UNITED STATES SECURITES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-KSB/A

               [X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                              For Fiscal Year Ended
                                December 31, 2003

                            Commission File #0-30503
                          PANGEA PETROLEUM CORPORATION
             (Exact name of registrant as specified in its charter)

                                    COLORADO
         (State or other jurisdiction of incorporation or organization)

                                   76-0635938
                      (IRS Employer Identification Number)

                5850 San Felipe, Suite 500, Houston, Texas 77057
               (Address of principal executive offices)(Zip Code)

                                 (713) 706-6350
               (Registrant's telephone no., including area code)

   (Former name, former address and former fiscal year, if changed since last
                                    report)

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: None

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: Common Stock, $0.001
Par Value

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 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 not contained in this form, and no disclosure  will be contained,
to the best of the  registrant's  knowledge,  in definitive proxy or information
statements  incorporated  by reference in Part III of this Form  10-KSB/A or any
amendment to this Form 10-KSB/A. (X)

Revenues for year ended December 31, 2003:  $33,187.  Aggregate  market value of
the voting common stock held by  non-affiliates of the registrant as of March 5,
2004 was  $1,595,820.24  Number  of  shares  of the  registrant's  common  stock
outstanding as of March 5, 2004 was 138,895,962.

                                     Page 1
<PAGE>

                               TABLE OF CONTENTS



                                     PART I

Item 1.  Description of Business


Item 2.  Properties

Item 3.  Legal Proceedings

Item 4.  Submission of Matters to a Vote of Security Holders


                                    PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

Item 6.  Management's Discussion and Analysis or Plan of Operations

Item 7.  Financial Statements and F-1

Item 8.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

Item 8A. Controls and Procedures

                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act

Item 10. Executive Compensation

Item 11. Security Ownership of Certain Beneficial Owners and Management

Item 12. Certain Relationships and Related Transactions

Item 13. Exhibits and Reports on Form 8-K

Item 14. Principal Accountant Fees and Services


SIGNATURES

                                     Page 2
<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL INFORMATION ABOUT PANGEA

Pangea Petroleum  Corporation  ("Pangea" or "Company"),  a Colorado corporation,
was  organized  on March 11, 1997.  Pangea is located at 5850 San Felipe,  Suite
500,  Houston,   Texas  77057.   Pangea's  company  website  can  be  viewed  at
www.pangeapetroleum.com.  Pangea is a publicly  traded company listed on the OTC
Electronic  Bulletin  Board under the symbol  "PAPO".  Pangea  currently  has no
subsidiaries. Pangea had acquired a subsidiary, Mass Energy, in October of 2000;
however, this subsidiary was unprofitable and was sold in September of 2002.

BUSINESS STRATEGY

Pangea is an independent  energy company  focused on exploration and development
of oil and natural gas reserves in the onshore United  States,  primarily on the
Gulf Coast.  The company has crafted a business model  specifically  designed to
exploit the unique  opportunities  currently available to small companies in the
domestic  oil  and  gas  industry.  Pangea's  basic  philosophy  is that it will
maximize potential success by focusing on shallow, less expensive prospects with
quality data.  Through the  development  of strong  relationships  with industry
partners,   Pangea  has  been  able  to   assemble  a  large  pool  of  prospect
opportunities,  which  have  been  rigorously  evaluated  to  identify  the best
possible drilling candidates. Finally, Pangea believes that, while not all wells
will be  successful,  there is a  relationship  between the number of  potential
prospects drilled and the rate of success enjoyed,  such that the more wells the
Company  drills,  the more chances we have for success.  For this reason  Pangea
takes a minority  position in each well, so that within the available funds, the
number of wells drilled can be increased.

Pangea projects are focused on low risk development type drilling.  Each project
is screened  looking at depth,  seismic data available,  surrounding  production
from similar  wells,  and  proximity to  infrastructure.  Pangea seeks to hold a
minority non-operating interest in the projects and, thus, also closely examines
the project  operator to determine  that they have the  experience and operating
philosophy that is consistent with Pangea quality expectations. Finally the well
drilling cost and upfront cost to buy in to the prospect are estimated.

Pangea then utilizes a risked based economic evaluation that compares high, most
likely,  and low production and price scenarios to rank projects for investment.
The Company's  overall  Business  Plan employs the same  technique for price and
production,  and in addition, uses high, most likely and low scenarios to factor
in a projection for the number of potential dry holes that may be encountered in
the drilling program each year.

The most likely case is designed to have a 65-70% chance of being achieved.  The
high and low cases then define the  boundaries of an 80% range,  such that there
is a 10% chance of achieving the high case and a 90% chance of achieving the low
case.

Pangea  attempts to design a drilling  program that will be attractive,  even in
the low case  assumption  range,  by  choosing  generally  lower risk wells from
prospects  at  shallower  depths.  This  philosophy  allows  Pangea to avoid the
unnecessarily  complex  down-hole  environments  which are often  encountered in
deeper wells, and which often invite very expensive and unreliable results.

To date Pangea has chosen to focus its acquisition, exploration, and development
activities  primarily in the Gulf Coast region.  This region is characterized by
long-lived gas reserves with predictable and relatively low production depletion
rates, multiple geologic targets that decrease drilling risk, strong natural gas
prices,  lower  service  costs  than in more  competitive  or remote  basins,  a
favorable  regulatory  environment that encourages active drilling efforts,  and
virtually no federal land or land access  impediments.  Management believes that

                                     Page 3
<PAGE>

by  continuing  to  identify  projects  that fit the  company's  investment  and
production criteria, Pangea has a strategy that will enhance production and cash
flow and optimize the use of the Company's investment capital.

Pangea is managed by a small  highly  experienced  team  focused on finding  and
structuring attractive oil and gas investment  opportunities and then extracting
the maximum value from them.  Pangea's goal is to create long-term value for our
investors by building a significant onshore oil and natural gas reserve base.

In summary,  Pangea seeks to acquire and exploit  properties with the following
characteristics:

      o     primarily Gulf Coast Basin locations

      o     an established production history and infrastructure

      o     multiple productive sands and reservoirs

      o     low current production levels with significant identified proven and
            potential reserve opportunities

      o     the opportunity to obtain a minority interest.

RISK FACTORS

GOING CONCERN RISK

We have had and could have losses, deficits and deficiencies in liquidity, which
could impair our ability to continue as a going concern.

In Note #2 to our consolidated  financial  statements,  our independent auditors
have indicated that certain factors raise substantial doubt about our ability to
continue as a going  concern.  Since its  inception,  the  Company has  suffered
recurring losses from operations and has been dependent on existing stockholders
and new  investors  to provide the cash  resources  to sustain  its  operations.
During the years ended  December  31, 2003 and 2002,  the Company  reported  net
losses and negative cash flows from operations as follows:



                                                    2003          2002
                                                 ---------     ----------
      Net loss                                   $ 669,654     $1,275,753
      Negative cash flows from operations        $  51,773     $  223,963

The  Company's  continuing  negative  operating  results have produced a working
capital  deficit of  $1,875,835  at  December  31,  2003.  These  factors  raise
substantial  doubt about the Company's  ability to continue as a going  concern.

The Company's long-term viability as a going concern is dependent on certain key
factors, as follows:

      -     The  Company's  ability  to  continue  to obtain  sources of outside
            financing to support near term  operations  and to allow the Company
            to continue to make  strategic  investments  in new oil and gas well
            prospects.

      -     The Company's  ability to locate attractive  development  prospects,
            and  coordinate  with timely  funding that will allow the Company to
            continue to increase oil and gas reserves and production.

      -     The Company's  ability to increase  profitability and sustain a cash
            flow level that will ensure support for continuing operations.

                                     Page 4
<PAGE>

IMPLEMENTATION OF BUSINESS STRATEGY DEPENDENT ON ADDITIONAL FINANCING

Pangea must obtain  financing to fund the  expansion of  operations  and to meet
obligations as they become due. Such outside financing must be provided from the
sale of equity or third party financing.  Further, the sale of equity securities
will dilute our existing  stockholders'  interests,  and  borrowings  from third
parties could result in our assets being pledged as  collateral.  It is possible
our  operations  could be  restricted  if loan terms  increase  our debt service
requirements.  There is no assurance  that we can obtain  financing on favorable
terms.

INDUSTRY

The petroleum  industry is a global industry that is fundamental to all economic
activity.  It is  composed  of the  down  stream  sector  (refining,  marketing,
products and derivatives) and the upstream sector that is focused on finding and
producing crude oil and natural gas. Oil and natural gas are commodities,  which
are  found  throughout  the world and they  have  been  produced  in  increasing
quantities  since  the  mid  19th  century.  The  exploration,   production  and
transportation  of these  materials  in the  modern  era  generate  an  enormous
appetite for capital because quantities  sufficient to fuel the world's economic
machine are rapidly  becoming  more  difficult to find and expensive to produce.
Consequently,  a few global corporations and state energy companies dominate the
industry.  These companies tend to concentrate  their  investments on very large
prospects and to quickly abandon less productive, older reserves.

The production technology in the petroleum industry has improved tremendously in
recent years,  however commercial  quantities of oil and gas are frequently left
in place when  fields are  abandoned.  This fact is  particularly  true in older
reservoirs  that were  abandoned  before  modern  technologies  were  available.
Additionally,  the economic level of interest  varies with company size. A small
company such as Pangea can successfully  exploit a field that is not of interest
to a major oil and gas company.

Mature  energy  provinces  such as the  United  States  have  many  fields  with
production and  collection  infrastructure  in place that can be purchased.  The
infrastructure  represents  a  significant  savings in  investment  required for
production  to  continue.  These  fields offer  investment  potential  for those
companies willing to commit capital and appropriate technology.  Technology that
is readily  available  from  consultants,  service  companies,  and other groups
established to support the petroleum production sector.

These factors allow small  companies like Pangea to effectively  and efficiently
target the niche  comprised  by fields with  established  reserves  that require
capital and/or technology in order to develop, enhance or restore production.

JOINT OPERATIONS WITH OTHERS; NON-OPERATOR STATUS

Pangea owns less than 100% of the working  interest in our oil and gas holdings.
Operations  are conducted  jointly with other  working  interest  owners.  Joint
operating  arrangements  are  customary  in the  oil and  gas  industry  and are
governed by a joint operating  agreement whereby a single working interest owner
is  designated  the operator.  On  properties  where we own less than 50% of the
working  interest,  drilling and operating  decisions may not be entirely within
our control.  If we disagree with the decision of a majority of working interest
owners,  we may be  required,  among  other  things,  to postpone  the  proposed
activity or decline to participate.  If we decline to  participate,  we might be
required to  relinquish  our  interest or may be subject to certain  non-consent
penalties,  as provided in the applicable  operating  agreement.  Such penalties
typically  allow  participating  working  interest  owners to  recover  from the
proceeds  of  production,  if any,  an  amount  equal to  100%-  400% of the new
investment.  Under most operating  agreements,  the operator is given direct and
full  control  over all  operations  on the property and is obligated to conduct
operations in a workman-like manner;  however the operator is usually not liable
to the working interest owners for losses sustained or for liabilities incurred,
except those resulting from its own gross negligence or willful misconduct. Each
working  interest  owner is  generally  liable  for its  share  of the  costs of
developing and operating jointly owned  properties.  The operator is required to
pay the  expenses of  developing  and  operating  the  property and will invoice
working  interest  owners  for  their  proportionate  share  of such  costs.  In

                                     Page 5
<PAGE>

instances  where we are a  non-operating  working  interest owner, we may have a
limited ability to exercise  control over operations and the associated costs of
such operations.  The success of our investment in such non-operated  activities
may,  therefore,  be  dependent  upon a number of facts that are  outside of our
direct control.

MARKETING

The revenue  generated by our operations is highly  dependent upon the price of,
and demand for, crude oil and natural gas.  Historically,  the markets for crude
oil and natural gas have been volatile and are likely to continue to be volatile
in the future.  The prices received by the Company for its crude oil and natural
gas production and the level of such production are subject to fluctuations  and
depend on  numerous  factors  beyond  our  control  including  seasonality,  the
condition of the United States economy (particularly the manufacturing  sector),
foreign  imports,  political  conditions  in  other  oil-producing  and  natural
gas-producing  countries, the actions of the Organization of Petroleum Exporting
Countries and domestic  regulation,  legislation and policies.  Decreases in the
prices of crude oil and natural gas could have an adverse effect on the carrying
value of any proved reserves or revenue from operations in the future.

COMPETITION

We operate in a highly  competitive  environment.  Competition  is  particularly
intense with respect to the acquisition of desirable  undeveloped  crude oil and
natural gas properties.  The principal competitive factors in the acquisition of
such undeveloped crude oil and natural gas properties include the staff and data
necessary  to  identify,  investigate  and  purchase  such  properties,  and the
financial resources necessary to acquire and develop such properties. We compete
with major and  independent  crude oil and natural gas companies for  properties
and the  equipment  and labor  required to develop and operate such  properties.
Many of these  competitors  have  financial  and other  resources  substantially
greater than ours, which may adversely  affect the company's  ability to compete
on certain projects.

TITLE TO PROPERTIES

As is  customary  in the  crude oil and  natural  gas  industry,  we make only a
cursory review of title to  undeveloped  crude oil and natural gas leases at the
time they are acquired by us. However,  before drilling commences,  we require a
thorough  title search to be  conducted,  and any material  defects in title are
remedied prior to the time actual drilling of a well begins. To the extent title
opinions or other  investigations  reflect  title  defects,  we, rather than the
seller of the undeveloped  property,  are typically  obligated to cure any title
defect at our expense. If we were unable to remedy or cure any title defect of a
nature such that it would not be prudent to commence drilling  operations on the
property,  we could suffer a loss of the lease cost for the property. We believe
that we have good title to our oil and gas leases.

RECENT FINANCING

In 2003,  Pangea received  $90,800 from private  placements and $30,000 in loans
from Officers of the company.

EMPLOYEES

As of March 5,  2004,  Pangea has 2  full-time  employees,  including  executive
officers, non- executive officers,  secretarial and clerical personnel and field
personnel.   Pangea  also  retains   independent   geological  and   engineering
consultants  and  administrative  assistance  on a limited  basis and expects to
continue to do so in the future.

                                     Page 6
<PAGE>

ITEM 2. DESCRIPTION OF PROPERTY

Pangea's principal executive offices are located at 5850 San Felipe,  Suite 500,
Houston,  Texas 77057 in  approximately  140 square feet of office space that is
leased on a one-year  contract  basis  expiring  March 31,  2005 for $687.52 per
month.  We believe  that our  offices  are  adequate  for our present and future
needs.

ITEM 3. LEGAL PROCEEDINGS

Pangea's former affiliate,  Mass Energy,  Inc., incurred substantial debt in the
drilling of a well. One of the Mass Energy creditors, Halliburton, Inc. has sued
Pangea  Petroleum  Corporation  under an alter ego claim on June 11, 2002, Cause
Number 2002-19465,  Halliburton Energy Services,  Inc. vs. Mass Energy, Inc. and
Pangea  Petroleum  Corp. in the District  Court of Harris County,  Texas,  129th
Judicial  District.  This claim is currently in the discovery phase. The Company
believes it will prevail in the case.

Additionally, in 2001, Pangea purchased a ten percent working interest in a well
in Duval County, Texas. The well is producing but Pangea has not received monies
under their  working  interest.  Pangea  filed suit against the operator of well
along with the individual from whom they purchased the working interest.  Pangea
Petroleum  Corporation vs. Clay  Exploration,  Inc. and Joseph W. Shunta,  Cause
Number 2002-18505,  in the District Court, Harris County,  Texas, 157th Judicial
District. Pangea has agreed to go to arbitration in the case and is currently in
the discovery phase. Arbitration is currently scheduled for April 2004.

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

None

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The following  table sets forth certain  information  as to the high and low bid
quotations quoted on the OTC Bulletin Board for 2002 and 2003.  Information with
respect to  over-the-counter  bid quotations  represents prices between dealers,
does  not  include  retail  mark-ups,  mark-downs  or  commissions,  and may not
necessarily represent actual transactions.

                                   Period          High             Low
                                   --------        ------           -----
                                   2002

First Quarter                                        .105            .032
Second Quarter                                       .06             .0081
Third Quarter                                        .06             .0081
Fourth Quarter                                       .025            .005

                                   2003

First Quarter                                       .013             .005
Second Quarter                                      .009             .002
Third Quarter                                       .027             .008
Fourth Quarter                                      .022             .012


The bid price of our common stock was $0.013 per share on March 22, 2004 and had
approximately 247 certificate shareholders of record as of March 22, 2004.

                                     Page 7
<PAGE>

SECURITIES  AUTHORIZED FOR ISSUANCE UNDER EQUITY  COMPENSATION  PLANS FOR FISCAL
YEAR ENDED DECEMBER 31, 2003

--------------------------------------------------------------------------------
                     Number of           Weighted-average    Number of
                     Securities to be    price of            Securities
                     issued upon         outstanding         remaining
                     exercise of         options warrants    available for
                     outstanding         and rights          future issuance
                     options, warrants                       under equity
                     and rights                              compensation
                                                             plans(excluding
                                                             securities
                                                             reflected in
                                                             column (a))
--------------------------------------------------------------------------------
                     (a)                 (b)                 (c)
--------------------------------------------------------------------------------
Equity compensation
plans approved by        10,000,000             $0.11             6,549,997
security holders
--------------------------------------------------------------------------------
Equity compensation
plans not approved        5,000,000                                   0
by security holders
--------------------------------------------------------------------------------
TOTAL                    15,000,000             $0.11             6,549,997
--------------------------------------------------------------------------------

For information  relating to the equity compensation plan,  reference is made to
footnote 11 to our Financial Statements, Stock Holders Equity.

OUR TRANSFER AGENT IS:

Olde Monmouth Stock Transfer Co., Inc.
200 Memorial Parkway
Atlantic Highlands, New Jersey 07716

DIVIDENDS

We presently intend to retain future earnings to support our growth. Any payment
of cash  dividends  in the future will be  dependent  upon:  the amount of funds
legally available, our earnings; financial condition; capital requirements;  and
other factors which our Board of Directors deems relevant.

                                    PART II

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

The following is a discussion of our financial condition, results of operations,
liquidity and capital  resources.  This discussion should be read in conjunction
with our  Consolidated  Financial  Statements  and the  notes  thereto  included
elsewhere in this Form 10-KSB/A.

FORWARD-LOOKING INFORMATION-GENERAL

The statements  contained herein and other information  contained in this report
may be  based,  in part,  on  management's  estimates,  projections,  plans  and
judgments.  These  forward-looking  statements  are subject to certain risks and
uncertainties  that  could  cause  actual  results  to  differ  materially  from
historical   results  or  those   anticipated.   In  this   report,   the  words
"anticipates",  "believes",  "expects",  "intends", "future", "plans", "targets"
and  similar  expressions  identify  forward-looking  statements.   Readers  are
cautioned  not  to  place  undue  reliance  on  the  forward-looking  statements
contained herein.  The Company undertakes no obligation to publicly revise these
forward-looking  statements to reflect  events or  circumstances  that may arise
after the date  hereof.  Additionally,  these  statements  are based on  certain
assumptions  that may prove to be  erroneous  and are  subject to certain  risks

                                     Page 8
<PAGE>

including,  but not  limited  to,  the  Company's  dependence  on  limited  cash
resources,  its dependence on certain key personnel within the Company,  and its
ability to raise additional capital. The Company's ability to generate long-term
value for the common stockholder is dependent upon the acquisition of profitable
energy  prospects.  There are many  companies  participating  in the oil and gas
industry, many with resources greater than the Company.  Greater competition for
profitable  operations can increase prices and make it more difficult to acquire
assets at reasonable  multiples of cash flow. The Company  believes that it will
be able to  compete  in this  environment  and  will be able to find  attractive
investments;  however,  it is not possible to predict  competition or the effect
this will have on the Company's  operations.  The Company's  operations are also
significantly affected by factors, which are outside the control of the Company,
including  the prices of oil and natural  gas,  environmental  and  governmental
regulations.  Accordingly,  actual results may differ, possibly materially, from
the predictions contained herein.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company's  discussion and analysis of its financial condition and results of
operations are based upon its consolidated financial statements, which have been
prepared in accordance  with  generally  accepted  accounting  principles in the
United  States.  The  preparation  of these  financial  statements  requires the
Company to make  estimates  and  judgments  that affect the reported  amounts of
assets, liabilities,  revenue and expenses, and related disclosure of contingent
assets  and  liabilities.  On  an  ongoing  basis,  the  Company  evaluates  its
estimates.  The Company  bases its  estimates on  historical  experience  and on
various  other  assumptions  that  are  believed  to  be  reasonable  under  the
circumstances.  These  estimates  and  assumptions  provide a basis  for  making
judgments  about the  carrying  values of assets  and  liabilities  that are not
readily  apparent  from other  sources.  Actual  results  may differ  from these
estimates under different  assumptions or conditions,  and these differences may
be material.

The Company believes the following critical  accounting policies affect its more
significant  judgments and estimates used in the preparation of its consolidated
financial statements.

OIL AND GAS PRODUCING ACTIVITIES

The Company  follows the  "successful  efforts" method of accounting for its oil
and gas properties.  Under this method of accounting,  all property  acquisition
costs (cost to acquire  mineral  interests in oil and gas  properties) and costs
(to drill and equip) of exploratory and development  wells are capitalized  when
incurred,  pending  determination of whether the well has found proved reserves.
If an exploratory  well has not found proved reserves in commercial  quantities,
the  costs  associated  with the well  are  charged  to  expense.  The  costs of
development   wells  are  capitalized   whether   productive  or  nonproductive.
Geological  and  geophysical  costs  and the  costs of  carrying  and  retaining
undeveloped  properties are expensed as incurred.  Management estimates that the
salvage value of lease and well equipment will  approximately  offset the future
liability for plugging and  abandonment  of the related wells.  Accordingly,  no
accrual for such costs has been recorded.

Unproved  oil  and  gas  properties  that  are   individually   significant  are
periodically  assessed for impairment of value,  and a loss is recognized at the
time  of  impairment  by  providing  an  impairment  allowance.  Other  unproved
properties  are  amortized  based  on  the  Company's  average  holding  period.
Capitalized  costs  of  producing  oil  and  gas  properties  after  considering
estimated  dismantlement and abandonment costs and estimated salvage values, are
depreciated  and  depleted  by the  unit-of-production  method.  On the  sale or
retirement  of a  complete  unit of a proved  property,  the  cost  and  related
accumulated  depreciation,  depletion,  and amortization are eliminated from the
property  accounts,  and  the  resultant  gain or  loss  is  recognized.  On the
retirement or sale of a partial unit of proved property,  the cost is charged to
accumulated  depreciation,  depletion, and amortization with a resulting gain or
loss recognized in the statement of operations.

                                     Page 9
<PAGE>

On the sale of an  entire  interest  in an  unproved  property  for cash or cash
equivalent,  gain or loss on the sale is recognized,  taking into  consideration
the  amount  of any  recorded  impairment  if the  property  had  been  assessed
individually.  If a partial interest in an unproved property is sold, the amount
received is treated as a reduction of the cost of the interest retained.

OIL AND GAS REVENUES

Oil and gas revenues are recorded under the sales method. The Company recognizes
oil and gas revenues as  production  occurs.  As a result,  the Company  accrues
revenue relating to production for which the Company has not received payment.

GENERAL

Pangea Petroleum  Corporation  ("Pangea" or "Company"),  a Colorado corporation,
was  organized  on March 11, 1997.  Pangea is located at 5850 San Felipe,  Suite
500,  Houston,   Texas  77057.   Pangea's  company  website  can  be  viewed  at
www.pangeapetroleum.com.

Pangea is a publicly traded company listed on the OTC Electronic  Bulletin Board
under the symbol "PAPO". The Company is an independent energy company focused on
exploration and development of oil and natural gas reserves, whose core business
is  directed  to the  development  of oil and gas  prospects  in proven  onshore
production areas.  Pangea is pursuing a development  program designed to achieve
profitability by distributing risk across multiple oil and gas projects.  Pangea
diversifies its risk by carefully  identifying  prospects that fit within strict
parameters  and by taking a  minority  working  interest  in each  project.  The
Company  devotes  essentially  all of it  resources  to  development  of revenue
producing  activities  by keeping its  overhead at a minimum  level  through the
retention of carefully selected consultants,  contractors and service companies.

Pangea is  working  to create  shareholder  value by using  capital  and  proven
technology  to exploit  energy  prospects  that are of minor  interest to larger
companies  due to their size and  location.  The Company  invests in projects at
different  levels of  participation,  generally as a minority  owner,  such that
daily  operating  responsibility  is in the hands of  experienced,  high quality
partners and contractors.  Producing  properties may be resold as appropriate to
establish and maintain optimum asset value.

Since its inception,  the Company has suffered  recurring losses from operations
and has been dependent on existing stockholders and new investors to provide the
cash  resources to sustain its  operations.  During the year ended  December 31,
2003 and 2002,  the  Company  reported  net losses of  $669,654  and  $1,275,753
respectively.

The Company's long-term viability as a going concern is dependent on certain key
factors, as follows:

      -     The  Company's  ability  to  continue  to obtain  sources of outside
            financing to support near term  operations  and to allow the Company
            to continue to make  strategic  investments  in new oil and gas well
            prospects.

      -     The Company's  ability to locate attractive  development  prospects,
            and  coordinate  with timely  funding that will allow the Company to
            continue to increase oil and gas reserves and production.

      -     The Company's  ability to increase  profitability and sustain a cash
            flow level that will ensure support for continuing operations.

                                    Page 10
<PAGE>

RESULTS OF OPERATIONS

Pangea  participated  in  drilling  4 wells in  2003.  Two of  those  wells  are
producing and two are suspended  awaiting  further work. At one of the suspended
wells, oil reserves were found but the well is not currently producing due to an
apparent  mechanical problem.  The other suspended well is being evaluated,  but
may be uneconomical for further  development.  The income from the two producing
wells, in Liberty and Panola  counties,  has made a substantial  contribution to
the Pangea  cash flow in the second half of 2003.  The two wells still  awaiting
further work are:

LEE COUNTY, WHICH is a Lower Wilcox prospect identified in a 2D seismic analysis
that shows a closure between two existing Lower Wilcox  producing  fields in the
area, was drilled and tested in August 2003. Pangea has a 17.5% working interest
(13.125% net interest). The well encountered 40' of overall sand with 16'-18' of
oil sand on top and water in the bottom 22'. The well was tested in early August
and showed signs of oil at a low rate of production.  The well was  subsequently
stimulated with an acid treatment which greatly  increased the water  production
rate,  making the well  uneconomical  to produce.  Pangea and its partners  have
reviewed the reservoir data and determined  that there may be locations that are
up structure from the first well,  further from the underlying  water. We are in
the  process  of  obtaining  new  seismic  data,  which will  clarify  whether a
follow-up  well can be  drilled.  Following  that  determination,  we will  also
further  examine the  potential  for the first well, if the new data supports an
adequate amount of potential reserves to justify remedial work.

AUSTIN  COUNTY,  WHICH is a 2600'  Frio zone  test that was based in 3D  seismic
analysis,  was drilled in July 2003.  The Company has a 15.3%  working  interest
(11.48% net  interest).  Unfortunately,  the target  production  zone  contained
residual gas and water,  and produced only water on the test.  The well has been
shut in and is being evaluated for potential shallower productive intervals.  No
timetable has been set for decisions on future work at this time.

COMPARISON OF YEAR ENDED DECEMBER 31, 2003 TO YEAR ENDED DECEMBER 31, 2002.

Revenues were $33,187 in 2003 compared to no revenue in 2002. To produce greater
revenue,  investments  in oil and gas were  increased to $188,264 in 2003 (using
the successful effort method of accounting).

The  substantial  reduction  in the net loss from  $669,654  for the year  ended
December 31, 2003 compared to $1,275,753 for the year ended December 31, 2002 is
due to the discontinued operation and sale of its wholly-owned subsidiary,  Mass
Energy,  Inc., a Settlement Agreement negotiated with certain parties related to
the Company and the decreased selling,  general and administrative expenses. The
decreases  in these areas  reflect the  progress the Company has made since 2002
when it developed a plan and took actions to improve its financial  position and
to deal with its liquidity problems. Most of the expenses in 2002 are related to
the  disposition  of a  non-performing  subsidiary and settlement of outstanding
issues.  In 2003,  the focus  changed to  strategic  investments  in oil and gas
properties and continued to focus on minimizing  expenses that is also reflected
in the reduction of expenses from $1,065,598 in 2002 to $702,841 in 2003. Pangea
maintains a low overhead by minimizing  personnel  and office space.  Nearly all
work is contracted on an as needed basis.  In addition,  the two officers of the
Company that are permanent  employees have agreed to accept restricted shares of
Pangea Common stock in lieu of cash compensation.  This move aligns the goals of
the  Company  and the  officers  and allows the Company to direct any extra cash
into investment opportunities.

The Company invested in several wells that generated  revenue in 2003 of $33,187
compared to no revenue in 2002.  This  increased  lease  operating  expenses and
production tax expenses.  However,  selling, general and administrative expenses
decreased  from $311,822 for the year ended  December 31, 2002 to $72,554 in for
the year ended December 31, 2003 as a result of a minimizing  overhead including
compensation  consultants  with  equity  and  conserving  cash  for oil and cash
investments.  Stock based compensation increased to $575,494 in 2003 compared to

                                    Page 11
<PAGE>

$263,974 in 2002 as the company  compensation  employees  with stock rather than
cash. In 2002, the company had several expenses related to their plan to improve
their financial  position,  which included the  disposition of a  non-performing
subsidiary and settlement of outstanding issues.  Several expenses were incurred
as this plan was put into effect that were not incurred in 2003.  These included
impairment of oil and gas properties  ($197,039 in 2002), penalty for failure to
timely register shares ($192,833 in 2002) and loss on sale of marketable  equity
securities  ($55,887 in 2002).  None of these  expenses were incurred in 2003 as
the company's focus changed from resolving their liquidity  issues to active oil
and gas investment.

Loss on sale of marketable  equity  securities  was $55,887 in 2002 was due to a
decline in the value of securities that were received in a settlement  agreement
with certain related parties. There was no similar activity in 2003.

Interest  expense  remained  fairly constant in 2003 as compared to 2002 because
debt levels remained reasonably consistent.

LIQUIDITY AND CAPITAL RESOURCES

The Company's  operating  activities used cash in the amount of $188,264 for the
fiscal  year  2003 to  invest in four  wells.  Two of the  wells are  generating
revenue but currently,  the Company has not been able to generate  positive cash
flow from  operations.  The Company  utilized cash from financing  activities to
fund these investments. The net cash from financing activities increased in 2003
to $227,300 from $49,100 in 2002. The Company  intends to continue  investing in
additional  oil and gas projects but will need  additional  private  placements,
debt  financing or equity  investment in order to  participate  fully and at the
levels the  Company  intends.  There can be no  assurance  that any of the plans
developed  by the  Company  will  produce  cash flows  sufficient  to ensure its
long-term viability.

OFF BALANCE SHEET ARRANGEMENT

During the year ended  December 31, 2003,  the Company had no off balance  sheet
arrangements.

2004 OUTLOOK

The Company has identified two specific  prospects for drilling in early 2004 in
Anderson  and  Liberty  counties  and is in the  process of  evaluating  several
additional prospects for 2004 drilling.

ANDERSON  COUNTY is a 4600' test of a new fault block that was identified in the
Woodbine formation.  Geologic and seismic analysis revealed an untested area off
the  southwest  flank of the Jarvis  dome that was  untested.  The  Jarvis  dome
structures  have had several  recent  successful  well  completions  in the last
several  years in three  different  Woodbine  sands.  Pangea has a 5.0%  working
interest  (4.25% net  interest) in the well.  The well was drilled at the end of
February 2004. Unfortunately it encountered the Woodbine sands as predicted, but
they did not contain oil or gas reserves and the well was abandoned.

LIBERTY COUNTY is a 9000' test of the Lower Wilcox, based on 3D seismic data and
multiple  surrounding  wells.  The fault trap  identified  has a down  structure
producing well that would not have produced the bulk of the reserves potentially
available.  In  addition,  several  wells in the  surrounding  area  support the
presence of a large fault block that is substantially  untested. The well should
encounter  several zones that are currently  producing in adjacent fault blocks,
which will be  secondary  objectives.  It is  anticipated  that the well will be
drilled around the end of the second quarter.

Pangea is actively reviewing  additional prospects in Texas,  Louisiana,  Kansas
and Oklahoma to add new wells to the prospect  list.  The Company is  continuing
its strategy of evaluating primarily shallow, onshore oil and gas projects, that
avoid  investing in "wildcat" or  exploratory  wells,  and focus on investing in
development well prospects that are supported by seismic data, proven production
from  the   surrounding   area  and  good   information   from  adjacent  wells.

Additionally,  Pangea will  continue to diversity  its risk by taking a minority
working interest in the prospects, such that the Company is not dependent on any
one project,  or highly impacted by an unsuccessful  well. The ability to invest
further will be heavily dependent on securing  additional capital from investors
or debt. There is no assurance that additional  equity or debt financing will be
available on terms acceptable to Management.

ITEM 7. FINANCIAL STATEMENTS

The financial statements of the company are set forth beginning on page F-1.

                                    Page 12
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                                  __________





                        CONSOLIDATED FINANCIAL STATEMENTS
                     WITH REPORT OF INDEPENDENT ACCOUNTANTS
                FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

                                       F-1
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                               TABLE OF CONTENTS
                                   __________



                                                                   PAGE

Report of Independent Accountants                                   F-3

Consolidated Financial Statements:

  Consolidated Balance Sheet as of December 31, 2003                F-4

  Consolidated Statements of Operations for the years
    ended December 31, 2003 and 2002                                F-5

  Consolidated Statements of Stockholders' Deficit for
    the years ended December 31, 2003 and 2002                      F-6

  Consolidated Statements of Cash Flows for the years
    ended December 31, 2003 and 2002                                F-8

Notes to Consolidated Financial Statements                          F-9

                                       F-2
<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS



To the Board of Directors and Stockholders
Pangea Petroleum Corporation


We have audited the accompanying  consolidated balance sheet of Pangea Petroleum
Corporation   and   subsidiaries  as  of  December  31,  2003  and  the  related
consolidated statements of operations,  stockholders' deficit and cash flows for
each of the two years in the period then  ended.  These  consolidated  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated financial position of Pangea
Petroleum  Corporation and subsidiaries as of December 31, 2003, and the results
of their operations and their cash flows for each of the two years in the period
then ended, in conformity with accounting  principles  generally accepted in the
United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial statements,  the Company has suffered recurring losses,  negative cash
flows from operations and has a net capital deficiency at December 31, 2003 that
raise  substantial  doubt  about its  ability to  continue  as a going  concern.
Management's  plans with  regard to this  matter are also  discussed  in Note 2.
These financial statements do not include any adjustments that might result from
the outcome of this uncertainty.







Houston, Texas
February 15, 2004

                                       F-3
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                           CONSOLIDATED BALANCE SHEET
                               DECEMBER 31, 2003
                                   __________


     ASSETS

Current assets:
  Cash                                                             $      1,890
  Accounts receivable                                                    12,460
                                                                   ------------

      Total current assets                                               14,350
                                                                   ------------

Property and equipment:
  Oil and gas properties (successful efforts method)                    198,264
  Other property and equipment                                           16,689
  Less accumulated depletion, depreciation and amortization             (21,514)
                                                                   ------------

  Net property and equipment                                            193,439
                                                                   ------------

      Total assets                                                 $    207,789
                                                                   ============

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
  Accounts payable                                                 $     26,661
  Accrued liabilities                                                    65,699
  Notes payable to related parties                                      322,684
  Deferred gain on sale of Mass Energy, Inc.                          1,475,141
                                                                   ------------

      Total current liabilities                                       1,890,185

Obligation for dismantlement and disposal activities                     10,000

Notes payable to related parties, net of current portion                 60,000
                                                                   ------------

      Total liabilities                                               1,960,185
                                                                   ------------

Commitments and contingencies

Stockholders' deficit:
  Preferred stock: $.001 par value; 10,000,000 shares authorized             --
  Common stock: $.001 par value; 200,000,000 shares authorized;
    117,665,959 shares issued and outstanding                           117,666
  Additional paid-in capital                                         16,116,224
  Unissued common stock: 1,440,500 shares                               192,833
  Accumulated deficit                                               (18,163,474)
                                                                   ------------

                                                                     (1,736,751)
  Less subscriptions receivable                                         (15,645)
                                                                   ------------

      Total stockholders' deficit                                    (1,752,396)
                                                                   ------------

        Total liabilities and stockholders' deficit                $    207,789
                                                                   ============

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

                                       F-4
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
                                   __________


                                                        2003           2002
                                                    ------------   ------------

Revenue from operations                             $     33,187   $         --
                                                    ------------   ------------

Costs and expenses:
  Lease operating expenses                                 7,756             --
  Production tax                                           2,367             --
  Selling, general and administrative                     72,554        311,822
  Stock based compensation                               575,494        263,974
  Impairment of oil and gas properties                        --        197,039
  Depletion, depreciation, and amortization                6,125             --
  Loss on sale of marketable equity securities                --         55,887
  Penalty for failure to timely register shares               --        192,833
  Interest expense                                        38,545         44,043
                                                    ------------   ------------

    Total costs and expenses                             702,841      1,065,598
                                                    ------------   ------------

      Loss from continuing operations                   (669,654)    (1,065,598)

Loss from operation of discontinued exploration
  and production subsidiary                                   --       (210,155)
                                                    ------------   ------------

        Net loss                                    $   (669,654)  $ (1,275,753)
                                                    ============   ============

Basic and diluted net loss per common share:
  Continuing operations                             $      (0.01)  $      (0.02)
  Discontinued operations                                  (0.00)         (0.00)
                                                    ------------   ------------

        Net loss                                    $      (0.01)  $      (0.02)
                                                    ============   ============

Weighted average common shares                        90,591,355     57,612,359
                                                    ============   ============

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

                                       F-5
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
                                   __________






<TABLE>
<CAPTION>
                                                       ADDITIONAL  UNISSUED                    STOCK                       TOTAL
                                     COMMON STOCK       PAID-IN     COMMON    ACCUMULATED  SUBSCRIPTIONS   TREASURY    STOCKHOLDERS'
                                 SHARES      AMOUNT     CAPITAL     STOCK       DEFICIT     RECEIVABLE      STOCK        (DEFICIT)
                                ----------  --------  -----------  --------  ------------  -------------  ----------   ------------

<S>                             <C>           <C>      <C>              <C>   <C>               <C>              <C>     <C>
Balance at December 31, 2001    52,186,900    52,187   14,717,956        --   (16,218,067)      (16,000)          --     (1,463,924)

Common stock issued for cash     1,205,000     1,205       43,895        --            --       (22,500)          --         22,600

Common stock issued to
  compensate employees          10,966,654    10,967      253,007        --            --            --           --        263,974

Capital contribution by
  stockholders under the
  Settlement Agreement (See
  Note 4)                               --        --      576,008        --            --            --     (223,640)       352,368

Common stock to be issued
  under the Securities
  Purchase Agreement (See
  Note 12) because the
  Company did not meet
  registration requirements
  re-quired under the
  Agreement (1,440,500 shares)          --        --           --   192,833            --            --           --        192,833

Surrender of common stock          (25,000)      (25)          25        --            --            --           --             --

Net loss                                --        --           --        --    (1,275,753)           --           --     (1,275,753)
                                ----------  --------  -----------  --------  ------------  -------------  ----------   ------------
Balance at December 31, 2002    64,333,554  $ 64,334  $15,590,891  $192,833  $(17,493,820) $    (38,500)  $ (223,640)  $ (1,907,902)
                                ==========  ========  ===========  ========  ============  =============  ==========   ============
</TABLE>

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

                                       F-6
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
                                   __________



<TABLE>
<CAPTION>
                                                        ADDITIONAL  UNISSUED                    STOCK                      TOTAL
                                     COMMON STOCK        PAID-IN     COMMON   ACCUMULATED   SUBSCRIPTIONS  TREASURY    STOCKHOLDERS'
                                  SHARES      AMOUNT     CAPITAL     STOCK      DEFICIT      RECEIVABLE      STOCK       (DEFICIT)
                                -----------  --------  -----------  --------  ------------  -------------  ----------  ------------

<S>                              <C>         <C>       <C>          <C>       <C>           <C>            <C>         <C>
Balance at December 31, 2002     64,333,554  $ 64,334  $15,590,891  $192,833  $(17,493,820) $    (38,500)  $ (223,640) $(1,907,902)

Common stock issued for cash     12,058,063    12,058      134,242        --            --            --           --      146,300

Common stock issued to
  compensate employees and
  consultants and to satisfy
  $55,388 of compensation
  accrued at December 31,
  2002                           43,043,593    43,044      564,911        --            --            --           --      607,955

Common stock issued for
  legal services                    671,104       671        6,018        --            --            --           --        6,689

Common stock issued to
  convert $39,000 of related
  party debt and $2,361 of
  accrued interest to equity      3,150,645     3,150       38,211        --            --            --           --       41,361

Cancellation of treasury
  stock                          (5,591,000)   (5,591)    (218,049)       --            --            --      223,640           --

Stock subscription receivable
  paid or treated as
  compensation                           --        --           --        --            --        22,855           --       22,855

Net loss                                 --        --           --        --      (669,654)           --           --     (669,654)
                                -----------  --------  -----------  --------  ------------  ------------   ----------  -----------

Balance at December 31, 2003    117,665,959  $117,666  $16,116,224  $192,833  $(18,163,474) $    (15,645)  $       --  $(1,752,396)
                                ===========  ========  ===========  ========  ============  ============   ==========  ===========
</TABLE>

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

                                       F-7
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
                                   __________


<TABLE>
<CAPTION>
                                                                    2003          2002
                                                                -----------   -----------

<S>                                                             <C>           <C>
Cash flows from operating activities:
  Net loss                                                      $  (669,654)  $(1,275,753)
  Adjustments to reconcile net loss to net cash
    used in operating activities:
    Loss from operation of discontinued business segment                 --       210,155
    Depletion, depreciation and amortization expense                  6,125            --
    Impairment of oil and gas properties                                          197,039
    Loss on sale of marketable equity securities                         --        55,887
    Common stock issued as compensation for services                582,111       263,974
    Common stock issuable for failure to register shares                 --       192,833
    Common stock issued for accrued interest                          2,361            --
    Common stock issued for accrued compensation                     55,388            --
    Changes in operating assets and liabilities, net of
      effects of dispositions:
      Accounts receivable                                            (9,676)        6,453
      Prepaid expenses and other assets                               4,720        (4,720)
      Accounts payable and accrued liabilities                      (23,148)      118,801
                                                                -----------   -----------

        Net cash used in continuing operations                      (51,773)     (235,331)
        Net cash provided by discontinued operations                     --        11,368
                                                                -----------   -----------

          Net cash used in operating activities                     (51,773)     (223,963)
                                                                -----------   -----------

Cash flows from investing activities:
  Proceeds from settlement agreement                                     --        75,000
  Proceeds from sale of marketable equity securities                     --        97,113
  Capital and exploratory expenditures                             (188,264)           --
                                                                -----------   -----------

        Net cash provided by (used in) continuing operations       (188,264)      172,113
        Net cash provided by (used in) discontinued operations           --            --
                                                                -----------   -----------

          Net cash provided by (used in) investing activities      (188,264)      172,113
                                                                -----------   -----------

Cash flows from financing activities:
  Proceeds from the sale of common stock                            146,300        22,600
  Proceeds from notes payable to related parties                     81,000        26,500
                                                                -----------   -----------

        Net cash provided by continuing operations                  227,300        49,100
        Net cash provided by discontinued operations                     --            --
                                                                -----------   -----------

          Net cash provided by financing activities                 227,300        49,100
                                                                -----------   -----------

Net decrease in cash and cash equivalents                           (12,737)       (2,750)

Cash and cash equivalents at beginning of year                       14,627        17,377
                                                                -----------   -----------

Cash and cash equivalents at end of year                        $     1,890   $    14,627
                                                                ===========   ===========
</TABLE>

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

                                       F-8
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   __________


1.   ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

     ORGANIZATION

     Pangea  Petroleum  Corporation  (the  "Company") is a Colorado  corporation
     engaged  in oil  and gas  exploration  and  development.  The  Company  was
     originally incorporated in 1997 as Zip Top, Inc. and subsequently adopted a
     name change to Pangea Petroleum Corporation. On April 26, 2000, the Company
     was recapitalized when the Company acquired the non-operating public shell,
     Segway II Corporation.  Segway II Corporation had no significant  assets or
     liabilities at the date of acquisition  and,  accordingly,  the transaction
     was  accounted  for as a  recapitalization.  In  October  2000 the  Company
     acquired a wholly owned subsidiary, Mass Energy, Inc., that was disposed of
     in December 2002 (See Note 3).

     PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements presented herein include the accounts
     of the Company and its wholly owned subsidiary,  Mass Energy, Inc., through
     the  date  of  the  sale.  All  significant   inter-company   accounts  and
     transactions have been eliminated.

     ACCOUNTING ESTIMATES

     The  preparation  of financial  statements  in conformity  with  accounting
     principles  generally  accepted  in the United  States of America  requires
     management  to make  estimates  and  assumptions  that affect the  reported
     amounts of assets and  liabilities at the date of the financial  statements
     and the  reported  amounts of revenue  and  expenses  during the  reporting
     period.  Actual results could differ from those estimates.  These estimates
     mainly involve the useful lives of property and  equipment,  the impairment
     of unproved oil and gas properties, the recognition of a deferred gain that
     arose upon sale of Mass Energy,  Inc., the valuation of deferred tax assets
     and the realization of accounts receivable.

     OIL AND GAS PRODUCING ACTIVITIES

     The Company follows the  "successful  efforts" method of accounting for its
     oil and gas  properties.  Under this  method of  accounting,  all  property
     acquisition  costs  (cost  to  acquire  mineral  interests  in oil  and gas
     properties)  and costs (to drill and equip) of exploratory  and development
     wells are capitalized when incurred,  pending  determination of whether the
     well has found proved reserves. If an exploratory well has not found proved
     reserves in commercial  quantities,  the costs associated with the well are
     charged to expense.  The costs of development wells are capitalized whether
     productive or nonproductive. Geological and geophysical costs and the costs
     of carrying and retaining undeveloped  properties are expensed as incurred.
     Management  estimates  that the salvage  value of lease and well  equipment
     will approximately offset the future liability for plugging and abandonment
     of the  related  wells.  Accordingly,  no  accrual  for such costs has been
     recorded.

     Unproved  oil and gas  properties  that are  individually  significant  are
     periodically  assessed for impairment of value, and a loss is recognized at
     the time of impairment by providing an impairment allowance. Other unproved
     properties are amortized  based on the Company's  average  holding  period.
     Capitalized  costs of producing oil and gas  properties  after  considering
     estimated dismantlement and abandonment costs and estimated salvage values,
     are depreciated and depleted by the unit-of-production  method. On the sale
     or retirement of a complete unit of a proved property, the cost and related
     accumulated  depreciation,  depletion, and amortization are eliminated from
     the property accounts, and the resultant gain or loss is recognized. On the
     retirement  or sale of a  partial  unit of  proved  property,  the  cost is
     charged to accumulated  depreciation,  depletion,  and amortization  with a
     resulting gain or loss recognized in the statement of operations.

     On the sale of an entire interest in an unproved  property for cash or cash
     equivalent,   gain  or  loss  on  the  sale  is  recognized,   taking  into
     consideration  the amount of any  recorded  impairment  if the property had
     been assessed  individually.  If a partial interest in an unproved property
     is sold,  the amount  received is treated as a reduction of the cost of the
     interest retained.

                                       F-9
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   __________


1.   ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

     OTHER PROPERTY AND EQUIPMENT

     Property and equipment is stated at cost.  Depreciation  is computed  using
     the  straight-line  method over the estimated  useful lives of 3 to 5 years
     for office furniture and equipment and  transportation and other equipment.
     Additions or improvements  that increase the value or extend the life of an
     asset are capitalized.  Expenditures for normal maintenance and repairs are
     expensed as incurred.  Disposals are removed from the accounts at cost less
     accumulated depreciation and any gain or loss from disposition is reflected
     in operations.

     IMPAIRMENT OF LONG-LIVED ASSETS

     In the event  facts and  circumstances  indicate  the  carrying  value of a
     long-lived asset,  including associated  intangibles,  may be impaired,  an
     evaluation of recoverability is performed by comparing the estimated future
     undiscounted  cash flows  associated with the asset to the asset's carrying
     amount to determine if a write-down to market value or discounted cash flow
     is required.  Based upon a recent  evaluation by management,  an impairment
     write-down  of the Company's  long-lived  assets was recorded to write such
     assets down to their estimated net realizable value.

     CASH AND CASH EQUIVALENTS

     For purposes of reporting cash flows, the Company  considers all short-term
     investments  with an  original  maturity  of  three  months  or  less  when
     purchased to be cash equivalents.

     FAIR VALUE OF FINANCIAL INSTRUMENTS

     The  Company  includes  fair value  information  in the notes to  financial
     statements  when the fair value of its financial  instruments  is different
     from the book  value.  When the book  value  approximates  fair  value,  no
     additional disclosure is made.

     CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

     Financial instruments which subject the Company to concentrations of credit
     risk include cash and cash equivalents and accounts receivable. The Company
     maintains its cash and cash equivalents  with major financial  institutions
     selected  based  upon  management's  assessment  of  the  banks'  financial
     stability.  Balances  periodically  exceed the $100,000 federal  depository
     insurance  limit.  The Company has not  experienced any losses on deposits.
     During the years ended  December 31, 2003 and 2002,  100% of the  Company's
     revenues was received from two customers.

     OIL AND GAS REVENUES

     Oil and gas  revenues  are  recorded  under the sales  method.  The Company
     recognizes  oil and gas revenues as  production  occurs.  As a result,  the
     Company  accrues  revenue  relating to production for which the Company has
     not received payment.

     EARNINGS PER SHARE

     The Company has adopted SFAS No. 128,  which  provides for  calculation  of
     "Basic" and "Diluted" earnings per share. Basic earnings per share includes
     no dilution  and is computed by  dividing  net income  available  to common
     shareholders  by the weighted  average  common shares  outstanding  for the
     period.  Diluted  earnings  per share  reflect  the  potential  dilution of
     securities  that could share in the earnings of an entity  similar to fully
     diluted earnings per share.

                                      F-10
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   __________


1.   ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

     STOCK BASED COMPENSATION

     SFAS  No.  123,  "Accounting  for  Stock-Based   Compensation"  established
     financial  accounting  and  reporting  standards for  stock-based  employee
     compensation  plans. It defined a fair value based method of accounting for
     an employee  stock option or similar  equity  instrument and encouraged all
     entities to adopt that method of accounting for all of their employee stock
     compensation  plans  and  include  the  cost  in the  income  statement  as
     compensation  expense.  However,  it also  allows an entity to  continue to
     measure  compensation  cost for those plans using the intrinsic value based
     method of  accounting  prescribed by  Accounting  Principles  Board ("APB")
     Opinion No. 25,  "Accounting  for Stock Issued to  Employees".  The Company
     accounts for  compensation  cost for stock option plans in accordance  with
     APB Opinion No. 25.

     INCOME TAXES

     The Company uses the liability method in accounting for income taxes. Under
     this method,  deferred tax assets and liabilities  are determined  based on
     differences  between financial reporting and income tax carrying amounts of
     assets and  liabilities  and are  measured  using the enacted tax rates and
     laws that will be in effect when the differences are expected to reverse. A
     valuation allowance, if necessary, is provided against deferred tax assets,
     based upon management's assessment as to their realization.

     NEW ACCOUNTING PRONOUNCEMENTS

     In June  2002,  the  FASB  issued  SFAS  No.  146,  "Accounting  for  Costs
     Associated with Exit or Disposal  Activities,"  which  addresses  financial
     accounting  and  reporting  for  costs  associated  with  exit or  disposal
     activities  and  supersedes  Emerging  Issues Task Force ("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)."  SFAS  No.  146  requires  companies  to  recognize  costs
     associated  with exit or disposal  activities when they are incurred rather
     than at the date of a commitment to an exit or disposal  plan. In addition,
     SFAS No. 146  establishes  that fair  value is the  objective  for  initial
     measurement  of the  liability.  SFAS  No.  146 is  effective  for  exit or
     disposal  activities  initiated after December 31, 2002, but early adoption
     is  permitted.  The Company  adopted SFAS No. 146 on January 1, 2003 and at
     December 31, 2003 has  recognized a liability  for disposal  activities  of
     $10,000.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock Based
     Compensation",  which amends SFAS No. 123 to provide alternative methods of
     transaction for an entity that voluntarily changes to the fair value method
     of accounting  for stock based  employee  compensation.  It also amends the
     disclosure provisions of SFAS No. 123 to require prominent disclosure about
     the  effects  on  reported  net  income of an  entity's  accounting  policy
     decisions with respect to stock based employee compensation.  Finally, SFAS
     No. 148 amends  APB  Opinion  No. 28,  "Interim  Financial  Reporting",  to
     require disclosure of those effects in interim financial  statements.  SFAS
     No. 148 is effective  for fiscal years ended after  December 15, 2002,  but
     early adoption is permitted.  The Company  continues to measure stock based
     compensation in accordance with APB Opinion No. 25, but began reporting the
     additional  quarterly  disclosures  required by SFAS No. 148 in the quarter
     ending March 31, 2003.

     In  January  2003,  the  FASB  issued  FASB  Interpretation  (FIN)  No.  46
     "Consolidation  of  Variable  Interest  Entities."  FIN No. 46  requires  a
     company to  consolidate a variable  interest  entity ("VIE") if the company
     has variable  interests that give it a majority of the expected losses or a
     majority of the expected  residual returns of the entity.  Prior to FIN No.
     46,  VIEs  were  commonly  referred  to as SPEs.  FIN No.  46 is  effective
     immediately  for VIEs created after January 31, 2003.  This  interpretation
     did not have a material  effect on the  Company's  financial  condition  or
     results of operations.

                                      F-11
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    __________


1.   ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

     NEW ACCOUNTING PRONOUNCEMENTS, CONTINUED

     In April 2003, the FASB issued SFAS No. 149, Amendment to Statement No. 133
     on Derivative Instruments and Hedging Activities. This statement amends and
     clarifies  financial  accounting and reporting for derivative  instruments,
     including  certain  derivative  instruments  embedded  in  other  contracts
     (collectively  referred to as derivatives) and for hedging activities under
     SFAS No. 133.  The changes in SFAS No. 149 improve  financial  reporting by
     requiring that contracts with comparable  characteristics  be accounted for
     similarly.  Those  changes  will  result in more  consistent  reporting  of
     contracts  as either  derivatives  or hybrid  instruments.  SFAS No. 149 is
     effective  for  contracts  entered  into or modified  after June 30,  2003,
     except  in  certain  instances  detailed  in  the  statement,  and  hedging
     relationships designated after June 30, 2003. Except as otherwise stated in
     SFAS No. 149, all provisions should be applied prospectively.  The adoption
     of this statement did not have a material effect on the Company's financial
     condition or results of operations.

     In May  2003,  the  FASB  issued  SFAS No.  150,  "Accounting  for  Certain
     Financial Instruments with Characteristics of both Liabilities and Equity."
     SFAS No. 150,  which is  effective at the  beginning  of the first  interim
     period  beginning after June 15, 2003, must be implemented by reporting the
     cumulative  effect  of a  change  in  accounting  principle  for  financial
     instruments  created  before the issuance  date of the  statement and still
     existing at the beginning of the interim period of adoption.  The statement
     requires  that a financial  instrument  which falls within the scope of the
     statement  to be  classified  and measured as a  liability.  The  following
     financial  instruments  are required to be classified as  liabilities:  (1)
     shares that are mandatorily redeemable, (2) an obligation to repurchase the
     issuer's  equity  shares  or one  indexed  to such an  obligation  and that
     requires  or may  require  settlement  by  transferring  assets and (3) the
     embodiment of an  unconditional  obligation  that the issuer may or may not
     settle by issuing a variable number of equity shares if, at inception,  the
     monetary value of the obligation is based on certain  measurements  defined
     in the  statement.  The adoption of this  statement did not have a material
     effect on the Company's financial condition or results of operations.

     RECLASSIFICATIONS

     Certain amounts  presented in the 2002  consolidated  financial  statements
     have  been   reclassified  to  conform  to  the  2003   presentation.   The
     reclassifications  relate  primarily  to  the  presentation  of  costs  and
     expenses in the statement of operations.

2.   GOING CONCERN CONSIDERATIONS

     Since its  inception,  the  Company  has  suffered  recurring  losses  from
     operations  and  has  been  dependent  on  existing  stockholders  and  new
     investors to provide the cash resources to sustain its  operations.  During
     the years ended December 31, 2003 and 2002, the Company reported net losses
     of $669,654 and  $1,275,753,  respectively,  and  negative  cash flows from
     operations of $51,773 and $223,963 respectively.

     Continuing negative operating results produced a working capital deficit of
     $1,875,835  as of December 31, 2003.  The negative  operating  results were
     largely caused by the Company's former subsidiary,  Mass Energy,  Inc. Mass
     Energy,  Inc.  became  severely  delinquent  on certain  accounts  payable.
     Various  vendors have initiated  legal actions against the Company and Mass
     Energy,  Inc. to force payment of past due accounts,  but Mass Energy, Inc.
     lacks the cash  resources  to make such  payments.  One suit has been filed
     against Pangea  Petroleum  Corporation  alleging that it is responsible for
     the debt of its former  subsidiary,  Mass Energy,  Inc. The result of legal
     actions against the Company cannot be predicted,  but this legal action and
     the Company's  recurring negative financial results raise substantial doubt
     about the Company's ability to continue as a going concern.

                                      F-12
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  __________


2.   GOING CONCERN CONSIDERATIONS, CONTINUED

     In 2002,  the  Company  developed  a plan and took  actions to improve  its
     financial position and deal with its liquidity problems.  In the first step
     of the plan, the Company negotiated a settlement agreement (the "Settlement
     Agreement") between the Company and certain parties related to the Company.
     Under the terms of the  Settlement  Agreement  the Company  received a cash
     payment of $75,000 and marketable  equity  securities of $153,000 and fully
     satisfied $296,010 of liabilities and claims in exchange for various assets
     with a carrying  value of $171,642.  Due to the related party nature of the
     Settlement  Agreement,  the Company  recognized no gain,  but recognized an
     increase to  additional  paid-in  capital of $352,368.  (See Note 4) In the
     second step of the plan the Company sold Mass Energy, Inc. in a transaction
     that management  believes will improve both the Company's overall financial
     position  and its  chances  of  acquiring  economically  viable oil and gas
     properties or engaging in transactions  necessary for the future  viability
     of the Company. The final steps of the plan are still being developed,  but
     may include  additional  private  placements of the Company's common stock,
     additional oil and gas property  acquisitions  and/or exploration  efforts,
     and efforts to raise additional debt financing or equity investments. There
     can be no  assurance  that any of the plans  developed  by the Company will
     produce cash flows sufficient to ensure its long-term  viability as a going
     concern.

     The  Company's  long-term  viability  as a going  concern is  dependent  on
     certain key factors, as follows:

      o     The  Company's   ability  to  obtain  adequate  sources  of  outside
            financing to support near term  operations  and to allow the Company
            to continue forward with current strategic plans.

      o     The Company's ability to locate, prove and produce from economically
            viable oil and gas reserves.

      o     The Company's ability to ultimately  achieve adequate  profitability
            and cash flows to sustain continuing operations.


3.   ACQUISITION AND SUBSEQUENT DISPOSITION OF MASS ENERGY, INC.

     On October 5, 2000,  the Company  acquired  Mass  Energy,  Inc., a Houston,
     Texas based oil and gas exploration company, in a transaction accounted for
     as a purchase.  The purchase  price was  2,000,000  shares of the Company's
     restricted  common  stock  issued in  exchange  for all of the  outstanding
     common  stock of Mass  Energy,  Inc.  The  $4,521,856  purchase  price  was
     allocated to the assets  acquired and  liabilities  assumed  based on their
     estimated fair values at the date of acquisition.

     Almost  immediately,  the Mass Energy, Inc.  acquisition  produced negative
     financial  results.  A  series  of  costly  dry-hole  projects  caused  the
     financial  position of Mass Energy,  Inc., and  accordingly,  the Company's
     consolidated  financial position, to deteriorate.  Over the next two years,
     trade payables and other liabilities increased  dramatically.  Mass Energy,
     Inc.'s  unpaid  liabilities  resulted  in legal  actions by a number of its
     vendors and certain of the legal actions seek relief from Pangea  Petroleum
     Corporation (See Note 10).

     Accordingly,  on October 7, 2002, the Company  initiated a transaction (the
     "Transaction")  under which it sold 100 percent of the common stock of Mass
     Energy,   Inc.  to  Thomas  Banks,   Ltd.,  an  unrelated   Cayman  Islands
     corporation,  in  exchange  for $500 and the  assignment  of certain  fully
     reserved notes receivable on the books of Mass Energy,  Inc. At the date of
     the sale,  all of Mass Energy,  Inc.'s assets had been written off or fully
     reserved based on impairment analysis performed by the Company. The $500 in
     cash from Thomas  Banks,  Ltd.  has not been  collected  and has been fully
     reserved.

     The Transaction  resulted in Thomas Banks, Ltd's assumption of Mass Energy,
     Inc.'s   liabilities   totaling   $1,475,141.   The  Company  has  deferred
     recognition of any gain from the  Transaction  because legal counsel cannot
     currently  determine if legal actions against Mass Energy,  Inc and related
     imputed  liability or alter-ego claims against Pangea  Petroleum,  Inc., as
     the sole stockholder of Mass Energy,  Inc. could  eventually  result in the
     Company's liability for the claims.

                                      F-13
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   __________


3.   ACQUISITION AND SUBSEQUENT DISPOSITION OF MASS ENERGY, INC., CONTINUED

     Based on the  Transaction,  the  operations  of Mass Energy,  Inc have been
     separated from  continuing  operations and presented as loss from operation
     of  discontinued   business  segment  in  the  accompanying   statement  of
     operations:

     The  following is a summary of the operating  results of Mass Energy,  Inc.
     for the period from January 1, 2002 to October 7, 2002.

     Revenues:
       Sales and operating revenues                                   $  31,895
       Interest income                                                       --
                                                                      ---------

         Total revenue                                                   31,895
                                                                      ---------

     Costs and expenses:
       Exploration-dry hole and abandonment expense                          --
       Cost of sales                                                         --
       Selling, general and administrative                                9,142
       Loss on write-down of assets to estimated net
         realizable value                                               232,908
       Interest expense                                                      --
                                                                      ---------

         Total costs and expenses                                       242,050
                                                                      ---------

           Net loss                                                   $(210,155)
                                                                      =========

4.   SETTLEMENT AGREEMENT

     On May 30,  2002,  the Company  entered into a  settlement  agreement  (the
     "Settlement  Agreement")  with  various  related  parties  to  settle  debt
     obligations  and  position  the  Company  in a  more  favorable  cash  flow
     position.  Under the Settlement Agreement,  the Company gave up 100% of the
     outstanding  common stock of a wholly owned  subsidiary,  Pangea  Services,
     Inc. in exchange  for:  (i) the  settlement  of certain  accounts and notes
     payable  totaling  approximately  $300,000;  (ii) the  return of  5,991,000
     shares of its common stock to treasury; (iii) the receipt of 900,000 shares
     of Consolidated  Medical Management,  Inc.; and (iv) the receipt of $75,000
     in cash. The primary assets of Pangea Services,  Inc. that were given up in
     the settlement were: (i) 475,000 Class A membership units of Worldlink USA,
     LLC, (an investment previously written off by the Company); (ii) a $125,000
     investment  in  Paradigm  Advanced  Technologies,  Inc.  including  200,000
     warrants to purchase shares of Paradigm  Advanced  Technologies,  Inc. at a
     price of $1.00 per share; and (iii) certain real estate held for investment
     of $46,642.  The Company  recognized no gain or loss on the transaction but
     recognized a capital contribution of $352,368.

5.   NOTES RECEIVABLE FROM RELATED PARTIES

     Notes  receivable  from  related  parties at December  31, 2003  consist of
     demand notes receivable from the former owner of Mass Energy, Inc. and from
     a company  that he owns.  These notes bear  interest at rates  ranging from
     6.25% to 7% per year and are uncollateralized. The notes are fully reserved
     at December 31, 2003.  Following  is an analysis of notes  receivable  from
     related parties at December 31, 2003:

     Contractual balance                                              $ 190,000
     Accrued interest                                                    54,839
                                                                      ---------

                                                                        244,839
     Less allowance for doubtful notes                                 (244,839)
                                                                      ---------
                                                                      $      --
                                                                      ==========


     The Company is pursuing collection of the note receivable;  however, due to
     the uncertainty of the outcome of those efforts, the balance has been fully
     reserved.

                                      F-14
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   __________


6.   PROPERTY AND EQUIPMENT

     Property and equipment consists of the following at December 31, 2003:

       Oil and gas properties                                        $  198,264
       Office equipment                                                  15,245
       Furniture and fixtures                                             1,444
                                                                     ----------

                                                                        214,953
     Less accumulated depreciation, depletion and amortization          (21,514)
                                                                     ----------

     Net property and equipment                                      $  193,439
                                                                     ==========

     Included in oil and gas properties is $10,000  recorded to reflect the cost
     of disposal  activities  associated  with oil and gas  properties  added in
     2003.  A long-term  liability  for the same amount has been  recognized  to
     reflect the Company's obligation for future disposal and dismantlement.

     During the year ended  December  31, 2002,  the Company  recorded dry hole,
     abandonment and impairment  charges of $197,039.  At December 31, 2003, the
     Company  has working  interests  in five  wells.  Three of the wells,  with
     capitalized   costs  totaling   $89,114,   have  not  been  completed  and,
     accordingly,  a  determination  has not yet been  made if those  wells  are
     economically viable.


7.   ACCRUED LIABILITIES

     Accrued liabilities consist of the following at December 31, 2003:

       Consulting expense payable to stockholders                     $   2,000
       Payroll taxes payable                                             12,392
       Accrued interest payable                                          51,307
                                                                      ---------
                                                                      $  65,699
                                                                      =========

8.   NOTES PAYABLE TO RELATED PARTIES

     Notes payable to related  parties  consist of the following at December 31,
     2003:

     Notes  payable  to a  stockholder  of the  Company,  bearing
       interest at the prime rate (4% at December  31, 2003) with
       interest due  quarterly and principal due in October 2004.
       This note is uncollateralized.                                 $  89,184

     Notes payable to two  stockholders/officers  of the Company,
       bearing  interest  at 12% per  year,  and due in one  time
       payments  of  principal  and  interest  at  various  dates
       between  July  2004 and  December  2005.  These  notes are
       uncollateralized.                                                283,500

     Other note payable                                                  10,000
                                                                      ----------

                                                                        382,684
     Less current portion                                              (322,684)
                                                                      ----------

     Long-term portion of notes payable to related parties            $  60,000
                                                                      =========

     Included in accrued  liabilities  at December 31, 2003 is accrued  interest
     owed to these notes payable to related parties of $51,307.

     Future  annual  maturities  of the notes  payable to related  parties as of
     December 31, 2003 are as follows:

                                      F-15
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   __________


8.   NOTES PAYABLE TO RELATED PARTIES, CONTINUED

       YEAR ENDED
       DECEMBER 31,
       ------------

          2004                                                    $  322,684
          2005                                                        60,000
                                                                  ----------

                                                                  $  382,684
9.   INCOME TAXES

     The Company has incurred losses since its inception and, therefore, has not
     been subject to federal income taxes.  As of December 31, 2003, the Company
     had net  operating  loss ("NOL")  carryforwards  for income tax purposes of
     approximately  $12,380,000  which expire in various tax years through 2023.
     Under the  provisions of Section 382 of the Internal  Revenue Code, the net
     operating loss carryforwards resulting from the acquisition of Mass Energy,
     Inc. and the ownership  change in the Company when it recapitalized in 2000
     will severely limit the Company's  ability to utilize its NOL  carryforward
     to reduce future taxable income and related tax liabilities.  Additionally,
     because   United   States  tax  laws  limit  the  time  during   which  NOL
     carryforwards  may be applied  against future taxable  income,  the Company
     will, in all  likelihood,  be unable to take full  advantage of its NOL for
     federal income tax purposes should the Company generate taxable income.

     The  composition  of  deferred  tax assets and the  related  tax effects at
     December 31, 2003 are as follows:

       Net operating losses                                      $ 4,209,200
       Other                                                          17,411
                                                                 -----------
         Total deferred tax assets                                 4,226,611

       Less valuation allowance                                   (4,226,611)
                                                                 -----------
       Net deferred tax asset                                    $        --
                                                                 ===========

     The difference between the income tax benefit in the accompanying statement
     of  operations  and the  amount  that  would  result  if the  U.S.  Federal
     statutory  rate of 34% were  applied  to pre-tax  loss for the years  ended
     December 31, 2003 and 2002 is as follows:

                                               2003                2002
                                         ----------------    ----------------
                                           AMOUNT     %       AMOUNT      %
                                         ---------  -----    ---------  -----

     Benefit for income tax at federal
       statutory rate                    $(227,682) (34.0%)  $(433,756) (34.0%)
     Non-deductible expenses               195,643   29.2%     155,314   12.2%
     Increase in valuation allowance        32,039    4.8%     278,442   21.8%
                                         ---------  -----    ---------  -----
                                         $      --     --%   $      --     --%
                                         =========  =====    =========  =====

10.  COMMITMENTS AND CONTINGENCIES

     OPERATING LEASE

     The Company  leases  office space under an operating  lease that expires in
     2004.  The Company  expects to replace its office space lease in the normal
     course of business. Rent expense incurred under operating leases during the
     years  ended   December   31,  2003  and  2002  was  $4,738  and   $15,364,
     respectively.

                                      F-16
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   __________


10.  COMMITMENTS AND CONTINGENCIES, CONTINUED

     EMPLOYMENT AGREEMENT

     The Company  entered into an employment  agreement with its  Chairman/Chief
     Executive Officer and its President.  The employment agreements provide for
     salaries of $10,000 and $9,000 per month,  respectively,  which the Company
     may defer and pay,  plus  accrued  interest  at the prime  rate plus 1%, on
     amounts  deferred.  The  employees  may  convert any or all  salaries  with
     accrued  interest  to  common  stock  of the  Company  based on 30% off the
     average  closing  bid  price  during  the month  prior to the  month  being
     compensated.  Additionally,  the  employment  agreements  provide  for  the
     issuance  of 100,000  shares of  restricted  stock per month as part of the
     base salary compensation.

     LEGAL PROCEEDINGS

     During the year ended  December 31,  2002,  various  vendors that  provided
     services and supplies to Mass Energy,  Inc. initiated legal actions against
     Mass Energy, Inc. and related alter-ego claims against the Company to force
     payment of past due amounts, but Mass Energy, Inc. lacks the cash resources
     to make such  payments.  In  addition,  one  alter ego suit has been  filed
     against the Company.  These legal actions pertain to approximately $209,000
     of accounts payable and accrued liabilities and all balances claimed by the
     vendors  were  included in the sale of Mass Energy,  Inc. to Thomas  Banks,
     Ltd. (See Note 3). Based on the legal claims against the Company,  the gain
     the Company would have  otherwise  realized on the sale was deferred  until
     the outcome of legal actions is known. Accordingly,  all claims against the
     Company and Mass Energy,  Inc. are fully reserved as part of the $1,475,141
     deferred gain presented in the balance sheet at December 31, 2003.

     The  Company  may also be  periodically  subject to legal  proceedings  and
     claims that arise in the ordinary course of its business. In the opinion of
     management,  such legal  proceedings and claims will not materially  affect
     the financial position, results of operations or cash flows of the Company.

11.  STOCKHOLDERS' EQUITY

     In  September  2003 the  stockholders  of the  company  voted to approve an
     increase in the authorized  shares from  105,000,000 to 210,000,000,  which
     includes 200,000,000 common shares and 10,000 preferred shares.

     PREFERRED STOCK

     The  Company's  articles of  incorporation  authorize the issuance of up to
     5,000,000 shares of serial  preferred stock,  with a par value of $.001 and
     other characteristics determined by the Company's board of directors. As of
     December  31,  2003 and  2002,  there  was no  preferred  stock  issued  or
     outstanding.

     COMMON STOCK

     During the years  ended  December  31, 2003 and 2002,  the  Company  issued
     shares for cash under private  placements of securities and as compensation
     to employees and consultants. These issuances are shown on the accompanying
     statement of stockholders' deficit.

     Included  in stock  issuances  for the year ended  December  31,  2001 were
     certain   shares  issued  under  a  Securities   Purchase   Agreement  (the
     "Securities  Purchase  Agreement")  whereby the Company  issued  12,650,000
     shares  of  restricted  common  stock to an  escrow  agent  (the  "Escrowed
     Shares") for the benefit of four investor groups in exchange for $1,300,000
     in cash.  The  terms of the  Securities  Purchase  Agreement  required  the
     Company to file a  Registration  Statement with the Securities and Exchange
     Commission to register the Escrowed Shares and included  provisions for the
     issuance of four series of warrants with exercise prices to be set based on
     a combination of certain future events and the performance of the Company's
     common  stock.  As of December  31,  2002,  the Company had not  registered
     shares in accordance  with the terms of the Securities  Purchase  Agreement
     and,  accordingly,  at December 31, 2002,  1,440,500  additional shares are
     issuable  to the  investors  under the  agreement.  During  the year  ended
     December 31, 2002, the Company recognized a $192,833 expense for failure to
     timely register shares under the Securities Purchase  Agreement.  Following
     is an  analysis  of shares  and  warrants  issuable  under  the  Securities
     Purchase Agreement.

                                      F-17
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   __________


10.  STOCKHOLDERS' EQUITY, CONTINUED

     COMMON STOCK
                                                 MAXIMUM
                                    PURCHASE    NUMBER OF      MAXIMUM NUMBER
           PURCHASER                  PRICE       SHARES         OF WARRANTS
           ---------               ----------   ---------  ---------------------

    Generation Capital Associates  $  600,000   1,600,000   3,450,000 A Warrants
                                                            3,450,000 B Warrants

    STL Capital Partners, LLC         250,000     666,667   1,333,333 A Warrants
                                                            1,333,333 B Warrants

    Greenwood Partners, L.P.          200,000     533,333   1,066,666 A Warrants
                                                            1,066,666 B Warrants

    The Apmont Group, Inc.            250,000     550,000   1,100,000 C Warrants
                                                            1,100,000 D Warrants

    Escrow Agent Fee                     -           -         75,000 A Warrants
                                                               75,000 B Warrants
                                   ----------   ---------  ----------
      Total                        $1,300,000   3,350,000  14,049,998 Warrants
                                   ==========   =========  ==========

     STOCK OPTIONS

     The Company  periodically  issues incentive stock options to key employees,
     officers,  and  directors to provide  additional  incentives to promote the
     success of the Company's business and to enhance the ability to attract and
     retain the services of qualified persons.  The issuance of such options are
     approved by the Board of Directors. The exercise price of an option granted
     is determined by the fair market value of the stock on the date of grant.

     The Company has elected to follow  Accounting  Principles Board Opinion No.
     25,  "Accounting  for  Stock  Issued  to  Employees"  (APB 25) and  related
     Interpretations  in accounting for its employee stock options  because,  as
     discussed below,  the alternative fair value accounting  provided for under
     FASB Statement No. 123, "Accounting for Stock-Based Compensation", requires
     use of option  valuation  models that were not developed for use in valuing
     employee  stock  options.  Under  APB  25,  if the  exercise  price  of the
     Company's  employee  stock  options is greater  than or equal to the market
     price of the underlying stock on the date of grant, no compensation expense
     is recognized. No compensation expense related to options was recognized in
     2003 or 2002.

     Proforma  information  regarding  net  income  and  earnings  per  share is
     required by Statement  123, and has been  determined  as if the Company had
     accounted  for its employee  stock  options  under the fair value method of
     that  Statement.  There  were no  options  granted  during  the year  ended
     December 31, 2003.  For options  granted during the year ended December 31,
     2002,  the fair value for such  options was  estimated at the date of grant
     using a Black-Scholes option-pricing model with the following assumptions:

                                                          2003        2002
                                                          ----        ----

       Dividend yield                                        -          0%

       Expected volatility                                   -         30%

       Risk free interest                                    -          4%

       Expected lives                                        -     2 years

                                      F-18
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   __________


11.  STOCKHOLDERS' EQUITY, CONTINUED

     STOCK OPTIONS, CONTINUED

     The  Black-Scholes   option  valuation  model  was  developed  for  use  in
     estimating  fair value of traded options that have no vesting  restrictions
     and are fully  transferable.  In addition,  option valuation models require
     the input of highly  subjective  assumptions  including the expected  stock
     price  volatility.  Because  the  Company's  employee  stock  options  have
     characteristics  significantly  different from those of traded options, and
     because changes in the subjective input  assumptions can materially  affect
     the fair value estimate,  in management's  opinion,  the existing models do
     not necessarily  provide a reliable single measure of the fair value of its
     employee stock options.

     For  purposes  of proforma  disclosures,  the  estimated  fair value of the
     options is included in expense over the option's vesting period or expected
     life.


                                                    2003           2002
                                                -----------    -----------

     Net loss as reported                       $  (669,654)   $(1,275,753)

     Adjustment calculated in accordance
       with SFAS 123                                     --         (4,200)
                                                -----------    -----------

     Proforma net loss                          $  (669,654)   $(1,279,953)
                                                ===========    ===========

     Loss per common share, as reported         $     (0.01)   $     (0.02)

     Proforma and diluted net loss per
       common share                             $     (0.01)   $     (0.02)


     A summary of the Company's  stock option  activity and related  information
     for the years ended December 31, 2003 and 2002 follows:

                                 NUMBER OF                        WEIGHTED
                                  SHARES                          AVERAGE
                                  UNDER            EXERCISE       EXERCISE
                                  OPTION            PRICE          PRICE
                                 ---------       -----------      --------

     Balance outstanding at
       December 31, 2001         4,150,000       $0.50-$5.00       $2.55

       Issued                      350,000       $0.20-$1.00       $0.56
                                 ---------

     Balance outstanding at
       December 31, 2002         4,500,000       $0.20-$5.00       $2.39

       Expired                  (2,720,000)      $0.50-$5.00       $3.35
                                 ---------

     Balance outstanding at
       December 31, 2003         1,780,000       $0.20-$1.00       $0.91
                                 =========

     All  outstanding  stock  options are  exercisable  at December 31, 2003 and
     2002. A summary of outstanding stock options at December 31, 2003 follows:

                                      F-19
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   __________


11.  STOCKHOLDERS' EQUITY, CONTINUED

     STOCK OPTIONS, CONTINUED


                                                   REMAINING
       NUMBER OF COMMON                            CONTRACTED
       STOCK EQUIVALENTS      EXPIRATION DATE     LIFE (YEARS)    EXERCISE PRICE
       -----------------      ---------------     ------------    --------------

            350,000           January 2004            0.0             1.00
            370,000           February 2004           0.1             1.00
            160,000           March 2004              0.2             1.00
            100,000           April 2004              0.3             1.00
            125,000           May 2004                0.3             1.00
            150,000           June 2004               0.4             1.00
             75,000           July 2004               0.5             1.00
             50,000           August 2004             0.6             1.00
             50,000           September 2004          0.7             1.00
             50,000           May 2010                6.4             0.50
            100,000           May 2010                6.4             1.00
            100,000           August 2010             6.7             0.20
            100,000           January 2011            7.1             0.50
          ---------

          1,780,000
          =========

     Effective in March 2002, the Company  adopted a Stock Option and Grant Plan
     (the "Plan")  under which  incentive  stock  options,  non-qualified  stock
     options,  restricted  stock, and common stock of the Company may be granted
     from time to time to employees  and  consultants  of the Company.  The Plan
     allows for grants to other  individuals  contributing to the success of the
     Company at the discretion of the Company's board of directors.  The purpose
     of the Plan is to provide  additional  incentives to promote the success of
     the Company and to enhance the Company's  ability to attract and retain the
     services of  qualified  individuals.  The Company  has  reserved  5,000,000
     shares of stock for  issuance  under the Plan and up to 400,000  additional
     shares will be reserved and available for issuance under the Plan each year
     beginning in 2003 and continuing until 2012.


     STOCK WARRANTS

     A summary of the Company's stock warrant  activity and related  information
     for the years ended December 31, 2003 and 2002 follows:

                                 NUMBER OF                        WEIGHTED
                                   SHARES                         AVERAGE
                                   UNDER           EXERCISE       EXERCISE
                                  WARRANT           PRICE          PRICE
                                 ----------      -----------      --------

     Warrants outstanding at
       December 31, 2001         26,549,998      $0.01-$1.00       $0.48

       Issued                       625,000      $0.02             $0.02
       Canceled                 (12,500,000)     $1.00             $1.00
       Exercised                       -            -                 -
                                 ----------

     Warrants outstanding at
       December 31, 2002         14,674,998       $0.01-$0.02      $0.01

       Issued                          -            -                -
       Canceled                        -            -                -
       Exercised                       -            -                -
                                 ----------

     Warrants outstanding at
       December 31, 2003         14,674,998       $0.01-$0.02      $0.01
                                 ==========

                                      F-20
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   __________


11.  STOCKHOLDERS' EQUITY, CONTINUED

     STOCK OPTIONS, CONTINUED

     All stock warrants are exercisable at December 31, 2003 and 2002. A summary
     of outstanding stock warrants at December 31, 2003 follows:

                                                   REMAINING
       NUMBER OF COMMON                            CONTRACTED
       STOCK EQUIVALENTS      EXPIRATION DATE     LIFE (YEARS)    EXERCISE PRICE
       -----------------      ---------------     ------------    --------------

         14,049,998           November 2005           2.9            $0.01
            625,000           December 2012           9.9             0.02
         ----------

         14,674,998
         ==========

     The warrants  issued in connection with the Securities  Purchase  Agreement
     had original  exercise  prices of $0.0375 to $1.00 and a five year exercise
     term. The related warrant  agreements include various provisions that could
     reduce  the  exercise   price  and,   although  the  Company  is  currently
     negotiating to establish the final terms, the Company believes the exercise
     price may be as low as $0.01 as shown above.

12.  RELATED PARTY TRANSACTIONS

     During the years ended  December 31, 2003 and 2002, the Company was engaged
     in various transactions with related parties as follows:

        In May 2002, the Company  completed the Settlement  Agreement  involving
        amounts due from related parties.  The Settlement Agreement is described
        in Note 4.

        In November 2001, the Company entered into a consulting agreement with a
        stockholder to provide record-keeping and other administrative services.
        During the years  ended  December  31,  2003 and 2002 the  Company  paid
        consideration  under this  record-keeping  and  administrative  services
        agreement totaling $80,722 and $39,000, respectively. Such consideration
        was paid by issuing  8,072,223  and  1,100,000  shares of the  Company's
        common stock.

     In addition to the transactions  and balances  described above, the Company
     has various related party notes payable at December 31, 2003 (See Note 8).

13.  NON-CASH INVESTING AND FINANCING ACTIVITIES

     During the years ended December 31, 2003 and 2002,  the Company  engaged in
     various non-cash financing and investing activities as follows:

                                                          2003          2002
                                                       ---------     ---------
       Subscription receivable for issuance of
         common stock                                  $      --     $  22,500

       Common stock issued to retire related party
          Debt                                         $  39,000     $      --

      Long-term obligation recorded upon
         recognition of dismantlement costs            $  10,000     $      --


     In addition to the non-cash  transactions  shown above, the Company entered
     into the  Settlement  Agreement  in 2002,  as described in Note 4, and sold
     Mass Energy,  Inc. for the  assumption  of debts  totaling  $1,475,141,  as
     described in Note 3.

     Following is an analysis of cash paid for interest and income taxes:

                                                          2003          2002
                                                       ---------     ---------

       Cash paid for interest                          $      --     $      --

       Cash paid for income taxes                      $      --     $      --

                                      F-21
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   __________

14.  SUPPLEMENTAL OIL AND GAS INFORMATION - UNAUDITED

     The following supplemental information regarding the oil and gas activities
     of  the  Company  is  presented  pursuant  to the  disclosure  requirements
     promulgated by the Securities and Exchange  Commission ("SEC") and SFAS No.
     69, Disclosures About Oil and Gas Producing Activities ("Statement 69").

     Production  from this field  accounted for 15% and 19% of the Company's oil
     and gas sales  revenues  for the years  ended  December  31, 2003 and 2002,
     respectively.

     ESTIMATED QUANTITIES OF PROVED OIL AND GAS RESERVES

     Set forth below is a summary of the changes in the estimated  quantities of
     the Company's  crude oil and  condensate,  and gas reserves for the periods
     indicated,  as estimated by the Company as of December 31, 2003. All of the
     Company's  reserves are located within the United States.  Proved  reserves
     cannot be measured  exactly  because the  estimation  of reserves  involves
     numerous judgmental determinations.  Accordingly, reserve estimates must be
     continually  revised as a result of new information  obtained from drilling
     and production history,  new geological and geophysical data and changes in
     economic conditions.

     Proved reserves are estimated quantities of gas, crude oil, and condensate,
     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 reserves are
     proved reserves that can be expected to be recovered through existing wells
     with existing equipment and operating methods.

                                                             OIL         GAS
     QUANTITY OF OIL AND GAS RESERVES                       (BBLS)      (MCF)
                                                          ---------   ---------

     Total proved reserves at December 31, 2002                   -           -
     Discoveries                                                532      86,321
     Production                                                 (63)     (5,628)
                                                          ---------   ---------

       Total proved reserves at December 31, 2003               469      80,693
                                                          =========   =========
     Proved developed reserves:

       December 31, 2003                                          -           -

       December 31, 2002                                        469      80,693


     CAPITALIZED COSTS OF OIL AND GAS PRODUCING ACTIVITIES

     The following table sets forth the aggregate  amounts of capitalized  costs
     relating  to the  Company's  oil  and  gas  producing  activities  and  the
     aggregate  amount  of  related  accumulated  depletion,   depreciation  and
     amortization as of December 31, 2003:

       Unproved properties and prospect generation costs
         not being amortized                                        $    89,114
       Dismantlement costs                                               10,000
       Proved properties being amortized                                 99,150
       Less accumulated depletion, depreciation and amortization         (5,837)
                                                                    -----------

         Net capitalized costs                                      $   192,427
                                                                    ===========

                                      F-22
<PAGE>

                          PANGEA PETROLEUM CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   __________


14.  SUPPLEMENTAL OIL AND GAS INFORMATION - UNAUDITED, CONTINUED

     COSTS INCURRED IN OIL AND GAS PRODUCING ACTIVITIES

     The  following  table  reflects the costs  incurred in oil and gas property
     acquisition,  exploration and development activities during the years ended
     December 31, 2003 and 2002:

                                                          2003          2002
                                                      -----------   -----------

       Exploration costs                              $        --   $        --
       Development costs                                  198,264            --
                                                      -----------   -----------

                                                      $   198,264   $        --
                                                      ===========   ===========

     STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS

     The following table reflects the Standardized  Measure of Discounted Future
     Net Cash Flows  relating  to the  Company's  interest in proved oil and gas
     reserves as of December 31, 2003 and 2002:

                                                          2003          2002
                                                      -----------   -----------

       Future cash inflows                            $ 2,036,000            --
       Future development costs                           (44,000)           --
       Future production costs                            (44,000)           --
       Future dismantlement costs                         (10,000)           --
                                                      -----------   -----------

       Future net cash inflows before income taxes      1,938,000            --
       Future income taxes                                     --            --
                                                      -----------   -----------

       Future net cash flows                            1,938,000            --
       10% discount factor                               (511,000)           --
                                                      -----------   -----------

         Standardized measure of discounted future
           net cash inflow                            $ 1,427,000   $        --
                                                      ===========   ===========

     Future net cash flows at each year end, as reported in the above  schedule,
     were determined by summing the estimated annual net cash flows computed by:
     (1)  multiplying  estimated  quantities  of proved  reserves to be produced
     during  each  year  by  current   prices,   and  (2)  deducting   estimated
     expenditures  to be  incurred  during  each year to develop and produce the
     proved reserves (based on current costs).

     Income taxes were computed by applying  year-end  statutory rates to pretax
     net cash flows,  reduced by the tax basis of the  properties  and available
     net  operating  loss  carryforwards.  The annual future net cash flows were
     discounted,  using a  prescribed  10% rate,  and  summed to  determine  the
     standardized measure of discounted future net cash flow.

     The Company  cautions  readers that the  standardized  measure  information
     which places a value on proved  reserves is not  indicative  of either fair
     market  value  or  present  value  of  future  cash  flows.  Other  logical
     assumptions  could have been used for this  computation  which would likely
     have resulted in  significantly  different  amounts.  Such  information  is
     disclosed  solely in  accordance  with  Statement  69 and the  requirements
     promulgated  by the SEC to provide  readers  with a common  base for use in
     preparing  their own  estimates  of  future  cash  flows and for  comparing
     reserves among companies.  Management of the Company does not rely on these
     computations when making investment and operating decisions.

                                      F-23
<PAGE>

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

None

                                    PART III

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

The  directors and officers of the Company,  as of March 5, 2004,  are set forth
below.  The  directors  hold  office for their  respective  term and until their
successors are duly elected and qualified. The officers serve at the will of the
Board of Directors.

DIRECTORS AND EXECUTIVE OFFICERS

Set forth below are the names, ages, and positions of the executive officers and
directors of the Company



Name                      Age    Office
-------                  -----   --------
Charles B. Pollock        64     Chief Executive Officer
                                 and Chairman of
                                 The Board of Directors

Mark F. Weller            53     President and Director

Scott Duncan              37     Chief Financial Officer

Edward R. Skaggs          37     Director

CHARLES B. POLLOCK was appointed the Chief Executive Officer and Chairman of the
Board in June 1999.  From  January  1994 to  September  1995,  Mr.  Pollock  was
President of Praxair Indonesia,  an industrial gas company. From October 1995 to
August  1996,  he was General  Manager of  Praxair,  Inc.  His  responsibilities
included strategic  marketing and competition  analysis.  From September 1996 to
May 1999, Mr.  Pollock was  self-employed  as a consultant and managed  projects
including  the  acquisition  and sale of  businesses,  competitive  analysis and
strategic marketing. Mr. Pollock received his Bachelor of Science degree in 1962
from North  Carolina State  University,  his Master of Science degree in Ceramic
Engineering from North Carolina State University in 1968 and his PhD in Material
Engineering from North Carolina State University in 1972.

MARK F. WELLER was appointed  President  and Director in March 2002.  Mr. Weller
was with Texaco,  Inc. for over 30 years until his departure in early 2002.  His
last position with Texaco was as general manager for new project development for

                                    Page 13
<PAGE>

West Africa.  His  background  includes all phases of oil and gas operations and
development, both onshore and offshore on the U.S. gulf and west coasts, as well
as international  project development  assignments.  He holds a BS in mechanical
engineering from the University of California, Davis.

SCOTT DUNCAN was appointed Chief Financial  Officer in February 2003. Mr. Duncan
is currently the Cost Accounting  Manager for Farouk Systems,  a rapidly growing
manufacturer of hair care and spa products. From September 2001 through February
2004,   Mr.  Duncan   handled   financial  and  cost   accounting   for  Goodman
Manufacturing, a large air conditioner manufacturing company. From December 1998
to August  2001,  Mr.  Duncan was a  Programmer  Analyst  with RHI  Refractories
America.  Mr.  Duncan has a total of 8 years of experience in financial and cost
accounting  for  manufacturing  companies  along  with a  total  of 6  years  of
experience  with  computer  programming.  He is actively  involved  with various
organizations  offering  accounting,  programming  and consulting  services.  He
received a BBA in accounting from Southwest  Texas State  University in 1989 and
his CPA license in 1992.

EDWARD R.  SKAGGS was  appointed  to the Board of  Directors  of the  Company on
December 18, 2000. Mr. Skaggs has worked for an  investigative  consulting firm,
Skaggs  &  Associates  since  June of  1991.  Mr.  Skaggs  has  over 10 years of
experience  in  investigations  and  security.  In  addition,  he has  extensive
experience in retail  management  specifically  dealing in personnel  issues and
security  matters.  He received a Bachelor of Arts degree in  Political  Science
from Texas Tech University in 1992.

All  officers  and  directors  listed above will remain in office until the next
annual meeting of our  stockholders,  and until their  successors have been duly
elected and qualified.  There are no agreements  with respect to the election of
Directors.  We have not  compensated  our  Directors for service on our Board of
Directors,  any  committee  thereof,  or  reimbursed  for expenses  incurred for
attendance  at meetings of our Board of  Directors  and/or any  committee of our
Board of Directors.  Officers are  appointed  annually by our Board of Directors
and each  Executive  Officer serves at the discretion of our Board of Directors.
We do not have any standing committees. Our Board of Directors may in the future
determine to pay Directors' fees and reimburse Directors for expenses related to
their activities.

ITEM 401(E)

The Company currently does not have an audit committee.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Section 16(a) of the Securities  Exchange Act of 1934, as amended (the "Exchange
Act") requires the Company's  officers,  directors and persons who own more than
10% of the  Company's  Common Stock to file reports of ownership  and changes in
ownership with the SEC and the National Association of Securities Dealers,  Inc.
Officers, directors and greater than 10% stockholders are required by regulation
to furnish  the Company  with copies of all forms they file  pursuant to Section
16(a) of the Exchange  Act.  Based solely on the reports we have received and on
written  representations  from certain  reporting  persons,  we believe that the
directors,  executive  officers,  and our greater  than ten  percent  beneficial
owners have complied with all applicable filing requirements for the fiscal year
ended December 31, 2003.

The Company has adopted a code of ethics for its Principal  Executive and Senior
Financial Officers, which is attached hereto as Exhibit 14.

                                    Page 14
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

             SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                             Annual Compensation                            Long Term Compensation
                                     ---------------------------------                -------------------------------------
                                                                                         Awards            Payouts
                                                                                      -----------  ------------------------
         Name and             Year    Salary    Bonus    Other Annual   Restricted    Securities     LTIP      All Other
         Principal Position             ($)      ($)     Compensation      Stock      Underlying    Payouts   Compensation
                                                             ($)          award(s)      Options /     ($)
                                                                          (shares)        SARs
                                                                                           (#)
         ------------------   ----   --------  --------  -------------  ------------  -----------  ---------  -------------
<S>                           <C>       <C>     <C>       <C>           <C>             <C>             <C>          <C>
         Charles B. Pollock   2001     -0-     -0-        3,000         1,000,000(4)    300,000        -0-          -0-
         CEO and              2002     -0-(1)  -0-            0           600,000(4)          0        -0-          -0-
         Chairman of the      2003     -0-(2)  -0-(3)         0         1,200,000(4)          0        -0-          -0-
         Directors
         ------------------   ----   --------  --------  -------------  ------------  -----------  ---------  -------------
         Mark F.  Weller      2001      N/A     N/A           N/A            N/A              N/A       N/A
         President and        2002     -0-(5)  -0-(3)         0           800,000(4)          0        -0-          -0-
         Director             2003     -0-(6)  -0-(3)         0         1,100,000(4)          0        -0-          -0-
         ------------------   ----   --------  --------  -------------  ------------  -----------  ---------  -------------
</TABLE>
(1) 6,279,041  shares of common  stock were  issued in lieu of cash  salary
(2) 14,041,356  shares of common  stock were issued in lieu of cash salary
(3) Bonus of 200,000  restricted  shares of common stock
(4) Restricted shares pursuant to employment  contract
(5) 3,602,230 shares of common stock were issued in lieu of cash salary
(6) 11,666,724  shares of common  stock were issued in lieu of cash salary



OPTIONS/SAR GRANTS IN LAST FISCAL YEAR


                  Individual Grants
----------------------------------------------------------------------------
Name        Number of  Percent of   Exercise  Expiration  Grant Date Present
           Securities     Total     of Base      Date           Value ($)
           Underlying   Options /    Price
            Options/      SARs       ($/sh)
              SARs     Granted to
             Granted    Employees
               (#)      in Fiscal
                           Year
---------- ----------- ----------- ---------- ----------  ------------------
Charles B.
Pollock         0           0          0        N/A           N/A
---------- ----------- ----------- ---------- ----------  ------------------
Mark F.
Weller          0           0          0        N/A           N/A
---------- ----------- ----------- ---------- ----------  ------------------

-------------- ------------ ---------------- ---------------- ---------------
Name           Shares        Value Realized  Number of        Value of
               Acquired on   ($)             Securities       Unexercised In-
               Exercise (#)                  Underlying       The-Money
                                             Unexercised      Options/SARs
                                             Options / SARs   At Fiscal Year-
                                             At Fiscal Year-  End ($)
                                             End (#)          Exercisable /
                                             Exercisable /    Unexercisable
                                             Unexercisable
-------------- ------------ ---------------- ---------------- ---------------
Charles B.
Pollock            -0-              -0-           -0-             -0-
-------------- ------------ ---------------- ---------------- ---------------
Mark F.
Weller             -0-              -0-            -0-            -0-
-------------- ------------ ---------------- ---------------- ---------------

                                    Page 15
<PAGE>


EMPLOYMENT AGREEMENTS

We have entered into employment  agreement with Mr. Charles Pollock and Mr. Mark
Weller. The following sets forth the terms of the employment agreement:  Charles
B. Pollock-On January 1, 2003, we entered into an employment  agreement with Mr.
Pollock that ends on December  31, 2004,  to act as our Chairman of the Board of
Directors and Chief Executive Officer. Pursuant to the employment agreement, Mr.
Pollock is paid a salary of $10,000  per month and has an option to convert  any
or all salary with accrued interest to Pangea  Petroleum  restricted stock under
Rule 144 at a conversion  rate thirty percent off the average closing bid during
the month  prior to the month  being  compensated.  In  addition,  he shall also
receive  100,000  restricted  shares a month as part of his base  salary  and an
annual  bonus in the  minimum  amount of  200,000  shares of  restricted  stock.
Currently, Mr. Pollock has chosen to defer his salary.

Mark F.  Weller-On  March 1, 2003, we entered into an employment  agreement with
Mr. Weller that ends on December 31, 2004, to act as our President and Director.
Pursuant to the employment agreement,  Mr. Weller is paid a salary of $9,000 per
month and has an option to convert  any or all salary with  accrued  interest to
Pangea  Petroleum  restricted  stock under Rule 144 at a conversion  rate thirty
percent  off the  average  closing bid during the month prior to the month being
compensated.  In addition,  he shall also receive  100,000  restricted  shares a
month as part of his base salary and an annual  bonus in the  minimum  amount of
200,000 shares of restricted  stock.  Currently,  Mr. Weller has chosen to defer
his salary through the end of 2004.

Mr.  Scott  Duncan was  retained on May 12, 2003 as Chief  Financial  Officer to
provide  advice and services on financial  matters  pertaining  to the Company's
business  including but not limited to SEC reports.  The terms of his employment
are based on payment in the form of the  Company's  common  stock at the rate of
40,000 restricted Rule 144 shares per month.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Based upon information received from the persons concerned, each person known to
us to be the  beneficial  owner of more than  five  percent  of the  outstanding
shares of our Common Stock,  each director,  each of our executive  officers and
all of our directors and executive officers as a group, owned beneficially as of
March 5, 2004,  the number and  percentage of  outstanding  shares of our Common
Stock indicated in the following table:

Name and Address of
Beneficial Owner                Number of Shares(1)     Percentage

Charles B.  Pollock                   28,635,328(2)            21%
5850 San Felipe, Suite 500
Houston, TX 77057

Mark F.  Weller
5850 San Felipe, Suite 500            20,788,954               15%
Houston, TX 77057

Edward Skaggs
5850 San Felipe, Suite 500               270,000               **
Houston, TX 77057

                                    Page 16
<PAGE>

Scott Duncan
5850 San Felipe, Suite 500               545,000               **
Houston, TX 77057

All directors and executive officers as a group
(as a group)                                                   36%

** Less than one percent.

(1) Shares are held directly with sole voting and investment power.
(2) 24,456,943  shares  indirectly held through spouse and 3,578,385 shares held
directly

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

On October 7, 2002,  the Company  sold their  interest in Mass  Energy,  Inc. in
exchange  for the  liabilities  of the  Company;  however,  Pangea  retained two
promissory notes owed by Randall Massey and Sandstone Ventures,  Inc. Both notes
receivables  were incurred prior to the Company's  acquisition of Mass Energy in
October of 2000. At December 31, 2003, the Company had notes receivable due from
Randy  Massey in the amount of $150,000  plus  accrued  interest.  Approximately
$150,000 of the  balance is  evidenced  by a  promissory  note.  Under the note,
interest  accrues on the unpaid  principal  at 6.25% per annum.  Mr.  Massey has
never made any payments of principal or interest on these notes receivable.  The
notes are fully reserved at December 31, 2003.

Additionally,  the Company had a notes  receivable due from Sandstone  Ventures,
Inc.,  an affiliate  of Randy  Massey in the amount of $40,000.  Under the note,
interest accrues on the unpaid principal at 7.0% per annum.

At December 31, 2003, the Company had notes payable to related parties  totaling
$372,684.  These  include a demand  note  payable in the amount of  $233,500  to
Charles  B.  Pollock,  a demand  note  payable  in the amount of $89,184 to Mary
Pollock,  daughter  of Charles B.  Pollock  and to Mark  Weller in the amount of
$50,000.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this report

Exhibit 31.1 --  Certification  of Chief Executive  Officer of Pangea  Petroleum
                 Corporation required by Rule 13a - 14(1) or Rule 15d - 14(a) of
                 the  Securities  Exchange Act of 1934,  as adopted  pursuant to
                 Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.2 --  Certification  of Chief Financial  Officer of Pangea  Petroleum
                 Corporation required by Rule 13a - 14(1) or Rule 15d - 14(a) of
                 the  Securities  Exchange Act of 1934,  as adopted  pursuant to
                 Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.1 --  Certification  of Chief Executive  Officer of Pangea  Petroleum
                 Corporation  pursuant to Section 906 of the  Sarbanes-Oxley Act
                 of 2002 and Section 1350 of 18 U.S.C. 63.

Exhibit 32.2 --  Certification  of Chief Financial  Officer of Pangea  Petroleum
                 Corporation  pursuant to Section 906 of the  Sarbanes-Oxley Act
                 of 2002 and Section 1350 of 18 U.S.C. 63.

(b) Reports on Form 8-K.

      None.

                                    Page 17
<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

AUDIT FEES

Ham, Langston & Brezina, L.L.P. billed us in the aggregate amount of $24,577 and
$27,816  for  professional  services  rendered  for  their  audit of our  annual
financial  statements and their reviews of the financial  statements included in
our Forms  10-QSB for the year ended  December  31, 2003 and  December 31, 2002,
respectively.

AUDIT-RELATED FEES

Ham,  Langston & Brezina,  L.L.P. did not bill us for, nor perform  professional
services  rendered  for  assurance  and related  services  that were  reasonably
related  to the  performance  of  audit or  review  of the  Company's  financial
statements for the fiscal years ended December 31, 2003 and December 31, 2002.

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES

For the fiscal  years  ended  December  31, 2003 and  December  31,  2002,  Ham,
Langston & Brezina,  L.L.P.  did not bill us for,  nor  perform,  any  financial
information  systems  design  or  implementation.  For the  fiscal  years  ended
December 31, 2003 and December  31,  2002,  we were not billed for  professional
services  from any  other  accounting  firm for  information  systems  design or
implementation.

TAX FEES

Ham, Langston & Brezina,  L.L.P. billed us in the aggregate amount of $1,758 and
$1,500 for  professional  services  rendered  for tax related  services  for the
fiscal years ended December 31, 2003 and December 31, 2002, respectively.

ALL OTHER FEES

We were not billed for any other professional services for the fiscal year ended
December 31, 2003.

AUDITOR INDEPENDENCE

Our Board of  Directors  considers  that the work done for us in the year  ended
December  31,  2003 by Ham,  Langston  &  Brezina,  L.L.P.  is  compatible  with
maintaining Ham, Langston & Brezina, L.L.P.'s independence.

AUDITOR'S TIME ON TASK

All of the work expended by Ham, Langston & Brezina,  L.L.P. on our December 31,
2003 audit was attributed to work performed by Ham, Langston & Brezina, L.L.P.'s
full-time, permanent employees.

                                   SIGNATURES

Pursuant to the  requirements of section 13 or 15(d) of the Securities  Exchange
Act of 1934, the  undersigned has duly caused this Form 10-KSB/A to be signed on
its  behalf  by the  undersigned,  there  unto duly  authorized,  in the City of
Houston, Texas, on May 26, 2004.

                                    Page 18
<PAGE>

PANGEA PETROLEUM CORPORATION


By: /s/ Charles B. Pollock                         Date: May 26, 2004
    -------------------------------------
    Charles B.  Pollock,
    Chairman of the Board and Chief Executive Officer


Pursuant to the requirements of the Securities Exchange Act of 1933, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the date indicated.

By: /s/ Charles B. Pollock
    ----------------------
Date: May 26, 2004
Charles B. Pollock, Chairman of the Board, and Chief Executive Officer


By: /s/ Scott Duncan
    ----------------
Date: May 26, 2004
Scott Duncan, Chief Financial Officer

By: /s/ Mark Weller
    ---------------
Date: May 26, 2004
Mark Weller, President and Director


By: /s/ Edward R. Skaggs
    --------------------
Date: May 26, 2004
Edward R. Skaggs, Director

                                    Page 19