES

          On November 8, 2001,  the Company signed a credit  facility  agreement
(the "Credit  Agreement")  with the Energy Finance Division of Bank One, N.A. in
Houston  Texas ("Bank One") whereby Bank One extended to the Company a revolving
line of credit of up to $35 million. The initial borrowing base under the Credit
Agreement  was $10  million.  As of March  31,  2002 the  outstanding  principal
balance of the loan was  $9,301,776.66.  A payment  was made on April 1, 2002 to
reduce the outstanding balance to $9,101,776.66.

          On or about April 5, 2002, the Company received a notice from Bank One
stating that it had redetermined and reduced the borrowing base under the Credit
Agreement  to  $3,101,776.66   and  required  a  $6  million  reduction  of  the
outstanding  loan. The notice did not provide any  explanation why the reduction
was made or as to how the reduction was  calculated.  Bank One demanded that the
Company pay the $6 million within thirty days of the receipt of the notice.

          It is the  position of the Company  that  pursuant to the terms of the
Credit  Agreement Bank One had no right to redetermine  the borrowing base until
it received a December 1, 2002 reserve  analysis,  and then only if the value of
the reserves was  inadequate  after applying the same guideline used with all of
its other oil and gas borrowers. The schedule of reserve reports required by the
Credit  Agreement  upon  which  such  re-determinations  are  to be  based  also
specifically  sets up a  procedure  involving  an  automatic  monthly  principal
payment of  $200,000  commencing  February 1, 2002.  The  Company  has  remained
current in payments of this monthly reduction through August 1, 2002. As of June
30, 2002, the outstanding balance was $8,701,776.66.

          As a result of Bank One's  unexpected  reduction of the borrowing base
and the corresponding  demand for payment of $6 million,  combined with the fact
that the  Company  is still in the  early  stages  of its oil and gas  operating
history during which time it has had a history of losses from operations and has
an  accumulated  deficit  of  $25,095,708  and  a  working  capital  deficit  of
$6,507,649 as of March 31, 2002,  the  Company's  ability to continue as a going
concern would be uncertain.  The Company's  independent  auditors indicated this
going  concern  uncertainty  in  their  report  on the  audit  of the  Company's
consolidated  financial  statements  for the year ended  December 31, 2001.  The
Company's  ability to continue as a going  concern  depends  upon its ability to
obtain long-term debt or raise capital and satisfy its cash flow requirements.

          On May 2, 2002, the Company filed suit in Federal Court in the Eastern
District of  Tennessee,  Northeastern  Division  at  Greeneville,  Tennessee  to
restrain Bank One from taking any steps  pursuant to its Credit  Agreement  with
the Company to enforce its demand that the Company reduce its loan obligation or
else be deemed in default and for damages resulting from the wrongful demand. It
is the position of the Company  that Bank One's  demand that the Company  reduce
its loan from  $9,101,776.66 to $3,101,776.66  within thirty days,  coming as it
does only four months  after the loan was made,  in the absence of any change in
the Company's production of oil and gas from the time the loan was closed or the
condition of the Company's assets,  without any warning and prior to the receipt
of the December  2002 reserve  report,  without any basis or  explanation,  is a
violation  of the terms of the Credit  Agreement  and an act of bad  faith.  The
Company is seeking a jury trial and actual  damages  sustained by it as a result
of this

                                       18
<PAGE>


arbitrary,  wrongful demand,  in the amount of $51,000,000 plus punitive damages
in the amount of $100 million.

          On July 1, 2002, Bank One filed its answer and counterclaim,  alleging
that its actions were proper under the terms of the Credit Agreement, and in the
counterclaim,  seeking  to recover  all  amounts it alleges to be owed under the
Credit Agreement, including principal, accrued interest, expenses and attorney's
fees in the  approximate  amount of $9  million.  Bank One did not  contest  the
jurisdiction  or  venue of the  Tennessee  federal  court in which  the case was
filed.

          The  Company  and Bank One have  engaged in efforts to reach an agreed
upon resolution of the matters raised in the lawsuit filed by the Company but to
date no agreement has been reached and  therefore the filed  litigation is being
actively pursued.  The Company has not,  however,  terminated the possibility of
additional  discussion and would consider a satisfactory  agreed upon resolution
of the matter.  Initial  disclosures are being made and depositions are expected
to commence by late summer of 2002. No hearings have occurred or been  scheduled
in the court  proceeding.  The  Company  has  filed  initial  written  discovery
requests from Bank One. No trial date has been set.

          On April 26, 2002,  the Board of Directors  authorized the issuance by
private  placement  offering  of a new series of  preferred  stock,  Series C 6%
Cumulative  Convertible  Preferred Stock ("Series C Shares") in a minimum amount
of $1 million  and a maximum  amount of $5  million.  During the second  quarter
14,491  Series C Shares were sold  raising  $1,449,100.  The net revenues to the
Company from the offering,  after issuance costs, were $1,328,168.  The offering
was closed on July 15, 2002.  The capital raised from the offering is being used
to provide funds to pay for reworking of wells, to continue the drilling program
in the Swan Creek Field to increase production, and to provide working capital.

                                       19
<PAGE>


ITEM 3    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS

          COMMODITY RISK

          The Company's major market risk exposure is in the pricing  applicable
to its oil and gas  production.  Realized  pricing  is  primarily  driven by the
prevailing  worldwide price for crude oil and spot prices  applicable to natural
gas  production.  Historically,  prices received for oil and gas production have
been volatile and  unpredictable  and price  volatility is expected to continue.
Monthly  oil price  realizations  for the first six months of 2002 ranged from a
low of $15.20 per barrel to high of $24.77 per  barrel.  Gas price  realizations
ranged  from a monthly  low of $1.91 per Mcf to a monthly  high of $3.40 per Mcf
during the same period.

          As required by its Credit  Agreement with Bank One the Company entered
into hedge  agreements  on  December  28,  2001 on  notional  volumes of oil and
natural gas  production  for the first  seven  months of 2002 in order to manage
some exposure to oil and gas price  fluctuations.  Realized gains or losses from
the Company's  price risk  management  activities  are recognized in oil and gas
production revenues when earned since the Company's positions are not considered
hedges for financial  reporting  purposes.  Notional volumes associated with the
Company's  derivative  contracts are 27,000 barrels and 630,000  MMBtu's for oil
and natural  gas,  respectively.  The Company does not  generally  hold or issue
derivative  instruments for trading purposes.  These hedge agreements expired in
June 2002 and have not been renewed.  Hedging  activities  resulted in a loss to
the Company of approximately $160,000 during the six months ended June 30, 2002.

          At December 31,  2001,  the  Company's  open natural gas and crude oil
price swap positions are not considered to have a material fair value.  Assuming
natural gas production and sales volumes remain  consistent  with levels for the
month of  December  2001  during  the  entire  year of fiscal  2002,  management
believes  that a 10 percent  decrease in natural gas prices from June 2002 price
levels would reduce the Company's natural gas revenues by approximately $497,000
on an annual basis.  Assuming  crude oil  production  and sales  volumes  remain
consistent  with levels for the month of December 2001 during the entire year of
fiscal 2002,  management believes that a 10 percent decrease in crude oil prices
from June 2002 price  levels would  reduce the  Company's  crude oil revenues by
approximately $382,000 on an annual basis.

          INTEREST RATE RISK

          At June 30, 2002, the Company had debt  outstanding  of  approximately
$9.9 million. The interest rate on the revolving credit facility of $8.7 million
is variable  based on the  financial  institution's  prime rate plus 0.25%.  The
remaining  debt of $1.2 million has fixed  interest  rates  ranging from 7.5% to
11.95%. As a result, the Company's annual interest costs in 2002 would fluctuate
based on  short-term  interest  rates on  approximately  88% of its  total  debt
outstanding  at March 31, 2002.  The impact on annual  interest  expense and the
Company's  cash flows of a 10 percent  increase in the  financial  institution's
prime rate  (approximately  .5 basis  points)  would be  approximately  $50,000,
assuming borrowed amounts under the credit facility remain at $8.7 million.  The
Company did not have any open derivative contracts relating to interest rates at
June 30, 2002.

                                       20
<PAGE>


          FORWARD-LOOKING STATEMENTS AND RISK

          Certain statements in this report,  including statements of the future
plans, objectives,  and expected performance of the Company, are forward-looking
statements that are dependent upon certain events,  risks and uncertainties that
may be outside the Company's  control,  and which could cause actual  results to
differ  materially from those  anticipated.  Some of these include,  but are not
limited  to,  the  market  prices  of oil  and  gas,  economic  and  competitive
conditions,  inflation  rates,  legislative  and regulatory  changes,  financial
market conditions,  political and economic uncertainties of foreign governments,
future business decisions,  and other uncertainties,  all of which are difficult
to predict.

          There are numerous  uncertainties inherent in estimating quantities of
proved oil and gas reserves and in projecting future rates of production and the
timing of development expenditures.  The total amount or timing of actual future
production may vary significantly from reserves and production estimates.

          The  drilling  of  exploratory  wells can involve  significant  risks,
including  those related to timing,  success rates and cost overruns.  Lease and
rig availability, complex geology and other factors can also affect these risks.
Additionally,  fluctuations in oil and gas prices,  or a prolonged period of low
prices,  may substantially  adversely affect the Company's  financial  position,
results of operations and cash flows.

                                       21
<PAGE>


PART II   OTHER INFORMATION


ITEM 1    LEGAL PROCEEDINGS

          On May 2, 2002, the Company filed suit in Federal Court in the Eastern
District of  Tennessee,  Northeastern  Division  at  Greeneville,  Tennessee  to
restrain Bank One from taking any steps  pursuant to its Credit  Agreement  with
the Company to enforce its demand that the Company reduce its loan obligation or
else be deemed in default and for damages resulting from the wrongful demand. It
is the position of the Company  that Bank One's  demand that the Company  reduce
its loan from  $9,101,776.66 to $3,101,776.66  within thirty days,  coming as it
did only four  months  after the loan was made,  in the absence of any change in
the Company's production of oil and gas from the time the loan was closed or the
condition of the Company's assets,  without any warning and prior to the receipt
of the December  2002 reserve  report,  without any basis or  explanation,  is a
violation  of the terms of the Credit  Agreement  and an act of bad  faith.  The
Company is seeking a jury trial and actual  damages  sustained by it as a result
of this arbitrary,  wrongful demand,  in the amount of $51,000,000 plus punitive
damages  in the  amount of $100  million.  On July 1,  2002,  Bank One filed its
answer and  counterclaim,  alleging that its actions were proper under the terms
of the Credit Agreement, and in the counterclaim, seeking to recover all amounts
it alleges to be owed under the Credit Agreement,  including principal,  accrued
interest,  expenses and attorney's fees in the approximate amount of $9 million.
No hearings have occurred or been scheduled in the court proceeding. The Company
has filed initial  written  discovery  requests from Bank One. No trial date has
been set.

          On  July  29,  2002,  the  Chancery  Court  granted  summary  judgment
confirming an  arbitration  award dated October 30, 2001.  The  arbitration  was
between the Company's  wholly owned  subsidiary  Tengasco  Pipeline  Corporation
("TPC") and King Pipeline & Utility  Company  ("King"),  the  contractor for the
construction  of Phase  II of the  Company's  pipeline  and  concerned  disputes
concerning final billings by King for the pipeline construction. The award found
that King was entitled to recover the sum of $266,390.66  for straw matting work
performed by King;  that King was entitled to retain the $72,500 payment made to
it by TPC for clearing and grubbing work, and that King be awarded its attorneys
fees of  approximately  $14,000 plus interest at the statutory rate from date of
the award.  TPC moved for relief  from the award in the  Chancery  Court in Knox
County,  Tennessee,  and King moved for  confirmation of the award by the Court.
Formal entry of the judgment is expected by August 16,  2002.  Pending  entry of
judgment,  the parties are engaged in  settlement  discussions  and a settlement
appears likely at a discount from the amount granted in the award.  In the event
settlement is concluded,  no appeal of the trial  court's order  confirming  the
award would be taken by TPC. If no settlement  is concluded,  TPC will appeal on
all available grounds. In the event of settlement or an unfavorable result on an
appeal,  and payment is made to settle or satisfy  the award,  then based on the
evidence  presented at the  arbitration  hearing,  the Company and TPC intend to
seek recovery of the payments  made to King as an additional  element of damages
being sought from Caddum, Inc., the project engineer,  in the action now pending
in the United  States  District  Court for the  Eastern  District  of  Tennessee
entitled C.H.  FENSTERMAKER & ASSOCIATES,  INC. V. TENGASCO,  INC., which is set
for trial in February,  2003. Potential exposure of approximately  $300,000 will
be accrued and added to the pipeline asset once all matters above are resolved.

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<PAGE>


ITEM 2    CHANGES IN SECURITIES AND USE OF PROCEEDS

          During the second  quarter of 2002,  the Company sold 14,491 shares of
its Series C 6%  Cumulative  Convertible  Preferred  stock ($100 par value) (the
"Series C Shares") to nine investors  pursuant to a private  placement  offering
under Rule 506 of  Regulation  D  promulgated  by the  Securities  and  Exchange
Commission.  The number of shares of the  Company's  Common Stock into which the
Series C Shares are convertible assuming the floor conversion price of $5.00 per
share is 289,820. The offering raised $1,449,100. The net proceeds of the offer,
after net of  issuance  cost,  which  totaled  $1,328,168,  is being used by the
Company for its drilling program in the Swan Creek Field and working capital, as
the Company deems appropriate.

          During the second quarter of 2002, 100,000 shares of restricted common
stock were sold to Bill L. Harbert, a Director of the Company who at the time of
the  transaction was not a Director in a private  placement,  10,296 shares were
issued  pursuant to the conversion of convertible  notes by several  individuals
and 8,500 shares were issued for payment for public relations work performed.

ITEM 3    DEFAULTS UPON SENIOR SECURITIES

          None.

ITEM 4    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          (a) The annual meeting of stockholders of the Company was held on June
27, 2002.

          (b) The first item voted on was the election of  Directors.  Joseph E.
Armstrong, Benton L. Becker, Bill L. Harbert, Robert D. Hatcher, Jr., Malcolm E.
Ratliff and Charles  Stivers were elected as Directors of the Company for a term
of one year or until their successors were elected and qualified. The results of
voting  were as  follows:  7,065,570  votes for Joseph E.  Armstrong  and 55,898
withheld;  7,065,680  votes for Benton L.  Becker and 55,788  withheld;7,065,643
votes for Bill L.  Harbert  and  55,825  withheld;7,065,538  votes for Robert D.
Hatcher,  Jr. and 55,930  withheld;  7,007,500  votes for Malcolm E. Ratliff and
113,968 withheld; and, 7,062,830 votes for Charles Stivers and 58,638 withheld.

          A majority  of votes at the  meeting  having  voted for them,  Messrs.
Armstrong,  Becker, Harbert,  Hatcher,  Ratliff and Stivers were duly elected as
Directors of the Company.

          (c) The  next  item  of  business  was  the  proposal  to  ratify  the
appointment of BDO Seidman, LLP, the independent certified public accountants of
the Company, for fiscal 2002. The results of the voting were as follows:

                           7,099,365 votes for the resolution,
                           13,408 votes against and
                           8,695 votes abstained.

          A  majority  of the votes  cast at the  meeting  having  voted for the
resolution, the


                                       23
<PAGE>


resolution was duly passed.

          No other matters were voted on at the meeting.

ITEM 5    OTHER INFORMATION

          None.

                                       24
<PAGE>


                                   SIGNATURES

          Pursuant to the  requirements  of the  Securities  and Exchange Act of
1934, the  registrant  duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.

          Dated: August 13, 2002                TENGASCO, INC.


                                                By: /s/ JEFFREY R. BAILEY
                                                    --------------------------
                                                        Jeffrey R. Bailey
                                                        President



                                                By: /s/ MARK A. RUTH
                                                    --------------------------
                                                        Mark A. Ruth
                                                        Chief Financial Officer

          Pursuant  to Section  906 of the  Sarbanes-Oxley  Act of 2002 I hereby
certify that:

          (A)       I have reviewed the Quarterly Report on Form 10-Q;

          (B)       To the best of my knowledge  this  Quarterly  Report on Form
10-Q (i) fully complies with the  requirements  of section 13(a) or 15(d) of the
Securities and Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d));  and, (ii) the
information  contained in this Report fairly presents, in all material respects,
the financial  condition  and results of  operations  of Tengasco,  Inc. and its
Subsidiaries during the period covered by this Report.



                                                 /s/ MALCOLM E. RATLIFF
                                                 ------------------------------
                                                     Malcolm E. Ratliff
                                                     Chief Executive Officer

          Pursuant  to Section  906 of the  Sarbanes-Oxley  Act of 2002 I hereby
certify that:

          (A)       I have reviewed the Quarterly Report on Form 10-Q;

          (B)       To the best of my knowledge  this  Quarterly  Report on Form
10-Q (i) fully complies with the  requirements  of section 13(a) or 15(d) of the
Securities and Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d));  and, (ii) the
information  contained in this Report fairly presents, in all material respects,
the financial  condition  and results of  operations  of Tengasco,  Inc. and its
Subsidiaries during the period covered by this Report.


                                                 /s/ MARK A. RUTH
                                                 ------------------------------
                                                 Mark A. Ruth
                                                 Chief Financial Officer

                                       25