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

                                 Amendment No. 1
                                       to
                                  FORM 10-KSB/A
(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, 2003

[ ]      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.
$ 2,015,012

         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. $2,102,996 (Based on price of $0.008 per share on March 30, 2004)

         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, 2003
-----------------------                     -----------------------------------
Common Stock, Par Value                                  269,010,438
   $.001 per share
<PAGE>

                       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]



         The purpose of this first  amendment to the Company's  Annual Report on
Form 10-KSB is to correct an error to the audited  financial  statements for the
period  ended  December 31,  2003.  The change was made to properly  reflect the
ending  balance of accounts  receivable as of December 31, 2003 and revenues for
the year ended  December 31, 2003.  Amended  financial  statements  are attached
hereto.


<PAGE>



<TABLE>
<CAPTION>

                               TRANS ENERGY, INC.

                                TABLE OF CONTENTS

                                                                                                       Page

                                     PART I

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

Item 2.           Description of Property........................................................       12

Item 3.           Legal Proceedings..............................................................       14

Item 4.           Submission of Matter to a Vote of Security Holders.............................       15

                                     PART II

Item 5.           Market for Common Equity and Related Stockholder Matters.......................       15

Item 6.           Management's Discussion and Analysis or Plan of Operation......................       16

Item 7.           Financial Statements...........................................................       21

Item 8.           Changes in and Disagreements with Accountants on Accounting and
                  Financial Disclosure...........................................................       21

Item 8A.          Controls and Procedures........................................................       21

                                    PART III

Item 9.           Directors, Executive Officers, Promoters and Control persons;
                  Compliance with Section 16(a) of the Exchange Act..............................       22

Item 10.          Executive Compensation.........................................................       23

Item 11.          Security Ownership of Certain Beneficial Owners and Management.................       23

Item 12.          Certain Relationships and Related Transactions.................................       24

Item 13.          Exhibits and Reports on Form 8-K...............................................       25

Item 14.          Principal Accountant Fees and Services.........................................       26

                  Signatures.....................................................................       27
</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,  4-inch and 6-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 an injection well for the water flood
during the summer of 2004.

     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.

     On December 31, 2003,  we sold our 75% working  interest  ownership in five
oil and gas  wells  located  in  Tyler  County,  West  Virginia  to  Ultra-Light
Investments  for $380,000.  Of the total  proceeds,  $30,000 was used to pay off
existing  debt on the  wells.  The  balance  of  $350,000  was used to settle an
ongoing dispute with Baker Hughes Oilfield Operations,  Inc. d/b/a/ Baker Hughes
Inteq, Western Geophysical, a division of Western Atlas International,  Inc. The
$350,000  was  considered  as payment in full and we were given a release of all
judgments and liens against us in the matter.

                                      -3-
<PAGE>

     The  following is a summary of our oil and gas assets  including  wells and
pipelines that we acquired in September 1993:

     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,
initially  consisting of  approximately 27 miles of 6-inch pipeline and 10 miles
of 4-inch pipeline.

     Tyler  Construction's  trunk line system  consists of 6-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 4-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  were  used to pay down  existing  short  and
long-term debt.

     On March 17, 2004, Tyler  Construction  sold 16,000 feet of 6-inch pipeline
located in Pleasants  and Tyler  Counties,  West  Virginia  for  $70,000.  Tyler
Construction  also sold 30,096 feet of 4-inch pipeline  located in Pleasants and
Ritchie  Counties,  West Virginia for $130,000.  The buyer in both instances was
Triad Energy Corporation of Reno, Ohio. Of the total proceeds, $161,391 was used
to pay off the bank debt of the  pipelines and the balance was used as operating
capital.  Following  the sale,  we  retain  approximately  16.3  miles of 6-inch
pipeline in Tyler County.

     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.

                                      -4-
<PAGE>

     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 4-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 4-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.

     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 TSRGNet               Bbls. to TSRG
------------                     ------------             -----------------              -------------
<S>            <C>                          <C>                       <C>                     <C>
Sagebrush Fed #1                            47                        48.8%                   23
Sagebrush Fed #2                             0                        47.5%                    0
Pinon Fee #1                                16                        51.2%                    8
Swartz Draw                                 34                        15.4%                    5
                                         -----                                              ----
        Total                               97                                                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.

                                      -5-
<PAGE>

     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.

     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.

                                      -6-
<PAGE>

     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.

     Although  management  believes  that  we are  not  dependent  upon  any one
customer,  our marketing arrangement with Sancho accounted for approximately 82%
of our revenue for the year ended December 31, 2003, and  approximately  26% for
the year ended December 31, 2002.  This  marketing  agreement is in effect until
September 1, 2008.

     In addition to the natural  gas  produced by our wells,  we also  purchased
approximately 500 Mcf of natural gas per day in 2003.

                                      -7-
<PAGE>

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.

     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.

                                      -8-
<PAGE>

     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.

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
     ---------------------------------------------------------------------------
     Although our revenues  increased  approximately 126% during the fiscal year
ended  December  31,  2003,  and we may not achieve,  or  subsequently  maintain
profitability  if  anticipated  revenues do not increase in the future.  We have

                                      -9-
<PAGE>

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, 2003, our net operating loss  carryforward was  approximately  $19.7 million
and our  accumulated  deficit  was  approximately  $28.8  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.

     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.

                                      -10-
<PAGE>

     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 2004. 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;
    *    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.

                                      -11-
<PAGE>

     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.  On
December 31, 2003,  we sold our 75% working  interest  ownership in five oil and
gas wells located in Tyler County, West Virginia to Ultra-Light  Investments for
$380,000. The wells included Eastlack #1, Nolan #2, Nolan #3, Nolan #4 and Nolan
#5. Our proved reserves for the years ended December 31, 2003, 2002 and 2001 are
set forth below:

                                                 December 31,
                                ---------------------------------------------
                                  2003              2002              2001
                                ---------         ---------         ---------
Natural Gas (MMcf)
    Developed                        --           1,131,415         1,133,839
    Undeveloped                      --                --                --
     Total Proved                    --           1,131,415         1,133,839
Crude Oil (MBbl)
    Developed                      99,880           113,406           147,876
    Undeveloped                      --                --                --
     Total Proved                  99,880           113,406           147,876

     These  estimates are bases  primarily on the reports of Robert L. Richards,
Geologist and  presently an officer and director of Trans  Energy.  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.

                                      -12-
<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:                     2003         2002        2001
-------------------                     ------       ------      ------
    Gas (per mcf)                       $ 7.04      $  4.73     $  5.22
    Oil (per bbl)                        23.38        17.91       16.22
Average cost of production:
    Gas (per mcf)                         -           -           -
    Oil (per bbl)                         4.58         5.03        4.05

     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,
                           -----------------------------------------
                               2003          2002           2001
                           -----------    -----------    -----------
Proved oil and gas
  producing properties
  and related lease
  and well equipment       $ 3,171,426    $ 3,678,730    $ 3,617,505
Unproved oil and gas
  properties                    99,945         95,945        114,426
Accumulated depreciation
  and depletion             (2,555,878)    (1,839,295)    (1,009,429)
                                                         -----------
Net Capitalized Costs      $   715,493    $ 1,935,380    $ 2,722,502
                           ===========    ===========    ===========

     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,
                             -----------------------------------------
                                 2003          2002           2001
                             -----------    -----------    -----------
Standardized measure,
  beginning of year           $ 4,314,941    $ 3,649,994   $ 4,425,778
Oil and gas sales, net
  of production costs          (2,411,293)          --            --
Sales of mineral in place            --             --      (1,039,658)
Purchases                            --             --            --
Net change due to revisions
  in quantity estimates           (39,271)       664,947       263,874
                              -----------    -----------   -----------
Standardized measure,
  end of year                 $ 1,864,377    $ 4,314,941   $ 3,649,994
                              ===========    ===========   ===========

     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.

                                      -13-
<PAGE>

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
     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.  On December 23, 2003 we
     entered  into a  Settlement  Agreement  and Mutual  Release  with the Baker
     Entities  whereby on January 5, 2004 we paid $350,000 to the Baker Entities
     as  payment in full for all monies  owed and the Baker  Entities  gave us a
     release of all judgments and liens against us.

                                      -14-
<PAGE>
     (b) 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.  We believe that we have  satisfied  the balance
     owed to  Tioga  of  $26,233.58,  although  the  judgment  has not yet  been
     released. We are proceeding to secure the release of the judgment.

     (c) 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.

     (d) 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.

     (e) 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. As of December 31, 2003, the amount due was $51,371.

     (f) On  February 5, 2003,  O.C.  Smith  obtained a judgment  against us for
     $6,000 in the Circuit Court of Ritchie County, West Virginia. Mr. Smith had
     brought suit against our predecessor Apple  Corporation,  for an accounting
     of all gas purchased by us as well as judgment for all amounts still owing.
     We acquired all of Apple Corporation's interest in this well and management
     determined  that there was an unpaid  balance  still owing Mr.  Smith.  The
     $6,000 was payable in three  monthly  installments  beginning  on April 25,
     2003. The final  installment  was paid on February 23, 2004 and we consider
     the judgment paid in full.

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, 2003.

                                     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.

                                       High          Low
                                       ----          ---
              2003
                  First Quarter     $   .004     $   .002
                  Second Quarter    $   .007     $   .002
                  Third Quarter     $   .006     $   .002
                  Fourth Quarter    $   .028     $   .003

                                      -15-
<PAGE>

              2002
                  First Quarter     $   .026     $   .005
                  Second Quarter    $   .019     $   .007
                  Third Quarter     $   .012     $   .002
                  Fourth Quarter    $   .009     $   .002

                  --------------------------
     As of December 31, 2003, there were  approximately 390 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

     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.

     During  2003,  we  issued   27,841,311  shares  of  common  stock  for  the
extinguishment  of certain debts and related  interest valued at $75,116,  or an
average  price of $.0027 per share,  and an additional  150,000  shares upon the
conversion of convertible  debt in the amount of $5,250,  or $.035 per share. We
also issued  3,500,000  shares in exchange  for services  valued at $10,500,  or
$.003 per share.

     Shares issued for cash, services and extinguishment of debt, were issued in
reliance upon the exemption from registration  under the Securities Act of 1933,
provided by Section  4(2)  thereunder.  Issuances of shares upon  conversion  of
debentures  or other debt were  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,  2003,  and 2002.  It  should be noted  that
percentages  discussed  throughout  this  analysis are stated on an  approximate
basis.

                                      -16-
<PAGE>
<TABLE>
<CAPTION>

                                                                             Fiscal Years Ended
                                                                                 December 31,
                                                                            2003             2002
                                                                           -----            ------

<S>                                                                         <C>              <C>
Total revenues........................................................      100%             100%
Total costs and expenses..............................................      162              257
Total other income (expenses).........................................      (15)             (62)
Loss before taxes and change in accounting principal .................      (77)            (219)
Income taxes..........................................................       -                -
Change in accounting principal........................................       (6)              -
Net (loss)............................................................      (83)            (219)
</TABLE>



For the Year Ended  December  31, 2003  Compared to the Year Ended  December 31,
2002


     Total  revenues of $1,902,836 for the year ended December 31, 2003 ("2003")
increased  114% when  compared to $889,764 for the year ended  December 31, 2002
("2002") due primarily to increased oil and gas prices and greater gas volume in
our pipelines.  In 2003,  oil made up 28% of total  revenues  compared to 31% in
2002, and gas  represented  72% of revenues in 2003 compared to 67% in 2002. The
changes  were  considered  minimal  representing  only a  slight  difference  in
percentage points.

     We had an  operating  loss of  $1,187,448  for 2003  compared  to a loss of
$1,399,549 in 2002. Total costs and expenses increased 35% in 2003 primarily due
to the 132%  increase in cost of oil and gas,  attributed  to higher oil and gas
prices and increased  pipeline costs.  As a percentage of revenues,  total costs
and  expenses  decreased  from 257% in 2002 to 162% in 2003,  attributed  to the
significant increase in revenues from pipeline transmissions. Salaries and wages
remained  constant  in  2003.  Selling,   general  and  administrative  expenses
decreased 35% in 2003 when compared to 2002, primarily due to a lower legal fees
and settlement of prior legal issues.  Depreciation,  depletion and amortization
increased 5% in 2003 due to increased oil production.


     Interest expense in 2003 decreased 17% in 2003 due to lower interest rates,
paying off certain debt with proceeds form the sale of assets, and settlement of
the Baker Hughes  judgment.  We also realized a gain on disposition of assets of
$231,702  in 2003,  compared  to $82,522 in 2002,  which was offset by a loss on
sale and valuation of assets in 2003 of $266,496. We also recognized a charge of
$116,486 in 2003 due to a change in accounting principal.


     Our net loss for 2003 was  $1,582,180  versus a net loss of $1,946,959  for
2002.  The  decrease in net loss in 2003 is  primarily  attributed  to increased
revenues and recognized gains on disposition of assets and debt.


Net Operating Losses

     We have  accumulated  approximately  $19.7  million of net  operating  loss
carryforwards  as of  December  31,  2003,  which may be offset  against  future
taxable  income  through  2023.  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, 2003 because the
potential tax benefits of the loss carryforward is offset by valuation allowance
of the same amount.
                                      -17-
<PAGE>
         Liquidity and Capital Resources

     Historically,  working  capital  needs  have  been  satisfied  through  our
operating revenues and from borrowed funds. Working capital at December 31, 2003
was a negative  $6,359,171  compared with a negative  $6,332,583 at December 31,
2002. We anticipate  meeting  working  capital needs during the 2004 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.

     As  of  December  31,  2003,  we  had  total  assets  of   $1,292,875   and
stockholders'  deficit of $5,430,033  compared to total assets of $2,747,636 and
total stockholders' deficit of $3,938,719 at December 31, 2002.

     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, 2003,  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, 2003, and has a working capital deficit at December 31, 2003, 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  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  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:

    *    the sufficiency of existing capital resources and our ability to raise
         additional capital to fund cash requirements for future operations;
    *    uncertainties  involved  in the  rate of  growth  of our  business  and
         acceptance of any products or services;
    *    volatility  of the stock  market,  particularly  within the  technology
         sector; and
    *    general economic conditions.

     Although we believe the  expectations  reflected  in these  forward-looking
statements are reasonable,  such  expectations  cannot guarantee future results,
levels of activity, performance or achievements.

                                      -18-
<PAGE>

Recent Accounting Pronouncements

     In August 2001,the  Financial  Accounting  Standards Board, or FASB, issued
Statement of Financial  Accounting Standards (SFAS) SFAS No. 143, Accounting for
Asset  Retirement  Obligations,  which  established  a uniform  methodology  for
accounting for estimated  reclamation and abandonment  costs.  The statement was
effective  for fiscal  years  beginning  after June 15,  2002.  We  recorded  an
environmental  remediation accrual of $200,000. A change in accounting principal
of $116,486 was recognized in the year ended December 31, 2003.

     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 adoption of SFAS 145 did not have a material  effect on
our financial statements.

     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 adoption of SFAS 146 did not have a material  effect
on our financial statements.

     In October  2002,  the FASB issued SFAS No. 147,  "Acquisitions  of Certain
Financial  Institutions" which is effective for acquisitions on or after October
1, 2002. This statement provides interpretive guidance on the application of the
purchase  method  to  acquisitions   of  financial   institutions.   Except  for

                                      -19-
<PAGE>

transactions  between two or more mutual  enterprises,  this  Statement  removes
acquisitions  of  financial  institutions  from the  scope  of both  SFAS 72 and
Interpretation  9 and  requires  that those  transactions  be  accounted  for in
accordance with SFAS No. 141, "Business Combinations" and No. 142, "Goodwill and
Other  Intangible  Assets." The adoption of SFAS No. 147 did not have a material
effect on our financial statements.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock Based
Compensation-Transition  and Disclosure-an  amendment of FASB Statement No. 123"
which is effective for financial statements issued for fiscal years ending after
December 15, 2002. This Statement  amends SFAS 123,  "Accounting for Stock-Based
Compensation,"  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, this Statement 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  compensation and the
effect of the method used on reported results.  The adoption of SFAS No. 148 did
not have a material effect on our financial statements.

     In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative  Instruments and Hedging Activities" which is effective for contracts
entered  into or  modified  after June 30,  2003 and for  hedging  relationships
designated  after June 30, 2003. This statement  amends and clarifies  financial
accounting for derivative instruments embedded in other contracts  (collectively
referred to as derivatives) and hedging  activities under SFAS 133. The adoption
of SFAS No. 149 did not have a material effect on our financial statements.

     In May  2003,  the  FASB  issued  SFAS No.  150,  "Accounting  for  Certain
Financial Instruments with Characteristics of both Liabilities and Equity" which
is effective for financial  instruments  entered into or modified  after May 31,
2003,  and is otherwise  effective at the beginning of the first interim  period
beginning after June 15, 2003. This Statement  establishes  standards for how an
issuer  classifies and measures in its statement of financial  position  certain
financial  instruments with  characteristics  of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a  liability  (or an  asset in some  circumstances)  because  that  financial
instrument  embodies an obligation  of the issuer.  The adoption of SFAS No. 150
did not have a material effect on our financial statements.

     FASB  Interpretation  No.  45,   "Guarantor's   Accounting  and  Disclosure
Requirements for Guarantees,  Including  Indirect  Guarantees of Indebtedness of
Others - an  Interpretation  of FASB  Statements No. 5, 57 and 107". The initial
recognition and initial measurement  provisions of this Interpretation are to be
applied  prospectively to guarantees issued or modified after December 31, 2002.
The disclosure  requirements in the Interpretation  were effective for financial
statements  of interim or annual  periods  ending after  December 15, 2002.  The
adoption  of FASB  Interpretation  No. 45 did not have a material  effect on our
financial statements.

     In January 2003, the FASB issued FASB  Interpretation No. 46 "Consolidation
of Variable Interest  Entities." FIN 46 provides guidance on the  identification
of entities  for which  control is  achieved  through  means other than  through
voting rights,  variable interest entities,  and how to determine when and which
business  enterprises  should  consolidate  variable  interest  entities.   This
interpretation  applies  immediately to variable interest entities created after
January  31,  2003.  It  applies  in the first  fiscal  year or  interim  period
beginning  after  June 15,  2003,  to  variable  interest  entities  in which an
enterprise  holds a variable  interest that it acquired before February 1, 2003.
The  adoption  of  FIN 46  did  not  have a  material  impact  on our  financial
statements.

                                      -20-
<PAGE>

     During the year ended December 31, 2003, we adopted the following  Emerging
Issues Task Force Consensuses:  EITF Issue No. 00-21 "Revenue  Arrangements with
Multiple Deliverables," EITF Issue No. 01 -8 "Determining Whether an Arrangement
Contains a Lease,"  EITF  Issue No.  02-3  "Issues  Related  to  Accounting  for
Contracts Involved in Energy Trading and Risk Management Activities," EITF Issue
No. 02-9  "Accounting  by a Reseller for Certain  Consideration  Received from a
Vendor," EITF Issue No. 02-17,  "Recognition of Customer Relationship Intangible
Assets Acquired in a Business Combination," EITF Issue No. 02-18 "Accounting for
Subsequent  Investments  in an Investee  after  Suspension of Equity Method Loss
Recognition,"  EITF Issue No. 03-1, "The Meaning of Other Than Temporary and its
Application  to Certain  Instruments,"  EITF Issue No. 03-5,  "Applicability  of
AICPA Statement of Position 9702, `Software Revenue Recognition' to Non-Software
Deliverables in an Arrangement  Containing More Than Incidental  Software," EITF
Issue No. 03-7,  "Accounting for the Settlement of the Equity Settled Portion of
a Convertible Debt Instrument That Permits or Requires the Conversion  Spread to
be Settled in Stock," EITF Issue No. 03-10, "Application of EITF Issue No. 02-16
by Resellers to Sales Incentives Offered to Consumers by Manufacturers."

Item 7.       Financial Statements


     Our  restated  financial  statements  as of and for the fiscal  years ended
December 31, 2003 and 2002 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.

Item 8A.      Controls and Procedures

     As of the end of the period  covered  by this  report,  we  carried  out an
evaluation,  under the  supervision  and with the  participation  of management,
including  our chief  executive  officer  and chief  financial  officer,  of the
effectiveness  of the  design  and  operation  of our  disclosure  controls  and
procedures  as  defined  in Rules  13a-15(e)  and  15d-15(e)  of the  Securities
Exchange Act of 1934.  Based upon that evaluation,  our chief executive  officer
and  chief  financial  officer  concluded  that  our  disclosure   controls  and
procedures  are  effective  to cause the  material  information  required  to be
disclosed  by us in the reports that we file or submit under the Exchange Act to
be  recorded,  processed,  summarized  and  reported  within  the  time  periods
specified in the SEC's rules and forms.  There have been no significant  changes
in our internal  controls or in other factors which could  significantly  affect
internal controls subsequent to the date we carried out our evaluation.

                                      -21-
<PAGE>

                                    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    58
                              and Director
Loren E. Bagley             Vice President            August 1991       61
                              and Director
William F. Woodburn         Secretary / Treasurer     August 1991       62
                              and Director
John B. Sims                Director                  January 1988      78

     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  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.

                                      -22-
<PAGE>
     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

     For the past three fiscal years ended  December 31, 2003,  we have not paid
any cash compensation for services rendered by our executive officers.

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, 2003,  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.

                                      -23-
<PAGE>

Name and Address                  Amount and Nature of           Percent
of Beneficial Owner               Beneficial Ownership           of Class(1)
-------------------               --------------------           -----------
Robert L. Richards                         1,691,287(2)                 0.6%
  210 Second Street
  St. Marys, WV 26170
Loren E. Bagley *                          2,074,527(3)                 0.7%
  210 Second Street
  St. Marys, WV 26170
William F. Woodburn *                      2,067,394(4)                 0.8%
  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)                 2.3%
  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 269,010,438  shares of common stock  outstanding on December
         31,  2003,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, 2003 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.
     (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.

                                      -24-
<PAGE>

     (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 2003, we paid Sancho an aggregate
of approximately $11,000 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.

Item 13.      Exhibits and Reports on Form 8-K

     (a) Exhibits

Exhibit No.             Exhibit Name
-----------             ------------
   2.1(1)     Stock  Acquisition  Agreement  between  Trans  Energy and Loren E.
              Bagley and William F. Woodburn
   2.2(1)     Asset  Acquisition  Agreement  between  Trans Energy and Dennis L.
              Spencer
   2.3(1)     Asset  Acquisition   Agreement  between  Trans  Energy  and  Tyler
              Pipeline, Inc.
   2.4(1)     Stock Exchange  Agreement  between Trans Energy and Ritchie County
              Gathering Systems, Inc.
   2.5(1)     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(2)     Agreements related to acquisition of Vulcan Energy Corporation
   3.1(1)     Articles of Incorporation and all amendments  pertaining  thereto,
              for Apple Corp., an Idaho corporation
   3.2(1)     Articles  of  Incorporation  for  Trans  Energy,  Inc.,  a  Nevada
              corporation
   3.3(1)     Articles  of Merger  for the  States of  Nevada  and Idaho  3.4(1)
              By-Laws
   4.1(1)     Specimen Stock Certificate
  10.1(1)     Marketing Agreement with Sancho Oil and Gas Corporation
  10.2(1)     Gas Purchase Agreement with Central Trading Company

                                      -25-
<PAGE>

     (a) Exhibits (continued)

Exhibit No.             Exhibit Name
-----------             ------------
  10.3(1)     Price Agreement with Key Oil Company
  10.4(3)     Settlement Agreement and Mutual Release
  21.1(1)     Subsidiaries Schedule
  31.1        Certification   of  C.E.O.   Pursuant   to  Section   302  of  the
              Sarbanes-Oxley Act of 2002
  31.2        Certification of Principal  Accounting Officer Pursuant to Section
              302 of the Sarbanes-Oxley Act of 2002
  32.1        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
  32.2        Certification  of  Principal  Accounting  Officer  Pursuant  to 18
              U.S.C.  Section  1350,  as Adopted  Pursuant to Section 906 of the
              Sarbanes-Oxley Act of 2002
  99.1(1)     Reserve Estimate and Evaluation of oil and gas properties
  99.2(1)     Reserve Estimate and Evaluation for Dennis L. Spencer wells

     (1)  Previously  filed as exhibit to Form 10-SB.  (2)  Previously  filed as
     exhibit to Form 8-K dated August 7, 1995. (3)  Previously  filed as exhibit
     to Form 8-K file January 23, 2004

         (b)      Reports on Form 8-K

         We filed a  Current  Report  on Form  8-K on  January  15,  2004 and an
         amended  report on January 23, 2004  reporting  under Items 2 and 5 the
         sale of certain working interests in five oil and gas wells and the use
         of a portion of the proceeds to settle an ongoing lawsuit.

Item 14. Principal Accountants Fees and Services

     We do not  have an audit  committee  and as a result  our  entire  board of
directors performs the duties of an audit committee. Our board of directors will
approve in advance the scope and cost of the engagement of an auditor before the
auditor  renders audit and non-audit  services.  As a result,  we do not rely on
pre-approval policies and procedures.

     Audit Fees

     The aggregate fees billed by our  independent  auditors,  H J & Associates,
for  professional  services  rendered  for the  audit  of our  annual  financial
statements  included  in our Annual  Reports on Form  10-KSB for the years ended
December 31, 2003 and 2002, and for the review of quarterly financial statements
included in our Quarterly  Reports on Form 10-QSB for the quarters  ending April
30, June 30 and September  30, 2003 and 2002,  were $30,250 for 2003 and $33,500
for 2002.

     Audit Related Fees

     For the years ended  December 31, 2003 and 2002,  there were no fees billed
for  assurance  and  related  services  by  H J &  Associates  relating  to  the
performance  of the audit of our  financial  statements  which are not  reported
under the caption "Audit Fees" above.

     Tax Fees

     For the  years  ended  December  31,  2003 and 2002,  fees  billed by H J &
Associates  for tax  compliance,  tax advice and tax  planning  were  $1,250 and
$1,000, respectively.

                                      -26-
<PAGE>
     We do not use H J & Associates for financial  information system design and
implementation. These services, which include designing or implementing a system
that  aggregates  source data  underlying the financial  statements or generates
information  that is  significant  to our  financial  statements,  are  provided
internally or by other service  providers.  We do not engage H J & Associates to
provide compliance outsourcing services.

     The board of directors has  considered the nature and amount of fees billed
by H J & Associates  and believes that the provision of services for  activities
unrelated  to  the  audit  is  compatible  with  maintaining  H J &  Associates'
independence.

                                   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: May 21, 2004

     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.
<TABLE>
<CAPTION>
         Signature                                 Title                        Date
         ---------                                 -----                        ----

<S>                                       <C>                                <C>
                                          President, C.E.O. and              May 21, 2004
/S/ ROBERT L. RICHARDS                    Director
----------------------------------
         Robert L. Richards


                                          Vice President and                 May 21, 2004
/S/ LOREN E. BAGLEY                       Director
------------------------------------      Principal Financial Officer
         Loren E. Bagley


                                          Secretary Treasurer/Treasurer      May 21, 2004
/S/  WILLIAM F. WOODBURN                  and Director
------------------------------            Chief Accounting Officer
         William F. Woodburn


                                                                             May 21, 2004
/S/  JOHN B. SIMS                               Director
-----------------------------------------
         John B. Sims
</TABLE>

                                      -27-
<PAGE>






                               TRANS ENERGY, INC.
                                AND SUBSIDIARIES

                   RESTATED CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2003


                                      F-1
<PAGE>




                                 C O N T E N T S


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

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

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

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

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

Notes to the Restated 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,  2003 and the related  consolidated
statements of operations, stockholders' equity (deficit), and cash flows for the
years ended December 31, 2003 and 2002. 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, 2003 and the  consolidated
results of their  operations  and their cash flows for the years ended  December
31, 2003 and 2002, 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 $28,804,202  and has a working
capital  deficit of  $6,359,171  at December 31,  2003,  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.


/s/ HJ & Associates, LLC
------------------------
Salt Lake City, Utah
March 17, 2004 except for Note 11, for which the date is May 12, 2004


                                      F-3
<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
                       Restated Consolidated Balance Sheet

                                     ASSETS

                                                                   December 31,
                                                                       2003
                                                                   -------------
CURRENT ASSETS

   Cash                                                             $       183
   Accounts receivable, net (Note 1)                                    198,691
   Other receivables                                                     58,452
   Prepaid expenses                                                         990
                                                                    -----------

     Total Current Assets                                               258,316
                                                                    -----------

PROPERTY AND EQUIPMENT (Note 2)

  Vehicles                                                               77,118
  Machinery and equipment                                                10,092
  Pipelines                                                           1,739,287
  Well equipment                                                         49,155
  Wells                                                               3,079,481
  Leasehold acreage                                                      95,945
  Accumulated depreciation                                           (4,021,605)
                                                                    -----------

     Total Fixed Assets                                               1,029,473
                                                                    -----------

OTHER ASSETS

  Cash surrender value - life insurance (net)                             5,086
                                                                    -----------

     Total Other Assets                                                   5,086
                                                                    -----------

     TOTAL ASSETS                                                   $ 1,292,875
                                                                    ===========

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


                                      F-4
<PAGE>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Restated Consolidated Balance Sheet (Continued)

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

                                                                    December 31,
                                                                         2003
CURRENT LIABILITIES                                                 -----------

   Bank overdraft                                                  $     49,120
   Accounts payable - trade                                             786,191
   Notes payable - convertible (Note 12)                                 36,325
   Accrued expenses                                                     954,749
   Salaries payable                                                   1,266,479
   Notes payable - current portion (Note 3)                           1,221,083
   Judgments payable (Note 7)                                           500,397
   Related party payables (Note 4)                                    1,271,681
   Debentures payable (Note 9)                                          331,462
   Environmental remediation (Note 1)                                   200,000
                                                                   ------------

     Total Current Liabilities                                        6,617,487
                                                                   ------------

LONG-TERM LIABILITIES

   Notes payable (Note 3)                                               105,421
                                                                   ------------

     Total Long-Term Liabilities                                        105,421
                                                                   ------------

     Total Liabilities                                                6,722,908
                                                                   ------------

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; 269,010,438 shares issued
    and outstanding                                                     269,010
   Capital in excess of par value                                    23,105,159
   Accumulated deficit                                              (28,804,202)
                                                                   ------------

     Total Stockholders' Equity (Deficit)                            (5,430,033)
                                                                   ------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)          $  1,292,875
                                                                   ============

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

                                       F-5
<PAGE>
<TABLE>
<CAPTION>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
                 Restated Consolidated Statements of Operations
                                                                   For the Years Ended
                                                                        December 31,
                                                                 2003                2002
                                                            ---------------   -------------

<S>                                                         <C>               <C>
REVENUES                                                    $  2,015,012      $   889,764
                                                            ---------------   -------------

COSTS AND EXPENSES

Cost of oil and gas                                            1,536,434          662,958
Salaries and wages                                               381,743          382,117
Depreciation, depletion and amortization                         961,181          919,364
Selling, general and administrative                              210,926          324,874
                                                           -------------    -------------

Total Costs and Expenses                                       3,090,284        2,289,313
                                                           -------------    -------------
LOSS FROM OPERATIONS                                          (1,187,448      (1,399,549)
                                                           -------------    -------------

OTHER INCOME (EXPENSE)

Other income                                                        --             22,537
Gain on disposition of debt                                      231,702           82,522
Interest expense                                                (404,336)        (488,877)
Loss on sale and valuation of assets, net (Note 1 and 2)        (266,496)        (105,753)
Loss on extinguishments of debt                                  (11,268)            --
Gain on disposition of assets                                    172,152            2,650
Settlement expense                                                  --            (60,489)
                                                           -------------    -------------

Total Other Income (Expense)                                    (278,246)        (547,410)
                                                           -------------    -------------
LOSS BEFORE INCOME TAXES,
 AND CHANGE IN ACCOUNTING PRINCIPAL                           (1,465,694)      (1,946,959)

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

CHANGE IN ACCOUNTING PRINCIPAL (Note 1)                         (116,486)            --
                                                           -------------    -------------

NET LOSS - attributed to common shareholders               $  (1,582,180)   $  (1,946,959)
                                                           =============    =============
BASIC LOSS PER SHARE (Note 1)

Operations                                                 $       (0.01)   $       (0.01)
Change in accounting principal                                     (0.00)           (0.00)
                                                           -------------    -------------

      Total Basic Loss Per Share                           $       (0.01)   $       (0.01)
                                                           =============    =============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
   OUTSTANDING                                               253,125,570      207,824,349
                                                           =============    =============
</TABLE>
                   The accompanying notes are an integral part
                  of these consolidated financial statements.
                                       F-6
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
       Restated Consolidated Statements of Stockholders' Equity (Deficit)

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

<S>                                                <C>                 <C>           <C>          <C>            <C>
Balance, December 31, 2001                   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)

Common stock issued for
  services                                  --               --        3,500,000          3,500          7,000           --

Common stock issued for
  conversion of convertible
  debt                                      --               --          150,000            150          5,100           --

Common stock issued for
  extinguishments of
  related party debt                        --               --       22,833,163         22,834          7,209           --

Common stock issued for
  extinguishments of debt                   --               --        5,008,148          5,008         40,065           --

Net loss for the year ended
  December 31, 2003                         --               --             --             --             --       (1,582,180)
                                    ------------    -------------   ------------   ------------   ------------   ------------

Balance, December 31, 2003                  --      $        --      269,010,438   $    269,010   $ 23,105,159   $(28,804,202)
                                    ============    =============   ============   ============   ============   ============
</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,
                                                                                   2003            2002
                                                                                -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                             <C>            <C>
  Net loss                                                                      $(1,582,180)   $(1,946,959)

  Adjustments to reconcile net loss to net cash used by operating activities:
    Depreciation, depletion and amortization                                        961,181        919,364
    Loss on sale and valuation of assets                                            266,496        103,103
    Loss on extinguishments of debt                                                  11,268           --
    Gain on disposition of assets                                                  (172,152)        (2,650)
    Common stock issued for services and
     beneficial conversion features                                                  10,500         39,000
    Gain on disposition of debt                                                    (231,702)       (82,522)
    Settlement expense                                                                 --           54,489
Changes in operating assets and liabilities:
    Decrease (increase) in accounts receivable                                      (60,070)        45,612
    (Increase) decrease in prepaid and other current assets                         (62,078)         6,341
    Increase in accounts payable and accrued expenses                               682,320        656,705
    Decrease in judgments payable                                                  (385,697)       (61,625)
Increase in environmental remediation                                               200,000           --
                                                                                -----------    -----------

       Net Cash Used by Operating Activities                                       (362,114)      (269,142)
                                                                                ===========    ===========

CASH FLOWS FROM INVESTING ACTIVITIES:

  Proceeds from sale of property and equipment                                      670,000          2,650
  Expenditures for property and equipment                                          (152,848)       (10,249)
                                                                                -----------    -----------


       Net Cash Provided (Used) by Investing Activities                             517,152         (7,599)
                                                                                ===========    ===========

CASH FLOWS FROM FINANCING ACTIVITIES:

Change in cash overdraft                                                             49,120           --
  Common stock issued for cash                                                         --          200,000
  Principal payments to related parties                                            (249,161)      (208,754)
  Proceeds from related parties                                                     233,650        337,896
  Principal payments on notes payable                                              (217,980)       (76,968)
  Proceeds from notes payable                                                        17,289         35,303
                                                                                -----------    -----------

      Net Cash Provided (Used) by Financing Activities                          $  (167,082)   $   287,477
                                                                                ===========    ===========
</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)


                                                                                   For the Years Ended
                                                                                       December 31,
                                                                                   2003           2002
                                                                                -----------    -----------

<S>                                                                             <C>          <C>
NET INCREASE (DECREASE) IN CASH                                                 $ (12,044)   $  10,736

CASH, BEGINNING OF YEAR                                                            12,227        1,491
                                                                                ---------    ---------

CASH, END OF YEAR                                                               $     183    $  12,227
                                                                                =========    =========

CASH PAID FOR:

  Interest                                                                      $ 295,947    $ 288,561
  Income taxes                                                                  $    --      $    --

NON-CASH FINANCING ACTIVITIES:

  Common stock issued for services and beneficial conversion
     features                                                                   $  10,500    $  39,000
  Common stock issued for conversion of debt and interest                       $  80,366    $  75,000
  Common stock issued for conversion of preferred stock and
     dividends                                                                      --       $ 23,250
</TABLE>

                                      F-9
<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
             Notes to the Restated Consolidated Financial Statements
                           December 31, 2003 and 2002


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 Restated Consolidated Financial Statements
                           December 31, 2003 and 2002


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,  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.  During the
              year ended December 31, 2003, the Company recognized an impairment
              loss of $87,040 on one of its natural gas wells.

              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,
                                              2003              2002
                                        -------------    ---------------

              Numerator:
Loss from operations                    $  (1,465,694)   $    (1,946,959)
Change in accounting principal               (116,486)              --
                                        -------------    ---------------


   Net Loss                             $  (1,582,180)   $    (1,946,959)
                                        =============    ===============


Denominator - weighted average shares     253,125,570        207,824,349
                                        =============    ===============


Net loss per share:
 Change in accounting principal         $       (0.00)   $         (0.00)
 Loss from operations                           (0.01)             (0.01)
                                        -------------    ---------------


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

                                      F-11
<PAGE>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
             Notes to the Restated Consolidated Financial Statements
                           December 31, 2003 and 2002

NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              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
              assets 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 than 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.

              Net deferred tax assets consist of the following  components as of
              December 31, 2003 and 2002:
                                               2003           2002
                                           -----------    -----------

               Deferred tax assets:
                 NOL Carryover$            $ 8,183,500    $ 7,682,610

               Deferred tax liabilities:          --             --
                 Accrued Wages                (493,900)      (378,116)

               Valuation allowance          (7,689,600)    (7,304,494)
                                           -----------    -----------

               Net deferred tax asset      $      --      $      --
                                           ===========    ===========

               The income tax  provision  differs  from the amount of income tax
               determined by applying the U.S.  federal  income tax rates of 39%
               to pretax income from  continuing  operations for the years ended
               December 31, 2003 and 2002 due to the following:

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

               Book income                $(573,300)   $(759,314)
               Other                        (16,830)          94
               Penalties                      5,370       64,620
               Officer Insurance              6,645        4,610
               Stock for Services             4,095       15,200
               Accrued Wages                115,810      127,478
               Impairment Loss               33,945         --
               Accrued Interest/Payroll     424,265         --
               Valuation allowance             --        547,312
                                          ---------    ---------

                                          $    --      $    --
                                          =========    =========

              At  December  31,  2003,   the  Company  had  net  operating  loss
              carryforwards  of  approximately  $19,700,000  that may be  offset
              against  future taxable income from the year 2003 through 2023. No
              tax  benefit  has  been   reported  in  the   December   31,  2003
              consolidated  financial statements since the potential tax benefit
              is offset by a valuation allowance of the same amount.
                                      F-12
<PAGE>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
             Notes to the Restated Consolidated Financial Statements
                           December 31, 2003 and 2002

NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              d. Provision for Taxes (Continued)

              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 future years.

              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 100%  owned  subsidiary,  Tyler
              Construction Company,  Inc. All significant  intercompany accounts
              and transactions have been eliminated.

              f. Presentation

              Certain 2002  balances  have been  reclassified  to conform to the
              presentation of the 2003 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 Restated Consolidated Financial Statements
                           December 31, 2003 and 2002


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              j.  Newly Issued Accounting Pronouncements

              During the year ended December 31, 2003,  the Company  adopted the
              following accounting pronouncements:

              SFAS No. 143 -- In August  2001,  the FASB  issued  SFAS No.  143,
              Accounting for Asset Retirement  Obligations,  which established a
              uniform  methodology for accounting for estimated  reclamation and
              abandonment  costs.  The  statement was effective for fiscal years
              beginning   after  June  15,   2002.   The  Company   recorded  an
              environmental   remediation  accrual  of  $200,000.  A  change  in
              accounting  principal of $116,486 was recognized in the year ended
              December 31, 2003.

              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  adoption  of SFAS 145 did not have a material
              effect on the financial statements of the Company.

              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

                                      F-14
<PAGE>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
             Notes to the Restated Consolidated Financial Statements
                           December 31, 2003 and 2002


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              j.  Newly Issued Accounting Pronouncements (Continued)

              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 adoption of
              SFAS  146  did  not  have  a  material  effect  on  the  financial
              statements of the Company.

              SFAS  No.  147  --  In  October  2002,  the  Financial  Accounting
              Standards  Board (FASB) issued  Statement of Financial  Accounting
              Standards  (SFAS) No.  147,  "Acquisitions  of  Certain  Financial
              Institutions"  which is  effective  for  acquisitions  on or after
              October 1, 2002. This statement provides  interpretive guidance on
              the   application  of  the  purchase  method  to  acquisitions  of
              financial  institutions.  Except for  transactions  between two or
              more mutual  enterprises,  this Statement removes  acquisitions of
              financial  institutions  from  the  scope  of  both  SFAS  72  and
              Interpretation 9 and requires that those transactions be accounted
              for in accordance with SFAS No. 141,  "Business  Combinations" and
              No. 142, "Goodwill and Other Intangible  Assets".  The adoption of
              SFAS  No.  147 did not have a  material  effect  on the  financial
              statements of the Company.

              SFAS No. 148 -- In  December  2002,  the FASB issued SFAS No. 148,
              "Accounting   for   Stock   Based    Compensation-Transition   and
              Disclosure-an  amendment  of FASB  Statement  No.  123"  which  is
              effective for financial  statements issued for fiscal years ending
              after  December  15,  2002.   This  Statement   amends  SFAS  123,
              Accounting for Stock-Based  Compensation,  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,  this Statement 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  compensation  and the  effect of the  method  used on
              reported  results.  The  adoption  of SFAS No.  148 did not have a
              material effect on the financial statements of the Company.

                                      F-15
<PAGE>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
             Notes to the Restated Consolidated Financial Statements
                           December 31, 2003 and 2002


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              j.  Newly Issued Accounting Pronouncements (Continued)

              SFAS No.  149 -- In April  2003,  the FASB  issued  SFAS No.  149,
              "Amendment of Statement 133 on Derivative  Instruments and Hedging
              Activities"  which is  effective  for  contracts  entered  into or
              modified  after  June  30,  2003  and  for  hedging  relationships
              designated   after  June  30,  2003.  This  statement  amends  and
              clarifies financial accounting for derivative instruments embedded
              in other contracts  (collectively  referred to as derivatives) and
              hedging  activities  under SFAS 133.  The adoption of SFAS No. 149
              did not have a material effect on the financial  statements of the
              Company.

              SFAS No.  150 -- In May  2003,  the  FASB  issued  SFAS  No.  150,
              "Accounting for Certain Financial Instruments with Characteristics
              of both  Liabilities  and Equity" which is effective for financial
              instruments  entered into or modified  after May 31, 2003,  and is
              otherwise  effective at the beginning of the first interim  period
              beginning  after  June  15,  2003.   This  Statement   establishes
              standards  for  how  an  issuer  classifies  and  measures  in its
              statement of financial position certain financial instruments with
              characteristics  of both liabilities and equity.  It requires that
              an issuer classify a financial instrument that is within its scope
              as a liability  (or an asset in some  circumstances)  because that
              financial  instrument  embodies an obligation  of the issuer.  The
              adoption  of SFAS No.  150 did not have a  material  effect on the
              financial statements of the Company.

              FASB   Interpretation  No.  45  --  "Guarantor's   Accounting  and
              Disclosure   Requirements  for  Guarantees,   Including   Indirect
              Guarantees of Indebtedness of Others - an  Interpretation  of FASB
              Statements No. 5, 57 and 107". The initial recognition and initial
              measurement  provisions of this  Interpretation  are to be applied
              prospectively to guarantees  issued or modified after December 31,
              2002.  The  disclosure  requirements  in the  Interpretation  were
              effective  for financial  statements of interim or annual  periods
              ending   after   December   15,   2002.   The   adoption  of  FASB
              Interpretation  No.  45 did  not  have a  material  effect  on the
              financial statements of the Company.

              FASB  Interpretation  No. 46 -- In January  2003,  the FASB issued
              FASB  Interpretation  No. 46  "Consolidation  of Variable Interest
              Entities."  FIN 46  provides  guidance  on the  identification  of
              entities for which  control is achieved  through  means other than
              through  voting rights,  variable  interest  entities,  and how to
              determine when and which business  enterprises  should consolidate
              variable   interest   entities.    This   interpretation   applies
              immediately to variable  interest  entities  created after January
              31, 2003.  It applies in the first  fiscal year or interim  period
              beginning  after June 15, 2003, to variable  interest  entities in
              which an  enterprise  holds a variable  interest  that it acquired
              before  February  1, 2003.  The  adoption of FIN 46 did not have a
              material impact on the Company's financial statements.

                                      F-16
<PAGE>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
             Notes to the Restated Consolidated Financial Statements
                           December 31, 2003 and 2002


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              j.  Newly Issued Accounting Pronouncements (Continued)

              During the year ended December 31, 2003,  the Company  adopted the
              following Emerging Issues Task Force  Consensuses:  EITF Issue No.
              00-21  "Revenue  Arrangements  with Multiple  Deliverables",  EITF
              Issue No. 01 -8 " Determining  Whether an  Arrangement  Contains a
              Lease",  EITF Issue No. 02-3  "Issues  Related to  Accounting  for
              Contracts   Involved  in  Energy   Trading  and  Risk   Management
              Activities",  EITF Issue No. 02-9  "Accounting  by a Reseller  for
              Certain  Consideration  Received  from a  Vendor",  EITF Issue No.
              02-17,  "Recognition of Customer  Relationship  Intangible  Assets
              Acquired  in  a  Business  Combination",   EITF  Issue  No.  02-18
              "Accounting  for  Subsequent  Investments  in  an  Investee  after
              Suspension  of Equity  Method  Loss  Recognition",  EITF Issue No.
              03-1,  "The Meaning of Other Than Temporary and its Application to
              Certain Instruments", EITF Issue No. 03-5, "Applicability of AICPA
              Statement of Position  9702,  `Software  Revenue  Recognition'  to
              Non-Software  Deliverables in an Arrangement  Containing More Than
              Incidental  Software",  EITF Issue No. 03-7,  "Accounting  for the
              Settlement of the Equity  Settled  Portion of a  Convertible  Debt
              Instrument  That Permits or Requires the  Conversion  Spread to be
              Settled in  Stock",  EITF Issue No.  03-10,  "Application  of EITF
              Issue  No.  02-16 by  Resellers  to Sales  Incentives  Offered  to
              Consumers by Manufacturers.

              k.  Accounts Receivable

              Accounts  receivable are shown net of an allowance for bad debt of
              $2,000 at December 31, 2003.

              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. 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, 2003 the Company's  proved  properties  consist of
              costs in the  following  areas  net of  accumulated  depletion  of
              $2,555,872.

              Wyoming                                $         523,603
                                                     =================

              Productive Gas Wells

              The  following  summarizes  the Company's  productive  oil and gas
              wells as of December  31,  2003.  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.
                                      F-17
<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
             Notes to the Restated Consolidated Financial Statements
                           December 31, 2003 and 2002


NOTE 2 -      OIL AND GAS PROPERTY (Continued)

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

              Productive oil wells                       6               1.93
                                        ==================  =================

              The Company does not operate any of these wells.

              Oil and Gas Acreage

              The following table sets forth the undeveloped  leasehold acreage,
              by area, held by the Company as of December 31, 2003.  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                              14,158             12,168
                                       ==================  =================

              During the year ended  December 31, 2003, the Company sold its 75%
              working interest in the West Virginia gas wells for $380,000.  The
              proceeds were used to settle the Baker Hughes litigation.

                                      F-18
<PAGE>

                       TRANS ENERGY, INC. AND SUBSIDIARIES
             Notes to the Restated Consolidated Financial Statements
                           December 31, 2003 and 2002


NOTE 3 -      LONG-TERM DEBT

              The Company had the  following  debt  obligations  at December 31,
2003:
<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.                                                           $         158,473

              Union Bank of Tyler County, $332 due monthly, 10% interest
               rate, due November 20, 2005, secured by vehicle.                                              6,968

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

              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.                                       6,866

              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
                $326 due monthly, interest at 5.0%, secured by vehicle of the
                Company.                                                                                    16,517

              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                                                                          1,326,504

                          Less Current Portion                                                          (1,221,083)
                                                                                                 -----------------

                          Total Long-Term Debt                                                   $         105,421
                                                                                                 =================
</TABLE>


                                      F-19
<PAGE>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
             Notes to the Restated Consolidated Financial Statements
                           December 31, 2003 and 2002


NOTE 3 -      LONG-TERM DEBT (Continued)

              Future maturities of long-term debt are as follows:

                          2004                             $          1,221,083
                          2005                                           95,100
                          2006                                            3,479
                          2007                                            3,656
                          2008                                            3,186
                          2009 and thereafter                                 -
                                                           --------------------

                               Total                       $          1,326,504
                                                           ====================

              At  December  31,  2003,  total  interest  accrued  for these debt
              obligations was $171,942.

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.

              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  drilling  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 $1,030,033 at December 31,
              2003.  The net payable bears interest at 10%, is due on demand and
              is unsecured.  At December 31, 2003, total interest accrued in the
              net related party payable was $241,648.

                                      F-20
<PAGE>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
             Notes to the Restated Consolidated Financial Statements
                           December 31, 2003 and 2002


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,  2003  and  2002,   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 2003 and 2002, 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-.

              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.

              In January 2003,  the Company  issued  3,500,000  shares of common
              stock valued at $0.003 per share for total cash  consideration  of
              $10,500.

                                      F-21
<PAGE>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
             Notes to the Restated Consolidated Financial Statements
                           December 31, 2003 and 2002

NOTE 6 -      STOCKHOLDERS' EQUITY (Continued)

              In March 2003,  the Company  issued 150,000 shares of common stock
              valued at $0.035 per share for the conversion of convertible  debt
              of $5,250.

              In June 2003, the Company issued 22,833,163 shares of common stock
              for the extinguishment of related party debt valued at $30,043.

              In December 2003, the Company  issued  5,008,148  shares of common
              stock for the extinguishment of debts valued at $33,805.

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.  This judgment was paid in full
              in 2003, however the judgment has not yet been released.

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, 2003
              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.

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 of $83,730  which is included  in  judgments  payable and
              accrued expenses respectively.
                                      F-22
<PAGE>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
             Notes to the Restated Consolidated Financial Statements
                           December 31, 2003 and 2002

NOTE 7 -JUDGMENTS PAYABLE (Continued)

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, 2003,  the
              Company  had  accrued a balance of $13,587  including  interest of
              $3,580  which  is  included  in  judgments   payable  and  accrued
              expenses, respectively.

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
              of $56,792  including  interest  of $20,736  which is  included in
              judgment payable and accrued expenses, respectively.

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-23
<PAGE>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
             Notes to the Restated Consolidated Financial Statements
                           December 31, 2003 and 2002


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.

              The Baker Entities  continued its proceedings to enforce a foreign
              judgment against the Company in Pleasants  County,  West Virginia.
              Then on December  23,  2003,  the  Company and the Baker  Entities
              entered into a Settlement Agreement and Mutual Release whereby the
              Company paid $350,000 to the Baker Entities as payment in full for
              all monies owned and the Baker Entities gave the Company a release
              of all judgments and liens against.

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 is asking 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.


                                      F-24
<PAGE>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
             Notes to the Restated Consolidated Financial Statements
                           December 31, 2003 and 2002


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,  2003,  the Company had accrued the total  amount of
              $2,000 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  $28,692,026,  and has a working  capital  deficit at
              December 31, 2002 of $6,246,995.

              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-25
<PAGE>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
             Notes to the Restated Consolidated Financial Statements
                           December 31, 2003 and 2002


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,  2003,  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-26
<PAGE>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
             Notes to the Restated Consolidated Financial Statements
                           December 31, 2003 and 2002


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  Pipelines     Corporate
                                                     December 31,   Sales       Transmission   Unallocated
                                                     ------------ ----------    ------------   -----------

<S>                                                       <C>    <C>            <C>            <C>
               Oil and gas revenue                        2003   $   535,278    $ 1,367,558    $      --
                                                          2002       454,288        435,476           --


               Operating loss applicable to
                industry segment                          2003       994,005        193,443           --
                                                          2002     1,137,369        262,180           --

               General corporate expenses
                not allocated to industry
                segments                                  2003          --             --             --
                                                          2002          --             --             --

               Interest expense                           2003      (344,923)       (59,413)          --
                                                          2002      (390,687)       (98,190)          --


               Other income (expenses)                    2003        20,386        105,704           --
                                                          2002        19,669          2,868           --


               Assets
                 (net of intercompany accounts)           2003       766,733        638,316           --
                                                          2002     2,250,407        497,229           --


               Depreciation and amortization              2003       870,537         90,644           --
                                                          2002       810,451        108,913           --

               Property and equipment
                acquisitions                              2003       152,848           --             --
                                                          2002          --           10,249           --
</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-27
<PAGE>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
             Notes to the Restated Consolidated Financial Statements
                           December 31, 2003 and 2002

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, 2002                  795,057    $   0.50
                  Granted                          --          --
                  Canceled/Expired             (795,057)      (0.50)
                  Exercised                        --          --
                                               --------    ---------

              Outstanding, December 31, 2003       --      $   --
                                               ========    =========

              Exercisable, December 31, 2003       --          --
                                               ========    =========

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
                                                                  $      36,325
                                                                  --------------
              Less current portion                                      (36,325)
                                                                  --------------
              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-      SUBSEQUENT EVENTS

              Subsequent to year end the Company's subsidiary Tyler Construction
              sold  approximately  47,000  feet  of  pipeline  to  Triad  Energy
              Corporation  for  $200,000.  The  Company  used  $161,391  of  the
              proceeds  to pay off the loan to the  First  National  Bank of St.
              Marys.

              Subsequent  to year end, the Company  issued  3,190,396  shares of
              common stock for the conversion of all convertible  debentures and
              the associated accrued interest.
                                      F-28
<PAGE>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
             Notes to the Restated Consolidated Financial Statements
                           December 31, 2003 and 2002


NOTE 14 -     RESTATEMENT

              The  accompanying  financial  statements  have  been  restated  to
              correct an error in the previously  issued  financial  statements.
              The  change was made to  properly  reflect  the ending  balance of
              accounts  receivable as of December 31, 2003, and revenues for the
              year then ended.

              As originally issued,  the December 31, 2003 financial  statements
              included amounts in the accounts receivable balance which had been
              collected during 2003. This  overstatement of accounts  receivable
              also resulted in the overstatement of revenues.

              The balances have been adjusted to reflect the actual  balances as
              of December 31, 2003 and for the year then ended.  This adjustment
              decreased revenues by $112,176 and decreased  accounts  receivable
              by $112,176.  The net loss was increased by $112,176 and there was
              no change in the calculated net loss per share.

                                      F-29
<PAGE>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
             Notes to the Restated Consolidated Financial Statements
                           December 31, 2003 and 2002
                                   (Unaudited)


S.F.A.S. 69 SUPPLEMENTAL DISCLOSURES

               (1)     Capitalized Costs Relating to Oil
                          and Gas Producing Activities
<TABLE>
<CAPTION>
                                                                                    December 31,
                                                                                2003           2002
                                                                             -----------    -----------
<S>                    <C>                                                  <C>            <C>
                       Proved oil and gas producing properties and related
                        lease and well equipment                             $ 3,171,426    $ 3,678,730
                       Unproved oil and gas properties                            99,945         95,945
                       Accumulated depreciation and depletion                 (2,555,878)    (1,839,295)
                                                                             -----------    -----------

                       Net Capitalized Costs                                 $   715,493    $ 1,935,380
                                                                             ===========    ===========
</TABLE>
               (2)           Costs Incurred in Oil and Gas Property
                      Acquisition, Exploration, and Development Activities
<TABLE>
<CAPTION>
                                                                          For the Years Ended
                                                                              December 31,
                                                                       2003                2002
                                                                ----------------    ----------------
<S>                    <C>                                     <C>                  <C>
                       Acquisition of Properties
                          Proved                                $       --          $      --
                          Unproved                                      --                 --
                       Exploration Costs                                --                 --
                       Development Costs                                --                 --
</TABLE>
               The Company does not have any  investments  accounted  for by the
               equity method.

               (3)          Results of Operations for
                              Producing Activities
<TABLE>
<CAPTION>
                                                                            For the Year Ended
                                                                               December 31,
                                                                         ----------------------
                                                                            2003         2002
                                                                         ---------    ---------
<S>                                                                      <C>          <C>
               Sales                                                     $ 535,278    $ 454,288

               Production costs                                           (299,851)    (277,125)
               Depreciation and depletion                                 (841,250)    (801,776)
               Income tax expenses                                            --           --
                                                                         ---------    ---------
               Results of operations for producing activities
                (excluding the activities of the pipeline transmission
                operations, corporate overhead and interest costs)       $(605,823)   $(624,613)
                                                                         =========    =========
</TABLE>
                                      F-30
<PAGE>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
             Notes to the Restated Consolidated Financial Statements
                           December 31, 2003 and 2002
                                   (Unaudited)


               (4) Reserve Quantity Information
<TABLE>
<CAPTION>

                                                                Oil            Gas
                                                                BBL             MCF
                                                            -----------   -----------

<S>                                                            <C>         <C>
                Proved developed and undeveloped reserves      113,406     1,131,415

                End of the year 2002                            17,454          --

                Revisions of previous estimates
                Improved recovery                                 --            --
                Purchases of minerals in place                    --            --
                Extensions and discoveries                        --            --
                Production                                     (30,980)      (45,055)
                Sales of minerals in place                        --      (1,086,360)
                                                            ----------    ----------

                End of the year 2003                            99,880          --
                                                            ==========    ==========
                         Proved developed reserves:
                                                                Oil            Gas
                                                                BBL             CF
                                                            ----------    ----------

                End of the year 2002                           113,406     1,131,415
                End of the year 2003                            99,880          --
</TABLE>

         During the years  ended  December  31,  2003 and 2002,  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
             Notes to the Restated Consolidated Financial Statements
                           December 31, 2003 and 2002
                                   (Unaudited)


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

         (5)           Standardized Measure of Discounted
                        Future Net Cash Flows Relating to
                           Proved Oil and Gas Reserves
<TABLE>
<CAPTION>
                              At December 31, 2003
                                                                                  Trans Energy
                                                                                       and
                                                                                  Subsidiaries
                                                                                ----------------
<S>                                                                             <C>
         Future cash inflows                                                    $      3,220,287
         Future production and development costs                                        (740,666)
         Future income tax expense                                                          --
                                                                                ----------------
         Future net cash flows                                                         2,479,621
         10% annual discount for estimated timing of cash flows                         (615,244)
                                                                                ----------------

         Standardized measure of discounted future net cash flows              $       4,769,701
                                                                               =================

                              At December 31, 2002
                                                                                  Trans Energy
                                                                                       and
                                                                                  Subsidiaries
                                                                                ----------------
         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               $      4,769,701
                                                                                ================
</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:

                                      F-32
<PAGE>
                       TRANS ENERGY, INC. AND SUBSIDIARIES
             Notes to the Restated Consolidated Financial Statements
                           December 31, 2003 and 2002
                                   (Unaudited)


S.F.A.S. 69 SUPPLEMENTAL DISCLOSURES (CONTINUED)
<TABLE>
<CAPTION>
                                                                          For the Years Ended
                                                                              December 31,
                                                                         2003            2002
                                                                      -----------    -----------
         <S>                                                         <C>             <C>
         Standardized measure, beginning of year $                      4,314,941    $ 3,649,994
         Oil and gas sales, net of production costs                          --             --
         Sales of mineral in place                                     (2,411,293)          --
         Purchases                                                           --             --
         Net change due to revisions in quantity estimates                (39,271)       664,947
         Accretion of discount items                                         --             --
                                                                      -----------    -----------

         Standardized measure, end of year                            $ 1,864,377    $ 4,314,941
                                                                      ===========    ===========
</TABLE>

         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