UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
                                   -----------

(Mark One)
   [X]  Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange
        Act of 1934
                           For the Fiscal Year Ended December 31, 2002

   [ ]  Transition Report Pursuant to Section 13 or 15(d) of The Securities
        Exchange Act of 1934

                         Commission File Number 0-23530

                               TRANS ENERGY, INC.
                 ----------------------------------------------
                 (Name of small business issuer in its charter)

            Nevada                                           93-0997412
--------------------------------                         -------------------
 (State or other jurisdiction of                          (I.R.S. Employer
incorporation or organization)                           Identification No.)

         210 Second Street, P.O. Box 393, St. Marys, West Virginia 26170
         ---------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

Issuer's telephone no.:  (304) 684-7053

Securities registered pursuant to Section 12(b) of the Exchange Act:   None

Securities registered pursuant to Section 12(g) of the Exchange Act:   Common

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.
                                                        Yes [X]           No [ ]

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of  Regulation  S-B 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 or any amendment to this Form 10-KSB.                   [X]

         State the issuer's revenues for its most recent fiscal year.  $ 889,764

         State  the  aggregate   market  value  of  the  voting  stock  held  by
non-affiliates  computed by  reference to the price at which the stock was sold,
or the average bid and ask prices of such stock as of a specified date within 60
days. $696,100 (Based on price of $0.003 on March 25, 2003)

         State the number of shares  outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.

              Class                         Outstanding as of December 31, 2002
     -----------------------                -----------------------------------
     Common Stock, Par Value                           237,519,127
         $.001 per share

                       DOCUMENTS INCORPORATED BY REFERENCE

         A description of "Documents  Incorporated by Reference" is contained in
Part III, Item 13.

Transitional Small Business Disclosure Format.      Yes [ ]           No [X]

<PAGE>



<TABLE>
<CAPTION>

                               TRANS ENERGY, INC.

                                TABLE OF CONTENTS

                                                                                                 Page

                                                      PART I

<S>         <C>                                                                                    <C>
Item 1.     Description of Business .......................................................        3

Item 2.     Description of Property........................................................       11

Item 3.     Legal Proceedings..............................................................       12

Item 4.     Submission of Matter to a Vote of Security Holders.............................       14

                                                PART II

Item 5.     Market for Common Equity and Related Stockholder Matters.......................       14

Item 6.     Management's Discussion and Analysis or Plan of Operation......................       15

Item 7.     Financial Statements...........................................................       19

Item 8.     Changes in and Disagreements with Accountants on Accounting and
            Financial Disclosure...........................................................       19

                                               PART III

Item 9.     Directors, Executive Officers, Promoters and Control persons;
            Compliance with Section 16(a) of the Exchange Act..............................       19

Item 10.    Executive Compensation.........................................................       20

Item 11.    Security Ownership of Certain Beneficial Owners and Management.................       21

Item 12.    Certain Relationships and Related Transactions.................................       22

Item 13.    Exhibits and Reports on Form 8-K...............................................       23

Item 14.    Controls and Procedures........................................................       23


            Signatures.....................................................................       24

            Certifications.................................................................       25

</TABLE>


                                       2
<PAGE>




                                     PART I

Item 1.  Description of Business

History

         Trans  Energy,  Inc. is engaged in the  transportation,  marketing  and
production  of natural gas and oil,  and  certain  exploration  and  development
activities.  We own interests in seven oil and gas wells in West Virginia and an
interest in seven oil wells in Wyoming that we do not  operate.  We also own and
operate an aggregate of over 100 miles of three-inch, four-inch and six-inch gas
transmission  lines  located  within West  Virginia in the  Counties of Ritchie,
Tyler and Pleasants.  This pipeline system gathers the natural gas produced from
these wells and from wells owned by third  parties.  We also have  approximately
14,000 gross acres under lease in the Powder River Basin in Campbell,  Crook and
Weston Counties, Wyoming.

         In 1998, we purchased from GCRL Energy, Ltd. all of its interest in the
Powder  River Basin in  Campbell  and Crook  Counties,  Wyoming,  consisting  of
interests  in five (5)  wells,  four (4) of which are  producing,  interests  in
30,000 leasehold acres,  and interests in approximately  seventy-three  miles of
3-D seismic data. The properties  include three producing  fields from Minnelusa
Sandstone and were discovered on 3-D seismic.  During 1999, the Sagebrush 3 well
was drilled in the Sagebrush field in Campbell  County Wyoming.  It will be used
as a water disposal well for the Sagebrush #1 and #2. It is anticipated that the
Sagebrush #3 will be put into operation as a injection well during the summer of
2003.

         Our principal  executive offices are located at 210 Second Street, P.O.
Box 393, St. Marys,  West  Virginia  26170,  and our  telephone  number is (304)
684-7053.

Business Development

         In 2001,  we  continued  our interest in the Trenton - Black River deep
gas field in the Appalachian Basin in West Virginia.  We believes that this area
may become active in the counties in which we operate. We continue to focus much
of  our  efforts  in  this  area  to  take  advantage  of the  situation  if the
opportunity  becomes  available.  In 1999, we sold many of our Appalachian Basin
assets  and  purchased  51% of a  producing  well in the Powder  River  Basin in
Wyoming.  We then focused our  attention  toward  developing  our acreage in the
Powder River Basin in Wyoming and  drilling  for deep gas in the Trenton-  Black
River area.

         Our business strategy is to economically increase reserves,  production
and the sale of gas and oil from existing and acquired  properties in the Powder
River Basin, Appalachian Basin and elsewhere, in order to maximize shareholders'
return over the long term. Our strategic location in West Virginia enables us to
actively pursue the acquisition and development of producing  properties in that
area that will  enhance our  revenue  base  without  proportional  increases  in
overhead costs.

         In September  1993,  we acquired  certain oil and gas assets  including
wells and  pipelines,  in  exchange  solely  for shares of our  authorized,  but
previously unissued common stock. These acquisitions are summarized below:

         Tyler Construction Company, Inc.

         We acquired an interest equal to 65% of the total outstanding shares of
Tyler Construction Company from Loren E. Bagley and William F. Woodburn, both of
whom are  directors  of Trans  Energy.  Tyler  Construction  owns and operates a
natural gas gathering  pipeline system serving the  industrialized  Ohio Valley.
Tyler  Construction  also owns and operates 27 miles of six-inch pipeline and 10
miles of four-inch pipeline.



                                       3
<PAGE>


         Tyler  Construction's trunk line system consists of a six-inch pipeline
that begins at the town of St. Marys,  West Virginia,  located on the Ohio River
in the County of Pleasants in western West Virginia,  and proceeds  twenty-seven
miles due east to Bradden  Station,  West Virginia.  Near Bradden  Station,  the
pipeline  intercepts major transmission lines of Equitable Natural Gas, Dominion
Transmission,  Inc. and Eastern American Energy. An intercepting line consisting
of ten miles of  four-inch  pipeline  begins at a point  eight miles east of St.
Marys and proceeds  north 10 miles to an  industrial  park  located  seven miles
south of  Sistersville,  West Virginia.  At this point,  gas is delivered to OSI
Specialties  (formerly Union Carbide) and Consolidated  Aluminum  Corporation of
America under a marketing agreement with Sancho.  Pursuant to our agreement with
Sancho,  we have  the  right  to sell  natural  gas  subject  to the  terms  and
conditions of a 20-year contract, as amended, that Sancho entered into with Hope
Gas, Inc. in 1988. This agreement is a flexible volume supply agreement  whereby
we receive the full price which Sancho  receives  less a $.05 per Mcf  marketing
fee paid to Sancho.  The price of the natural gas is based upon the  residential
gas index and the Inside F.E.R.C. CNG Index.

         On February  28, 2003,  we sold 7.6 miles of the 6-inch  pipeline to PC
Pipeline,  Inc., located in Morgantown,  West Virginia. In consideration for the
sale,  we  received  35% of the  outstanding  stock of Tyler  Construction  from
Ecological  Energy,  Inc.,  an  affiliate  of PC  Pipeline.  As a result  of the
transaction, we now own 100% of the capital stock of Tyler Construction.

         Also on February 28, 2003,  we sold 10 miles of the 4-inch  pipeline to
Triad Energy Corporation,  located in Marietta, Ohio, for the cash consideration
of $270,000.  Proceeds from the sale are being used to pay down  existing  short
and long-term debt.

         Spencer Wells

         We acquired all rights, title and interest to six producing oil and gas
wells  located in West  Virginia,  in exchange for shares of Trans Energy common
stock.  Five of the wells identified as "Fowler,"  "Goff," "Locke," "McGill" and
"Workman"  are  situated  in Ritchie  County in a proven  reservoir  field.  The
remaining  well  identified as  "Spencer,"  is located in Tyler County.  All six
wells were  completed  in 1991 and have been  producing  oil and gas through the
date hereof.  In 1999,  five of these wells were sold to an  unaffiliated  third
party and in 2000, the sixth well was sold to an unaffiliated third party.

         The Pipeline, Ltd.

         We acquired from Tyler Pipeline, Inc. all rights, title and interest in
the natural gas gathering pipeline system known as The Pipeline,  Ltd. (the name
of the  pipeline,  not a legal  entity),  a  four-inch  pipeline  that begins at
Twiggs,  West  Virginia,  nine miles east of St. Marys,  West Virginia  where it
intercepts Tyler  Construction's  trunk line system and proceeds due south for a
distance of six miles. The Pipeline, Ltd. system is used for purchasing gas from
third party producers.  Mr. Woodburn,  our Secretary / Treasurer and a director,
is also President and owns 50% of Tyler Pipeline. Mr. Bagley, our Vice President
and a director, also owns 50% of Tyler Pipeline.

         Ritchie County Gathering Systems, Inc.

         We acquired  all the issued and  outstanding  capital  stock of Ritchie
County  Gathering  Systems,  Inc., a West Virginia  corporation.  Ritchie County
Gathering owns and operates a four-inch  natural gas gathering line which begins
five miles south of Cairo,  West Virginia at Rutherford,  and proceeds due south
for 4.6 miles, crossing Mellon Ridge and ending at Macfarlan Creek approximately
1/2 mile  north of the  South  Fork of the  Hughes  River.  The  Ritchie  County
Gathering  pipeline is used for  purchasing  gas from third party  producers and
delivering such gas to Hope Gas.





                                       4
<PAGE>


         Powder River Basin Wyoming

         On March 6, 1998,  we entered into an  agreement to purchase  from GCRL
Energy, Ltd. all of its interest in the Powder River Basin in Campbell and Crook
Counties,  Wyoming, consisting of interests in five (5) wells, four (4) of which
are  producing,   interests  in  30,000   leasehold   acres,  and  interests  in
approximately  seventy-three  miles of 3-D seismic data. The properties  include
three  producing  fields from  Minnelusa  Sandstone  and were  discovered on 3-D
seismic.  We made an initial  payment  for the  properties  of  $50,000  and the
balance of $2,987,962 was paid for with proceeds from the sale of debentures.

         The following table sets forth information  concerning the existing oil
production per day of the producing wells located on the GCRL property.
<TABLE>
<CAPTION>

                                     Gross Bbls.
Name of Well                         Oil Per Day        Net % to TSRG          Net Bbls. to TSRG
------------                        ------------        -------------          -----------------
<S>            <C>                          <C>                 <C>                  <C>
Sagebrush Fed #1                            48                  48.8%                23
Sagebrush Fed #2                            21                  47.5%                10
Pinon Fee #1                                24                  51.2%                12
Sandbar Boley 31-36                         25                  27.8%                 7
                                         -----                                     ----
  includes Sandbar State
  1-36 and 2-36
</TABLE>

Current Business Activities

         We operate  our oil and  natural  gas  properties  and  transports  and
markets natural gas through our transmission systems in West Virginia.  Although
management  desires to acquire  additional oil and natural gas properties and to
become  more  involved  in  exploration  and  development,   this  can  only  be
accomplished if we can secure future funding.  Management intends to continue to
develop and increase the production from the oil and natural gas properties that
it currently owns.

         Although we will continue to transport  and market  natural gas through
our  various  pipelines,  there are no  current  plans to  acquire or to lay any
additional  pipeline  systems in 2003. Apart from one well drilled in the Powder
River  basin in  Wyoming  (Sagebrush  #3) and the seven  re-entry  Benson  wells
drilled in West Virginia,  we have not participated in any new wells in the last
four years.

         Powder River Basin Wyoming - Prima

         On December 28, 1996,  we purchased 420 acres in the Powder River basin
in Wyoming  for  $50,000  from an  unaffiliated  third  party.  Included  in the
purchase price was a condition that the previous owners would provide all of the
geologic and geophysical work as part of the purchase price. On February 3, 1997
we leased an  additional  480 acres that joined with our acreage  position.  The
target  formation is the Minnelusa "B1" sand.  There  presently are no producing
wells on such acreage and no proved reserves located on the acreage owned by us.

         Five  two-dimensional   ("2-D")  seismic  lines  and  a  6-square  mile
three-dimensional  ("3-D") seismic program have been shot across the acreage now
held by us. Unlike 2-D seismic testing which provides a cross-sectional  view of
the subsurface of the Earth,  3-D testing  provided a full,  three-  dimensional
view of the subsurface.  Such views allow for greater  precision in the location
of potential  drilling sites.  3-D testing allows  potential  drillers to obtain
accurate estimates of the size of oil and gas bearing structures and the profile
of the  structure.  2-D testing  only  informs  the driller  that an oil and gas
bearing structure is in a particular area, without giving information as to size
and shape.  Without an accurate  estimate of the size of the oil and gas bearing
structures,  it  is  difficult  to  accurately  estimate  the  reserves  in  the
structure,  and,  thus,  the economic  viability  of drilling  into a particular
structure.  Without an accurate profile of the structure,  a driller may not hit
the most economic portion of the structure.


                                       5
<PAGE>


         Water pressure  primarily is responsible for the movement of oil within
the area of our  acreage.  Where water  pressure  is the cause of oil  movement,
finding the apex of the oil bearing  structure  is critical.  Drilling  into the
apex of such a structure  usually  assures  that a maximum  amount of oil, and a
minimal  amount of water,  will be  recovered  from a well.  Hitting such a zone
elsewhere than at the apex will result in a lower proportion of oil to water and
reduced rates of recovery.

         We completed  drilling  the Fowler 22-8 in January 1998 and  determined
the well to be a dry hole and was plugged.  We have not done further drilling on
the acreage.

         Powder River Basin Wyoming - Wolffe Prospect

         In 1997, we purchased a 30% working  interest in the Wolffe Prospect in
the  Powder  River  Basin  in  Campbell  County,  Wyoming  for  $65,000  from an
unaffiliated  third  party.  Included  in the  purchase  price was a 30% working
interest  in the Wolffe  #1-35 well and 30%  interest  in 240 acres.  In October
1997,  we  participated  in our share of the drilling of the Horizon 32-35 well.
The target  formation was the Minnelusa "B1" sand. The well was determined to be
a dry hole and  plugged.  On November  15,  1999,  we  purchased  for $16,000 an
additional  51% working  interest in the Wolff 1-35 well from Renor  Exploration
Limited.  In September 2002, we transferred  this well to an unaffiliated  third
party in settlement of a lawsuit.

         Sistersville

         In 1995, we purchased  approximately  2,200 acres in a known  producing
field located near  Sistersville,  West Virginia for $100,000.  The Sistersville
field has been in operation  since the 1890's,  although at a very low level for
the past several years.  To date the field has produced over 13 million  barrels
of  oil.  The  field  contains  portions  of the  Big  Injun  and  Keener  sands
formations, both well known oil and gas bearing formations,  which are the zones
we intend to  explore.  These  formations  are  approximately  1,700  feet deep.
Recoverable  reserves  of oil in the  field are  estimated  at  several  million
barrels.  We drilled a well on the Sistersville  acreage in April 1997. In 1999,
we sold the Sistersville field for $125,000 to an unaffiliated third party.

Research and Development

         We have not allocated  funds for  conducting  research and  development
activities  and,  due  to  the  nature  of our  business.  We do not  anticipate
allocating funds for research and development in the immediate future.

Marketing

         We  operate  exclusively  in the  oil  and gas  industry.  Natural  gas
production  from wells owned by us is generally  sold to various  intrastate and
interstate  pipeline  companies and natural gas marketing  companies.  Sales are
generally  made on the spot market or under  short-term  contracts  (one year or
less) providing for variable or market sensitive prices.  These prices often are
tied to natural gas futures contracts as posted in national publications.

         Natural gas delivered  through our pipeline network is sold through the
Sancho  Oil and Gas  Corporation  contract  to the  industrial  facilities  near
Sistersville, West Virginia, or to Hope Gas, a local utility. Some of the gas is
sold at a fixed  price on a year  long  basis and some at a  variable  price per
month per Mcf. Under our contract with Sancho, we have the right to sell natural
gas subject to the terms and conditions of a 20-year contract,  as amended, that
Sancho entered into with Hope Gas in 1988.  This agreement is a flexible  volume
supply agreement  whereby we receive the full price which Sancho charges the end
user less a $.05 per Mcf marketing fee paid to Sancho.  The price of the natural
gas is based  upon the  greater  of the  residential  gas  commodity  index  and
published  Inside  F.E.R.C.  Index,  at our  option,  for the  first  1,500  Mcf
purchased per day by Hope Gas and  thereafter  the price is the Inside  F.E.R.C.
Index. The residential gas commodity index does not directly  fluctuate with the
overall price of natural gas. The Inside F.E.R.C.  Index fluctuates monthly with
the change in the price of natural gas. While such option provides certain price
protection for us, there can be no assurance that prices paid by us to suppliers
will be  lower  than  the  price  which  we  would  receive  under  the Hope Gas
arrangement.  Prior to June 1, 1996, the price was the residential gas commodity
index and when the market  price of gas rose above such  index,  our  ability to
purchase gas from third parties was adversely effected.

         We sell our oil production to third party  purchasers  under agreements
at posted  field  prices.  These third  parties  purchase the oil at the various
locations where the oil is produced.

                                       6
<PAGE>

         Although  management  believes that we are not  dependent  upon any one
customer,  our marketing arrangement with Sancho accounted for approximately 26%
of our revenue for the year ended December 31, 2002, and  approximately  49% for
the year ended December 31, 2001.  This  marketing  agreement is in effect until
September 1, 2008.

         In addition to the natural gas produced by our wells, we also purchased
approximately 250 Mcf of natural gas per day in 2002.

Competition

         We  are in  direct  competition  with  numerous  oil  and  natural  gas
companies, drilling and income programs and partnerships exploring various areas
of the  Appalachian  and Powder River Basins and  elsewhere,  and  competing for
customers.  Many  competitors  are large,  well-known  oil and gas and/or energy
companies,  although  no  single  entity  dominates  the  industry.  Many of our
competitors  possess greater financial and personnel  resources enabling them to
identify and acquire more economically desirable energy producing properties and
drilling prospects than us.  Additionally,  there is competition from other fuel
choices  to supply  the  energy  needs of  consumers  and  industry.  Management
believes  that there  exists a viable  market  place for  smaller  producers  of
natural  gas and oil and for  operators  of  smaller  natural  gas  transmission
systems.

         Under our contract  with Sancho,  we have the right to sell natural gas
subject to the terms and  conditions  of a 20-year  contract,  as amended,  that
Sancho entered into with Hope Gas in 1988.  This agreement is a flexible  volume
supply agreement  whereby we receive the full price which Sancho receives less a
$.05 per Mcf marketing fee paid to Sancho. The price of the natural gas is based
upon indices that include the residential  gas commodity  charge of Hope Gas and
the Inside F.E.R.C. CNG Index. Were it not for the relationship between Hope Gas
and  Sancho,  Hope Gas  would  compete  directly  with us for the sale of gas to
certain  customers,  specifically  OSI  Specialities,  Inc.  and Ormet  Aluminum
Company.

Government Regulation

         The oil and gas industry is extensively regulated by federal, state and
local  authorities.  The scope and  applicability  of  legislation is constantly
monitored for change and expansion.  Numerous agencies,  both federal and state,
have issued  rules and  regulations  binding on the oil and gas industry and its
individual members, some of which carry substantial penalties for noncompliance.
To date, these mandates have had no material effect on our capital expenditures,
earnings or competitive position.

         Legislation  and  implementing  regulations  adopted or  proposed to be
adopted by the  Environmental  Protection Agency ("EPA") and by comparable state
agencies,  directly and  indirectly  affect our  operations.  We are required to
operate in  compliance  with  certain air  quality  standards,  water  pollution
limitations,   solid  waste  regulations  and  other  controls  related  to  the
discharging of materials into, and otherwise  protecting the environment.  These
regulations  also relate to the rights of adjoining  property  owners and to the
drilling and production operations and activities in connection with the storage
and transportation of natural gas and oil.



                                       7
<PAGE>

         We may be required  to prepare  and present to federal,  state or local
authorities data pertaining to the effect or impact that any proposed operations
may have upon the environment. Requirements imposed by such authorities could be
costly, time-consuming and could delay continuation of production or exploration
activities.  Further,  the  cooperation  of other  persons  or  entities  may be
required for us to comply with all environmental regulations.  It is conceivable
that future legislation or regulations may significantly  increase environmental
protection  requirements  and,  as a  consequence,  our  activities  may be more
closely regulated which could significantly  increase operating costs.  However,
management is unable to predict the cost of future compliance with environmental
legislation.  As of  the  date  hereof,  management  believes  that  we  are  in
compliance with all present environmental regulations.  Further, we believe that
our oil and gas  explorations  do not pose a  threat  of  introducing  hazardous
substances into the environment.  If such event should occur, we could be liable
under certain  environmental  protection  statutes and laws. We presently  carry
insurance for environmental liability.

         Our exploration and development operations are subject to various types
of regulation at the federal,  state and local levels.  Such regulation includes
the  requirement  of permits for the drilling of wells,  the  regulation  of the
location  and  density of wells,  limitations  on the  methods of casing  wells,
requirements  for surface use and restoration of properties upon which wells are
drilled,  and governing the abandonment  and plugging of wells.  Exploration and
production  are also  subject to property  rights and other laws  governing  the
correlative rights of surface and subsurface owners.

         We are  subject  to the  requirements  of the  Occupational  Safety and
Health Act, as well as other state and local labor laws,  rules and regulations.
The cost of compliance  with the health and safety  requirements is not expected
to have a material impact on our aggregate production expenses. Nevertheless, we
are unable to predict the ultimate cost of compliance.

         Although  past  sales of  natural  gas and oil were  subject to maximum
price controls,  such controls are no longer in effect. Other federal, state and
local  legislation,  while not directly  applicable  to us, may have an indirect
effect on the cost of, or the demand for, natural gas and oil.

Employees

         As of the date hereof we employ eight people  full-time,  consisting of
three  executives,  two marketing  and clerical  persons,  and three  production
persons.   Management  presently  anticipates  hiring  additional  employees  as
business conditions warrant and as funds are available.

Facilities

         We currently occupy  approximately 4,000 square feet of office space in
St.  Marys,  West  Virginia,  which  we  share  with  our  subsidiaries,   Tyler
Construction Company and Ritchie County Gathering Systems. We lease an aggregate
of  approximately  4,000  square feet from an  unaffiliated  third party under a
verbal  arrangement  for $1,400 per month,  inclusive of  utilities.  Management
believes  that our  present  office  facilities  are  adequate  for our  current
business operations.

Industry Segments

         No information is presented as to industry  segments.  We are presently
engaged in the principal business of the exploration,  development,  production,
transportation  and  marketing of natural gas and oil.  Reference is made to the
statements of operations contained in the financial statements included herewith
for a  statement  of our  revenues  and  operating  loss for the past two fiscal
years.

                                       8
<PAGE>

Risk Factors

         You should  carefully  consider the risks and  uncertainties  described
below and other  information  in this report.  If any of the following  risks or
uncertainties  actually occur, our business,  financial  condition and operating
results,  would likely suffer.  Additional  risks and  uncertainties,  including
those that are not yet identified or that we currently  believe are  immaterial,
may also  adversely  affect  our  business,  financial  condition  or  operating
results.

         We have a history of losses and anticipate future losses
--------------------------------------------------------------------------------
         Our  revenues  declined  33% during the fiscal year ended  December 31,
2002,  and we  may  not  achieve,  or  subsequently  maintain  profitability  if
anticipated  revenues  do  not  increase  in the  future.  We  have  experienced
operating  losses,  negative  cash flow from  operations  and net losses in each
quarterly and annual period for the past several years. As of December 31, 2002,
our net operating  loss  carryforward  was  approximately  $19.7 million and our
accumulated  deficit was approximately  $27.2 million.  We expect to continue to
incur significant expenses in connection with

         *    exploration and development of new and existing properties,
         *    costs of sales and marketing efforts,
         *    additional personnel, and
         *    increased general and administrative expenses.

         Accordingly,  we will need to generate  significant revenues to achieve
and attain, and eventually sustain  profitability.  If revenues do not increase,
we may be unable to attain or sustain  profitability  on a  quarterly  or annual
basis. Any of these factors could cause the price of our stock to decline.

         There are many competitors in the oil and gas industry
--------------------------------------------------------------------------------
         We encounter many competitors in the oil and gas industry,  both in the
exploration  and  development  of  properties  and in the  sale of oil and  gas.
Management  expects  competition to continue and intensify in the future.  If we
are  unable  to  successfully  compete  with  other oil and gas  companies,  our
business will be adversely affected.

         Our operating  results are likely to fluctuate  significantly and cause
         our stock  price to be  volatile  which  could  cause the value of your
         investment in our shares to decline
--------------------------------------------------------------------------------
         Quarterly  and  annual  operating   results  are  likely  to  fluctuate
significantly  in the  future  due to a variety  of  factors,  many of which are
outside of our control.  If operating  results do not meet the  expectations  of
securities  analysts and investors,  the trading price of our common stock could
significantly  decline which may cause the value of your  investment to decline.
Some of the factors that could affect quarterly or annual  operating  results or
impact the market price of our common stock include:

         *    our ability to develop properties and to market our oil and gas;

         *    the  timing and amount of, or  cancellation  or  rescheduling  of,
              orders for our oil and gas;

         *    our  ability to retain key  management,  sales and  marketing  and
              engineering personnel;

         *    a decrease in the prices of oil and gas; and

         *    changes in costs of exploration or marketing oil and gas.

         Due to these and other factors, quarterly and annual revenues, expenses
and  results  of  operations  could  vary   significantly  in  the  future,  and
period-to-period  comparisons should not be relied upon as indications of future
performance.


                                       9
<PAGE>


         Additional share issuances could be dilutive
--------------------------------------------------------------------------------
         If we do not generate  necessary  cash from our  operations  to finance
future business, we may need to raise additional funds through public or private
financing  opportunities.  Selling  additional  stock  could  dilute  the equity
interests of existing stockholders. If we borrow more money, we will have to pay
interest  and may also  have to  agree  to  restrictions  that  limit  operating
flexibility.  We may not be able to obtain funds needed to finance operations at
all, or may be able to obtain funds only on very unattractive terms.  Management
may also explore other  alternatives  such as a joint venture with other oil and
gas companies.  There can be no assurances,  however,  that we will conclude any
such transaction.

         Outside factors may influence our business development
--------------------------------------------------------------------------------
         We expect to experience  significant  fluctuations in future results of
operations  due to a  variety  of  factors,  many of which  are  outside  of our
control, including:

         *    demand for oil and gas;
         *    attempts to expand into new markets;
         *    competitive factors that affect pricing;
         *    the timing and magnitude of capital expenditures,  including costs
              relating to the expansion of operations;
         *    hiring and retention of key personnel;
         *    changes in  generally  accepted  accounting  policies,  especially
              those related to the oil and gas industry; and
         *    new government legislation or regulation.

         Any of the above factors  could have a negative  effect on our business
and on the price of our common stock.

         If we lose key personnel, we may be unable to successfully operate
--------------------------------------------------------------------------------
         We depend on the continued  contributions of our executive officers and
other  technical  and  marketing  personnel to work  effectively  as a team,  to
execute  our  business  strategy  and to manage  our  business.  The loss of key
personnel or their  failure to work  effectively  could have a material  adverse
effect on our business, financial condition and results of operations.

         Going concern issue
--------------------------------------------------------------------------------
         Our  independent  auditors have  expressed a going concern  issue.  Our
ability to continue as a going concern is dependant  upon our ability to achieve
a profitable  level of  operations.  Management  will need,  among other things,
additional  capital resources which it may seek through loans from shareholders.
We expect that we will need  approximately  $300,000 to cover our negative  cash
flow through fiscal 2003. However, management cannot provide any assurances that
we will be successful in accomplishing any of our plans.

Risks relating to ownership of our common stock

         The price of our common stock is extremely  volatile and  investors may
         not be able to sell their shares at or above their purchase  price,  or
         at all.

--------------------------------------------------------------------------------
         Our  common  stock  is  presently  traded  on the OTC  Bulletin  Board,
although there is no assurance that a viable market will continue.  The price of
our  shares  in  the  public  market  is  highly   volatile  and  may  fluctuate
substantially because of:

         *    actual or anticipated fluctuations in our operating results;

         *    changes in or failure to meet market expectations;

                                       10
<PAGE>



         *    conditions and trends in the oil and gas industry; and

         *        fluctuations  in stock  market  price  and  volume,  which are
                  particularly  common among securities of small  capitalization
                  companies.

         We do not intend to pay dividends
--------------------------------------------------------------------------------
         To date,  we have never  declared or paid a cash  dividend on shares of
our common stock.  We currently  intend to retain any future earnings for growth
and  development  of  business  and,  therefore,  do not  anticipate  paying any
dividends in the foreseeable future.

         Possible "Penny Stock" Regulation
--------------------------------------------------------------------------------
         Trading of our common stock on the OTC Bulletin Board may be subject to
certain provisions of the Securities  Exchange Act of 1934, commonly referred to
as the "penny  stock" rule. A penny stock is generally  defined to be any equity
security  that has a market price less than $5.00 per share,  subject to certain
exceptions.  If our stock is deemed to be a penny  stock,  trading  in our stock
will be subject to additional  sales practice  requirements  on  broker-dealers.
These may require a broker dealer to:

         *    make a special  suitability  determination for purchasers of penny
              stocks;
         *    receive the purchaser's  written consent to the transaction  prior
              to the purchase; and
         *    deliver to a prospective  purchaser of a penny stock, prior to the
              first  transaction,  a risk  disclosure  document  relating to the
              penny stock market.

         Consequently,   penny   stock  rules  may   restrict   the  ability  of
broker-dealers to trade and/or maintain a market in our common stock. Also, many
prospective  investors  may  not  want  to  get  involved  with  the  additional
administrative  requirements,  which may have a material  adverse  effect on the
trading of our shares.


Item 2.  Description of Property

         Our properties  consist  essentially  of working and royalty  interests
owned by us in various  oil and gas wells and leases  located in West  Virginia.
Our proved reserves for the years ended December 31, 2002, 2001 and 2000 are set
forth below:

                                                    December 31,
                                    ------------------------------------------
                                       2002             2001            2000
                                    ---------        ---------       ---------
Natural Gas (MMcf)
    Developed                       1,131,415        1,133,839         -
    Undeveloped                                        -               -
     Total Proved                   1,131,415        1,133,839         356,196
Crude Oil (MBbl)
    Developed                         113,406          147,876       1,138,144
    Undeveloped                                        -               210,610
     Total Proved                     113,406          147,876       1,348,754

         These  estimates  are  bases  primarily  on the  reports  of  Donald C.
Kesterson,  Certified  Petroleum  Geologist  for  natural  gas,  and  Robert  L.
Richards, Geologist for oil. Such reports are, by their very nature, inexact and
subject to  changes  and  revisions.  Proved  developed  reserves  are  reserves
expected  to be  recovered  from  existing  wells with  existing  equipment  and
operating methods. Proved undeveloped reserves are expected to be recovered from
new wells drilled to known  reservoirs on undrilled  acreage for which existence
and recoverability of such reserves can be estimated with reasonable  certainty,
or from  existing  wells where a  relatively  major  expenditure  is required to
establish production. No estimates of reserves have been included in any reports
to any federal agency other than the SEC. See SFAS 69  Supplemental  Disclosures
included as part of our consolidated financial statements.


                                       11
<PAGE>


         Set forth in the following schedule is the average sales price per unit
of oil, expressed in barrels ("bbl"),  and of natural gas, expressed in thousand
cubic feet ("mcf"), produced by us for the past three fiscal years.

                                                 Years ended December 31,
                                        ----------------------------------------
Average sales price:                     2002          2001               2000
-------------------                     ------        ------             ------
    Gas (per mcf)                      $  4.73       $  5.22         $    -
    Oil (per bbl)                        17.91         16.22              24.67
Average cost of production:
    Gas (per mcf)                        --            --            $    --
    Oil (per bbl)                         5.03          4.05               3.38

         We have not  filed  any  estimates  of  total,  proved  net oil and gas
reserves  with any federal  authority or agency since the  beginning of our last
fiscal year.

         The following schedule sets forth the capitalized costs relating to oil
and gas producing activities by us for the past three fiscal years.


                                   Years ended December 31,
                           -----------------------------------------
                              2002           2001           2000
                           ===========    -----------    -----------
Proved oil and gas
  producing properties
  and related lease
  and well equipment       $ 3,678,730    $ 3,617,505    $ 3,372,880
Unproved oil and gas
  properties                    95,945        114,426        180,000
Accumulated depreciation
  and depletion             (1,839,295)    (1,009,429)      (269,365)
                           -----------    -----------    -----------
Net Capitalized Costs      $ 1,935,380    $ 2,722,502    $ 3,283,515
                           ===========    -----------    -----------

         The following schedule  summarizes changes in the standardized  measure
of discounted future net cash flows relating to our proved oil and gas reserves.

                                      Years ended December 31,
                              -----------------------------------------
                                 2002           2001           2000
                              ===========    -----------    -----------
Standardized measure,
  beginning of year           $ 3,649,994   $ 4,425,778    $ 5,216,987
Oil and gas sales, net
  of production costs                --            --             --
Sales of mineral in place            --      (1,039,658)    (1,611,730)
Purchases                            --            --          820,521
Net change due to revisions
  in quantity estimates           664,947       263,874           --
                              -----------   -----------    -----------
Standardized measure,
  end of year                 $ 4,314,941   $ 3,649,994    $ 4,425,778
                              ===========   ===========    ===========

         We do not anticipate  investing in or purchasing assets and/or property
for the purpose of capital gains.  It is our intention to purchase assets and/or
property for the purpose of enhancing our primary  business  operations.  We are
not limited as to the percentage amount of our assets we may use to purchase any
additional assets or properties.


Item 3.  Legal Proceedings

         Certain material  pending legal  proceedings to which we are a party or
to which any of our property is subject is set forth below.

         (a) On February 7, 2001, the United States Bankruptcy  Court,  Southern
         District of Texas,  entered an Order Granting Motion to Dismiss Chapter
         7 Case in the action  entitled  In Re:  Trans  Energy,  Inc.,  Case No.
         00-39496-H4-7. The Order dismissed the involuntary bankruptcy action


                                       12
<PAGE>


         instituted  against  us on  October  16,  2000.  The  sole  petitioning
         creditor   named  in  the   Involuntary   Petition  was  Western  Atlas
         International,  Inc. An Order for Relief Under Chapter 7 was entered by
         the Court on November 22, 2000.

         On April 23, 2000, the 189th  District  Court of Harris  County,  Texas
         entered an Agreed Final Judgment in favor of Western  against us in the
         amount of $600,665.36,  together with post judgment interest at 10% per
         annum. Following the judgment, we entered into settlement  negotiations
         with  Western  concerning  our  satisfaction  of the  judgment  through
         payments over a four to five month period,  together with the pledge of
         collateral on certain unencumbered assets. Previously, on or about July
         9, 1998,  a judgment had been  entered in the 152nd  District  Court of
         Harris  County,  Texas  against  us in favor of Baker  Hughes  Oilfield
         Operations,   Inc.  d/b/a/  Baker  Hughes  Inteq.  Western  Geophysical
         ("Baker"),  a division of Western  Atlas  International,  Inc.,  in the
         amount of $41,142.00,  together with interest and attorney  fees.  This
         judgment was  outstanding at the time of the filing of the  Involuntary
         Petition.

         During our negotiations with Western for settlement of the Judgment, we
         made a $200,000  "good faith  payment" to Western's  counsel on October
         23, 2000.  On December  12,  2000,  Joe Hill was named as the Chapter 7
         Trustee. Subsequently,  Western's counsel delivered the $200,000 to the
         Trustee.

         On January 19, 2001, we filed with the  Bankruptcy  Court the Motion to
         Dismiss  Chapter 7 Case.  The reasons cited in support of the Motion to
         Dismiss included, but were not limited to, (i) the Texas Court being an
         improper  venue  for the  action,  and  (ii)  we  never  receiving  the
         Involuntary  Petition  and  Summons  notifying  it of  the  action.  In
         anticipation  of  the  Bankruptcy   Court  dismissing  the  Involuntary
         Petition,  on February 2, 2001, we entered into a Settlement  Agreement
         with Baker Hughes Oilfield Operation,  Inc., d/b/a/ Baker Hughes Inteq.
         Western Geophysical,  a division of Western Atlas  International,  Inc.
         (the "Baker  Entities").  In entering  its order on February 7, 2001 to
         dismiss the action,  the Court ordered the Trustee to retain $17,694.80
         for  satisfaction of  administrative  fees and expenses,  and to pay to
         Western and Baker the sum of $182,736.66, on our behalf and pursuant to
         the terms of the Settlement Agreement.

         The Settlement  Agreement provided that, subject to the approval of the
         Bankruptcy  Court, we agreed to pay to the Baker Entities  $759,664.31,
         plus  interest at 10%. In addition  to the  $200,000  payable  from the
         escrow, we pledged as collateral certain properties,  personal property
         and  fixtures and two  directors  each  pledged  750,000  shares of our
         common stock which they personally own.  Subsequently,  we assigned the
         income  stream from the sale of oil in the Pinon Fee #1,  Sagebrush  #1
         and Sagebrush #2 to the Baker  Entities as payments  toward the amounts
         owed.  The Baker  Entities  continue  their  proceedings  to  enforce a
         foreign judgment against us in Pleasants County, West Virginia.

         (b) On April 10, 2000, Bellevue  Resources,  Inc. recorded and served a
         Notice and Statement of Lien in the Sixth Judicial  District,  Campbell
         County,  Wyoming,  against us for nonpayment of services. We recorded a
         liability of $78,651 in our financial statements under accounts payable
         for the year ended  December 31, 2000 to reflect  this claim.  Bellevue
         Resources has agreed to take certain lease acreage in Campbell  County,
         Wyoming  held by us as payment  for this  liability.  We  executed  the
         settlement  agreement  and  management  considered  the case  closed on
         December 18, 2002.

         (c) On September 22, 2000,  Tioga Lumber Company obtained a judgment of
         $43,300 plus  interest in the Circuit Court of Pleasants  County,  West
         Virginia, against Tyler Construction Company for breach of contract. On
         February 28, 2002, we reached a negotiated  payment schedule with Tioga
         and made the  initial  payment.  The current  balance  owed to Tioga is
         $26,091.58.

                                       13
<PAGE>

         (d) On April 16,  2001,  Ross  Forbus  obtained a judgment  of $428,018
         against us to satisfy a promissory  note  previously  entered into with
         Mr.  Forbus on April 8, 1996.  We agreed to payment  terms and has made
         several  payments to Mr. Forbus.  Mr. Forbus has made a demand upon for
         payment in full. We are not currently making payments.

         (e) In  September  2001,  the SEC filed a civil  action  in the  United
         States  District  Court for the District of Columbia  (Civil Action No.
         1:01CV020060) against us and two of our directors,  Loren E. Bagley and
         William F. Woodburn. The complaint alleged violations of the anti-fraud
         and reporting  provisions of the federal  securities laws in connection
         with press releases,  wesbite postings,  and SEC filings. The complaint
         sought injunctive relief and civil penalties.

         On February 26, 2002, the District Court entered a permanent injunction
         against  Trans  Energy,  Mr.  Bagley,  and  Mr.  Woodburn,  permanently
         enjoining them from future violations of the Securities Exchange Act of
         1934 and certain rules promulgated  thereunder.  The Court also ordered
         Messrs. Bagley and Woodburn to each pay a $20,000 civil penalty.  Trans
         Energy, Mr. Bagley and Mr. Woodburn consented to entry of the permanent
         injunction and the imposition of civil penalties  without  admitting or
         denying the Commission's allegations.  Messrs. Bagley and Woodburn have
         each paid their civil penalty.

         (f) On December 26, 2001,  George  Hillyer  filed a suit against  Trans
         Energy and William F.  Woodburn and Loren E. Bagley  individually.  The
         action seeks $250,750 in connection with certain services performed for
         us. On September 3, 2002, we entered into a Mutual Settlement Agreement
         and Release of All Claims  whereby we  conveyed a 240-acre  lease and a
         well  located in Campbell  County  Wyoming in release of all claims and
         dismissal of the suit by Mr.  Hillyer.  The Court dismissed the case on
         September 20, 2002.

         (g) In January  2002,  a suit  entitled  Dennis L.  Spencer  vs.  Trans
         Energy,  Inc. and Messrs.  Woodburn and Bagley was filed in the Circuit
         Court of Ritchie County, West Virginia ( Civil Action No. 02-C-02). The
         complaint  alleges that we sold certain assets which Mr. Spencer claims
         to be the beneficial  owner. The complaint seeks $1,000,000 in damages.
         We have  filed an  answer  to the  complaint  and the  matter  is still
         pending.

         (h) On January 15,  2003,  a suit  against us entitled  Lario Oil & Gas
         Company vs. Trans Energy,  Inc.  (Civil Action No. 24575) was initiated
         in the Sixth District Court of Campbell County,  Wyoming.  Lario's suit
         asks for  $50,692.10  which it claims we owe for operating  fees on the
         Sagebrush  #1 and #2 and the Pinon Fee #1 wells,  operated by Lario and
         in which we have working  interests.  We are preparing an answer to the
         complaint and are asking for a complete  accounting of all monies owed.
         Lario is  retaining  our share of  monthly  oil  production  monies and
         applying them to the amount owed.


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

         No matters were  submitted to a vote of our  securities  holders during
the fourth quarter of the fiscal year ended December 31, 2002.


                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters

         Our common stock is quoted on the OTC  Bulletin  Board under the symbol
"TSRG."  Set forth in the table below are the  quarterly  high and low prices of
our  common  stock as  obtained  from the  Nasdaq  Small-Cap  Market and the OTC
Bulletin Board for the past two fiscal years.


                                       14
<PAGE>

                                                      High              Low
                  2002
                          First Quarter              $   .026             .005
                          Second Quarter             $   .019             .007
                          Third Quarter              $   .012             .002
                          Fourth Quarter             $   .009             .002
                  2001
                          First Quarter              $   .07          $   .043
                          Second Quarter             $   .051         $   .023
                          Third Quarter              $   .03          $   .01
                          Fourth Quarter             $   .02          $   .007


         As of December 31, 2002, there were approximately 290 holders of record
of our common stock,  which figure does not take into account those shareholders
whose  certificates  are held in the  name of  broker-dealers  or other  nominee
accounts.

Dividend Policy

         We have not declared or paid cash  dividends or made  distributions  in
the  past,  and we do not  anticipate  that we will pay cash  dividends  or make
distributions  in the  foreseeable  future.  We currently  intends to retain and
reinvest future earnings to finance operations.

Recent Sales of Unregistered Securities

         In 2000, we issued 1,691,287 share of common stock for cash at $.05 per
share, or an aggregate of $83,000. We also issued 11,722,383 shares for services
and  conversion of debt valued at an average of $.12 per share,  or an aggregate
of  $1,422,923.   We  further  issued  151,930,606  shares  upon  conversion  of
convertible debentures valued at $5,653,991, or an average of $.04 per share.

         In 2001, we issued 4,655,000 shares of common stock for services valued
at an average of $.03 per  share,  or an  aggregate  of  $141,305.  All of these
shares were issued pursuant to registration statements on Form S-8.

         During  2002,  we issued  60,835,938  shares of common  stock for cash,
services and conversion of debt at an average of $.01 per share, or an aggregate
of $337,250.

         Except  for the  conversion  of  debentures  pursuant  to  registration
statements,  issuances  of  securities  by us were  made in  reliance  upon  the
exemption  from  registration  under the  Securities  Act of 1933,  provided  by
Section  4(2)  thereunder.  Issuances of shares  conversion  of  debentures  was
pursuant to the exemption provided by Section 3(a)(9) of said Act.


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

         The  following  information  should  be read in  conjunction  with  the
consolidated  financial statements and notes thereto appearing elsewhere in this
Form 10-KSB.

                              Results of Operations

         The following  table sets forth the  percentage  relationship  to total
revenues of principal  items  contained in the  statements  of operations of the
consolidated  financial  statements  included  herewith  for the two most recent
fiscal  years  ended  December  31,  2002,  and 2001.  It  should be noted  that
percentages  discussed  throughout  this  analysis are stated on an  approximate
basis.


                                       15
<PAGE>




                                                           Fiscal Years Ended
                                                                 December 31,
                                                          2002          2001
                                                         -----          ----
Total revenues.........................................   100%          100%
Total costs and expenses...............................   257            190
Total other income (expenses)..........................   (62)           (23)
Loss before taxes and minority interests ..............  (219)          (113)
Income taxes...........................................    -               -
Minority interests.....................................    -               -
Net (loss).............................................  (219)          (113)


For the Year Ended  December  31, 2002  Compared to the Year Ended  December 31,
2001
--------------------------------------------------------------------------------
         Total  revenues  of  $889,764  for the year  ended  December  31,  2002
("2002")  decreased 33% when compared to $1,320,868  for the year ended December
31, 2001 ("2001"). In 2002, oil made up 31% of total revenues compared to 29% in
2001,  and gas sales  represented  67% of sales in 2002 compared to 70% in 2001.
The changes were considered  minimal  representing  only a slight  difference in
percentage points.

         We had a net  loss of  $1,946,959  for 2002  compared  to a net loss of
$1,496,958 in 2001. Total costs and expenses  decreased 9% in 2002 primarily due
to the 29%  decrease  in cost of oil and  gas,  attributed  to lower  sales  and
production  costs.  As a  percentage  of  revenues,  total  costs  and  expenses
increased  from 190% in 2001 to 257% in 2002,  which  reflects  the total  lower
sales.  Salaries  and  wages  increased  38% in 2002  due to the  accrual  of an
additional  officer's  salary.  Selling,  general  and  administrative  expenses
decreased  18% in 2002 when  compared to 2001,  primarily due to the decrease in
specific  area of legal,  travel,  accounting,  consulting  and  general  office
expenses. Depreciation, depletion and amortization was relatively stable in 2002
increasing only 1%.

         Interest  expense in 2002 increased 35% in 2002 due to additional  debt
and other  liabilities in 2002. We also realized a gain on disposition of assets
of $82,522 in 2002,  compared to $40,902 in 2001,  which was offset by a loss on
sale and valuation of assets in 2002 of $103,103.

         Our net loss for 2002 was  $1,946,959  versus a net loss of  $1,496,958
for  2001.  The  increase  in net loss in 2002 is  primarily  attributed  to the
decreased revenues and increased interest expense.

Net Operating Losses

         We have accumulated  approximately  $19.7 million of net operating loss
carryforwards  as of  December  31,  2002,  which may be offset  against  future
taxable  income  through  2022.  The use of these losses to reduce future income
taxes will depend on the  generation of sufficient  taxable  income prior to the
expiration  of the net  operating  loss  carryforwards.  In the event of certain
changes  in  control,  there will be an annual  limitation  on the amount of net
operating loss carryforwards which can be used. No tax benefit has been reported
in the  financial  statements  for the year ended  December 31, 2002 because the
potential tax benefits of the loss carryforward is offset by valuation allowance
of the same amount.

                         Liquidity and Capital Resources

         Historically,  working  capital needs have been  satisfied  through our
operating revenues and from borrowed funds. Working capital at December 31, 2002
was a negative  $6,332,583  compared with a negative  $5,470,698 at December 31,
2001. This decrease in working capital was primarily  attributed to increases in
accrued  expenses,  interest,  salaries  payable and related party payables.  We
anticipate  meeting  working  capital  needs  during the 2003  fiscal  year with
revenues from  operations  and possibly from capital  raised through the sale of
either  equity  or debt  securities.  We have no  other  current  agreements  or
arrangements  for additional  funding and there can be no assurance such funding
will be available to us, or if available,  such funding will be on acceptable or
favorable terms to us.

                                       16
<PAGE>


         As of  December  31,  2002,  we had  total  assets  of  $2,747,636  and
stockholders'  deficit of $3,938,719  compared to total assets of $3,641,470 and
total stockholders' deficit of $2,305,796 at December 31, 2001.

         In 1998,  we issued  $4,625,400  face value of 8%  Secured  Convertible
Debentures  Due March 31, 1999.  A portion of the proceeds  were used to acquire
the GCRL  properties  and interest in Wyoming.  During 2000,  all but one of the
remaining outstanding  debentures were converted into commons stock. At December
31, 2002,  we owed  $331,462 in  connection  with the  debentures  consisting of
$50,000 for a debenture and $281,462 in penalties and interest.

         Because we have generated  significant  losses from operations  through
December 31, 2002, and has a working capital deficit at December 31, 2002, there
exists  substantial  doubt about our  ability to  continue  as a going  concern.
Revenues have not been  sufficient to cover  operating  costs and to allow us to
continue as a going concern.  Potential  proceeds from the future sale of common
stock, other contemplated debt and equity financing,  and increases in operating
revenues from new  development  would enable us to continue as a going  concern.
There can be no  assurance  that we can or will be able to complete  any debt or
equity financing.

         In the opinion of management,  inflation has not had a material  effect
on the operations of Trans Energy.

Forward-Looking and Cautionary Statements

         This report on Form 10-KSB includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the
Securities Exchange Act of 1934. These forward-looking  statements may relate to
such matters as anticipated financial performance,  future revenues or earnings,
business prospects,  projected ventures, new products and services,  anticipated
market  performance  and similar  matters.  When used in this report,  the words
"may,"  "will,"  expect,"  anticipate,"   "continue,"   "estimate,"   "project,"
"intend,"  and similar  expressions  are  intended  to identify  forward-looking
statements  within the meaning of Section 27A of the  Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 regarding events, conditions,
and financial  trends that may affect our future plans of  operations,  business
strategy,  operating results, and financial position.  We caution readers that a
variety of factors could cause our actual results to differ  materially from the
anticipated  results or other matters expressed in  forward-looking  statements.
These risks and uncertainties, many of which are beyond our control, include (i)
the  sufficiency  of  existing  capital  resources  and  our  ability  to  raise
additional  capital  to fund  cash  requirements  for  future  operations;  (ii)
uncertainties  involved in the rate of growth of our business and  acceptance of
our products and services;  (iii)  volatility of the stock market,  particularly
within the technology sector; and (iv) general economic conditions.  Although we
believe the  expectations  reflected  in these  forward-looking  statements  are
reasonable, such expectations may prove to be incorrect.

Recent Accounting Pronouncements

         On August 16, 2001, the Financial  Accounting Standards Board, or FASB,
issued  Statement  of  Financial  Accounting  Standards  (SFAS)  SFAS  No.  143,
Accounting  for Asset  Retirement  Obligations,"  which is effective  for fiscal
years  beginning  after June 15, 2002. It requires that  obligations  associated
with the  retirement of a tangible  long-lived  asset be recorded as a liability
when those obligations are incurred,  with the amount of the liability initially
measured  at fair  value.  Upon  initially  recognizing  an  accrued  retirement
obligation, an entity must capitalize the cost by recognizing an increase in the
carrying  amount of the related  long-lived  asset.  Over time, the liability is
accreted  to its  present  value  each  period,  and  the  capitalized  cost  is
depreciated  over the useful life of the related asset.  Upon  settlement of the
liability,  an entity either settles the  obligation for its recorded  amount or
incurs  a gain or loss  upon  settlement.  Although  we have not  completed  the
process of  determining  the  effect of this new  accounting  pronouncement,  it
currently expects that the effect of SFAS No. 143 on the consolidated  financial
statements, when it becomes effective, will not be significant.


                                       17
<PAGE>



         In  October  2001,  the  FASB  issued  SFAS  144,  Accounting  for  the
Impairment  or  Disposal  of  Long-Lived  Assets,   which  addresses   financial
accounting  and reporting for the  impairment or disposal of long-lived  assets.
Although  SFAS 144  supersedes  SFAS 121,  it  retains  many of the  fundamental
provisions of SFAS 121. SFAS 144 also  supersedes  the  accounting and reporting
provisions of Accounting  Principles Board Opinion No. 30, Reporting-the Results
of Operations-Reporting  the Effects of Disposal of a Segment of a Business, and
Extraordinary,  Unusual and Infrequently Occurring Events and Transactions,  for
the disposal of a segment of a business.  However, it retains the requirement in
APB 30 to report separately  discontinued  operations and extends that reporting
to a  component  of an  entity  that  either  has  been  disposed  of,  by sale,
abandonment,  or in a distribution to owners, or is classified as held for sale.
SFAS 144 is effective  for fiscal years  beginning  after  December 15, 2001 and
interim periods within those fiscal years.  Management  believes the adoption of
SFAS 144  will  not have a  significant  effect  on our  consolidated  financial
statements.

         In April 2002,  the FASB issued  Statement No. 145  "Rescission of FASB
Statements No. 4, 44, and 62,  Amendment of FASB Statement No. 13, and Technical
Corrections"   (SFAS  145).   SFAS  145  will   require   gains  and  losses  on
extinguishments  of debt to be  classified  as income  or loss  from  continuing
operations  rather than as  extraordinary  items as  previously  required  under
Statement  of  Financial  Accounting  Standards  No. 4 (SFAS  4).  Extraordinary
treatment  will be  required  for  certain  extinguishments  as  provided in APB
Opinion No. 30. SFAS 145 also amends Statement of Financial Accounting Standards
No. 13 to require certain  modifications to capital leases be treated as a sale-
leaseback and modifies the accounting for  sub-leases  when the original  lessee
remains a secondary obligor (or guarantor).  SFAS 145 is effective for financial
statements  issued  after May 15,  2002,  and with  respect to the impact of the
reporting  requirements  of changes  made to SFAS 4 for fiscal  years  beginning
after May 15, 2002.  The adoption of the  applicable  provisions of SFAS 145 did
not have an effect on our financial statements.

         In June 2002, the FASB issued Statement No. 146,  "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS 146 nullifies Emerging Issues
Task  Force  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 146 applies to costs associated with
an exit  activity  that does not involve an entity newly  acquired in a business
combination  or with a  disposal  activity  covered  by SFAS  144.  SFAS  146 is
effective for exit or disposal  activities that are initiated after December 31,
2002, with earlier  application  encouraged.  Management is currently  reviewing
SFAS 146.

         In October 2002,  the FASB issued  Statement No. 147  "Acquisitions  of
Certain Financial  Institutions - an amendment of FASB Statements No. 72 and 144
and FASB  Interpretation  No. 9" (SFAS 147).  SFAS 147 removes  acquisitions  of
financial  institutions from the scope of both Statement 72 and Interpretation 9
and requires that those  transactions  be accounted for in accordance  with FASB
Statements  No. 141,  Business  Combinations,  and No. 142,  Goodwill  and Other
Intangible  Assets.  Thus,  the  requirement  in  paragraph 5 of Statement 72 to
recognize  (and  subsequently   amortize)  any  excess  of  the  fair  value  of
liabilities assumed over the fair value of tangible and identifiable  intangible
assets  acquired  as an  unidentifiable  intangible  asset no longer  applies to
acquisitions  within the scope of this  Statement.  In addition,  this Statement
amends FASB  Statement  No. 144,  Accounting  for the  Impairment or Disposal of
Long-Lived  Assets,  to  include  in its scope  long-term  customer-relationship
intangible   assets  of   financial   institutions   such  as   depositor-   and
borrower-relationship intangible assets and credit cardholder intangible assets.
Consequently,  those intangible assets are subject to the same undiscounted cash
flow  recoverability  test  and  impairment  loss  recognition  and  measurement
provisions that Statement 144 requires for other long-lived assets that are held
and used. SFAS 147 is effective October 1, 2002. Management does not expect that
the  adoption  of SFAS 147  will  have a  material  effect  on its  consolidated
financial statements.

          In  December  2002,  the FASB issued  SFAS No.  148,  "Accounting  for
Stock-Based  Compensation  -- Transition and  Disclosure"(SFAS  148").  SFAS 148
amends SFAS No. 123 "Accounting for Stock-Based  Compensation"  ("SFAS 123"), to
provide  alternative  methods of transition  for a voluntary  change to the fair
value based method of  accounting  for  stock-based  employee  compensation.  In
addition,  SFAS 148 amends the  disclosure  requirements  of SFAS 123 to require
prominent disclosures


                                       18
<PAGE>


in both annual and interim  financial  statements about the method of accounting
for  stock-based  employee  compensation  and the effect of the  method  used on
reported  results.  SFAS 148 is  effective  for  fiscal  years  beginning  after
December 15, 2002. The interim disclosure provisions are effective for financial
reports  containing  financial  statements for interim  periods  beginning after
December  15,  2002.  Management  is  currently  evaluating  the effect that the
adoption  of SFAS 148 will  have on its  results  of  operations  and  financial
condition.


Item 7.  Financial Statements

         Our financial  statements as of and for the fiscal years ended December
31, 2002 and 2001 have been examined to the extent  indicated in their report by
H J & Associates,  LLC, independent certified public accountants,  and have been
prepared  in  accordance  with  generally  accepted  accounting  principles  and
pursuant  to  Regulation  S-B as  promulgated  by the  SEC.  The  aforementioned
financial statements are included herein starting with page F-1.


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

         This Item is not Applicable.


                                    PART III

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

         The following table sets forth the names, ages, and offices held by our
directors and executive officers:

         Name                 Position             Director Since       Age
         ----                 --------             --------------       ---
Robert L. Richards        President, C.E.O.        September 2001        57
                            and Director
Loren E. Bagley           Vice President           August 1991           60
                            and Director
William F. Woodburn       Secretary / Treasurer    August 1991           61
                            and Director
John B. Sims              Director                 January 1988          77

         All directors hold office until the next annual meeting of 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 the Board of Directors or any  committee  thereof,
but directors are reimbursed for expenses incurred for attendance at meetings of
the Board and any committee  thereof.  Executive officers are appointed annually
by the Board and each  executive  officer serves at the discretion of the Board.
The Executive Committee of the Board of Directors, to the extent permitted under
Nevada  law,  exercises  all of the  power  and  authority  of the  Board in the
management of the business and affairs of Trans Energy  between  meetings of the
Board.

         The business  experience of each of the persons listed above during the
past five years is as follows:

         Robert L. Richards  became a director and was  appointed  President and
C.E.O.  in September  2001.  From 1982 to the present,  he has been President of
Robert L. Richards,  Inc. as a consulting  geologist with 27 years experience in
the  petroleum  industry.  He  has  also  served  as  a  geologist  with  Exxon,
exploration  geologist  with Union Texas  Petroleum,  and  regional  exploration
manager for Carbonit  Exploration,  Inc.  From 2000 to the present,  he has been
President and C.E.O. of Derma - Rx, Inc., a formulator and marketer of skin care

                                       19
<PAGE>

products.  Also,  from 1992 to August 2000,  Mr.  Richards  was C.E.O.  of Kaire
Nutraceuticals,  Inc.,  a  developer  and  marketer  of health  and  nutritional
products.  Mr.  Richards served as Vice President of Continental Tax Corporation
from March 1989 to August 1992. He has five and one-half years experience in the
United States Air Force as an Instructor Pilot. Mr. Richards holds a B.S. degree
in geology from Brigham Young University.

         Loren E. Bagley served as our President and C.E.O.  from September 1993
to September 2001, at which time he resigned as President and was appointed Vice
President.  From  1979 to the present,  Mr. Bagley has been self-employed in the
oil  and  gas  industry  as  president,  C.E.O.  or vice  president  of  various
corporations which he has either started or purchased,  including Ritchie County
Gathering  Systems,  Inc. Mr.  Bagley's  experience  in the oil and gas industry
includes  acting as a lease  agent,  funding and  drilling of oil and gas wells,
supervising  production of over 175 existing wells,  contract  negotiations  for
purchasing  and  marketing of natural gas  contracts,  and owning a well logging
company specializing in analysis of wells. Prior to becoming involved in the oil
and gas industry,  Mr. Bagley was employed by the United States  government with
the  Agriculture  Department.  Mr.  Bagley  attended Ohio  University  and Salem
College and earned a B.S. Degree.

         William F. Woodburn has served as our Vice  President  from August 1991
to September 2001, at which time he resigned as Vice President and was appointed
Secretary / Treasurer. Mr. Woodburn has been actively engaged in the oil and gas
business in various  capacities  for the past twenty  years.  For several  years
prior to 1991, Mr. Woodburn supervised the production of oil and natural gas and
managed the pipeline  operations of Tyler Construction  Company,  Inc. and Tyler
Pipeline,  Inc. Mr.  Woodburn is a stockholder  and serves as President of Tyler
Construction  Company,  Inc., and is also a stockholder of Tyler Pipeline,  Inc.
which owns and operates oil and gas wells in addition to natural gas  pipelines,
and Ohio  Valley  Welding,  Inc.  which  owns a fleet of  heavy  equipment  that
services the oil and gas industry.  Prior to his  involvement in the oil and gas
industry, Mr. Woodburn was employed by the United States Army Corps of Engineers
for  twenty  four  years  and was  Resident  Engineer  on  several  construction
projects.  Mr. Woodburn  graduated from West Virginia  University with a B.S. in
civil engineering.

         John B. Sims served as our President,  C.E.O.  and a director from 1988
to September,  1993 and  currently is a director.  Prior to joining Trans Energy
and from 1984 to 1988, Mr. Sims was the General Partner of Ben's Run Oil Company
which was acquired by the Company in January,  1988.  Mr. Sims has also been the
general partner for fourteen limited  partnerships  from 1977 to 1984 drilling a
total  of  twenty  eight  wells.  Prior  to his  involvement  in the oil and gas
business,  Mr. Sims was a real estate  developer  for twenty years as well as an
exclusive  real estate  broker for Ednam Forrest in  Charlottesville,  Virginia.
During 1994, Mr. Sims  voluntarily  initiated a personal  bankruptcy  proceeding
pursuant  to Chapter 7 of the United  States  Bankruptcy  Code.  Pursuant to the
terms of such proceeding,  Mr. Sims was discharged of certain of his debts which
were incurred as a consequence  of his personal  guarantees of certain  business
related  debts,  not related to Trans  Energy,  upon which the  primary  obligor
defaulted.


Item 10. Executive Compensation

         We do not have a bonus, profit sharing,  or deferred  compensation plan
for the benefit of employees,  officers or  directors,  nor have we entered into
employment contracts with any of the aforementioned persons.

Cash Compensation

         The  following  table sets forth all cash  compensation  paid by us for
services  rendered for the years ended December 31, 2002,  2001 and 2000, to our
Chief Executive  Officer.  No executive officer has earned a salary greater than
$100,000 annually for any of the periods depicted.


                                       20
<PAGE>



                                            Summary Compensation Table
                                                            Other         All
                                                            Annual      Other
Name and                                                    Compen-    Compen-
Principal Position         Year      Salary      Bonus      sation      sation
------------------        ------    -------      -----      ------      ------
Robert L. Richards          2000    $   -0-     $  -0-      $  -0-     $  -0-
  President and C.E.O.      2001        -0-        -0-         -0-        -0-

Loren E. Bagley,            2002    $   -0-     $  -0-      $  -0-     $  -0-
  President and C.E.O.      2001        -0-        -0-         -0-        -0-
                            2000        -0-        -0-         -0-        -0-


Item 11. Security Ownership of Certain Beneficial Owners and Management

         The  following  table  sets  forth  information,  to  the  best  of our
knowledge as December  31, 2002,  with respect to each person known by us to own
beneficially more than 5% of our outstanding common stock, each director and all
directors and officers as a group.

Name and Address                             Amount and Nature of      Percent
of Beneficial Owner                          Beneficial Ownership    of Class(1)
-------------------                         ---------------------    -----------
Robert L. Richards 1,691,287(2) 0.7%
  210 Second Street
  St. Marys, WV 26170
Loren E. Bagley *                              2,074,527(3)            0.9%
  210 Second Street
  St. Marys, WV 26170
William F. Woodburn *                          2,067,394(4)            0.9%
  210 Second Street
  St. Marys, WV 26170
John B. Sims *                                   302,614(5)            0.1%
  210 Second Street
  St. Marys, WV 26170
All directors and executive                    6,135,822(6)            2.6%
  officers as a group
  (4 persons in group)
-----------------------------

*  Director and/or executive officer

 Note:   Unless otherwise indicated in the footnotes below, we have been advised
         that each person above has sole voting power over the shares  indicated
         above.

(1)      Based upon 237,519,127  shares of common stock  outstanding on December
         31,  2002,but does not take into  consideration  stock options owned by
         certain  officers and  directors  entitling  the holders to purchase an
         aggregate  of 650,000  shares of common  stock and which are  currently
         exercisable.  Therefore,  for purposes of the table above,  238,169,127
         shares of common  stock are  deemed  to be issued  and  outstanding  in
         accordance  with Rule  13d-3  adopted  by the SEC under the  Securities
         Exchange Act of 1934,  as amended.  Percentage  ownership is calculated
         separately  for each  person  on the  basis  of the  actual  number  of
         outstanding  shares as of December 31, 2002 and assumes the exercise of
         stock options held by such person (but not by anyone else)  exercisable
         within sixty days.
(2)      Includes 1,012,670 shares held in the name of Argene Richards,  wife of
         Mr.  Richards.  (3) Includes 312,500 shares that may be acquired by Mr.
         Bagley pursuant to stock options
         exercisable at $.50 per share and 50,000 shares of common stock held in
         the name of  Carolyn  S.  Bagley,  wife of Mr.  Bagley,  over which Ms.
         Bagley retains voting power.

                                       21
<PAGE>



(4)      Includes  312,500 shares that may be acquired by Mr. Woodburn  pursuant
         to stock  options  exercisable  at $.50 per share and 31,250  shares of
         common stock in the name of Janet L.  Woodburn,  wife of Mr.  Woodburn,
         over which shares Ms. Woodburn retains voting power.
(5)      Includes  25,000  shares that may be  acquired by Mr. Sims  pursuant to
         stock options exercisable at $.50 per share and 13,807 shares of common
         stock held jointly with Virginia Sims, wife of Mr. Sims.
(6)      Includes  650,000  shares  that may be  acquired  by certain  directors
         pursuant to stock options exercisable at $.50 per share.


Item 12. Certain Relationships and Related Transactions

         During  the past two  fiscal  years,  there  have been no  transactions
between us and any officer,  director,  nominee for election as director, or any
shareholder owning greater than five percent (5%) of our outstanding shares, nor
any member of the above referenced  individuals' immediate family, except as set
forth below.

         (a) Loren E. Bagley is  President of Sancho,  a principal  purchaser of
our natural gas. Mr. Bagley's wife, Carolyn S. Bagley is a director and owner of
33% of the outstanding capital stock of Sancho.  Under our contract with Sancho,
we have the right to sell natural gas subject to the terms and  conditions  of a
20-year  contract,  as amended,  that Sancho entered into with Hope Gas in 1988.
This agreement is a flexible volume supply agreement whereby we receive the full
price which Sancho  receives  less a $.05 per Mcf  marketing fee paid to Sancho.
The price of the natural gas is based upon the  greater of the  residential  gas
commodity index or the published Inside F.E.R.C.  Index, at our option,  for the
first 1,500 Mcf  purchased per day by Hope Gas and  thereafter  the price is the
Inside  F.E.R.C.  Index.  The  residential gas commodity index does not directly
fluctuate  with the overall  price of natural  gas.  The Inside  F.E.R.C.  Index
fluctuates  monthly  with the  change in the price of  natural  gas.  While such
option provides  certain price  protection for us there can be no assurance that
prices  paid by us to  suppliers  will be lower  than the  price  which we would
receive under the Hope Gas arrangement. During 2002, we paid Sancho an aggregate
of approximately $5,956 pursuant to such contract.

         (b) On May 7, 1996, we borrowed $100,000 from William  Stevenson.  Such
amount is repayable in one  installment of principal and interest of $110,000 on
November  7, 1996.  Messrs.  Bagley,  William F.  Woodburn  and John B. Sims are
jointly and severally liable with us for the repayment of such obligation.  Such
obligation  is secured by the pledge of 50,000  shares of common  stock owned by
Mr. Woodburn's wife, Janet L. Woodburn. The loan remains outstanding.

         We occupy approximately 4,000 square feet of office space in St. Marys,
West  Virginia,  which we share  with  Tyler  Construction  and  Ritchie  County
Gathering Systems. Prior to 1997, the office space was paid for by Sancho and we
used the office space rent free. We believe that the foregoing transactions with
Sancho  were made on terms no less  favorable  to us than those  available  from
unaffiliated third parties.

         It is our policy that any future material  transactions  between us and
members of management or their  affiliates  shall be on terms no less  favorable
than those available from unaffiliated third parties.


                                       22
<PAGE>



Item 13.          Exhibits and Reports on Form 8-K

         (a)      Exhibits
<TABLE>
<CAPTION>

Exhibit No.                                        Exhibit Name
-----------                                        ------------
<S>           <C>
    *2.1      Stock Acquisition Agreement between Trans Energy and Loren E. Bagley and William F.
              Woodburn
    *2.2      Asset Acquisition Agreement between Trans Energy and Dennis L. Spencer
    *2.3      Asset Acquisition Agreement between Trans Energy and Tyler Pipeline, Inc.
    *2.4      Stock Exchange Agreement between Trans Energy and Ritchie County Gathering Systems,
              Inc.
    *2.5      Plan and Agreement of Merger between Trans Energy, Inc. (Nevada) and Apple Corp.
              (Idaho), to facilitate the change of our corporate domicile to Nevada
   **2.6      Agreements related to acquisition of Vulcan Energy Corporation
    *3.1      Articles of Incorporation and all amendments pertaining thereto, for Apple Corp., an Idaho
              corporation
    *3.2      Articles of Incorporation for Trans Energy, Inc., a Nevada corporation
    *3.3      Articles of Merger for the States of Nevada and Idaho
    *3.4      By-Laws
    *4.1      Specimen Stock Certificate
   *10.1      Marketing Agreement with Sancho Oil and Gas Corporation
   *10.2      Gas Purchase Agreement with Central Trading Company
   *10.3      Price Agreement with Key Oil Company
   *21.1      Subsidiaries Schedule
   *99.1      Reserve Estimate and Evaluation of oil and gas properties
   *99.2      Reserve Estimate and Evaluation for Dennis L. Spencer wells
    99.3      Certification of C.E.O. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
              906 of the Sarbanes-Oxley Act of 2002
    99.4      Certification of C.F.O. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
              906 of the Sarbanes-Oxley Act of 2002
</TABLE>
----------------
 * Previously  filed as Exhibit to Form 10-SB.
** Previously filed as Exhibit to Form 8-K dated August 7, 1995.

         (b)      Reports on Form 8-K

         On March  14,  2003,  we filed a Current  Report on Form 8-K  reporting
         under Item 2 that our subsidiary, Tyler Construction Company, Inc., had
         sold certain pipeline assets.


Item 14. Controls and Procedures

         Evaluation  of  Disclosure   Controls  and  Procedures.   Based  on  an
evaluation  under  the  supervision  and  with  the  participation  of  the  our
management  as of a date within 90 days of the filing date of this Annual Report
on Form 10-KSB, our principal  executive officer and principal financial officer
have concluded that our disclosure  controls and procedures (as defined in Rules
13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, are effective
to ensure that  information  required to be disclosed in reports that we file or
submit under the Exchange Act is recorded,  processed,  summarized  and reported
within the time periods specified in SEC rules and forms.

         Changes in Internal Controls.  There were no significant changes in our
internal  controls or in other  factors  that could  significantly  affect these
controls  subsequent to the date of their evaluation.  There were no significant
deficiencies  or material  weaknesses,  and  therefore  there were no corrective
actions  taken.  However,  the design of any system of controls is based in part
upon certain  assumptions  about the likelihood of future events and there is no
certainty  that any design will succeed in  achieving  its stated goal under all
potential future considerations, regardless of how remote.

                                       23
<PAGE>

                                   SIGNATURES
                                   ----------

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

                                               TRANS ENERGY, INC.



                                       BY:     /S/ ROBERT L. RICHARDS
                                          -------------------------------
                                               Robert L. Richards,
                                               President and C.E.O.

Dated: March 28, 2003

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

Signature                       Title                                 Date
---------                       -----                                 ----


                                President, C.E.O. and            March 28, 2003
/S/ ROBERT L. RICHARDS          Director
-----------------------------
         Robert L. Richards


                                Vice President and               March 28, 2003
/S/ LOREN E. BAGLEY             Director
-----------------------------
         Loren E. Bagley        Principal Financial Officer


                                Secretary Treasurer/            March 28, 2003
/S/  WILLIAM F. WOODBURN        Treasurer and Director
-----------------------------
         William F. Woodburn    Chief Accounting Officer


                                                                 March 28, 2003
/S/  JOHN B. SIMS               Director
-----------------------------
         John B. Sims


                                       24
<PAGE>



                                                                  Certifications
                                                                  --------------


                            CERTIFICATION PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

         I, Robert I.  Richards,  Chief  Executive  Officer of the Trans Energy,
Inc. (the "registrant"), certify that:

         1.   I have reviewed this annual report on Form 10-KSB of Trans Energy,
              Inc.;

         2.   Based on my  knowledge,  this  annual  report does not contain any
              untrue  statement  of a material  fact or omit to state a material
              fact  necessary  to make  the  statements  made,  in  light of the
              circumstances   under  which  such   statements   were  made,  not
              misleading  with  respect  to the period  covered  by this  annual
              report;

         3.   Based  on  my  knowledge,  the  financial  statements,  and  other
              financial  information  included  in this  annual  report,  fairly
              present in all material respects the financial condition,  results
              of operations and cash flows of the registrant as of, and for, the
              periods presented in this annual report;

         4.   The registrant's  other certifying  officers and I are responsible
              for   establishing   and  maintaining   disclosure   controls  and
              procedures  (as defined in Exchange  Act Rules  13a-14 and 15d-14)
              for the registrant and we have:

                  a) designed such disclosure  controls and procedures to ensure
                  that  material   information   relating  to  the   registrant,
                  including its consolidated  subsidiaries,  is made known to us
                  by others  within  those  entities,  particularly  during  the
                  period in which this annual report is being prepared;

                  b) evaluated the effectiveness of the registrant's  disclosure
                  controls and  procedures  as of a date within 90 days prior to
                  the filing date of this annual report (the "Evaluation Date");
                  and

                  c) presented in this annual report our  conclusions  about the
                  effectiveness of the disclosure  controls and procedures based
                  on our evaluation as of the Evaluation Date;

         5.   The registrant's  other certifying  officers and I have disclosed,
              based on our most recent evaluation,  to the registrant's auditors
              and the audit  committee of  registrant's  board of directors  (or
              persons performing the equivalent function):

                  a) all significant  deficiencies in the design or operation of
                  internal   controls   which   could   adversely   affect   the
                  registrant's ability to record, process,  summarize and report
                  financial  data  and  have  identified  for  the  registrant's
                  auditors any material weaknesses in internal controls; and

                  b)  any  fraud,   whether  or  not  material,   that  involves
                  management or other  employees who have a significant  role in
                  the registrant's internal controls; and

         6.   The registrant's other certifying officers and I have indicated in
              this annual report whether or not there were  significant  changes
              in internal controls or in other factors that could  significantly
              affect internal controls subsequent to the date of our most recent
              evaluation,  including  any  corrective  actions  with  regard  to
              significant deficiencies and material weaknesses.


Date:   March 28, 2003


/s/   ROBERT I. RICHARDS
------------------------------
      Robert I. Richards
      Chief Executive Officer


                                       25
<PAGE>


                            CERTIFICATION PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

         I,  William  F.  Woodburn,  Principal  Accounting  Officer of the Trans
Energy, Inc. (the "registrant"), certify that:

         1.   I have reviewed this annual report on Form 10-KSB of Trans Energy,
              Inc.;

         2.   Based on my  knowledge,  this  annual  report does not contain any
              untrue  statement  of a material  fact or omit to state a material
              fact  necessary  to make  the  statements  made,  in  light of the
              circumstances   under  which  such   statements   were  made,  not
              misleading  with  respect  to the period  covered  by this  annual
              report;

         3.   Based  on  my  knowledge,  the  financial  statements,  and  other
              financial  information  included  in this  annual  report,  fairly
              present in all material respects the financial condition,  results
              of operations and cash flows of the registrant as of, and for, the
              periods presented in this annual report;

         4.   The registrant's  other certifying  officers and I are responsible
              for   establishing   and  maintaining   disclosure   controls  and
              procedures  (as defined in Exchange  Act Rules  13a-14 and 15d-14)
              for the registrant and we have:

                  a) designed such disclosure  controls and procedures to ensure
                  that  material   information   relating  to  the   registrant,
                  including its consolidated  subsidiaries,  is made known to us
                  by others  within  those  entities,  particularly  during  the
                  period in which this annual report is being prepared;

                  b) evaluated the effectiveness of the registrant's  disclosure
                  controls and  procedures  as of a date within 90 days prior to
                  the filing date of this annual report (the "Evaluation Date");
                  and

                  c) presented in this annual report our  conclusions  about the
                  effectiveness of the disclosure  controls and procedures based
                  on our evaluation as of the Evaluation Date;

         5.   The registrant's  other certifying  officers and I have disclosed,
              based on our most recent evaluation,  to the registrant's auditors
              and the audit  committee of  registrant's  board of directors  (or
              persons performing the equivalent function):

                  a) all significant  deficiencies in the design or operation of
                  internal   controls   which   could   adversely   affect   the
                  registrant's ability to record, process,  summarize and report
                  financial  data  and  have  identified  for  the  registrant's
                  auditors any material weaknesses in internal controls; and

                  b)  any  fraud,   whether  or  not  material,   that  involves
                  management or other  employees who have a significant  role in
                  the registrant's internal controls; and

         6.   The registrant's other certifying officers and I have indicated in
              this annual report whether or not there were  significant  changes
              in internal controls or in other factors that could  significantly
              affect internal controls subsequent to the date of our most recent
              evaluation,  including  any  corrective  actions  with  regard  to
              significant deficiencies and material weaknesses.


Date:   March 28, 2003


/s/   WILLIAM F. WOODBURN
----------------------------------
      William F. Woodburn
      Principal Accounting Officer


                                       26
<PAGE>



















                               TRANS ENERGY, INC.
                                AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002





























                                       F-1

<PAGE>



                                 C O N T E N T S


Independent Auditors' Report ............................................... F-3

Consolidated Balance Sheet ................................................. F-4

Consolidated Statements of Operations ...................................... F-6

Consolidated Statements of Stockholders' Equity (Deficit)................... F-7

Consolidated Statements of Cash Flows ...................................... F-8

Notes to the Consolidated Financial Statements .............................F-10























                                      F-2
<PAGE>










                          INDEPENDENT AUDITORS' REPORT


Board of Directors
Trans Energy, Inc. and Subsidiaries
St. Marys, West Virginia

We have audited the  accompanying  consolidated  balance  sheet of Trans Energy,
Inc.  and  Subsidiaries  as of December  31,  2002 and the related  consolidated
statements of operations, stockholders' equity (deficit), and cash flows for the
years ended December 31, 2002 and 2001. 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
audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain reasonable  assurance about whether the consolidated
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  consolidated  financial  statements.  An audit also includes  assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall  consolidated  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 Trans
Energy,  Inc.  and  Subsidiaries  as of December  31, 2002 and the  consolidated
results of their  operations  and their cash flows for the years ended  December
31, 2002 and 2001, in conformity with accounting  principles  generally accepted
in the United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 8 to the
consolidated financial statements,  the Company has generated significant losses
from  operations,  has an accumulated  deficit of $27,222,022  and has a working
capital  deficit of  $6,332,583  at December 31,  2002,  which  together  raises
substantial doubt about its ability to continue as a going concern. Management's
plans in regards to these matters are also described in Note 8. The consolidated
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.

As discussed in Note 13 to the consolidated financial statements, certain errors
were  discovered  by  management  during  the  current  year  resulting  in  the
understatement of previously reported amounts in wells,  accumulated  depletion,
related  party  payables,   and  accrued  expenses  as  of  December  31,  2001.
Accordingly,  adjustments have been made to the above mentioned accounts.  These
adjustments  increased  the net loss and  accumulated  deficit as of and for the
year ended December 31, 2001.




HJ & Associates, LLC
Salt Lake City, Utah
March 4, 2003


                                      F-3
<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheet



                                     ASSETS

                                                                December 31,
                                                                    2002
                                                                ------------
CURRENT ASSETS

   Cash                                                         $    12,227
   Accounts receivable, net (Note 1)                                138,621
   Prepaid expenses                                                     360
                                                                -----------

     Total Current Assets                                           151,208
                                                                -----------

PROPERTY AND EQUIPMENT (Note 2)

  Vehicles                                                           59,830
  Machinery and equipment                                            10,092
  Pipelines                                                       2,254,908
  Well equipment                                                     49,155
  Wells                                                           3,620,868
  Leasehold acreage                                                  95,945
  Accumulated depreciation                                       (3,496,460)
                                                                -----------

     Total Fixed Assets                                           2,594,338
                                                                -----------

OTHER ASSETS

  Cash surrender value - life insurance (net)                         2,090
                                                                -----------

     Total Other Assets                                               2,090
                                                                -----------

     TOTAL ASSETS                                               $ 2,747,636
                                                                ===========

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


                                      F-4
<PAGE>



                       TRANS ENERGY, INC. AND SUBSIDIARIES
                     Consolidated Balance Sheet (Continued)


                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

                                                                 December 31,
                                                                      2002
                                                                 ------------
CURRENT LIABILITIES

   Accounts payable - trade                                      $    701,791
   Notes payable - convertible (Note 12)                               41,575
   Accrued expenses                                                   921,420
   Salaries payable                                                   969,529
   Notes payable - current portion (Note 3)                         1,327,333
   Judgments payable (Note 7)                                       1,115,094
   Related party payables (Note 4)                                  1,075,587
   Debentures payable (Note 9)                                        331,462
                                                                 ------------

     Total Current Liabilities                                      6,483,791
                                                                 ------------

LONG-TERM LIABILITIES

   Judgments payable (Note 7)                                           2,702
   Notes payable (Note 3)                                             199,862
                                                                 ------------

     Total Long-Term Liabilities                                      202,564
                                                                 ------------

     Total Liabilities                                              6,686,355
                                                                 ------------

COMMITMENTS AND CONTINGENCIES (Note 7)

STOCKHOLDERS' EQUITY (DEFICIT) (Note 6)

   Preferred stock; 10,000,000 shares authorized at $0.001 par
    value; -0- shares issued and outstanding                             --
   Common stock; 500,000,000 shares authorized at $0.001 par
    value; 237,519,127 shares issued and outstanding                  237,518
   Capital in excess of par value                                  23,045,785
   Accumulated deficit                                            (27,222,022)
                                                                 ------------

     Total Stockholders' Equity (Deficit)                          (3,938,719)
                                                                 ------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)        $  2,747,636
                                                                 ============




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


                                      F-5
<PAGE>
<TABLE>
<CAPTION>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
                      Consolidated Statements of Operations

                                                             For the Years Ended
                                                                 December 31,
                                                        ------------------------------
                                                             2002                2001
                                                        -------------    -------------
                                                                           (Restated)
<S>                                                     <C>              <C>
REVENUES                                                $     889,764    $   1,320,868
                                                        -------------    -------------

COSTS AND EXPENSES

Cost of oil and gas                                           662,958          934,678
Salaries and wages                                            382,117          275,931
Depreciation, depletion and amortization                      919,364          906,931
Selling, general and administrative                           324,874          393,976
                                                        -------------    -------------

Total Costs and Expenses                                    2,289,313        2,511,516
                                                        -------------    -------------

LOSS FROM OPERATIONS                                       (1,399,549)      (1,190,648)
                                                        -------------    -------------

OTHER INCOME (EXPENSE)
  Other income                                                 22,537           16,026
  Gain on disposition of debt                                  82,522           40,902
  Interest expense                                            (488,87         (361,087)
  Loss on sale and valuation of assets (Note 1 and 2)        (103,103)          (2,151)
  Settlement expense                                          (60,489)            --
                                                        -------------    -------------

    Total Other Income (Expense)                             (547,410)        (306,310
                                                        -------------    -------------



NET LOSS BEFORE INCOME TAXES,
 AND MINORITY INTERESTS                                    (1,946,959)      (1,496,958)
                                                        -------------    -------------

INCOME TAXES (Note 1)                                            --               --
                                                        -------------    -------------

MINORITY INTERESTS                                               --               --
                                                        -------------    -------------

NET LOSS - attributed to common shareholders            $  (1,946,959)   $  (1,496,958)
                                                        =============    =============

DIVIDEND ON PREFERRED STOCK                             $        --      $     (23,250)
                                                        =============    =============

BASIC LOSS PER SHARE (Note 1)

   Operations                                           $       (0.01)       $ (0.01 )
                                                        -------------    -------------

      Total Basic Loss Per Share                        $       (0.01)   $       (0.01)
                                                        =============    =============

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
  OUTSTANDING                                             207,824,349      175,981,559
                                                        =============    =============
</TABLE>

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


                                      F-6
<PAGE>

<TABLE>
<CAPTION>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
            Consolidated Statements of Stockholders' Equity (Deficit)


                                                                                                  Capital in
                                             Preferred Stock               Common Stock           Excess of      Accumulated
                                          Shares        Amount       Shares           Amount      Par Value         Deficit
                                        -----------  ------------  ------------    ------------   ------------   ------------

<S>                                             <C>                  <C>           <C>            <C>            <C>
Balance, December 31, 2000                      300          --      172,028,189   $    172,027   $ 22,608,733   $(23,754,855)


Common stock issued for services               --            --        4,655,000          4,655        136,650           --

Discount on beneficial conversion
 feature of notes payable                      --            --             --             --           23,988           --

Dividend on preferred stock at 7.75%           --            --             --             --             --          (23,250)

Net loss for the year ended
 December 31, 2001 (Restated)                  --            --             --             --             --       (1,496,958)
                                        -----------  ------------  ------------    ------------   ------------   ------------

Balance, December 31, 2001
 (Restated)                                     300          --      176,683,189        176,682     22,769,371    (25,275,063)

Conversion of preferred stock and
 preferred dividends to common
 stock                                         (300)         --       16,835,938         16,836          6,414           --

Conversion of notes payable to
 common stock                                  --            --        5,000,000          5,000         45,000           --

Common stock issued for services               --            --        1,000,000          1,000         28,000           --

Conversion of notes payable to
 common stock                                  --            --        4,166,667          4,167         20,833           --

Common stock issued for cash                   --            --       33,333,333         33,333        166,667           --

Common stock issued for services               --            --          500,000            500          9,500           --

Net loss for the year ended
 December 31, 2002                             --            --             --             --             --       (1,946,959)
                                        -----------  ------------  ------------    ------------   ------------   ------------

Balance, December 31, 2002                     --          $ --      237,519,127   $    237,518   $ 23,045,785   $(27,222,022)
                                        ===========  ============  ============    ============   ============   ============
</TABLE>

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

                                      F-7
<PAGE>

<TABLE>
<CAPTION>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows

                                                                For the Years Ended
                                                                    December 31,
                                                            --------------------------
                                                                2002          2001
                                                            -----------    -----------
                                                                           (Restated)
CASH FLOWS FROM OPERATING ACTIVITIES:

<S>                                                         <C>            <C>
  Net loss                                                  $(1,946,959)   $(1,496,958)
  Adjustments to reconcile net loss to net cash
   used by operating activities:
  Depreciation, depletion and amortization                      919,364        906,931
  Loss on valuation of wells                                    103,103         36,577
  Loss on impairment of leases                                     --           60,756
  Gain on disposition of assets                                  (2,650)       (95,182)
  Common stock issued for services &
    beneficial conversion features                               39,000        165,293
  Gain on disposition of debt                                   (82,522)       (40,902)
  Settlement expense                                             54,489           --
Changes in operating assets and liabilities:
  Decrease (increase) in accounts receivable                     45,612       (115,472)
  Decrease in restricted cash                                      --           65,689
  (Increase) decrease in prepaid and other current assets         6,341         (7,371)
  Increase in accounts payable and accrued expenses             656,705        461,344
  Decrease in judgments payable                                 (61,625)      (122,084)

    Net Cash Used by Operating Activities                      (269,142)      (181,379)
                                                            -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:

  Proceeds from sale of property and equipment                    2,650        100,000
  Expenditures for property and equipment                       (10,249)      (522,819)
                                                            -----------    -----------

    Net Cash Used by Investing Activities                        (7,599)      (422,819)
                                                            -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:

  Decrease in cash overdraft                                       --          (11,608)
  Common stock issued for cash                                  200,000           --
  Principal payments to related parties                        (208,754)       (57,879)
  Proceeds from related parties                                 337,896        643,308
  Principal payments on notes payable                           (76,968)       (52,992)
  Proceeds from notes payable                                    35,303         43,285

  Proceeds from convertible notes payable                          --           41,575
                                                            -----------    -----------
    Net Cash Provided by Financing Activities               $   287,477    $   605,689
                                                            -----------    -----------
</TABLE>


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


                                      F-8
<PAGE>

<TABLE>
<CAPTION>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                Consolidated Statements of Cash Flows (Continued)


<S>                                                         <C>             <C>
NET INCREASE IN CASH                                        $ 10,736        $  1,491

CASH, BEGINNING OF YEAR                                        1,491            --

CASH, END OF YEAR                                           $ 12,227        $  1,491
                                                            ========        ========
CASH PAID FOR:
  Interest                                                  $288,561        $ 87,939
  Income taxes                                              $   --          $   --

NON-CASH FINANCING ACTIVITIES:

  Common stock issued for services
    and beneficial conversion features                      $ 39,000        $165,293
  Common stock issued for conversion
    of debt and interest                                    $ 75,000        $597,666
  Common stock issued for conversion
    of preferred stock and dividends                        $ 23,250        $   --
</TABLE>


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


                                      F-9
<PAGE>

<PAGE>


                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2002 and 2001



NOTE 1 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

            a. Organization

            The Company  was  originally  incorporated  in the State of Idaho on
            January 16, 1964. On January 11, 1988, the Company  changed its name
            to Apple  Corporation.  In 1988,  the Company  acquired  oil and gas
            leases  and other  assets  from Ben's Run Oil  Company  (a  Virginia
            limited  partnership)  and has since  engaged in the business of oil
            and gas production.

            On  November  5,  1993,   the  Board  of  Directors   caused  to  be
            incorporated  in the State of Nevada,  a new corporation by the name
            of Trans  Energy,  Inc.,  with the  specific  intent of  effecting a
            merger  between  Trans  Energy,  Inc. of Nevada and Apple  Corp.  of
            Idaho,  for the sole purpose of changing the domicile of the Company
            to the State of Nevada.  On November 15, 1993,  Apple Corp.  and the
            newly formed Trans Energy,  Inc. executed a merger agreement whereby
            the  shareholders  of Apple Corp.  exchanged all of their issued and
            outstanding  shares of common stock for an equal number of shares of
            Trans  Energy,  Inc.  common  stock.  Trans  Energy,  Inc.  was  the
            surviving corporation and Apple Corp. was dissolved.

            b. Accounting Method

            The Company uses the successful efforts method of accounting for oil
            and gas producing activities.  Costs to acquire mineral interests in
            oil and gas properties,  to drill and equip  exploratory  wells that
            find proved reserves,  and to drill and equip  development wells are
            capitalized.  Costs  to  drill  exploratory  wells  that do not find
            proved  reserves,  geological and  geophysical  costs,  and costs of
            carrying and retaining unproved properties are expensed.

            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  experience  of  successful  drilling and 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. Support equipment and other property and
            equipment are depreciated over their estimated useful lives.

            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 income.

            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.



                                      F-10
<PAGE>



                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2002 and 2001



NOTE 1 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

            b. Accounting Method (Continued)

            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.  During the year ended December 31, 2001, the Company sold
            100% of a tract of leasehold acreage for $100,000. The sale resulted
            in a gain of $95,182.  During the year ended  December 31, 2001, the
            Company  recognized a loss of $60,756 relating to leasehold  acreage
            for which the leases had expired. During the year ended December 31,
            2002,  the  Company  transferred  240  acres and one of its wells as
            settlement  with  George  Hillyer  for an expense of  $54,489.  Also
            during 2002, the Company  recognized an impairment  loss of $103,103
            on one of its natural gas wells in West Virginia that was shut down.

            The Company has elected a December 31 year-end.

            c. Basic Loss per Share of Common Stock

            The basic  loss per share of common  stock is based on the  weighted
            average  number of shares issued and  outstanding at the date of the
            consolidated  financial statements.  Fully diluted loss per share of
            common stock is not  disclosed as the common stock  equivalents  are
            antidilutive in nature.

                                              For the Years Ended
                                                  December 31,
                                        ---------------- -------------
                                              2002             2001
                                        -------------    -------------

Numerator:
  Loss from operations                  $  (1,946,959)   $  (1,496,958)
                                        -------------    -------------

Net Loss                                $  (1,946,959)   $ (1,496,958 )
                                        =============    =============

Denominator - weighted average shares     207,824,349      175,981,559
                                        =============    =============

Net loss per share:
Loss from Operations                    $       (0.01)       $ (0.01 )
                                        -------------    -------------

Total Basic Loss Per Share              $       (0.01)   $       (0.01)
                                        =============    =============

            d. Provision for Taxes

            Deferred taxes are provided on a liability  method whereby  deferred
            tax assets are recognized for deductible  temporary  differences and
            operating  loss  and  tax  credit  carryforwards  and  deferred  tax
            liabilities  are  recognized  for  taxable  temporary   differences.
            Temporary  differences  are the  differences  between  the  reported
            amounts of assets and liabilities and their tax bases.  Deferred tax
            assets are reduced by a valuation  allowance when, in the opinion of
            management,  it is more likely that not that some  portion or all of
            the deferred  tax assets will not be  realized.  Deferred tax assets
            and  liabilities are adjusted for the effects of changes in tax laws
            and rates on the date of enactment.


                                      F-11
<PAGE>



                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2002 and 2001



NOTE 1 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

            d. Provision for Taxes (Continued)

            Net deferred tax assets  consist of the  following  components as of
            December 31, 2002 and 2001:
                                            2002          2001
                                        -----------    -----------
           Deferred tax assets
               NOL Carryover            $ 7,682,610    $ 6,933,470
                                        -----------    -----------
                                               --             --
                                        -----------    -----------
            Deferred tax liabilities:
               Accrued wages               (378,116)          --

            Valuation allowance          (7,304,494)    (6,933,470)
                                        -----------    -----------
            Net deferred tax asset      $      --      $      --
                                        ===========    ===========

            The  income  tax  provision  differs  from the  amount of income tax
            determined  by applying the U.S.  federal  income tax rate of 39% to
            pretax  income  from  continuing  operations  for  the  years  ended
            December 31, 2002 and 2001 due to the following:

                                                    2002         2001
                                                 ---------    ---------

            Book loss                            $(759,314)   $(583,820)
            Other                                       94       34,525
            Penalties                               64,620        7,820
            Officer insurance                        4,610      (38,146)
            Stock for services/options expense      15,200       64,460
            Accrued wages                          127,478         --

            Valuation allowance                    547,312      515,161
                                                 ---------    ---------
                                                 $    --      $    --
                                                 =========    =========

            At  December  31,  2002,   the  Company  had  net   operating   loss
            carryforwards  of  approximately  $19,700,000  that  may  be  offset
            against  future  taxable  income from the year 2002 through 2022. No
            tax benefit has been reported in the December 31, 2002  consolidated
            financial  statements since the potential tax benefit is offset by a
            valuation allowance of the same amount.

            Due to the change in ownership  provisions  of the Tax Reform Act of
            1986,  net  operating  loss  carryforwards  for  Federal  income tax
            reporting  purposes  are  subject  to annual  limitations.  Should a
            change in ownership occur, net operating loss  carryforwards  may be
            limited as to use in the future.


                                      F-12
<PAGE>



                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2002 and 2001



NOTE 1 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

            e. Principles of Consolidation

            The consolidated  financial  statements  include the Company and its
            wholly owned subsidiaries,  Prima Oil Company,  Inc., Ritchie County
            Gathering  Systems,  Inc.  and  its  65%  owned  subsidiary,   Tyler
            Construction Company, Inc. All significant intercompany accounts and
            transactions have been eliminated.

            f. Presentation

            Certain  2001  balances  have been  reclassified  to  conform to the
            presentation of the 2002 consolidated financial statements.

            g. Depreciation

            Fixed assets are stated at cost. Depreciation on vehicles, machinery
            and  equipment  is  provided  using the  straight  line  method over
            expected  useful lives of five years.  Depreciation on pipelines and
            well equipment is provided using the  straight-line  method over the
            expected useful lives of fifteen years.  Wells are being depreciated
            using the units-of-production method on the basis of total estimated
            units of proved reserves.

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

            i. Long Lived Assets

            The Company reviews  long-lived assets and identifiable  intangibles
            whenever events or circumstances  indicate that the carrying amounts
            of such assets may not be fully  recoverable.  The Company evaluates
            the  recoverability  of long-lived  assets by measuring the carrying
            amounts of the assets against the estimated  undiscounted cash flows
            associated with these assets. At the time such evaluation  indicates
            that the future undiscounted cash flows of certain long-lived assets
            are not sufficient to recover the assets' carrying value, the assets
            are  adjusted  to their fair  values  (based  upon  discounted  cash
            flows).


                                      F-13
<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2002 and 2001


NOTE 1 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

            j. Newly Issued Accounting Pronouncements

            SFAS No. 145 -- On April 30,  2002,  the FASB issued FASB  Statement
            No. 145 (SFAS 145),  "Rescission  of FASB  Statements No. 4, 44, and
            64, Amendment of FASB Statement No. 13, and Technical  Corrections."
            SFAS 145 rescinds  both FASB  Statement  No. 4 (SFAS 4),  "Reporting
            Gains and Losses from  Extinguishment of Debt," and the amendment to
            SFAS 4, FASB  Statement No. 64 (SFAS 64),  "Extinguishments  of Debt
            Made to Satisfy Sinking-Fund Requirements." Through this rescission,
            SFAS 145  eliminates  the  requirement  (in both SFAS 4 and SFAS 64)
            that gains and losses from the  extinguishment of debt be aggregated
            and, if material,  classified as an  extraordinary  item, net of the
            related income tax effect. However, an entity is not prohibited from
            classifying such gains and losses as extraordinary items, so long as
            it meets the criteria in paragraph 20 of Accounting Principles Board
            Opinion No. 30,  Reporting the Results of  Operations  Reporting the
            Effects of Disposal of a Segment of a Business,  and  Extraordinary,
            Unusual and Infrequently Occurring Events and Transactions. Further,
            SFAS  145  amends   paragraph   14(a)  of  FASB  Statement  No.  13,
            "Accounting for Leases",  to eliminate an inconsistency  between the
            accounting  for   sale-leaseback   transactions  and  certain  lease
            modifications  that  have  economic  effects  that  are  similar  to
            sale-leaseback  transactions.  The  amendment  requires that a lease
            modification (1) results in recognition of the gain or loss in the 9
            financial  statements,  (2) is  subject  to FASB  Statement  No. 66,
            "Accounting  for Sales of Real  Estate," if the leased asset is real
            estate (including  integral  equipment),  and (3) is subject (in its
            entirety) to the sale-  leaseback  rules of FASB  Statement  No. 98,
            "Accounting for Leases: Sale- Leaseback  Transactions Involving Real
            Estate,  Sales-Type  Leases of Real Estate,  Definition of the Lease
            Term,  and  Initial  Direct  Costs  of  Direct  Financing   Leases."
            Generally, FAS 145 is effective for transactions occurring after May
            15, 2002.  The Company does not expect that the adoption of SFAS 145
            will have a material effect on its financial  performance or results
            of operations.

            SFAS  No.  146 -- In June  2002,  the  FASB  issued  SFAS  No.  146,
            "Accounting  for Exit or Disposal  Activities"  (SFAS 146). SFAS 146
            addresses significant issues regarding the recognition, measurement,
            and  reporting of costs that are  associated  with exit and disposal
            activities,  including  restructuring  activities that are currently
            accounted  for  under  EITF No.  94-3,  "Liability  Recognition  for
            Certain  Employee  Termination  Benefits  and Other Costs to Exit an
            Activity (including Certain Costs Incurred in a Restructuring)." The
            scope of SFAS 146 also  includes  costs  related  to  terminating  a
            contract that is not a capital lease and  termination  benefits that
            employees who are involuntarily  terminated  receive under the terms
            of a one-time  benefit  arrangement  that is not an ongoing  benefit
            arrangement or an individual  deferred-compensation  contract.  SFAS
            146 will be  effective  for  exit or  disposal  activities  that are
            initiated   after  December  31,  2002  and  early   application  is
            encouraged.  The provisions of EITF No. 94-3 shall continue to apply
            for an exit  activity  initiated  under  an exit  plan  that met the
            criteria  of EITF No. 94-3 prior to the  adoption  of SFAS 146.  The
            effect on adoption of SFAS 146 will  change on a  prospective  basis
            the timing of when the  restructuring  charges are  recorded  from a
            commitment  date  approach to when the  liability is  incurred.  The
            Company  does not expect  that the  adoption of SFAS 146 will have a
            material   effect  on  its  financial   performance  or  results  of
            operations.


                                      F-14
<PAGE>


                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2002 and 2001


NOTE 1 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

            j. Newly Issued Accounting Pronouncements (Continued)

            SFAS No. 147 -- In October 2002,  the FASB issued  Statement No. 147
            "Acquisitions  of Certain  Financial  Institutions - an amendment of
            FASB Statements No. 72 and 144 and FASB  Interpretation No. 9" (SFAS
            147). SFAS 147 removes  acquisitions of financial  institutions from
            the scope of both  Statement  72 and  Interpretation  9 and requires
            that those  transactions  be accounted for in  accordance  with FASB
            Statements No. 141, Business Combinations, and No. 142, Goodwill and
            Other  Intangible  Assets.  Thus, the  requirement in paragraph 5 of
            Statement 72 to recognize (and subsequently  amortize) any excess of
            the  fair  value of  liabilities  assumed  over  the  fair  value of
            tangible  and   identifiable   intangible   assets  acquired  as  an
            unidentifiable  intangible  asset no longer applies to  acquisitions
            within the scope of this  Statement.  In  addition,  this  Statement
            amends FASB  Statement  No. 144,  Accounting  for the  Impairment or
            Disposal of  Long-Lived  Assets,  to include in its scope  long-term
            customer-relationship  intangible  assets of financial  institutions
            such as depositor- and  borrower-relationship  intangible assets and
            credit cardholder intangible assets. Consequently,  those intangible
            assets are subject to the same undiscounted cash flow recoverability
            test and impairment loss recognition and measurement provisions that
            Statement 144 requires for other long-lived assets that are held and
            used.  SFAS 147 is effective  October 1, 2002.  The Company does not
            expect that the adoption of SFAS 147 will have a material  effect on
            its consolidated financial statements.

            SFAS No. 148 -- In  December  2002,  the FASB  issued  SFAS No. 148,
            "Accounting   for   Stock-Based   Compensation   --  Transition  and
            Disclosure"(SFAS 148"). SFAS 148 amends SFAS No. 123 "Accounting for
            Stock-Based  Compensation"  ("SFAS  123"),  to  provide  alternative
            methods of transition for a voluntary change to the fair value based
            method of  accounting  for  stock-based  employee  compensation.  In
            addition, SFAS 148 amends the disclosure requirements of SFAS 123 to
            require  prominent  disclosures in both annual and interim financial
            statements  about the method of accounting for stock-based  employee
            compensation and the effect of the method used on reported  results.
            SFAS 148 is effective for fiscal years  beginning after December 15,
            2002. The interim disclosure  provisions are effective for financial
            reports   containing   financial   statements  for  interim  periods
            beginning   after  December  15,  2002.  The  Company  is  currently
            evaluating the effect that the adoption of SFAS 148 will have on its
            results of operations and financial condition.

            k. Accounts Receivable

            Accounts  receivable  are shown net of an allowance  for bad debt of
            $2,000 at December 31, 2002.


                                      F-15
<PAGE>


                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2002 and 2001


NOTE 1 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

            l. Preferred Stock

            The Company  has  authorized  10,000,000  shares of $0.001 par value
            preferred  stock.  The preferred  stock shall have  preference as to
            dividends and to liquidation of the Company.  The board of directors
            has determined that the 300 preferred shares outstanding at December
            31, 2000 valued at $300,000 are  convertible  into common stock at a
            20% discount  from the closing price of the common stock on the date
            of conversion  and bears  interest at prime plus 1%. The  conversion
            discount  of $60,000 has been  recorded  and is included in retained
            deficit at December  31,  2000.  During the year ended  December 31,
            2001,  the Company  declared a dividend of $23,250 on the  preferred
            stock.  During  the  year  ended  December  31,  2002,  the  Company
            converted  the  preferred  stock and accrued  dividend  payable into
            16,835,938  shares of common  stock.  The common stock was valued at
            80% of the closing  price on August 31, 2001 which was the  dividend
            declaration date.

NOTE 2 -    OIL AND GAS PROPERTY

            At December  31, 2002 the  Company's  proved  properties  consist of
            costs  in the  following  areas  net  of  accumulated  depletion  of
            $1,781,433.

            Wyoming                              $    1,229,293
            West Virginia                               610,142
                                                 --------------
                                                 $    1,839,435
                                                 ==============

            Productive Gas Wells

            The following  summarizes the Company's productive oil and gas wells
            as of December 31, 2002.  Productive  wells are producing  wells and
            wells  capable of  production.  Gross wells are the total  number of
            wells in which the Company has an interest. Net wells are the sum of
            the Company's fractional interests owned in the gross wells.

                                                Gross               Net
                                                -----              ----

            Productive oil wells                   6               1.93
            Productive gas wells                   7               5.25
                                                   -               ----
                                                  13               7.18
                                                ====               ====

            The Company does not operate any of these wells.



                                      F-16
<PAGE>


                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2002 and 2001



NOTE 2 -    OIL AND GAS PROPERTY (Continued)

            Oil and Gas Acreage

            The following table sets forth the undeveloped leasehold acreage, by
            area, held by the Company as of December 31, 2002. Undeveloped acres
            are acres on which  wells have not been  drilled or  completed  to a
            point that would permit the  production of commercial  quantities of
            oil and gas,  regardless  of  whether or not such  acreage  contains
            proved reserves.  Gross acres are the total number of acres in which
            the  Company  has a working  interest.  Net acres are the sum of the
            Company's  fractional interests owned in the gross acres. In certain
            leases,   the  Company's   ownership  varies  at  different  depths;
            therefore,  the net acres in these leases are  calculated  using the
            lowest ownership interest at any depth.

                                              Gross                Net
                                              -----              -----

            Wyoming                           14,305             12,315
            West Virginia                        424                424
                                              ------             -------

                  Total acres                 14,729             12,739
                                              ======             ======

NOTE 3 -    LONG-TERM DEBT

            The Company had the following debt obligations at December 31, 2002:
<TABLE>
<CAPTION>
<S>                                                                                 <C>
            First National Bank of St. Marys, $9,244 payable monthly,
              prime plus 2% interest rate, secured by equipment and personal
              guarantee of officers.                                                $   362,407

            Union Bank of Tyler County, $332 due monthly, 10% interest
              rate, due November 20, 2005, secured by vehicle.                           10,303

            Union Bank of Tyler County, interest at 10% due quarterly,
              renewable, due on demand, unsecured                                        19,683
                                                                                    -----------

              Balance forward                                                       $   392,393
                                                                                    -----------
</TABLE>


                                      F-17
<PAGE>


                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2002 and 2001


NOTE 3 -    LONG-TERM DEBT (Continued)
<TABLE>
<CAPTION>
<S>        <C>                                                                      <C>

            Balance forward                                                         $   392,393

            Union Bank of Tyler  County,  principal  and interest  payments of
              $799 due monthly,  interest  rate of 14.4%,  due  September  25,
              2004, secured by vehicle and personal guarantee of officers.               14,831

            Wesbanco, interest payable quarterly, prime +1%, due on demand,
              secured by officers' personal assets.                                     300,000

            Note payable to an individual,  due on demand, bearing interest at
              NY prime +1%, interest payments due monthly, secured by
              equipment.                                                                292,078

            Union Bank of Tyler County, principal and interest payments of
              $230 due monthly, interest at 16.0%, secured by vehicle of the
              Company.                                                                    1,974

            Note due to a private individual, due on demand with interest
              at 20%, secured by personal guarantee of officers.                        200,919

            Note payable to Raven Group, interest imputed at 10%,
              due on demand, unsecured.                                                 325,000
                                                                                    -----------

                    Total                                                             1,527,195

                    Less Current Portion                                             (1,327,333)
                                                                                    -----------

                          Total Long-Term Debt                                      $   199,862
                                                                                    ===========

            Future maturities of long-term debt are as follows:

                          2003                                                      $ 1,327,333
                          2004                                                          100,119
                          2005                                                           99,743
                          2006                                                             --
                          2007                                                             --
                          2008 and thereafter                                              --
                                                                                           --
                                                                                    -----------
                               Total                                                $ 1,527,195
                                                                                    ===========
</TABLE>

         At December 31, 2002, total interest accrued for these debt obligations
was $106,692.

NOTE 4 -    RELATED PARTY TRANSACTIONS

            a. Marketing Agreement - Sancho

            Natural gas delivered through the Company's pipeline network is sold
            either  to  Sancho  Oil and Gas  Corporation  ("Sancho"),  a company
            controlled by the Vice  President of the Company,  at the industrial
            facilities near Sistersville,  West Virginia,  or to Dominion Gas, a
            local  utility,  on an on-going  basis at a variable price per month
            per Mcf.


                                      F-18
<PAGE>



                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2002 and 2001


NOTE 4 -    RELATED PARTY TRANSACTIONS (Continued)

            a. Marketing Agreement - Sancho (Continued)

            Under its contract  with  Sancho,  the Company has the right to sell
            natural  gas  subject  to the  terms  and  conditions  of a  20-year
            contract,  as amended, that Sancho entered into with Dominion Gas in
            1988. This agreement is a flexible volume supply  agreement  whereby
            the Company  receives  the full price which  Sancho  charges the end
            user less a $0.05 per Mcf marketing fee paid to Sancho.

            b. Well Drilling and Operating Agreement

            In June 2000, the Company  entered into a well drillin and operating
            agreement with Sancho Oil and Gas Corporation ("Sancho"),  a company
            controlled  by the Vice  President  of the  Company,  on an on-going
            basis.  Sancho  provided  seven  drill-down  wells  located in Tyler
            County, West Virginia and the Company was to pay 100% of the cost of
            drilling and  completing  the well  including any topside  equipment
            needed and other related equipment.  The Company will receive 75% of
            the working interest in each of the wells competed.

            c. Receivables and Payables

            The  Company  has  various  receivables  from  and  payables  to the
            officers and  companies  of the  officers.  These  amounts have been
            grouped  together  with a net payable of  $1,075,587 at December 31,
            2002. The net payable bears interest at 10%, is due on demand and is
            unsecured.  At December 31, 2002,  total interest accrued in the net
            related  party  payable  was  $191,945  and is  included  in accrued
            expenses.

NOTE 5 -    ECONOMIC DEPENDENCE AND MAJOR CUSTOMERS

            The  Company's  marketing  arrangement  with  Sancho  accounted  for
            approximately  82% and 82% of the  Company's  revenue  for the years
            ended December 31, 2002 and 2001, respectively in Tyler Construction
            Company.  This  marketing  agreement is in effect until  December 1,
            2008.  Another  customer  also  generated  sales  of 99%  and 99% of
            Ritchie County total sales in 2002 and 2001, respectively.

NOTE 6 -    STOCKHOLDERS' EQUITY

            In 2001,  the Company  issued  4,655,000  shares of common stock for
            services  rendered.  The shares were  valued at an average  price of
            $0.03 per share for total consideration of $141,305. The shares were
            issued  after the  services  were  rendered  and were  valued at the
            closing price on the dates of issue.

            During February 2002, the Company  converted 300 shares of preferred
            stock and $23,250 of cumulative  preferred dividends into 16,835,938
            shares of common stock. As a result of this conversion,  the Company
            has -0- shares of preferred stock issued and outstanding at December
            31, 2002.

            During February 2002, the Company received $200,000 for the purchase
            of  33,333,333  shares  of  common  stock  and was  shown as a stock
            subscription deposit.  During September 2002, the Company issued the
            33,333,333  shares and at September 30, 2002 the stock  subscription
            deposit was reduced to $-0-.


                                      F-19
<PAGE>


                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2002 and 2001


NOTE 6 -    STOCKHOLDERS' EQUITY (Continued)

            During March 2002, the Company  entered into a promissory  note with
            an unrelated party for $25,000.  The note is payable upon demand and
            accrues  interest  at 10% per  annum.  During  September  2002,  the
            Company  issued  4,166,667  shares  of  its  common  stock  for  the
            conversion of notes payable for this amount.

            During April 2002, the Company issued 5,000,000 shares of its common
            stock for the  conversion of notes payable in the amount of $50,000.
            The Company additionally issued 1,000,000 shares of its common stock
            for services rendered and valued at $29,000.

            During  October  2002,  the Company  entered into an agreement for a
            proposed  private  offering of either its debt or equity  securities
            with an  investment  banking  firm.  The Company was required to pay
            $10,000 at the time of the agreement as an advance towards expenses.
            The advance may be paid using cash and/or the Company's common stock
            not to exceed 500,000  shares  regardless of the market value of the
            stock at the time of  issuance.  During  October  2002,  the Company
            issued  500,000  shares of its common  stock valued at $10,000 as an
            advance in accordance with the agreement.  The Company later decided
            not to proceed with the proposed  private offering and forfeited the
            $10,000 advance as per the terms of the agreement.

NOTE 7 -    JUDGMENTS PAYABLE

            Tioga Lumber Company
            --------------------

            A  foreign  judgment  has  been  filed  with  the  Circuit  Court in
            Pleasants  County,  West Virginia for a judgment against the Company
            by Tioga Lumber  Company  (Tioga)  rendered by the Circuit  Court in
            Pleasants  County,  West  Virginia  for  non-payment  of an accounts
            payable.  The judgment is for $46,375 plus  prejudgment  interest at
            10.00%.

            On February  28,  2002,  the Company and Tioga  reached an agreement
            wherein  the  Company  would pay Tioga  $10,000 by March 5, 2002 and
            $8,000  per  month   thereafter.   The  court  appointed  a  special
            commissioner  to act as an arbitrator if the Company  defaults.  The
            special  commissioner would attach a lien if property is found which
            does not have a lien attached.  The first payment has been made, and
            at December 31, 2002,  the balance due  including  interest to Tioga
            was $26,092 and is included in judgments  payable and is  classified
            as a current liability.

            Dennis L. Spencer
            -----------------

            In January  2002,  Dennis L. Spencer  filed suit against the Company
            and William F.  Woodburn and Loren E. Bagley in the Circuit Court of
            Ritchie  County,  West  Virginia  (Civil  Action No.  02-C-02).  The
            complaint  alleges  that the Company  sold  certain  assets that Mr.
            Spencer  claims to be the  beneficial  owner.  The  complaint  seeks
            $1,000,000  in  damages.  The  Company  has filed its  answer to the
            allegations  and feels that the Company has met its  obligations  in
            full to Mr.  Spencer.  Management  also believes the suit is without
            merit and intends to vigorously  defend the action.  The Company has
            not accrued any  amounts  for these  claims as of December  31, 2002
            because the  Company  feels that based on its  defenses  against the
            claims that the Company will have no  additional  liability.  Due to
            the early stage of  litigation,  it is not  possible to evaluate the
            likelihood  of an  unfavorable  outcome  or  estimate  the extent of
            potential loss.


                                      F-20
<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2002 and 2001


NOTE 7 -    JUDGMENTS PAYABLE (Continued)

            George Hillyer
            --------------

            On  December  26,  2001,  George  Hillyer  filed a suit  against the
            Company and William F.  Woodburn and Loren E. Bagley,  individually.
            The action  seeks  $250,750  in  connection  with  certain  services
            performed for the Company. On September 3, 2002, the Company entered
            into a Mutual Settlement Agreement and Release of All Claims whereby
            the Company conveyed a 240-acre lease and a well located in Campbell
            County Wyoming in release of all claims and dismissal of the suit by
            Mr. Hillyer. The court dismissed the case on September 20, 2002. The
            well given to Mr.  Hillyer was valued at $54,489  which was included
            in the statement of operations as an expense.

            Ross O. Forbus
            --------------

            On April 16, 2001,  Ross O. Forbus  obtained a judgment  against the
            Company  for  $428,018  plus post  judgment  interest  at 10.00% per
            annum. The judgment was obtained to satisfy a previous note payable.
            The Company has made  several  small  payments to Mr.  Forbus and is
            currently  negotiating  with him toward extending the payments until
            the judgment can be paid in full.  Mr. Forbus has made a demand upon
            the  Company  for  payment of the full  obligation.  The Company has
            accrued the balance of $428,018 plus accrued  interest.  At December
            31,  2002,  the total  amount  including  interest  of  $479,647  is
            included  in  judgments  payable  and  is  classified  as a  current
            liability.

            Core Laboratories, Inc.
            -----------------------

            On July 28, 1999, Core Laboratories, Inc. (Core) obtained a judgment
            against the  Company for  non-payment  of an accounts  payable.  The
            judgment calls for monthly  payments of $351 and is bearing interest
            at 10.00% per annum. At December 31, 2002, the Company had accrued a
            balance including interest of $15,310 which is included in judgments
            payable.

            RR Donnelly
            -----------

            On July 1, 1998, RR Donnelly  (RR)  obtained a judgment  against the
            Company for non-payment of accounts payable.  The judgment calls for
            monthly  payments  of $3,244 and is bearing  interest  at 10.00% per
            annum.  At  December  31,  2002,  the  Company has accrued a balance
            including  interest of $68,559 which is included in judgment payable
            as a current liability.

                                      F-21
<PAGE>



                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2002 and 2001

NOTE 7 -    JUDGMENTS PAYABLE (Continued)

            Bellevue Resources
            ------------------

            On April 10, 2000, Bellevue Resources recorded and served its Notice
            and  Statement  of Lien in the  Sixth  Judicial  District,  Campbell
            County,  Wyoming,  against the Company for  non-payment of services.
            The Company  had  recorded a  liability  of $78,651 at December  31,
            2000. During 2001, the Company has agreed to a settlement  agreement
            wherein  the  Company  will  transfer a portion of the Powder  River
            Basin leasehold acreage in Campbell County,  Wyoming as full payment
            of the  liability.  The Company  recognized a gain of $38,784 on the
            disposition  of the debt.  The Company has executed  the  settlement
            agreement and the court dismissed the case on December 18, 2002.

            Baker Hughes Entities
            ---------------------

            On February 7, 2001, the United States  Bankruptcy  Court,  Southern
            District  of Texas,  entered  an Order  Granting  Motion to  Dismiss
            Chapter 7 Case in the action  entitled In Re:  Trans  Energy,  Inc.,
            Case  No.   00-39496-H4-7.   The  Order  dismissed  the  involuntary
            bankruptcy  action  instituted  against  the  Company on October 16,
            2000.  The  sole  petitioning  creditor  named  in  the  Involuntary
            Petition was Western Atlas International, Inc. ("Western"). An Order
            for Relief Under  Chapter 7 was entered by the Court on November 22,
            2000.

            On April 23, 2000, the 189th District Court of Harris County,  Texas
            entered an Agreed  Final  Judgment  in favor of Western  against the
            Company  in the  amount of  $600,665,  together  with post  judgment
            interest at 10% per annum.  Following the judgment,  Western and the
            Company   entered  into  settlement   negotiations   concerning  the
            Company's  satisfaction of the judgment through payments over a four
            to five  month  period  together  with the pledge of  collateral  on
            certain unencumbered assets.

            Previously, on or about July 9, 1998, a judgment had been entered in
            the 152nd District Court of Harris County, Texas against the Company
            in favor of Baker  Hughes  Oilfield  Operations,  Inc.  d/b/a/ Baker
            Hughes Inteq. Western Geophysical  ("Baker"),  a division of Western
            Atlas International,  Inc., in the amount of $41,142,  together with
            interest and attorney  fees.  This judgment was  outstanding  at the
            time of the filing of the Involuntary Petition.

            During its negotiations with Western for settlement of the Judgment,
            the  Company  made a $200,000  "good  faith  payment"  to  Western's
            counsel on October 23,  2000.  On December  12,  2000,  Joe Hill was
            named as the  Chapter 7  Trustee.  Subsequently,  Western's  counsel
            delivered the $200,000 to the Trustee.

            On January 19, 2001, the Company filed with the Bankruptcy Court the
            Motion to Dismiss  Chapter 7 Case.  The reasons cited by the Company
            in support of its Motion to Dismiss  included,  but were not limited
            to, (i) the Texas Court being an improper venue for the action,  and
            (ii) the  Company  never  receiving  the  Involuntary  Petition  and
            Summons notifying it of the action.


                                      F-22
<PAGE>


                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2002 and 2001

NOTE 7 - JUDGMENTS PAYABLE (Continued)

            Baker Hughes Entities (Continued)
            ---------------------------------

            In anticipation of the Bankruptcy  Court  dismissing the Involuntary
            Petition, on February 2, 2001, the Company entered into a Settlement
            Agreement with Baker Hughes Oilfield  Operations,  Inc. d/b/a/ Baker
            Hughes  Inteq.  Western  Geophysical,  a division  of Western  Atlas
            International, Inc. (the "Baker Entities"). In entering its order on
            February  7, 2001 to  dismiss  the  action,  the Court  ordered  the
            Trustee to retain $17,695 for  satisfaction of  administrative  fees
            and  expenses,  and to pay to Western and Baker the sum of $182,737,
            on behalf of the Company and pursuant to the terms of the Settlement
            Agreement.

            The Settlement  Agreement  provided that, subject to the approval of
            the  Bankruptcy  Court,  the  Company  agreed  to pay  to the  Baker
            Entities $759,664, plus interest at 10%. In addition to the $200,000
            payable  from the  escrow,  the  Company  agreed to pay to the Baker
            Entities an initial payment of $117,261 within fifteen days from the
            date of the Dismissal Order (due February 21, 2001).

            The  Company  also  agreed to make  additional  payments of $100,000
            every  thirty days  following  the initial  payment,  with the first
            payment due beginning no later than March 23, 2001, continuing until
            the total  obligation  plus interest is paid in full.  Further,  the
            Company pledged as collateral certain properties,  personal property
            and fixtures and two directors  each pledged  750,000  shares of the
            Company's common stock which they personally own.

            During 2002, the Company assigned the income stream from the sale of
            oil  from  three  of its  wells  (Pinon  Fee  #1,  Sagebrush  #1 and
            Sagebrush #2) to the Baker entities as payments  towards the amounts
            owed. The Company  believes that this payment will satisfy the Baker
            Entities until the Company has paid the full  obligation.  The Baker
            Entities  continue  its  proceedings  to enforce a foreign  judgment
            against the Company in Pleasants County, West Virginia.  At December
            31, 2002, the Company has a remaining  liability  including interest
            of  $522,189  which is included  in  judgments  payable as a current
            liability.

            Lario Oil & Gas Company
            -----------------------

            On January 15, 2003, Lario Oil & Gas Company  ("Lario") filed a suit
            against the Company in the Sixth District Court of Campbell  County,
            Wyoming (Civil Action No. 24575).  Lario asks for $50,692,  which it
            claims  the  Company  owes for  operating  fees on the Pinon Fee #1,
            Sagebrush #1 and Sagebrush #2 wells,  operated by Lario and in which
            the Company  has working  interests.  The  Company is  preparing  an
            answer to the complaint  and is asking for a complete  accounting of
            all monies owed. Lario is retaining a portion of the Company's share
            of the monthly oil production monies and applying them to the amount
            owed. At December 31, 2002, the Company has accrued  $50,692,  which
            is included in accounts payable as a current liability.

                                      F-23
<PAGE>



                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2002 and 2001


NOTE 7 -    JUDGMENTS PAYABLE (Continued)

            O.C. Smith
            ----------

            On  February 5, 2003,  O.C.  Smith  obtained a judgment  against the
            Company  for  $6,000 as  ordered  by the  Circuit  Court of  Ritchie
            County,  West  Virginia.  Mr.  Smith had  brought  suit  against the
            Company,  successor of Apple  Corporation,  for an accounting of all
            gas  purchased  by the Company as well as  judgment  for all amounts
            still owing.  The Company had  acquired  all of Apple  Corporation's
            interest  in this gas and  management  determined  that there was an
            unpaid balance still owing Mr. Smith. The $6,000 is payable in three
            monthly  installments  beginning on April 25, 2003.  At December 31,
            2002,  the Company  had  accrued the total  amount of $6,000 and has
            included it in judgments  payable and has classified it as a current
            liability.

NOTE 8 - GOING CONCERN

            The Company's  consolidated  financial statements are prepared using
            generally  accepted  accounting  principles  applicable  to a  going
            concern which contemplates the realization of assets and liquidation
            of  liabilities  in the normal  course of business.  The Company has
            incurred  cumulative  operating  losses through December 31, 2002 of
            $27,222,022,  and has a working capital deficit at December 31, 2002
            of $6,332,583.

            Revenues have not been  sufficient to cover its operating  costs and
            to allow it to continue as a going concern.  The potential  proceeds
            from the sale of common stock, sale of drilling programs,  and other
            contemplated debt and equity  financing,  and increases in operating
            revenues from new  development  would enable the Company to continue
            as a going  concern.  There can be no assurance that the Company can
            or will be  able to  complete  any  debt or  equity  financing.  The
            Company's  consolidated  financial  statements  do not  include  any
            adjustments that might result from the outcome of this uncertainty.

NOTE 9 -    CONVERTIBLE DEBENTURES

            On September 10, 1998,  the Company  completed a debenture  issue of
            $4,625,400 face value of 8% Secured Convertible Debentures due March
            31, 1999 (the "Debentures").  Interest shall accrue from the date of
            issuance until payment in full of the principal sum has been made or
            duly provided for.  Holders of the Debentures shall have the option,
            at any time,  until  maturity,  to convert the  principal  amount of
            their Debenture,  or any portion of the principal amount which is at
            least  $10,000  into  shares  of the  Company's  Common  Stock  at a
            conversion  price for each share  equal to the lower of (a)  seventy
            percent  (70%) of the market  price of the  Company's  Common  Stock
            averaged over the five trading days prior to the date of conversion,
            or (b) the market price on the issuance date of the Debentures.  Any
            accrued and unpaid  interest shall be payable,  at the option of the
            Company,  in cash or in shares of the Company's  Common Stock valued
            at the then effective conversion price.

                                      F-24
<PAGE>

<PAGE>


                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2002 and 2001


NOTE 9 -    CONVERTIBLE DEBENTURES (Continued)

            Pursuant to the terms of the  Debentures,  the Company had agreed to
            file a  registration  statement  with the Commission to register the
            shares of the Company's  Common Stock into which the  Debentures may
            be converted.  Upon effectiveness of the registration statement, the
            shares of the Company's Common Stock underlying the Debentures, when
            issued,  will  be  deemed  registered  securities  and  will  not be
            restricted as to the resale of such securities.

            If the  Company  failed to file its  registration  statement  within
            forty-five (45) days from the closing of the Debenture offering, the
            Company  would be  obligated  to increase  by up to fifteen  percent
            (15%) the number of shares issuable upon conversion to each holder.

            The Company failed to obtain an effective registration statement.

            The  Company  has  accrued  and fully  amortized  a discount  on the
            Debentures of $1,445,480 to compensate for the seventy percent (70%)
            market price  conversion and  contributed  this amount to additional
            paid-in capital.  The Company has also accrued an additional  amount
            of $963,653 as a penalty payable to compensate for the non-filing of
            the registration statement penalty of 15% and for the 5% discount on
            the  conversion  of the  debentures  penalty  and have  added  these
            amounts to the  debenture  payable as of December 31, 1999. In 1999,
            the Company  converted  $469,064 of the debenture and $60,102 of the
            penalties and interest into 4,398,929 shares of common stock.

            In 2000, the Company converted  $1,547,655 of interest and penalties
            and $4,106,337 of the debentures  payable into 151,930,606 shares of
            common stock. At December 31, 2002, the Company owed $331,462 on the
            debentures  consisting  of $50,000 for a debenture  and  $281,462 in
            penalties.

NOTE 10 -   BUSINESS SEGMENTS

            The Company has adopted SFAS No. 131,  "Disclosure about Segments of
            an Enterprise  and Related  Information."  The Company  conducts its
            operations  principally  as oil and gas sales with Trans  Energy and
            Prima Oil and pipeline  transmission  with Ritchie  County and Tyler
            Construction.

                                      F-25
<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2002 and 2001


NOTE 10 -   BUSINESS SEGMENTS (Continued)

            Certain financial information concerning the Company's operations in
            different industries is as follows:
<TABLE>
<CAPTION>

                                              For the
                                            Years Ended      Oil and Gas           Pipelines          Corporate
                                            December 31,        Sales            Transmission        Unallocated
                                            ------------     -----------         ------------        -----------

<S>                                            <C>          <C>                  <C>                  <C>
            Oil and gas revenue                2002         $   454,288          $   435,476          $     --
                                               2001             544,905              775,963                --

            Operating loss applicable to
              industry segment                 2002           1,137,369              262,180                --
                                               2001           1,005,198              185,450                --

            General corporate expenses
              not allocated to industry
              segments                         2002                --                   --                  --
                                               2001                --                   --                  --

            Interest expense                   2002            (390,687)             (98,190)               --
                                               2001            (275,571)             (85,516)               --

            Other income (expenses)            2002              19,669                2,868                --
                                               2001              16,026                 --                  --

            Assets
              (net of intercompany accounts)   2002           2,250,407              497,229                --
                                               2001           3,079,204              792,831                --

            Depreciation and amortization      2002             810,451              108,913                --
                                               2001             798,189              108,742                --

            Property and equipment
             acquisitions                      2002                --                 10,249                --
                                               2001             281,203                 --                  --
</TABLE>

NOTE 11 -   OUTSTANDING STOCK OPTIONS

            The Company applies Accounting  Principles Board ("APB") Opinion 25,
            "Accounting   for  Stock   Issued   to   Employees,"   and   related
            Interpretations  in accounting for all stock option plans. Under APB
            Opinion  25,  compensation  cost is  recognized  for  stock  options
            granted to  employees  when the option price is less than the market
            price of the underlying common stock on the date of grant.

                                      F-26
<PAGE>


                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2002 and 2001


NOTE 11 -   OUTSTANDING STOCK OPTIONS (Continued)

            FASB Statement 123, "Accounting for Stock-Based Compensation" ("SFAS
            No.  123"),  requires  the Company to provide  proforma  information
            regarding  net income  and net  income per share as if  compensation
            costs for the  Company's  stock  option plans and other stock awards
            had been  determined in accordance  with the fair value based method
            prescribed in SFAS No. 123. The Company  estimates the fair value of
            each stock award at the grant date by using the Black-Scholes option
            pricing model.

            A summary of the status of the  Company's  stock  option plans as of
            December 31, 2002 and changes during the year is presented below:

                                                                Weighted
                                                                Average
                                                     Shares   Exercise Price
                                                     -------  ---------------
            Outstanding, December 31, 2001           795,057   $   0.50

                  Granted                               --      --
                  Canceled/Expired                      --      --
                  Exercised                             --      --
                                                     -------   --------

             Outstanding, December 31, 2002          795,057   $   0.50
                                                     =======   ========

            Exercisable, December 31, 2002           795,057   $   0.50
                                                     =======   ========

<TABLE>
<CAPTION>

                                                 Outstanding                      Exercisable
                                                 -----------                      -----------
                                                  Weighted
                                                   Average       Weighted                   Weighted
                                     Number       Remaining      Average      Number        Average
                                  Outstanding    Contractual     Exercise     Exercisable   Exercise
            Exercise Prices       at 12/31/01       Life         Price        at 12/31/02   Price
            ---------------       -----------       ----         --------     -----------   --------

<S>         <C>                   <C>               <C>          <C>          <C>           <C>
            $ 0.50                795,057           1.00         $ 0.50       795,057       $ 0.50
</TABLE>

            The  795,057  options  were  issued at $0.50,  which is equal to the
            market price on the date of issuance.  All options are fully vested,
            have a five-year  period to be exercised and will expire on December
            31, 2003. The options were not issued  pursuant to an employee stock
            option plan.


                                      F-27
<PAGE>


                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2002 and 2001


NOTE 12 -   NOTES PAYABLE - CONVERTIBLE

            Nine (9) convertible  debentures  dated between  February 21, 2001
              and April 27, 2001  bearing  interest at 10% with  interest  and
              principal  due  upon  demand;  unsecured;  convertible  into the
              Company's common stock at $0.035 per share            $  41,575
                                                                    ---------

              Less current portion                                    (41,575)
                                                                    ---------

              Long-term portion                                     $    --

            The Company  recognized an additional  expense of $23,989 because of
            the additional  beneficial  feature offered to the debenture holders
            below the market  value.  This  beneficial  conversion  feature  was
            expensed  during the year ended  December  31, 2001  pursuant to the
            EITF 96-18 and has been  included in the general and  administrative
            expense in the accompanying consolidated statement of operations.

NOTE 13-    CORRECTION OF AN ERROR

            The Company has restated its consolidated  financial  statements for
            the year ended  December  31,  2001 to reflect  adjustments  made to
            capitalize  well  costs  under  the  successful  efforts  method  of
            accounting for oil and gas producing  activities and properly record
            its corresponding liabilities. The Company determined that under its
            agreement with Sancho Oil and Gas Corporation,  a related party, the
            Company  is  responsible  to pay  100% of the cost of  drilling  and
            completing  seven natural gas wells in Tyler County,  West Virginia.
            The Company had previously recognized only 75% of the costs incurred
            in drilling the wells. Additionally the Company also determined that
            they had not recognized its  proportional  share of all the expenses
            in its joint working interest,  with Sancho, in operating these same
            seven wells.

            These  adjustments   increased  the  previously  reported  wells  at
            December   31,  2001  by   $241,616,   increased   the   accumulated
            depreciation/depletion  on the wells by $11,047,  increased  related
            party payable by $241,616,  increased  accrued  expenses by $12,167,
            increased revenues by $42,641,  and increased cost of oil and gas by
            $42,641.   These   adjustments   had  increased  the  net  loss  and
            accumulated deficit by $23,214 for the year ended December 31, 2001.
            A summary of the changes is as follows:

                       Originally           As
                        Reported         Restated       Difference
                        --------         --------       ----------

Total Assets          $  3,641,470    $  3,872,035    $    230,565
Total Liabilities        5,947,266       6,201,045         253,779
Accumulated deficit    (25,251,849)    (25,275,063)        (23,214)

Net loss                (1,473,744)     (1,496,958)        (23,214)
Loss per share               (0.01)          (0.01)           --


                                      F-28
<PAGE>



                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2002 and 2001


NOTE 14 -   SUBSEQUENT EVENTS

            On January 31, 2003,  the Company  entered into an Agreement of Sale
            and Exchange with PC Pipeline,  Inc.  ("Purchaser") for 7.6 miles of
            Tyler  Construction's  six-inch  natural gas  pipeline in  Pleasants
            County,  West  Virginia in  exchange  for the  remaining  35% of the
            outstanding  common stock of Tyler  Construction  Company.  This now
            makes Tyler  Construction  Company a wholly-owned  subsidiary of the
            Company.

            On February 27,  2003,  the Company  entered into an Asset  Purchase
            Agreement with Triad Energy  Corporation  ("Triad") and Sancho Oil &
            Gas  Corporation   ("Sancho")  whereby  Tyler  Construction  Company
            ("Tyler")  sold  55,000  feet of gas  pipeline  located in Tyler and
            Pleasants County,  West Virginia for $270,000.  $240,000 was paid at
            the time of closing  and the  remaining  $30,000 was payable 60 days
            from  closing.  As  part  of  the  Agreement,   Tyler  assigned  its
            right-of-ways and its gas purchase contract with Sancho,  along with
            an agreement  for Traid to use Tyler's  right to transport gas which
            right is not assignable.

            During February 2003, the Company filed Form S-8 with the Securities
            and Exchange  Commission for the registration of 3,500,000 shares of
            the  Company's  common stock to be issued to A. Thomas  Crompton for
            consulting services that were performed during the fourth quarter of
            2002. The shares were valued at $0.003,  which was the trading price
            at the  time  the  shares  were  registered,  for a total  value  of
            $10,500.  This amount has been accrued at December 31, 2002,  and is
            included in accrued expenses as a current liability.


                                      F-29
<PAGE>


                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 2002 and 2001
                                   (Unaudited)


S.F.A.S. 69 SUPPLEMENTAL DISCLOSURES
<TABLE>
<CAPTION>

         (1)                 Capitalized Costs Relating to
                           Oil and Gas Producing Activities

                                                                                  December 31,
                                                                           2002                 2001
                                                                       ------------         ------------
<S>                                                                    <C>                  <C>
         Proved oil and gas producing properties and related
         lease and well equipment                                      $  3,678,730         $  3,617,50
         Unproved oil and gas properties                                     95,945              114,426
         Accumulated depreciation and depletion                          (1,839,295)          (1,060,552)
                                                                       ------------         ------------

         Net Capitalized Costs                                         $  1,935,380         $  2,671,379
                                                                       ============         ============
</TABLE>

<TABLE>
<CAPTION>
         (2)                 Costs Incurred in Oil and Gas Property
                      Acquisition, Exploration, and Development Activities

                                                                             For the Years Ended
                                                                                  December 31,
                                                                           2002                 2001
                                                                       ------------         ------------
<S>                                                                    <C>                  <C>
         Acquisition of Properties
            Proved                                                     $       --           $    522,819
            Unproved                                                           --                   --
         Exploration Costs                                                     --                   --
         Development Costs                                                     --                   --
</TABLE>

         The Company does not have any  investments  accounted for by the equity
method.

<TABLE>
<CAPTION>
         (3)                   Results of Operations for
                                 Producing Activities

                                                                               For the Years Ended
                                                                                    December 31,
                                                                           2002                 2001
                                                                       ------------         ------------
<S>                                                                    <C>                  <C>
         Sales                                                         $    454,288         $    544,905

         Production costs                                                  (277,125)            (263,643)
         Depreciation and depletion                                        (801,776)            (782,921)
         Income tax expenses                                                --                   --

         Results of operations for producing activities
           (excluding the activities of the pipeline transmission
           operations, corporate overhead and interest costs$
                                                                       $   (624,613)        $    (501,65)
                                                                       ============         ============
</TABLE>

                                      F-30
<PAGE>


                       TRANS ENERGY, INC. AND SUBSIDIARIES
                      S.F.A.S. 69 Supplemental Disclosures
                           December 31, 2002 and 2001
                                   (Unaudited)


S.F.A.S. 69 SUPPLEMENTAL DISCLOSURES (CONTINUED)
<TABLE>
<CAPTION>

         (4)              Reserve Quantity Information

                                                                           Oil                  Gas
                                                                           BBL                   MCF
                                                                       ------------         ------------
         Proved developed and undeveloped reserves
<S>                                                                         <C>                <C>
         End of the year 2001                                               147,876            1,133,839

         Revisions of previous estimates                                      1,928               52,048
         Improved recovery                                                     --                   --
         Purchases of minerals in place                                        --                   --
         Extensions and discoveries                                            --                   --
         Production                                                         (36,398)             (54,472)
         Sales of minerals in place                                            --                   --
                                                                       ------------         ------------

         End of the year 2002                                               113,406            1,131,415
                                                                       ============         =============
         Proved developed reserves:
                                                                           Oil                  Gas
                                                                           BBL                   MCF
                                                                       ------------         ------------

            End of the year 2001                                            147,876            1,133,839
            End of the year 2002                                            113,406            1,131,415
</TABLE>

            During the years ended  December 31, 2002 and 2001,  the Company had
            reserve  studies and estimates  prepared on its various  properties.
            The difficulties and uncertainties involved in estimating proved oil
            and gas reserves  makes  comparisons  between  companies  difficult.
            Estimation  of reserve  quantities  is subject to wide  fluctuations
            because it is dependent on judgmental  interpretation  of geological
            and geophysical data.

                                      F-31
<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                      S.F.A.S. 69 Supplemental Disclosures
                           December 31, 2002 and 2001
                                   (Unaudited)


S.F.A.S. 69 SUPPLEMENTAL DISCLOSURES (CONTINUED)
<TABLE>
<CAPTION>

         (5)                Standardized Measure of Discounted
                            Future Net Cash Flows Relating to
                              Proved Oil and Gas Reserves

                                  At December 31, 2002

                                                                     Trans Energy
                                                                     and
                                                                     Subsidiaries
                                                                     ------------

<S>                                                                  <C>
          Future cash inflows                                        $ 8,063,052
          Future production and development costs                     (1,854,502)
          Future income tax expense                                         --
                                                                     -----------
          Future net cash flows                                        6,208,550
          10% annual discount for estimated timing of cash flows      (1,438,849)
                                                                     -----------

          Standardized measure of discounted future net cash flows   $ 4,314,941
                                                                     ===========


                                  At December 31, 2001
                                                                     Trans Energy
                                                                     and
                                                                     Subsidiaries
                                                                     ------------

          Future cash inflows                                        $ 6,582,335
          Future production and development costs                     (1,331,000)
          Future income tax expense                                        --
                                                                      -----------
          Future net cash flows                                        5,251,335
          10% annual discount for estimated timing of cash flows      (1,601,341)
                                                                      -----------

          Standardized measure of discounted future net cash flows   $ 3,649,994
                                                                      ===========
</TABLE>


         Future income taxes were  determined  by applying the statutory  income
         tax rate to future pre-tax net cash flow relating to proved reserves.

         The following schedule  summarizes changes in the standardized  measure
         of  discounted  future  net cash flow  relating  to proved  oil and gas
         reserves:
<TABLE>
<CAPTION>

                                                                         For the Years Ended
                                                                             December 31,
                                                                     --------------------------
                                                                         2002            2001
                                                                     -----------    -----------
<S>                                                                  <C>            <C>
          Standardized measure, beginning of year                    $ 3,649,994    $ 4,425,778
          Oil and gas sales, net of production costs                        --             --
          Sales of mineral in place                                         --       (1,039,658)
          Purchases                                                         --             --
          Net change due to revisions in quantity estimates              664,947        263,874
          Accretion of discount items                                       --             --
                                                                     -----------    -----------

          Standardized measure, end of year                          $ 4,314,941    $ 3,649,994
                                                                     ==========     ===========
</TABLE>

                                      F-32
<PAGE>


                       TRANS ENERGY, INC. AND SUBSIDIARIES
                      S.F.A.S. 69 Supplemental Disclosures
                           December 31, 2002 and 2001
                                   (Unaudited)

S.F.A.S. 69 SUPPLEMENTAL DISCLOSURES (CONTINUED)

         The  above   schedules   relating  to  proved  oil  and  gas  reserves,
         standardized measure of discounted future net cash flows and changes in
         the standardized measure of discounted future net cash flows have their
         foundation  in  engineering  estimates of future net revenues  that are
         derived from proved reserves and prepared using the prevailing economic
         conditions. These reserve estimates are made from evaluations conducted
         by independent geologists,  of such properties and will be periodically
         reviewed based upon updated  geological and production data.  Estimates
         of proved  reserves are inherently  imprecise.  The above  standardized
         measure  does not  include  any  restoration  costs due to the fact the
         Company does not own the land.

         Subsequent  development  and production of the Company's  reserves will
         necessitate  revising the present estimates.  In addition,  information
         provided in the above schedules does not provide definitive information
         as the results of any particular  year but,  rather,  helps explain and
         demonstrate the impact of major factors affecting the Company's oil and
         gas producing activities.  Therefore,  the Company suggests that all of
         the aforementioned  factors concerning  assumptions and concepts should
         be  taken  into   consideration   when  reviewing  and  analyzing  this
         information.

                                      F-33