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

                                    FORM 10-K
              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended March 31, 2003              Commission File No. 0-6694

                            MEXCO ENERGY CORPORATION
             (Exact name of registrant as specified in its charter)

            COLORADO                                             84-0627918
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

   214 W. TEXAS AVENUE, SUITE 1101                                  79701
         MIDLAND, TEXAS                                           (Zip Code)
(Address of principal executive offices)

       Registrant's telephone number, including area code: (432) 682-1119

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

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

       Title of Each Class              Name of Exchange on Which Registered
  -----------------------------         ------------------------------------
  Common Stock, $0.50 par value                          None

     Indicate by  check-mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the  preceding  twelve (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 ninety (90) days. Yes [ ] No [ ]

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K (ss.229.405 of this chapter) is not contained herein,  and
will not be  contained,  to the best of  registrant's  knowledge,  in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or an amendment to this Form 10-K. [ ]

     As of June 26, 2003, the aggregate market value of the registrant's  common
stock  held by  non-affiliates  (using  the  closing  bid  price of  $7.75)  was
approximately $3,956,088.

     The number of shares  outstanding  of the  registrant's  common stock as of
June 26, 2003 was 1,736,041.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Part III of this Report is incorporated by reference from the  Registrant's
Information  Statement relating to its Annual Meeting of Stockholders to be held
on August 14, 2003. Such Information Statement will be filed with the Commission
not later than July 30, 2003.

<PAGE>

                                TABLE OF CONTENTS

                                     PART I

Item 1.   Business ........................................................    3
Item 2.   Properties.......................................................    7
Item 3.   Legal Proceedings................................................   10
Item 4.   Submission of Matters to a Vote of Security Holders..............   11

                                 PART II

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

          Stockholder Matters..............................................   11
Item 6.   Selected Financial Data..........................................   12
Item 6A.  Selected Quarterly Financial Data................................   13
Item 7.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations..............................   13
Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.......   15
Item 8.   Financial Statements and Supplementary Data......................   17
Item 9.   Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosures.............................   34

                                PART III

Item 10.  Directors and Executive Officers of the Registrant...............   34
Item 11.  Executive Compensation...........................................   34
Item 12.  Security Ownership of Certain Beneficial Owners and Management...   34
Item 13.  Certain Relationships and Related Transactions...................   35
Item 14.  Controls and Procedures..........................................   35


                                 PART IV

Item 15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K..   35
Signatures.................................................................   36
Certifications.............................................................   38

                                       2
<PAGE>

                                     PART I

ITEM 1. BUSINESS

GENERAL

     Mexco Energy Corporation,  a Colorado  corporation,  (the "Company",  which
reference shall include the Company's wholly-owned subsidiary) is an independent
oil and gas company engaged in the  acquisition,  exploration and development of
oil and gas properties located in the United States.  Incorporated in April 1972
under the name Miller Oil Company,  the Company changed its name to Mexco Energy
Corporation  effective  April 30, 1980. At that time,  the  shareholders  of the
Company also approved amendments to the Articles of Incorporation resulting in a
one-for-fifty reverse stock split of the Company's common stock.

     On February  25, 1997 Mexco Energy  Corporation  acquired all of the issued
and outstanding stock of Forman Energy Corporation,  a New York corporation also
engaged in oil and gas exploration and development.

     Since  its  inception,  the  Company  has been  engaged  in  acquiring  and
developing oil and gas properties and the  exploration for and production of oil
and  gas  within  the  United  States.  The  Company  primarily  focuses  on the
exploration for and  development of natural gas resources,  as well as increased
profit margins through  reductions in operating costs.  The Company's  long-term
strategy  is  to  increase   production  and  profits,   while   increasing  its
concentration on gas reserves.

     While the Company owns oil and gas properties in other states, the majority
of its activities are centered in West Texas. The Company acquires  interests in
producing and  non-producing oil and gas leases from landowners and leaseholders
in areas  considered  favorable  for oil and gas  exploration,  development  and
production.  In  addition,  the Company may  acquire  oil and gas  interests  by
joining  in oil and gas  drilling  prospects  generated  by third  parties.  The
Company may employ a  combination  of the above  methods of obtaining  producing
acreage and prospects.  In recent years, the Company has placed primary emphasis
on the  evaluation and purchase of producing oil and gas properties and re-entry
prospects that could have a potentially meaningful impact on Company reserves.

OIL AND GAS OPERATIONS

     As of March 31, 2003,  gas reserves  constituted  approximately  90% of the
Company's total proved reserves and approximately 76% of the Company's  revenues
for fiscal  2003.  Revenues  from oil and gas royalty  interests  accounted  for
approximately 15% of the Company's revenues for fiscal 2003.

     VIEJOS GAS FIELD properties, encompassing 2,583 gross acres, 156 net acres,
18  gross  wells  and  1.27  net  wells in  Pecos  County,  Texas,  account  for
approximately 6% of the Company's  discounted  future net cash flows from proved
reserves  as of March  31,  2003,  and for  fiscal  2003,  approximately  21% of
revenues and 12% of production costs.

     GOMEZ GAS FIELD properties,  encompassing 13,847 gross acres, 73 net acres,
24  gross  wells  and  .11  net  wells  in  Pecos  County,  Texas,  account  for
approximately 17% of the Company's  discounted future net cash flows from proved
reserves  as of March  31,  2003,  and for  fiscal  2003,  approximately  11% of
revenues and 6% of production costs.

     EL CINCO GAS FIELD properties,  encompassing  1,873 gross acres,  1,349 net
acres,  10 gross  producing  wells  and 7.36 net wells in Pecos  County,  Texas,
account for approximately 48% of the Company's  discounted future net cash flows
from proved reserves as of March 31, 2003. This is a

                                       3
<PAGE>

multi-pay area where most of the leases have potential reserves in two zones. Of
this amount  approximately 33% of the Company's discounted future net cash flows
from proved reserves are attributable to proven undeveloped  reserves which will
be developed primarily through re-entry of existing wells.

     The Company  owns  interests  in and  operates 22  producing  wells and two
shut-in  wells.  The Company  owns  partial  interests  in an  additional  1,572
producing wells located in the states of Texas, New Mexico, Oklahoma, Louisiana,
Arkansas,  Wyoming,  Kansas,  Colorado,  Montana  and North  Dakota.  Additional
information  concerning  these  properties  and the oil and gas  reserves of the
Company is provided below.

     The following  table indicates the Company's oil and gas production in each
of the last five years, all of which is located within the United States:

          Year                          Oil(Bbls)       Gas (Mcf)
          ----                          ---------       ---------
          2003.......................      23,391         538,787
          2002.......................      21,139         467,013
          2001.......................      18,545         503,773
          2000.......................      19,334         540,793
          1999.......................      49,573         482,948

COMPETITION

     The oil and gas industry is a highly competitive business.  Competition for
oil and gas reserve  acquisitions is  significant.  The Company may compete with
major  oil and gas  companies,  other  independent  oil  and gas  companies  and
individual producers and operators. Some of these competitors have financial and
personnel  resources  substantially  in excess of those available to the Company
and,  therefore,  the  Company  may be  placed  at a  competitive  disadvantage.
Competitive  factors  include price,  contract  terms,  and types and quality of
service,  including pipeline  distribution.  The price for oil and gas is widely
followed and is generally  subject to worldwide  market factors.  Our ability to
acquire and  develop  additional  properties  in the future will depend upon our
ability to conduct operations,  to evaluate and select suitable properties,  and
to consummate  transactions in this highly  competitive  environment in a timely
manner.

MAJOR CUSTOMERS

     The Company had sales to the following company that amounted to 10% or more
of revenues for the year ended March 31:

                                                  2003         2002         2001
                                                  ----         ----         ----
   Sid Richardson Energy Services, Co.
     (formerly Koch Midstream Services Company)    26%          24%          39%

     Because a ready market exists for the Company's oil and gas production, the
Company  does not  believe  the loss of any  individual  customer  would  have a
material adverse effect on its financial position or results of operations.

RISK FACTORS

     There are many  factors that affect the  Company's  business and results of
operations, some of which are beyond our control. The following is a description
of some of the important  factors that may cause results of operations in future
periods to differ materially from those currently expected or desired.

Oil and gas prices are volatile and could  adversely  affect our revenues,  cash
flow, liquidity and reserve estimates. The Company cannot predict

                                       4
<PAGE>

future oil and natural gas prices with any certainty.  Historically, the markets
for oil and gas have  been  volatile,  and they are  likely  to  continue  to be
volatile.  Factors that can cause price  fluctuations  include changes in supply
and demand, weather conditions, the price and availability of alternative fuels,
political and economic conditions in oil producing countries,  and other factors
that are beyond our control. Natural gas prices affect the Company more than oil
prices because most of the Company's production and reserves are natural gas.

     Prices  also  affect  the  amount  of  cash  flow   available  for  capital
expenditures  and the  Company's  ability  to borrow  money or raise  additional
capital.  Lower  prices may also  reduce the amount of crude oil and natural gas
than can be  produced  economically.  Changes in oil and gas prices  impact both
estimated  future net revenue  and the  estimated  quantity of proved  reserves.
Price  increases  may permit  additional  quantities  of reserves to be produced
economically,  and price  decreases  may render  uneconomic  the  production  of
reserves  previously  classified  as proved.  Thus,  the Company may  experience
material  increases  or decreases  in reserve  quantities  solely as a result of
price changes and not as a result of drilling or well performance.

     Lower  oil  and  gas  prices  increase  the  risk  of  ceiling   limitation
write-downs.  The  Company  uses the full cost method to account for oil and gas
operations.  Accordingly,  the Company capitalizes the cost to acquire,  explore
for and  develop  crude  oil and  natural  gas  properties.  Under the full cost
accounting  rules,  the net  capitalized  cost of  crude  oil  and  natural  gas
properties  may not exceed a  "ceiling  limit"  which is based upon the  present
value of estimated future net cash flows from proved reserves, discounted at 10%
plus the  lower of cost or fair  market  value of  unproved  properties.  If net
capitalized  costs of oil and natural gas  properties  exceed the ceiling limit,
the Company must charge the amount of the excess to  earnings.  This charge does
not impact cash flow from operating  activities,  but does reduce  stockholders'
equity and  earnings.  The risk that the Company  will be required to write down
the  carrying  value of oil and natural gas  properties  increases  when oil and
natural gas prices are low.

     Estimates of proved reserves and the estimated future net revenue from such
reserves are uncertain and inherently  imprecise.  The process of estimating oil
and gas reserves is complex and requires  significant  decisions and assumptions
in the evaluation of available geological, geophysical, engineering and economic
data for each reservoir. The interpretation of such data is a subjective process
dependent upon the quality of the data and the  decision-making  and judgment of
reservoir engineers

     Actual future production,  oil and gas prices, revenues, taxes, development
expenditures,  operating  expenses and  quantities  of  recoverable  oil and gas
reserves most likely will vary from those  estimated.  Any significant  variance
could materially affect the estimated  quantities and present value of reserves,
which may in turn adversely affect our cash flow,  results of operations and the
availability of capital resources.

     One should not assume that the present value of proved reserves is equal to
the current fair market value of the  Company's  estimated oil and gas reserves.
In accordance with the requirements of the "Securities and Exchange Commission",
the  estimated  discounted  future  net cash  flows  from  proved  reserves  are
generally  based on  prices  and  costs as of the date of the  estimate.  Actual
future prices and costs may be  materially  higher or lower than those as of the
date of the estimate.  The timing of both the  production  and the expenses with
respect to the  development and production of oil and gas properties will effect
the  timing of future  net cash flows from  proved  reserves  and their  present
value.

                                       5
<PAGE>

REGULATION

     The Company's exploration, development, production and marketing operations
are subject to  extensive  rules and  regulations  by  federal,  state and local
authorities.  Numerous  federal,  state and local  departments and agencies have
issued rules and regulations, binding on the oil and gas industry, some of which
carry substantial  penalties for  noncompliance.  State statutes and regulations
require  permits  for  drilling   operations,   bonds  and  reports   concerning
operations.   Most  states  also  have   statutes  and   regulations   governing
conservation  and safety  matters,  including the unitization and pooling of oil
and gas properties,  the  establishment  of maximum rates of production from oil
and gas wells and the spacing of such wells.  Such statutes and  regulations may
limit  the rate at  which  oil and gas  otherwise  could  be  produced  from the
Company's  properties.  The  regulatory  burden  on the  oil  and  gas  industry
increases   its  cost  of  doing   business  and,   consequently,   affects  its
profitability.  Because these rules and  regulations  are frequently  amended or
reinterpreted,  the  Company is not able to predict the future cost or impact of
complying with such laws.

     Currently there are no laws that regulate the price for sales of production
by the Company.  However,  the rates  charged and terms and  conditions  for the
movement of gas in interstate commerce through certain intrastate  pipelines and
production area hubs are subject to regulation  under the Natural Gas Policy Act
of 1978  ("NGPA").  The  construction  of  pipelines  and hubs are, to a limited
extent,  also subject to  regulation  under the Natural Gas Act of 1938 ("NGA").
The NGA also  establishes  comprehensive  controls  over  interstate  pipelines,
including the transportation in interstate commerce. While these NGA controls do
not apply  directly to the  Company,  their effect on natural gas markets can be
significant in terms of competition  and cost of  transportation  services.  The
Federal Energy Regulatory Commission ("FERC") administers the NGA and NGPA.

     FERC has  taken  significant  steps to  increase  competition  in the sale,
purchase,  storage and transportation of natural gas. FERC's regulatory programs
generally  allow more accurate and timely price signals from the consumer to the
producer.  Nonetheless, the ability to respond to market forces can and does add
to  price  volatility,  inter-fuel  competition  and  pressure  on the  value of
transportation and other services.

     Additional  proposals  and  proceedings  that might  affect the natural gas
industry are considered from time to time by Congress,  FERC,  state  regulatory
bodies and the  courts.  Several  proposals  that might  affect the  natural gas
industry are pending before FERC. The Company cannot predict when or if any such
proposals  will become  effective  and their  effect,  if any, on the  Company's
operations.  Historically,  the natural gas industry has been heavily regulated;
therefore,  there is no assurance  that the less stringent  regulatory  approach
recently pursued by FERC and Congress will continue.

ENVIRONMENTAL

     The  Company,  by  nature  of its oil and gas  operations,  is  subject  to
extensive   federal,   state  and  local   environmental  laws  and  regulations
controlling the generation,  use,  storage,  and discharge of materials into the
environment or otherwise relating to the protection of the environment. Numerous
governmental  departments  issue rules and  regulations to implement and enforce
such laws,  which are often  difficult and costly to comply with and which carry
substantial  penalties  for failure to comply.  These laws and  regulations  may
require the acquisition of a permit before drilling or production commences,

                                       6
<PAGE>

restrict the types,  quantities and concentration of various substances that can
be released  into the  environment  in connection  with drilling and  production
activities,  limit or prohibit  construction  or drilling  activities on certain
lands lying within protected areas, restrict the rate of oil and gas production,
require remedial actions to prevent  pollution from former operations and impose
substantial  liabilities for pollution resulting from the Company's  operations.
In addition,  these laws and regulations may impose substantial  liabilities and
penalties for the Company's failure to comply with them or for any contamination
resulting  from  the  Company's  operations.  The  Company  believes  it  is  in
compliance,   in  all   material   respects,   with   applicable   environmental
requirements.  The  Company  does not believe  costs  relating to these laws and
regulations  have had a material  adverse effect on the Company's  operations or
financial  condition  in the past.  As these laws and  regulations  become  more
stringent  and complex,  there is no  assurance  that changes in or additions to
laws or regulations  regarding the protection of the  environment  will not have
such an impact in the future.

INSURANCE

     The Company is subject to all the risks  inherent in the  exploration  for,
and  development  and  production of oil and gas including  blowouts,  fires and
other  casualties.  The  Company  maintains  insurance  coverage  customary  for
operations of a similar  nature,  but losses could arise from uninsured risks or
in amounts in excess of existing insurance coverage.

EMPLOYEES

     As of March 31, 2003,  the Company had two  full-time  and three  part-time
employees.  The  Company  believes  that  relations  with  these  employees  are
generally  satisfactory.  The Company's  employees are not covered by collective
bargaining arrangements. From time to time, the Company utilizes the services of
independent contractors to perform various field and other services. Experienced
personnel are available in all  disciplines  should the need to hire  additional
staff arise.

OFFICE FACILITIES

     The Company  maintains its principal  offices at 214 W. Texas,  Suite 1101,
Midland, Texas pursuant to a month to month lease.

TITLE TO OIL AND GAS PROPERTIES

     The  Company  believes  that  its  methods  of  investigating  title to its
properties are consistent with practices  customary in the oil and gas industry,
and that such  practices  are  adequately  designed to enable it to acquire good
title to such properties. The Company's properties may be subject to one or more
royalty,   overriding  royalty,  carried  and  other  similar  non-cost  bearing
interests and contractual arrangements customary in the industry.  Substantially
all of the Company's properties are currently mortgaged under a deed of trust to
secure funding through a revolving line of credit.

ITEM 2. PROPERTIES

OIL AND NATURAL GAS RESERVES

     The  estimates  of the  Company's  proved oil and gas  reserves,  which are
located entirely within the United States,  were prepared in accordance with the
guidelines  established by the SEC and Financial Accounting Standards Board. The
estimates as of March 31, 2003, 2002 and 2001 are based on evaluations  prepared
by Joe C. Neal and Associates, Petroleum Consultants. For information concerning
costs incurred by the

                                       7
<PAGE>

Company for oil and gas  operations,  net revenues from oil and gas  production,
estimated  future  net  revenues  attributable  to the  Company's  oil  and  gas
reserves,  present  value of future net revenues  discounted  at 10% and changes
therein, see Notes to the Company's consolidated financial statements.

     The Company emphasizes that reserve estimates are inherently  imprecise and
there can be no assurance  that the reserves set forth below will be  ultimately
realized.  Actual  future  production,  oil and  gas  prices,  revenues,  taxes,
development  expenditures,  operating expenses and quantities of recoverable oil
and gas reserves will most likely vary from the assumptions  and estimates.  Any
significant  variance could materially affect the estimated quantities and value
of our oil and gas reserves,  which in turn may  adversely  affect the Company's
cash flow, results of operations and the availability of capital resources.

     In accordance with applicable  financial accounting and reporting standards
of the Securities and Exchange Commission,  the estimates of our proved reserves
and the present value of proved reserves set forth herein are made using oil and
gas  sales  prices  estimated  to be in  effect  as of the date of such  reserve
estimates and are held constant  throughout the life of the  properties.  Actual
future prices and costs may be  materially  higher or lower than those as of the
date of the estimate.  The timing of both the  production  and the expenses with
respect to the  development and production of oil and gas properties will effect
the  timing of future  net cash flows from  proved  reserves  and their  present
value.

     The  Company  has not  filed  any other  oil or gas  reserve  estimates  or
included any such estimates in reports to other federal or foreign  governmental
authority or agency within the last twelve months.

     The  estimated  proved oil and gas reserves and present  value of estimated
future net  revenues  from  proved oil and gas  reserves  for the Company in the
periods ended March 31 are summarized below.

                                 PROVED RESERVES
<TABLE>
<CAPTION>
                                                           March 31,
                                             2003            2002            2001
                                         ------------    ------------    ------------
Oil (Bbls):
<S>                                      <C>             <C>             <C>
     Proved developed - Producing              93,199         143,003         145,954
     Proved developed - Non-producing           1,386           1,404          88,700
     Proved undeveloped                        55,564          92,900              --
                                         ------------    ------------    ------------
         Total                                150,149         237,307         234,654
                                         ============    ============    ============
Natural gas (Mcf):
     Proved developed - Producing           3,451,880       3,822,715       4,447,379
     Proved developed - Non-producing       1,065,902       1,336,190       1,889,833
     Proved undeveloped                     3,413,846       5,023,328           8,234
                                         ------------    ------------    ------------
         Total                              7,931,628      10,182,233       6,345,446
                                         ============    ============    ============
Present value of estimated future
     net revenues before income taxes    $ 20,772,830    $ 11,925,260    $ 15,988,820
                                         ============    ============    ============
</TABLE>

     The  preceding  tables  should  be read in  connection  with the  following
definitions:

     PROVED RESERVES. Estimated quantities of oil and gas, based on geologic and
     engineering  data,  appear with  reasonable  certainty  to be  economically
     recoverable in future years from known reservoirs  under existing  economic
     and operating conditions.

     PROVED DEVELOPED RESERVES. Proved oil and gas reserves expected

                                       8
<PAGE>

     to  be  recovered  through  existing  wells  with  existing  equipment  and
     operating   methods.   Developed   reserves   include  both  producing  and
     non-producing  reserves.  Producing reserves are those reserves expected to
     be recovered from existing completion intervals producing as of the date of
     the reserve report. Non-producing reserves are currently shut-in awaiting a
     pipeline  connection or in reservoirs  behind the casing or at minor depths
     above  or  below  the  producing  zone and are  considered  recoverable  by
     production either from wells in the field, by successful  drill-stem tests,
     or by core analysis.  Non-producing  reserves require only moderate expense
     for recovery.

     PROVED  UNDEVELOPED  RESERVES.  Proved oil and gas reserves  expected to be
     recovered  from  additional  wells yet to be drilled or from existing wells
     where a relatively major expenditure is required for completion.

PRODUCTIVE WELLS AND ACREAGE

     Productive   wells  consist  of  producing   wells  and  wells  capable  of
production,  including gas wells awaiting pipeline  connections.  Wells that are
completed in more than one producing zone are counted as one well. The following
table indicates the Company's productive wells as of March 31, 2003:

                                                           Gross      Net
                                                          -------    -----
          Oil........................................       1,268       14
          Gas........................................         326       11
                                                          -------    -----
            Total Productive Wells...................       1,594       25
                                                          =======    =====

     Undeveloped  acreage  includes  leased  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.  A gross acre is an acre in which an interest is owned.  A net
acre is deemed to exist when the sum of fractional  ownership interests in gross
acres equals one. The number of net acres is the sum of the fractional interests
owned in gross acres. As of March 31, 2003 material undeveloped acreage owned by
the Company was approximately 8,018 gross and 2,983 net acres all of which is in
the state of Texas.

     The following table sets forth the approximate  developed  acreage in which
the Company held a leasehold mineral or other interest at March 31, 2003.

                                                        Developed Acres
                                                    ------------------------
                                                     Gross             Net
                                                    ------------------------
          Texas................................      114,273           4,993
          New Mexico...........................       17,154             147
          North Dakota.........................       23,999              18
          Louisiana............................       22,601              28
          Oklahoma.............................       39,002             137
          Montana..............................        7,508               4
          Kansas...............................        7,240              21
          Wyoming..............................        2,078               4
          Colorado.............................        1,040               1
          Arkansas.............................          320              --
                                                    --------         -------
          Total................................      235,215           5,353
                                                    ========         =======

                                       9
<PAGE>

DRILLING ACTIVITIES

     The following table sets forth the drilling activity of the Company for the
years ended March 31, 2003, 2002 and 2001.

                                        Years ended March 31,
                      --------------------------------------------------------
                            2003                2002                2001
                      ----------------    ----------------    ----------------
                      Gross      Net      Gross      Net      Gross      Net
                      ------    ------    ------    ------    ------    ------
Exploratory Wells
     Productive            2       .01         2       .01         1       .08
     Nonproductive         1       .07         1       .09         2       .48
                      ------    ------    ------    ------    ------    ------
         Total             3       .08         3       .10         3       .56
                      ======    ======    ======    ======    ======    ======
Development Wells
     Productive           10       .17        12       .13         1       .02
     Nonproductive        --        --        --        --        --        --
                      ------    ------    ------    ------    ------    ------
         Total            10       .17        12       .13         1       .02
                      ======    ======    ======    ======    ======    ======

NET PRODUCTION, UNIT PRICES AND COSTS

     The following  table  summarizes the net oil and natural gas production for
the  Company,  the average  sales price per barrel of oil and per mcf of natural
gas produced and the average  production  (lifting)  cost per unit of production
for the years ended March 31, 2003, 2002 and 2001.

                                                   Year Ended March 31,
                                          --------------------------------------
                                             2003          2002          2001
                                          ----------    ----------    ----------
Oil (a):
    Production (Bbls)                         23,391        21,139        18,545
    Revenue                               $  640,685    $  456,108    $  531,751
    Average Bbls per day                          64            58            51
    Average sales price per Bbl           $    27.39    $    21.58    $    28.67
Gas (b):
    Production (Mcf)                         538,787       467,013       503,773
    Revenue                               $2,041,074    $1,312,452    $2,560,459
    Average Mcf per day                        1,476         1,279         1,380
    Average sales price per Mcf           $     3.79    $     2.81    $     5.08
Production cost:

    Production cost                       $  848,513    $  648,820    $  526,032
    Equivalent Mcf (c)                       679,133       593,847       615,043
    Production cost per equivalent Mcf    $     1.25    $     1.09    $     0.86
    Production cost per sales dollar      $     0.32    $     0.37    $     0.17
Total oil and gas revenues                $2,681,759    $1,768,560    $3,092,210

(a)  Includes condensate.
(b)  Includes natural gas products.
(c)  Oil production is converted to equivalent mcf at the rate of 6 mcf per bbl,
     representing the estimated relative energy content of natural gas to oil.

ITEM 3. LEGAL PROCEEDINGS

     The Company is a named  plaintiff in one class action lawsuit against a gas
purchaser  involving  contract price  disputes.  The Company does not expect any
expenses of a material  nature to arise from this class action claim. No amounts
have  been  accrued  for  this  item  in the  Company's  consolidated  financial
statement for the year ended March 31, 2003.  During the third quarter of fiscal
2003, the Company  received  proceeds of $254,862  before  expenses of $101,945,
from the settlement of a class action lawsuit against a gas purchaser  involving
contract price disputes.

                                       10
<PAGE>

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

     There were no matters  submitted to a vote of security  holders  during the
fourth quarter ended March 31, 2003.

EXECUTIVE OFFICERS OF THE REGISTRANT

     The following table sets forth certain information concerning the executive
officers of the Company as of March 31, 2003.

          Name             Age                    Position
   -------------------     ---     ---------------------------------------------
   Nicholas C. Taylor       65     President and Chief Executive Officer
   Donna Gail Yanko         58     Vice President and Corporate Secretary
   Tamala L. McComic        34     Treasurer, Controller and Assistant Secretary

     Set forth  below is a  description  of the  backgrounds  of each  executive
officer of the Company,  including employment history for at least the last five
years.

     Nicholas C. Taylor was elected  President,  Treasurer  and  Director of the
Company in April 1983 and continues to serve as President and Director on a part
time basis,  as required.  Mr. Taylor served as Treasurer until March 1999. From
July 1993 to the  present,  Mr.  Taylor  has been  involved  in the  independent
practice of law and other business activities. For more than the prior 19 years,
he was a director and  shareholder of the law firm of Stubbeman,  McRae,  Sealy,
Laughlin & Browder, Inc., Midland, Texas, and a partner of the predecessor firm.
In 1995 he was appointed by the Governor of Texas to the State  Securities Board
through  January  2001.  In addition to serving as chairman  for four years,  he
continues to serve as a member pending the appointment of his successor.

     Donna Gail Yanko worked as part-time  administrative assistant to the Chief
Executive Officer and as Assistant Secretary of the Company until June 1992 when
she was appointed Corporate Secretary.  Mrs. Yanko was appointed to the position
of Vice President and elected to the Board of Directors of the Company in 1990.

     Tamala L. McComic has been  Controller for the Company since July 2001. She
was appointed Assistant Secretary of the Company in August 2001 and Treasurer in
September  2001.  From 1994 to 2001 Mrs.  McComic was  Regional  Controller  and
Credit  Manager for Transit Mix Concrete & Materials  Company,  a subsidiary  of
Trinity Industries, Inc. In May 2003, Mrs. McComic was appointed Vice President,
Chief  Financial  Officer and  continues  to serve as  Treasurer  and  Assistant
Secretary.

                                     PART II
                                     -------

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The  Company's  common  stock  is  traded  on the  over-the-counter  market
bulletin  board under the symbol  MEXC.  The  registrar  and  transfer  agent is
Computershare Investor Services,  Inc., P.O. Box 1596, Denver,  Colorado,  80201
(Tel: 303-262-0600).  As of March 31, 2003 the Company had 1,406 shareholders of
record and 1,766,566 shares outstanding.

                                       11
<PAGE>

                           PRICE RANGE OF COMMON STOCK

                                                         Bid Price
                                                    -------------------
                                                     High          Low
                                                    ------       ------
          2003: (1)
             April - June 2002                      $ 6.00       $ 3.80
             July - September 2002                    6.00         2.50
             October - December 2002                  3.00         2.25
             January - March 2003                     4.80         2.85
          2002: (1)
             April - June 2001                        4.10         3.00
             July - September 2001                    4.10         3.71
             October - December 2001                  4.50         2.85
             January - March 2002                     4.50         3.50

(1)  Reflects  high and low bid  information  received  from  Pink  Sheets  LLC,
     formerly  National  Quotation Bureau,  LLC. These bid quotations  represent
     prices between dealers, without retail markup, markdown or commissions, and
     do not reflect actual transactions.

     On June 26, 2003, the bid price was $7.75.

     On  February  1, 2002 the  Company's  Board of  Directors  declared a stock
     dividend  consisting  of  shares  of par value  $0.50  common  stock of the
     Company in the amount of ten percent (10%) of the outstanding  shares, or 1
     share for each 10 shares held by all  stockholders of record of the Company
     as of February 15, 2002, with any resulting  fractional  share dividends to
     be rounded up or down to the nearest  whole number of shares and issued the
     stock dividend accordingly. The payable date for this dividend was February
     28, 2002 and resulted in an additional  160,566  shares of stock issued and
     outstanding.

ITEM 6. SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                               Years Ended March 31,
                                  --------------------------------------------------------------------------------
                                      2003             2002             2001             2000             1999
                                  --------------------------------------------------------------------------------
Statement of Operations:
<S>                               <C>              <C>              <C>              <C>              <C>
Operating revenues                $  2,949,113     $  1,778,583     $  3,099,966     $  1,686,266     $  1,510,005
Operating income (loss)                926,277          252,101        1,881,776          498,384         (281,099)
Other income (expense)                 (95,357)         (54,706)         (92,160)        (104,737)        (144,675)
Net income (loss)                 $    672,808     $    189,291     $  1,539,458     $    393,647     $   (425,774)
Net income (loss) per
     share - basic (1)            $       0.39     $       0.11     $       0.86     $       0.22     $      (0.24)
Net Income (loss) per
     share - diluted (1)          $       0.39     $       0.11     $       0.86     $       0.22     $      (0.24)
Weighted average shares
     outstanding - basic (1)         1,741,462        1,768,314        1,784,825        1,785,618        1,785,618
Weighted average shares
     outstanding - diluted (1)       1,746,831        1,768,579        1,787,503        1,785,618        1,785,618

Balance Sheet:

Property and equipment, net       $  7,028,659     $  5,895,429     $  4,009,852     $  3,749,400     $  3,749,400
Total assets                         7,688,638        6,347,965        4,961,360        4,043,015        4,043,015
Total debt                           2,150,000        1,710,000          600,000        1,200,000        1,784,000
Stockholders' equity              $  4,956,388     $  4,276,042     $  4,046,452     $  2,567,228     $  2,173,581

Cash Flow:

Cash provided by operations       $  1,369,690     $    899,977     $  1,903,345     $    722,088     $    532,171
</TABLE>

(1) Amounts  have been  adjusted to reflect the 10% stock  dividend  effected on
February 1, 2002.

                                       12
<PAGE>

ITEM 6A.  SELECTED QUARTERLY FINANCIAL DATA

<TABLE>
<CAPTION>
                                                        FISCAL 2003
                                     4TH QTR       3RD QTR       2ND QTR       1ST QTR
                                    ----------    ----------    ----------    ----------
<S>                                 <C>           <C>           <C>           <C>
Net sales                           $  956,890    $  668,039    $  512,180    $  544,650
Gross profit                        $  730,662    $  434,963    $  279,575    $  388,046
Net income                          $  336,588    $  238,718    $   20,356    $   77,146
Net income per share-basic          $     0.19    $     0.14    $     0.01    $     0.04
Net income per share-diluted        $     0.19    $     0.14    $     0.01    $     0.04

<CAPTION>
                                                        FISCAL 2002
                                     4TH QTR       3RD QTR       2ND QTR       1ST QTR
                                    ----------    ----------    ----------    ----------
<S>                                 <C>           <C>           <C>           <C>
Net sales                           $  409,058    $  329,953    $  434,798    $  594,751
Gross profit                        $  261,890    $  199,406    $  221,096    $  437,348
Net income                          $   48,988    $  (32,538)   $  (26,012)   $  198,852
Net income per share-basic(1)       $     0.03    $    (0.02)   $    (0.01)   $     0.11
Net income per share-diluted(1)     $     0.03    $    (0.02)   $    (0.01)   $     0.11
</TABLE>

(1)  Amounts have been  adjusted to reflect the 10% stock  dividend  effected on
     February 1, 2002.

ITEM 7.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
          RESULTS OF OPERATIONS

     The  following   information   should  be  read  in  conjunction  with  the
information  contained in the  Consolidated  Financial  Statements and the notes
thereto included in Item 10 of this report.

LIQUIDITY AND CAPITAL RESOURCES AND COMMITMENTS

     Historically,   the  Company  has  funded  its  operations,   acquisitions,
exploration  and  development  expenditures  from cash  generated  by  operating
activities, bank borrowings and issuance of common stock.

     In fiscal 2003,  the Company  primarily  used cash  provided by  operations
($1,369,690) and borrowings on the line of credit ($910,000) to fund oil and gas
property acquisitions and development ($1,628,695).  Working capital as of March
31, 2003 was $389,179.

     In fiscal  2001,  the board of directors  authorized  the purchase of up to
25,000 shares of the Company's common stock, and the Company  repurchased 13,160
shares, at an aggregate cost of $84,934. For fiscal 2002, the board of directors
authorized  the use of up to  $250,000  to  repurchase  shares of the  Company's
common stock. During fiscal year 2002, the Company repurchased 22,533 shares, at
an aggregate  cost of $91,231.  Of such shares,  18,400  shares were reissued in
exchange  for oil and gas lease  rights  representing  368 net  acres  valued at
approximately  $83,000.  The remaining  4,133 shares were  cancelled.  In fiscal
2003, the board of directors once again  authorized the use of up to $250,000 to
repurchase  shares of the Company's  common stock.  During fiscal year 2003, the
Company  repurchased  30,244  shares,  at an aggregate  cost of $127,536 for the
treasury account.

     In December,  2002, the Company entered into a participation agreement with
Falcon Bay  Exploration,  LLC  exercising  its right to purchase at an aggregate
cash price of  $597,301,  the acreage and seismic data on the first of four such
prospects  referred  to in the  exploration  agreement  between  the Company and
Falcon Bay Exploration,  LLC. This information is contained in Form 8-K filed by
the Company on December 6, 2002.

                                       13
<PAGE>

     The  Company  is  reviewing   several  other   projects  in  which  it  may
participate.  The cost of such projects would be funded, to the extent possible,
from existing cash balances and cash flow from operations.  The remainder may be
funded  through  borrowings  on the  credit  facility.  See  Note B of  Notes to
Consolidated  Financial  Statements for a description of the Company's revolving
credit agreement with Bank of America, N.A.

     Crude oil and natural gas prices have  fluctuated  significantly  in recent
years as well as in recent  months.  Fluctuations  in price  have a  significant
impact on the Company's financial condition and liquidity.  However,  management
believes the Company can maintain adequate liquidity for the next fiscal year.

RESULTS OF OPERATIONS

FISCAL 2003 COMPARED TO FISCAL 2002

     Oil and gas sales  increased from $1,768,560 in 2002 to $2,681,759 in 2003,
an increase  of  $913,199 or 52%.  This  increase  was  attributable  to both an
increase in  production  and an increase in oil and gas prices  during the year.
The average oil price increased from $21.58 per bbl in 2002 to $27.39 per bbl in
2003, an increase of $5.81 per bbl or 27%. The average gas price  increased from
$2.81 in 2002 to $3.79 per mcf in 2003,  an increase of $.98 per mcf or 35%. Oil
production  increased  from  21,139  bbls in 2002 to  23,391  bbls in  2003,  an
increase of 2,252 bbls or 11%. Gas production increased from 467,013 mcf in 2002
to 538,787 mcf in 2003, an increase of 71,774 mcf or 15%.

     Other  income  increased  from  $10,023  in 2002 to  $267,354  in 2003,  an
increase  of  $257,331.  This  increase is the result of the  proceeds  received
($254,862) from the settlement of a class action lawsuit against a gas purchaser
involving contract price disputes.

     Production  costs  increased  from $648,820 in 2002 to $848,513 in 2003, an
increase of $199,633 or 31%.  This is  primarily  attributable  to an  increased
number of repairs on operated properties during the year.

     Depreciation, depletion and amortization increased from $448,422 in 2002 to
$641,827 in 2003,  an increase of $193,405 or 43%, due primarily to the downward
revisions of proved  undeveloped  reserves in the El Cinco  Field.  There was no
impairment of oil and gas properties in fiscal 2002 or 2003.

     General and  administrative  expenses  increased  from  $429,240 in 2002 to
$532,496 in 2003,  an increase of $103,256 or 24%.  This  increase was primarily
attributable  to the  increased  cost of  consulting  expenses  relating  to the
settlement  of the lawsuit which was settled  during the fiscal year  ($101,945)
and an increase in compensation  related to stock options granted to consultants
($12,792).

     Interest  expense  increased  from  $57,161 in 2002 to $96,337 in 2003,  an
increase  of  $39,176 or 69%.  This  increase  was  attributable  to  additional
borrowings during the current fiscal year.

FISCAL 2002 COMPARED TO FISCAL 2001

     Oil and gas sales  decreased from $3,092,210 in 2001 to $1,768,560 in 2002,
a decrease of $1,323,650 or 43%. This decrease was primarily attributable to the
decrease in oil and gas prices during the year. The average oil price  decreased
from  $28.67 in 2001 to $21.58 per bbl in 2002,  a decrease  of $7.09 per bbl or
25%.  The  average  gas price  decreased  from $5.08 in 2001 to $2.81 per mcf in
2002, a decrease of $2.27 per mcf or 45%. Oil  production  increased from 18,545
bbls in 2001

                                       14
<PAGE>

to  21,139  bbls in 2002,  an  increase  of 2,594  bbls or 14%.  Gas  production
decreased  from 503,773 mcf in 2001 to 467,013 mcf in 2002, a decrease of 36,760
mcf or 7%.

     Production  costs  increased  from $526,032 in 2001 to $648,820 in 2002, an
increase of $122,788 or 23%.  This is primarily  attributable  to the  increased
number of working  interests the Company acquired during the fiscal year as well
as repairs on operated properties.

     Depreciation, depletion and amortization increased from $377,761 in 2001 to
$448,422  in 2002,  an increase of $70,661 or 19%,  due  primarily  to lower gas
prices and a large amount of reserves  attributable to acquired properties which
require a significant  amount of development  costs.  There was no impairment of
oil and gas properties in fiscal 2001 or 2002.

     General and  administrative  expenses  increased  from  $314,397 in 2001 to
$429,240 in 2002,  an increase of $114,843 or 37%.  This  increase was primarily
attributable  to increased  cost of shareholder  maintenance  related to the 10%
stock  dividend  issued  ($28,200),   increases  in  financial  consulting  fees
($20,000),  engineering ($13,000),  land and geological services ($18,000),  and
compensation related to stock options granted to consultants ($24,000).

     Interest  expense  decreased  from  $95,999 in 2001 to  $57,161 in 2002,  a
decrease of $38,838 or 40%. This decrease was  primarily  attributable  to lower
interest rates during 2002.

OTHER MATTERS

FORWARD LOOKING STATEMENTS

     Certain  statements in this Form 10-K may be deemed to be  "forward-looking
statements"  within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities  Act"), and Section 21E of the Securities  Exchange Act
of 1934, as amended (the "Exchange Act"). All statements,  other than statements
of historical facts, included in this Form 10-K that address activities,  events
or developments that the Company expects, projects, believes or anticipates will
or may occur in the  future,  including  such  matters as oil and gas  reserves,
future  drilling and  operations,  future  production of oil and gas, future net
cash  flows,   future  capital   expenditures   and  other  such  matters,   are
forward-looking  statements.  These statements are based on certain  assumptions
and analysis made by management  of the Company in light of its  experience  and
its  perception  of  historical  trends,  current  conditions,  expected  future
developments and other factors it believes are appropriate in the circumstances.
Such statements are subject to a number of assumptions, risks and uncertainties,
including general economic and business  conditions,  prices of oil and gas, the
business opportunities (or lack thereof) that may be presented to and pursued by
the Company, changes in laws or regulations and other factors, many of which are
beyond the control of the Company.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

RISK FACTORS

     All of the  Company's  financial  instruments  are for purposes  other than
trading.  At March  31,  2003,  the  Company  had not  entered  into  any  hedge
arrangements,  commodity swap agreements,  commodity  futures,  options or other
similar agreements relating to crude oil and natural gas.

     INTEREST RATE RISK. The following table summarizes maturities for

                                       15
<PAGE>

the  Company's  variable  rate bank debt,  which is tied to prime  rate.  If the
interest  rate  on  the  Company's  bank  debt  increases  or  decreases  by one
percentage point, the Company's annual pretax income would change by $21,500.

                                             Year ended March 31,
                                   --------------------------------------
                                      2003          2004          2005
                                   ----------    ----------    ----------
     Variable rate bank debt       $       --    $2,150,000    $       --

     CREDIT RISK.  Credit risk is the risk of loss as a result of nonperformance
by  counter-parties  of their  contractual  obligations.  The Company's  primary
credit risk is related to oil and gas production sold to various  purchasers and
the  receivables  are  generally  not  collateralized.  At  March  31,  2003 the
Company's largest credit risk associated with any single purchaser was $138,657.
The Company has not experienced any significant credit losses.

     VOLATILITY OF OIL AND GAS PRICES. The Company's revenues, operating results
and future rate of growth are  dependent  upon the prices  received  for oil and
gas. These market prices tend to fluctuate  significantly in response to factors
beyond the Company's control.  The prices the Company receives for its crude oil
production are based on global market  conditions.  The continued terror threats
in the Middle East,  the  continuing  economic  crisis in Venezuela (a major oil
exporter), and actions of OPEC and its maintenance of production constraints, as
well as other  economic,  political,  and  environment  factors will continue to
affect world supply.  Natural gas prices fluctuate  significantly in response to
numerous factors including the U.S. economic environment, North American weather
patterns, other factors affecting demand such as substitute fuels, the impact of
drilling levels on natural gas supply,  and the  environmental and access issues
that limit  future  drilling  activities  for the  industry.  Historically,  the
markets for oil and gas have been  volatile  and are likely to continue to be so
in the future.  Various  factors  beyond the  control of the Company  affect the
price of oil and gas,  including  but not  limited  to  worldwide  and  domestic
supplies  of oil and gas,  the  ability of the  members of the  Organization  of
Petroleum  Exporting Countries to agree to and maintain oil price and production
controls,  political instability or armed conflict in oil-producing regions, the
price and level of foreign imports,  the level of consumer demand, the price and
availability  of  alternative  fuels,  the  availability  of pipeline  capacity,
weather conditions, domestic and foreign governmental regulation and the overall
economic  environment.  Any significant decline in prices would adversely affect
the Company's  revenues and operating  income and may require a reduction in the
carrying value of the Company's oil and gas properties. If the average oil price
had increased or decreased by one cent per barrel for fiscal 2003, the Company's
pretax income would have changed by $234. If the average gas price had increased
or decreased by one cent per mcf for fiscal 2003,  the  Company's  pretax income
would have changed by $5,388.

     UNCERTAINTY  OF  RESERVE  INFORMATION  AND FUTURE  NET  REVENUE  ESTIMATES.
Estimates  of oil and gas  reserves,  by  necessity,  are  projections  based on
engineering data, and there are uncertainties  inherent in the interpretation of
such data as well as the projection of future rates of production and the timing
of development  expenditures.  Reserve  engineering  is a subjective  process of
estimating  underground  accumulations  of oil and gas  that  are  difficult  to
measure.  Estimates  of  economically  recoverable  oil and gas  reserves and of
future net cash flows depend upon a number of variable  factors and assumptions,
such as future  production,  oil and gas prices,  operating  costs,  development
costs  and  remedial  costs,  all of which  may vary  considerably  from  actual
results. As a result,  estimates of the economically  recoverable  quantities of
oil  and  gas  and  of  future  net  cash  flows  expected  therefrom  may  vary
substantially.  Moreover,  there can be no assurance that the Company's reserves
will ultimately be produced or that any undeveloped  reserves will be developed.
As required by the SEC, the

                                       16
<PAGE>

estimated  discounted  future net cash flows from proved  reserves are generally
based on prices and costs as of the date of the  estimate,  while actual  future
prices and costs may be materially higher or lower.

     RESERVE  REPLACEMENT  RISK. The Company's  future success  depends upon its
ability to find, develop or acquire additional, economically recoverable oil and
gas  reserves.  The proved  reserves of the Company  will  generally  decline as
reserves  are  depleted,  except to the extent the Company can find,  develop or
acquire replacement reserves.

     DRILLING AND OPERATING RISKS. Drilling and operating activities are subject
to many risks,  including  availability  of workover  and  drilling  rigs,  well
blowouts,  cratering,  explosions,  fires,  formations with abnormal  pressures,
pollution,  releases of toxic gases and other  environmental  hazards and risks.
Any of these  operating  hazards  could  result  in  substantial  losses  to the
Company.  In  addition,  the  Company  incurs  the  risk  that  no  commercially
productive  reservoirs  will be  encountered  and there is no assurance that the
Company will recover all or any portion of its  investment  in wells  drilled or
re-entered.

     MARKETABILITY OF PRODUCTION.  The marketability of the Company's production
depends in part on the  availability,  proximity  and  capacity  of natural  gas
gathering  systems,  pipelines  and  processing  facilities.  Federal  and state
regulation  of oil  and  gas  production  and  transportation,  tax  and  energy
policies, changes in supply and demand and general economic conditions could all
affect the Company's ability to produce and market its oil and gas.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

     Report of Independent Certified Public Accountants...................... 18
     Consolidated Balance Sheets............................................. 19
     Consolidated Statements of Operations................................... 20
     Consolidated Statements of Changes in Stockholders' Equity.............. 21
     Consolidated Statements of Cash Flows................................... 22
     Notes to Consolidated Financial Statements.............................. 23

                                       17
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
               --------------------------------------------------

Board of Directors
Mexco Energy Corporation

We have audited the  accompanying  consolidated  balance  sheets of Mexco Energy
Corporation  and  Subsidiary  as of March  31,  2003  and  2002 and the  related
consolidated statements of operations,  stockholders' equity, and cash flows for
each of the three years in the period  ended  March 31,  2003.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position  of Mexco  Energy
Corporation  and  Subsidiary  as of March 31,  2003 and 2002 and the  results of
their  operations and their cash flows for each of the three years in the period
ended March 31, 2003 in conformity with accounting principles generally accepted
in the United States of America.

GRANT THORNTON LLP

Oklahoma City, Oklahoma
May 23, 2003

                                       18
<PAGE>

                     MEXCO ENERGY CORPORATION AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                                 As of March 31,

                                                      2003             2002
                                                  ------------     ------------
ASSETS
    Current assets
       Cash and cash equivalents                  $     68,547     $     44,958
       Accounts receivable:
       Oil and gas sales                               560,297          229,257
           Trade                                        17,617           49,644
           Related parties                               3,475              523
           Income taxes receivable                          --          104,030
       Prepaid costs and expenses                       10,043           24,124
                                                  ------------     ------------
              Total current assets                     659,979          452,536

    Property and equipment, at cost
       Oil and gas properties, using
           the full cost method ($673,690
           excluded from amortization in 2003)      15,656,928       13,886,798
       Other                                            33,708           28,781
                                                  ------------     ------------
                                                    15,690,636       13,915,579
       Less accumulated depreciation,
           depletion, and amortization               8,661,977        8,020,150
                                                  ------------     ------------
              Property and equipment, net            7,028,659        5,895,429
                                                  ------------     ------------
                                                  $  7,688,638     $  6,347,965
                                                  ============     ============

LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities
       Accounts payable - trade                   $     93,434     $    105,332
       Lease obligation payable                         61,086               --
       Current portion of long-term debt               116,280               --
                                                  ------------     ------------
              Total current liabilities                270,800          105,332

    Long-term debt                                   2,033,720        1,710,000

    Deferred income tax liability                      427,730          256,591

    Stockholders' equity
       Preferred stock - $1.00 par value;
         10,000,000 shares authorized                       --               --
       Common stock - $0.50 par value;
         40,000,000 shares authorized;
         1,766,566 shares issued                       883,283          883,283
       Additional paid-in capital                    3,734,119        3,599,045
       Retained earnings (accumulated deficit)         466,522         (206,286)
       Treasury stock, at cost                        (127,536)              --
                                                  ------------     ------------
              Total stockholders' equity             4,956,388        4,276,042
                                                  ------------     ------------

                                                  $  7,688,638     $  6,347,965
                                                  ============     ============

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

                                       19
<PAGE>

                     MEXCO ENERGY CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                              Year ended March 31,

<TABLE>
<CAPTION>
                                              2003             2002             2001
                                          ------------     ------------     ------------
Operating revenues:
<S>                                       <C>              <C>              <C>
    Oil and gas                           $  2,681,759     $  1,768,560     $  3,092,210
    Other                                      267,354           10,023            7,756
                                          ------------     ------------     ------------
              Total operating revenues       2,949,113        1,778,583        3,099,966

Operating expenses:
    Production                                 848,513          648,820          526,032
    Depreciation, depletion,
       and amortization                        641,827          448,422          377,761
    General and administrative                 532,496          429,240          314,397
                                          ------------     ------------     ------------
              Total operating expenses       2,022,836        1,526,482        1,218,190
                                          ------------     ------------     ------------

                                               926,277          252,101        1,881,776

Other income (expense):
    Interest income                                981            2,455            3,839
    Interest expense                           (96,337)         (57,161)         (95,999)
                                          ------------     ------------     ------------
              Net other expense                (95,356)         (54,706)         (92,160)
                                          ------------     ------------     ------------

Earnings before income taxes                   830,921          197,395        1,789,616

Income tax expense:
    Current                                    (13,026)         (62,992)          64,663
    Deferred                                   171,139           71,096          185,495
                                          ------------     ------------     ------------
                                               158,113            8,104          250,158
                                          ------------     ------------     ------------

Net earnings                              $    672,808     $    189,291     $  1,539,458
                                          ============     ============     ============

Net earnings per share:
    Basic                                 $       0.39     $       0.11     $       0.86
    Diluted                               $       0.39     $       0.11     $       0.86

Weighted average outstanding shares:
    Basic                                    1,741,462        1,768,314        1,784,825
    Diluted                                  1,746,831        1,768,579        1,787,503
</TABLE>

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

                                       20
<PAGE>

                     MEXCO ENERGY CORPORATION AND SUBSIDIARY
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                Retained
                                                             Additional         Earnings           Total
                           Common Stock      Treasury          Paid-In        (Accumulated     Stockholders'
                             Par Value         Stock           Capital          Deficit)           Equity
                           ------------     ------------     ------------     ------------     ------------
<S>                        <C>              <C>              <C>              <C>              <C>
Balance, April 1, 2000     $    811,644               --     $  2,875,399     $ (1,119,815)    $  2,567,228
  Net earnings                       --               --               --        1,539,458        1,539,458
  Issuance of stock                   2               --               (2)              --               --
  Retirement of stock              (953)              --               --          (12,389)         (13,342)
  Stock based
   compensation                      --               --           24,700               --           24,700
  Purchase of stock                  --          (71,592)              --               --          (71,592)
                           ------------     ------------     ------------     ------------     ------------

Balance, March 31, 2001    $    810,693     $    (71,592)    $  2,900,097     $    407,254     $  4,046,452

  Net earnings                       --               --               --          189,291          189,291
  10% stock dividend             80,283               --          722,548         (802,831)              --
  Purchase of stock                  --          (91,231)              --               --          (91,231)
  Issuance of stock
   for property                      --           72,576           10,224               --           82,800
  Retirement of stock            (7,693)          90,247          (82,554)              --               --
  Stock based
   compensation                      --               --           48,730               --           48,730
                           ------------     ------------     ------------     ------------     ------------

Balance, March 31, 2002    $    883,283     $         --     $  3,599,045     $   (206,286)    $  4,276,042

Net earnings                         --               --               --          672,808          672,808
Purchase of stock                    --         (127,536)              --               --         (127,536)
Issuance of warrants
    for acreage                      --               --           73,552               --           73,552
Stock based
  compensation                       --               --           61,522               --           61,522
                           ------------     ------------     ------------     ------------     ------------

Balance, March 31, 2003    $    883,283     $   (127,536)    $  3,734,119     $    466,522     $  4,956,388
                           ============     ============     ============     ============     ============
</TABLE>

                                                Share Activity
                                                --------------
                                       2003           2002           2001
                                    ----------     ----------     ----------
Common stock issued
   At beginning of year              1,766,566      1,621,387      1,623,289
     Issued                                 --        160,566              4
     Cancelled                              --        (15,387)        (1,906)
                                    ----------     ----------     ----------
   At end of year                    1,766,566      1,766,566      1,621,387

Held in treasury
   At beginning of year                     --        (11,254)            --
      Acquisitions                     (30,244)       (22,533)       (11,254)
      Issued for property                   --         18,400             --
      Cancellation, returned to
        unissued                            --         15,387             --
                                    ----------     ----------     ----------
   At end of year                      (30,244)            --        (11,254)
                                    ----------     ----------     ----------
Common shares outstanding at end
   of year                           1,736,322      1,766,566      1,610,133
                                    ==========     ==========     ==========


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

                                       21
<PAGE>

                     MEXCO ENERGY CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                              Year ended March 31,

<TABLE>
<CAPTION>
                                                          2003             2002             2001
                                                      ------------     ------------     ------------
Cash flows from operating activities:
<S>                                                   <C>              <C>              <C>
   Net earnings                                       $    672,808     $    189,291     $  1,539,458
   Adjustments to reconcile net earnings
     to net cash provided by operating
     activities:
       Deferred income taxes                               171,139           71,096          185,495
         Stock-based compensation                           61,522           48,730           24,700
       Depreciation, depletion, and amortization           641,827          448,422          377,761
       (Increase) decrease in accounts receivable         (193,089)         114,896         (218,054)
       Increase in accounts payable                          1,403           28,964              901
       (Increase) decrease in prepaid assets                14,080           50,215          (58,553)
       Increase(decrease) in income taxes payable               --          (51,637)          51,637
                                                      ------------     ------------     ------------
         Net cash provided by operating activities       1,369,690          899,977        1,903,345

Cash flows from investing activities:
   Additions to oil and gas properties                  (1,628,695)      (2,247,423)        (936,293)
   Additions to other property and equipment                (4,927)          (5,181)          (1,014)
                                                      ------------     ------------     ------------
         Net cash used in investing activities          (1,633,622)      (2,252,604)        (937,307)

Cash flows from financing activities:
   Borrowings                                              910,000        1,160,000               --
   Principal payments on long-term debt                   (470,000)         (50,000)        (600,000)
   Payments of capital lease obligations                   (24,943)              --               --
   Purchases of common stock                              (127,536)         (91,231)         (84,934)
                                                      ------------     ------------     ------------
         Net cash (used in) provided by
           financing activities                            287,521        1,018,769         (684,934)
                                                      ------------     ------------     ------------

Net increase (decrease) in cash
   and cash equivalents                                     23,589         (333,858)         281,104

Cash and cash equivalents
   at beginning of year                                     44,958          378,816           97,712
                                                      ------------     ------------     ------------

Cash and cash equivalents
   at end of year                                     $     68,547     $     44,958     $    378,816
                                                      ============     ============     ============

   Interest paid                                      $     94,792     $     55,022     $     99,044
   Income taxes paid (recovered)                      $   (117,056)    $     92,675     $         --

Supplemental Disclosure of Non-cash investing
 and financing activities:
  Issuance of common stock in exchange
   for oil and gas properties                         $         --     $     82,800     $         --
  Fair value of warrants issued for
   oil and gas properties                             $     73,552     $         --     $         --
  Acquisition of equipment under capital leases       $     81,182     $         --     $         --
</TABLE>

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

                                       22
<PAGE>

NOTE A - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

Mexco  Energy  Corporation  and  its  wholly  owned  subsidiary,  Forman  Energy
Corporation  (collectively,  the  "Company")  are  engaged  in the  acquisition,
exploration,  development,  and  production  of  domestic  oil and gas and  owns
producing  properties and undeveloped  acreage in 11 states. The majority of the
Company's activities are centered in West Texas.  Although most of the Company's
oil and gas  interests  are  operated by others,  the Company  operates  several
properties in which it owns an interest.

SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation.  The consolidated  financial statements include the
accounts  of Mexco  Energy  Corporation  and its wholly  owned  subsidiary.  All
significant  intercompany  balances and  transactions  have been  eliminated  in
consolidation.

Cash  and Cash  Equivalents.  The  Company  considers  all  highly  liquid  debt
instruments  purchased with  maturities of three months or less and money market
funds to be cash  equivalents.  The Company  maintains  its cash in bank deposit
accounts and money market funds,  some of which are not federally  insured.  The
Company has not  experienced  any losses in such accounts and believes it is not
exposed to any significant credit risk.

Oil and Gas Properties.  Oil and gas properties are accounted for using the full
cost method of  accounting.  Under this method,  all costs  associated  with the
acquisition,  exploration,  and  development of properties  (successful or not),
including leasehold  acquisition costs,  geological and geophysical costs, lease
rentals,  exploratory  and  developmental  drilling,  and equipment  costs,  are
capitalized.  All capitalized costs of oil and gas properties (excluding certain
unevaluated  property  costs),  including the estimated  future costs to develop
proved reserves, are amortized on the unit-of-production  method using estimates
of proved reserves.  If unamortized  costs,  less related deferred income taxes,
exceed the sum of the present value,  discounted at 10%, of estimated future net
revenues from proved  reserves,  less related income tax effects,  the excess is
charged to expense.  Generally, no gains or losses are recognized on the sale or
disposition of oil and gas properties.

Other Property and Equipment.  Provisions for  depreciation of office  furniture
and equipment are computed on the straight-line method based on estimated useful
lives of five to ten years.

Earnings Per Common Share.  Basic earnings per share is computed by dividing net
earnings by the weighted average number of shares outstanding during the period.
Diluted  earnings per share is computed by dividing net earnings by the weighted
average  number of common  shares and dilutive  potential  common  shares (stock
options and warrants) outstanding during the period. In periods where losses are
reported,  the  weighted-average  number of common shares  outstanding  excludes
potential  common shares,  because their inclusion would be  anti-dilutive.  The
following is a reconciliation of the number of shares used in the calculation of
basic  earnings per share and diluted  earnings per share for the periods  ended
March 31:

                                       23
<PAGE>

                                       2003          2002          2001
                                    ----------    ----------    ----------
     Weighted average number
         of common shares
         outstanding, basic          1,741,462     1,768,314     1,784,825
     Incremental shares from
         the assumed exercise of
         dilutive stock options          5,369           265         2,678
                                    ----------    ----------    ----------
     Dilutive potential common
          shares                     1,746,831     1,768,579     1,787,503
                                    ==========    ==========    ==========

Outstanding options and warrants to purchase 388,500, 200,000 and 150,000 shares
at March 31,  2003,  2002,  and 2001,  respectively,  were not  included  in the
computation  of diluted net earnings per share because the exercise price of the
options or warrants  was greater  than the  average  market  price of the common
shares and, therefore, the effect would be anti-dilutive.

Stock Dividend.  On February 1, 2002, the Company  declared a 10% stock dividend
to  shareholders  of record on February  15, 2002.  On February  28,  2002,  the
Company issued 160,566 shares of common stock in conjunction with this dividend.
Accordingly,  amounts  equal to the fair market value of the  additional  shares
issued have been  charged to retained  earnings and credited to common stock and
additional  paid-in  capital.  All  references  in  the  consolidated  financial
statements  to weighted  average  number of shares and earnings per common share
amounts have been adjusted to reflect the stock dividend on a retroactive basis.

Income Taxes. The Company recognizes deferred tax assets and liabilities for the
future tax consequences of temporary differences between the carrying amounts of
assets and liabilities and their  respective tax bases.  Deferred tax assets and
liabilities  are measured  using  enacted tax rates  applicable  to the years in
which those  differences are expected to be settled.  The effect on deferred tax
assets and  liabilities  of a change in tax rates is recognized in net income in
the period that includes the enactment date.

Environmental.  The Company is subject to extensive  federal,  state,  and local
environmental laws and regulations.  These laws, which are constantly  changing,
regulate the  discharge of materials  into the  environment  and may require the
Company to remove or  mitigate  the  environmental  effects of the  disposal  or
release of  petroleum or chemical  substances  at various  sites.  Environmental
expenditures  are expensed or  capitalized  depending  on their future  economic
benefit.  Liabilities for expenditures of a non-capital nature are recorded when
environmental  assessment  and/or  remediation  is probable and the costs can be
reasonably estimated.  There were no significant  environmental  expenditures or
liabilities for the years ended March 31, 2003, 2002, or 2001.

Use of Estimates. In preparing financial statements in conformity with generally
accepted  accounting  principles,  management is required to make  estimates and
assumptions that affect the amounts reported in the these financial  statements.
Although  management  believes its estimates  and  assumptions  are  reasonable,
actual results may differ materially from those estimates. Significant estimates
affecting these financial  statements include the estimated quantities of proved
oil and gas reserves and the related present value of estimated  future net cash
flows.

Revenue  Recognition  and  Gas  Balancing.  Oil  and  gas  sales  and  resulting
receivables  are  recognized  when the product is delivered to the purchaser and
title has transferred.  Sales are to credit-worthy  major energy purchasers with
payments generally received within 60 days of transportation from the well site.
The Company has  historically  had little,  if any,  uncollectible  receivables;
therefore,  an  allowance  for  uncollectible  accounts  is  not  required.  Gas
imbalances  are  accounted  for under  the sales  method  whereby  revenues  are
recognized based on production

                                       24
<PAGE>

sold. A liability  is recorded  when the  Company's  excess takes of natural gas
volumes exceed its estimated remaining recoverable reserves (over produced).  No
receivables  are  recorded for those wells where the Company has taken less than
its  ownership  share of gas  production  (under  produced).  The Company has no
significant gas imbalances.

Stock  Options and  Warrants.  The Company  accounts for  employee  stock option
grants in accordance  with Accounting  Principles  Board ("APB") Opinion No. 25,
"Accounting  for Stock Issued to Employees," as amended by Financial  Accounting
Standards  Board  ("FASB")   Interpretation  No.  44,  "Accounting  for  Certain
Transactions involving Stock Compensation," an interpretation of APB Opinion No.
25. The  Company  applies  the  intrinsic  value  method in  accounting  for its
employee  stock options and records no  compensation  costs for its stock option
awards to employees.  The Company recognizes  compensation cost related to stock
options awarded to independent consultants based on fair value of the options at
date of grant.

If  compensation  cost for the Company's  stock option plan had been  determined
based on the fair value at the grant  dates for all  employee  awards  under the
plan, net earnings,  basic earnings per common share,  and diluted  earnings per
common share would have been as follows:

                                     2003             2002             2001
                                 ------------     ------------     ------------

Net income, as reported          $    672,808     $    189,291     $  1,539,458
Deduct: Stock-based employee
compensation expense determined
under fair value based method
(SFAS 123), net of tax           $    (63,133)    $    (50,066)    $    (79,622)
                                 ------------     ------------     ------------

Net income, pro forma            $    609,675     $    139,225     $  1,459,836
                                 ============     ============     ============

Basic earnings per share:

          As reported (1)        $       0.39     $       0.11     $       0.86
          Pro forma (1)          $       0.35     $       0.08     $       0.82

Diluted earnings per share:

          As reported (1)        $       0.39     $       0.11     $       0.86
          Pro forma (1)          $       0.35     $       0.08     $       0.82

     (1)  Amounts have been adjusted to reflect the 10% stock dividend  effected
          on February 1, 2002.

Financial  Instruments.  Cash and  money  market  funds,  stated  at  cost,  are
available upon demand and approximate fair value. Interest rates associated with
the Company's  long-term debt are linked to current  market rates.  As a result,
management  believes that the carrying amount approximates the fair value of the
Company's  credit  facilities.  All financial  instruments are held for purposes
other than trading.

Reclassifications.   Certain  reclassifications  have  been  made  to  the  2001
and 2002 financial statements to conform with the 2003 presentation.

Recent  Accounting  Pronouncements.  In  June  2001,  the  Financial  Accounting
Standards Board issued Statement of Financial  Accounting Standards ("SFAS") No.
143,  "Accounting  for Asset  Retirement  Obligations".  SFAS No.  143  requires
entities  to  record  the fair  value  of a  liability  for an asset  retirement
obligation in the period in which it is incurred and a corresponding increase in
the carrying amount of the related  long-lived  asset.  Subsequently,  the asset
retirement  cost should be allocated to expense using a systematic  and rational
method. SFAS No. 143 is effective

                                       25
<PAGE>

for fiscal  years  beginning  after June 15,  2002.  The Company is required and
plans to adopt the  provisions of SFAS 143 for the quarter ending June 30, 2003.
To accomplish  this, the Company must identify all legal  obligations  for asset
retirement  obligations and determine the fair value of these obligations on the
date of adoption.  The  determination  of fair value is complex and requires the
Company to gather market  information and develop cash flow models. Due to these
complexities, the Company has not completed all of the computations necessary to
adopt SFAS No. 143 and the  effects of  adoption  may  materially  increase  the
Company's  liabilities,  and  may  have a  material  effect  on its  results  of
operations.

NOTE B - DEBT

The  Company  has a  revolving  credit  agreement  with  Bank of  America,  N.A.
("Bank"),  which  provides  for a credit  facility of  $5,000,000,  subject to a
borrowing base  determination.  The borrowing  base was originally  decreased to
$2,200,000, with scheduled monthly reductions of the available borrowing base of
$25,581  per month  beginning  September  5,  2002,  and the  maturity  date was
originally  August 15, 2003. The borrowing base was  re-determined  on September
10, 2002 and  increased to  $2,586,000  with monthly  commitment  reductions  of
$33,150.  On November  15, 2002,  the  maturity  date was extended to August 15,
2004.  The  borrowing  base  was  re-determined  on this  date  and  reduced  to
$2,526,755 with monthly  commitment  reductions of $30,814 beginning on December
5, 2002. As of March 31, 2003, the balance  outstanding under this agreement was
$2,150,000.  Principal  payments of $116,280 are  anticipated to be required for
fiscal 2004 to comply with the monthly commitment reductions. A letter of credit
for  $50,000,  in lieu of a  plugging  bond with the Texas  Railroad  Commission
covering the  properties the Company  operates,  is also  outstanding  under the
facility. The borrowing base is subject to redetermination on or about August 1,
of each year.  Amounts borrowed under this agreement are  collateralized  by the
common stock of Forman and the Company's oil and gas properties.  Interest under
this  agreement  is payable  monthly at prime rate (4.25% and 4.75% at March 31,
2003 and 2002,  respectively).  This agreement generally restricts the Company's
ability to transfer assets or control of the Company, incur debt, extend credit,
change the nature of the Company's  business,  substantially  change  management
personnel, or pay cash dividends.

NOTE C - OTHER INCOME

During the third  quarter of fiscal  2003,  the  Company  received  proceeds  of
$254,862 before expenses of $101,945,  from the settlement of a class action law
suit against a gas purchaser involving contract price dispute.

NOTE D - CAPITAL LEASE OBLIGATIONS

During  fiscal 2003,  the Company  began  leasing  three gas  compressors  under
separate  agreements  that are  classified  as capital  leases.  The cost of the
equipment  under the capital leases is included in the balance sheet as property
and equipment and was $81,182 with  accumulated  amortization of $5,796 on March
31,  2003.   Amortization   of  assets  under  capital  leases  is  included  in
depreciation  expense.  The lease agreements are each for a 12-month period with
equal monthly  payments.  At the end of the term, the Company will receive title
to the compressors  under bargain  purchase  options of $1. The lease obligation
associated  with these three  compressors  was $61,086 on March 31, 2003, all of
which is a current  liability.  Total  payments  required for these three leases
will be $67,366, of which $6,280 represents interest.

                                       26
<PAGE>

NOTE E - INCOME TAXES

Deferred tax assets and liabilities at March 31 are as follows:

                                                    2003           2002
                                                 ----------     ----------
     Deferred tax assets:
       Percentage depletion carryforwards        $  403,344     $  317,174
       Vacation accrual                               1,334            691
       Deferred compensation                         41,835         22,763
       Net operating loss carryforwards              43,927         87,481
                                                 ----------     ----------
                                                    490,440        428,109
     Deferred tax liabilities:
       Excess financial accounting bases over
         tax bases of property and equipment       (918,170)      (684,700)
                                                 ----------     ----------
       Net deferred tax liabilities              $ (427,730)    $ (256,591)
                                                 ==========     ==========

As of March 31,  2003,  the Company has a net  operating  loss  carryforward  of
approximately   $141,700,   which  expires  in  2022,  and  statutory  depletion
carryforwards of approximately $1,301,000, which do not expire.

A  reconciliation  of the  provision  for income taxes to income taxes  computed
using the federal statutory rate for years ended March 31 follows:

                                       2003            2002            2001
                                    ----------      ----------      ----------
Tax expense at statutory rate       $  282,513      $   67,114      $  608,469
Decrease in valuation allowance             --              --        (196,469)
Depletion in excess of basis           (86,170)        (58,513)        (80,864)
Effect of graduated rates              (24,928)         (5,922)        (53,688)
Revision of prior year estimates       (13,026)          7,657              --
Other                                     (276)         (2,232)        (27,290)
                                    ----------      ----------      ----------
                                    $  158,113      $    8,104      $  250,158
                                    ==========      ==========      ==========
Effective tax rate                         19%              4%             14%
                                    ==========      ==========      ==========

NOTE F - EXPLORATION AGREEMENT

On December 5, 2002,  the Company  entered into an  exploration  agreement  with
Falcon Bay Operating,  LLC. Pursuant to such agreement, the Company has obtained
the right to purchase and  inventory  seismic data and acreage in shallow  water
areas of Texas and Louisiana. In consideration for the right to obtain four such
prospects,  the Company has issued warrants to purchase 107,500 shares of common
stock at an exercise price of $5.00 per share. Such warrants are exercisable for
a period of two years from date of grant.  Additional  warrants,  exercisable at
the same exercise price and exercisable for two years,  would be issued covering
322,500 shares upon exercise of the Company's right to participate in a total of
four prospects.

NOTE G - MAJOR CUSTOMERS

The Company operates  exclusively  within the United States and its revenues and
operating income are derived  predominately  from the oil and gas industry.  Oil
and gas  production  is sold  to  various  purchasers  and the  receivables  are
unsecured.  Historically,  the Company has not  experienced  significant  credit
losses  on its  oil and gas  accounts  and  management  is of the  opinion  that
significant  credit risk does not exist.  Management  is of the opinion that the
loss of any one purchaser would not have an adverse

                                       27
<PAGE>

effect on the ability of the Company to sell its oil and gas production.

In fiscal 2003,  2002, and 2001, one purchaser  accounted for 28%, 24%, and 39%,
respectively,  of revenues.  At March 31,  2003,  accounts  receivable  from the
purchaser was approximately 25% of accrued oil and gas sales.

NOTE H - OIL AND GAS COSTS

The costs related to the oil and gas  activities of the Company were incurred as
follows:

                                            Year ended March 31,
                                   --------------------------------------
                                      2003          2002          2001
                                   ----------    ----------    ----------
     Property acquisition costs
        Proved                     $   64,090    $  649,021    $  267,589
        Unproved                   $  673,690    $  280,745    $  177,305
     Exploration costs             $   55,543    $   46,907    $   34,995
     Development costs             $  990,106    $1,353,553    $  456,404

     The Company had the following  aggregate  capitalized costs relating to the
     Company's oil and gas property activities at March 31:

<TABLE>
<CAPTION>
                                             2003            2002            2001
                                         ------------    ------------    ------------
<S>                                      <C>             <C>             <C>
     Proved oil and gas properties       $ 14,596,072    $ 13,462,406    $ 11,309,873
     Unproved oil and gas properties:
         subject to amortization              387,166         424,392         248,107
         not subject to amortization
         (acquired in 2003)                   673,690              --              --
                                         ------------    ------------    ------------
                                           15,656,928      13,886,798      11,557,980
     Less accumulated depreciation,
       depletion, and amortization          8,637,902       7,999,539       7,555,356
                                         ------------    ------------    ------------
                                         $  7,019,026    $  5,887,259    $  4,002,624
                                         ============    ============    ============
</TABLE>

     The costs of a certain oil and gas lease that the Company has acquired, but
     not evaluated has been excluded in computing  amortization of the full cost
     pool.  The Company will begin to amortize this property when the project is
     evaluated,  which is currently  estimated to be within the following  year.
     Costs  excluded  from  amortization  at March 31, 2003 total  $673,690.  No
     impairment exists for this property at March 31, 2003.

     Depreciation,  depletion,  and amortization  amounted to $5.64,  $4.49, and
     $3.65 per  equivalent  barrel of  production  for the years ended March 31,
     2003, 2002, and 2001, respectively.

NOTE I - STOCKHOLDERS' EQUITY

In fiscal 2001,  the board of directors  authorized the purchase of up to 25,000
shares of the Company's  common stock.  For fiscal 2002,  the board of directors
has authorized  the use of up to $250,000 to repurchase  shares of the Company's
common stock.  During fiscal 2001, the Company  repurchased 13,160 shares, at an
aggregate cost of $84,934.  During fiscal 2002, the Company  repurchased  22,533
shares, at an aggregate cost of $91,231. Of such shares, 18,400 were reissued in
exchange  for oil and gas lease  rights  representing  368 net  acres  valued at
$83,000.  The remaining  4,133 shares along with the 11,254 shares of stock held
in the treasury account from

                                       28
<PAGE>

fiscal year ending March 31, 2001 were  cancelled.  On February  28,  2002,  the
Company  distributed  160,566  shares of common stock in  connection  with a 10%
stock  dividend.  As a result of the stock  dividend,  par value of  outstanding
common stock was increased by $80,283,  additional paid-in capital was increased
by $722,548,  and retained  earnings was decreased by $802,831.  In fiscal 2003,
the board of directors authorized the use of up to $250,000 to repurchase shares
of the Company's  common  stock.  During  fiscal 2003,  the Company  repurchased
30,244 shares at an aggregate cost of $127,536 for the treasury account.

NOTE J - STOCK OPTIONS AND WARRANTS

The Company  adopted an employee  incentive  stock plan effective  September 15,
1997.  Under the plan,  350,000 shares are available for  distribution.  Awards,
granted  at the  discretion  of the  compensation  committee  of  the  Board  of
Directors,  include stock options of restricted  stock.  Stock options may be an
incentive  stock  option or a  nonqualified  stock  option.  Options to purchase
common  stock under the plan are granted at the fair market  value of the common
stock at the date of  grant,  become  exercisable  to the  extent  of 25% of the
shares optioned on each of four  anniversaries of the date of grant,  expire ten
years  from the date of grant,  and are  subject  to  forfeiture  if  employment
terminates.  Restricted stock awards may be granted with a condition to attain a
specified  goal.  The  purchase  price  will be at  least  $5.00  per  share  of
restricted stock. The awards of restricted stock must be accepted within 60 days
and will vest as determined by agreement.  Holders of restricted  stock have all
rights of a shareholder of the Company.

During fiscal 2003,  options for 51,000 shares were  granted.  Of these,  20,000
options were granted to contract consultants.  The exercise price of all options
granted  equaled or exceeded the market price of the stock on the date of grant.
Also during fiscal 2003, warrants for 107,500 shares were issued pursuant to the
Falcon Bay Exploration Agreement.

Additional  information  with respect to the Plan's  stock  option  activity for
options issued to employees and directors is as follows:

                                                              Weighted
                                                 Number        Average
                                               of Shares    Exercise Price
                                               ----------     ----------
     Options outstanding, at April 1, 2000        140,000     $     6.27
       Granted                                     30,000           6.75
       Exercised                                       --             --
       Forfeited                                       --             --
                                               ----------     ----------
     Options outstanding, at March 31, 2001       170,000     $     6.49
       Granted                                     20,000           4.00
       Exercised                                       --             --
       Forfeited                                  (40,000)          6.81
                                               ----------     ----------
     Options outstanding, at March 31, 2002       150,000           6.07
       Granted                                     31,000           4.00
       Exercised                                       --             --
       Forfeited                                       --             --
                                               ----------     ----------
     Options outstanding, at March 31, 2003       181,000     $     5.71
                                               ==========     ==========

     Options exercisable at March 31, 2001         52,500     $     6.82
     Options exercisable at March 31, 2002         72,500     $     6.57
     Options exercisable at March 31, 2003        110,000     $     6.40

Weighted average grant date fair value of stock options granted to

                                       29
<PAGE>

employees and directors  during fiscal 2003,  2002, and 2001 were $3.72,  $1.30,
and  $2.33,  respectively.   These  values  were  determined  using  a  Binomial
option-pricing  model.  The model values options based on the stock price at the
grant date,  the expected life of the option,  the  estimated  volatility of the
stock, the expected dividend payments,  and the risk-free interest rate over the
expected  life of the option.  The Company  considers  the  binomial  model more
accurate than the  Black-Scholes  model,  in that it  recognizes  the ability to
exercise  before  expiration  once an  option  is  vested,  and began to use the
Binomial model in fiscal 2001. The assumptions  used in the Binomial models were
as follows for stock options granted in fiscal 2003, 2002 and 2001:

                                    2003         2002        2001
                                  --------     --------    --------
     Expected volatility           134.07%       27.24%       29.86%
     Expected dividend yield         0.00%        0.00%        0.00%
     Risk-free rate of return        5.40%        4.79%        5.25%
     Expected life of options      7 years      7 years     10 years


     The option  valuation  models were developed for use in estimating the fair
     value of traded  options  that have no vesting  restrictions  and are fully
     transferable.  In addition,  option  valuation  models require the input of
     highly subjective assumptions including expected stock price volatility.

     The following  tables  summarize  information  about employee and directors
     stock options outstanding and exercisable at March 31, 2003:

                            Stock Options Outstanding

                                          Weighted Average
                         Number of            Remaining           Weighted
        Range of          Shares             Contractual           Average
     Exercise Prices    Outstanding         Life in Years       Exercise Price
     ---------------    -----------         -------------       --------------
        $7.50-$7.75          50,000              5.55               $7.60
        $6.75                20,000              7.81               $6.75
        $5.25                60,000              6.97               $5.25
        $4.00                51,000              8.87               $4.00
                        -----------
                            181,000

                            Stock Options Exercisable

                                      Number of               Weighted
        Range of                       Shares                  Average
     Exercise Prices                 Exercisable            Exercise Price
     ---------------                 -----------            --------------
        $7.50-$7.75                     50,000                   $7.60
        $6.75                           10,000                   $6.75
        $5.25                           45,000                   $5.25
        $4.00                            5,000                   $4.00


     Since the Company  applies the intrinsic value method in accounting for its
     employee stock options,  it generally  records no compensation cost for its
     stock option awards to employees. The Company recognizes

                                       30
<PAGE>

     expense  related to stock options  awarded to independent  consultants  and
     contractors based on fair value of the options at date of grant. Additional
     information  with respect to stock option and warrant  activity for options
     and warrants granted to outside consultants and contractors is as follows:

                                                              Weighted
                                                 Number        Average
                                               of Shares   Exercise Price
                                               ----------    ----------
     Options outstanding, at April 1, 2000         40,000    $     6.44
       Granted                                     30,000          6.75
       Exercised                                       --            --
       Forfeited                                       --            --
                                               ----------    ----------
     Options outstanding, at March 31, 2001        70,000    $     6.57
       Granted                                     10,000          4.00
       Exercised                                       --            --
       Forfeited                                       --    $       --
                                               ----------    ----------
     Options outstanding, at March 31, 2002        80,000          6.25
       Granted                                    127,500          4.84
       Exercised                                       --            --
       Forfeited                                       --            --
                                               ----------    ----------
     Options outstanding, at March 31, 2003       207,500    $     5.39
                                               ==========    ==========
     Options exercisable at March 31, 2001         15,000    $     6.83
     Options exercisable at March 31, 2002         32,500    $     6.69
     Options exercisable at March 31, 2003        160,000    $     5.50

     Weighted  average  grant  date fair  value of stock  options  and  warrants
     granted to outside  consultants and contractors  during fiscal 2003,  2002,
     and 2001 were $1.16,  $1.26,  and $2.33,  respectively.  These  values were
     determined using a Binomial  option-pricing model. The model values options
     based on the  stock  price at the  grant  date,  the  expected  life of the
     option,  the  estimated  volatility  of the stock,  the  expected  dividend
     payments,  and the  risk-free  interest  rate over the expected life of the
     option.  The  assumptions  used in the Binomial  models were as follows for
     stock options granted in fiscal 2003, 2002 and 2001:

                                    2003         2002         2001
                                  --------     --------     --------
     Expected volatility            90.09%       27.23%       29.86%
     Expected dividend yield         0.00%        0.00%        0.00%
     Risk-free rate of return        2.39%        4.52%        5.25%
     Expected life of options      3 years      7 years     10 years

     The option  valuation  models were developed for use in estimating the fair
     value of traded  options  that have no vesting  restrictions  and are fully
     transferable.  In addition,  option  valuation  models require the input of
     highly subjective assumptions including expected stock price volatility.

The  following  tables  summarize  information  about  outside  consultants  and
contractors stock options and warrants  outstanding and exercisable at March 31,
2003:

                                       31
<PAGE>

                       Stock Options/Warrants Outstanding


                                          Weighted Average
                         Number of            Remaining           Weighted
        Range of          Shares             Contractual           Average
     Exercise Prices    Outstanding         Life in Years       Exercise Price
     ---------------    -----------         -------------       --------------
       $7.50-$7.75           20,000              5.46                $7.63
       $6.75                 30,000              7.81                $6.75
       $5.25                 20,000              6.97                $5.25
       $5.00                107,500              1.68                $5.00
       $4.00                 30,000              8.96                $4.00
                        -----------
                            207,500

                       Stock Options/Warrants Exercisable

                                      Number of               Weighted
        Range of                       Shares                  Average
     Exercise Prices                 Exercisable            Exercise Price
     ---------------                 -----------            --------------
       $7.50-$7.75                      20,000                   $7.63
       $6.75                            15,000                   $6.75
       $5.25                            15,000                   $5.25
       $5.00                           107,500                   $5.00
       $4.00                             2,500                   $4.00

     The  Company  recognizes  expense  related  to  stock  options  awarded  to
     independent  consultants  based  on fair  value of the  options  at date of
     grant.  Total expense  related to these awards for fiscal 2003 was $61,522.
     The fair value of the warrants  are  capitalized  as part of the  leasehold
     cost of the  acreage  acquired  in  connection  with  the  issuance  of the
     warrants.

NOTE K - RELATED PARTY TRANSACTIONS

The Company  served as operator of properties in which the majority  stockholder
had interests and billed the majority  stockholder for lease operating  expenses
and shared office  expenditures on a monthly basis subject to usual trade terms.
The billings totaled $43,827 and $37,884 for the years ended March 31, 2002, and
2001,  respectively.  All of such properties were sold in October 2001. The only
related  party  transactions  for the year ended March 31, 2003 relate to shared
office expenditures. The total billed for year ended March 31, 2003 was $10,016.

Effective  January 1, 2000,  the  Company  entered  into an  agreement  with the
husband  of an  officer  and  director  of the  Company  to  provide  geological
consulting services. Amounts paid under this contract were $19,251, $23,627, and
$25,787 for the years ended March 31, 2003, 2002, and 2001, respectively.

During the year ending March 31, 2003, a member of the Board of Directors  and a
Company  employee  entered into an agreement  with Falcon Bay,  LLC,  whereby he
receives a  commission  from  Falcon  Bay  Operating,  LLC for any  transactions
consummated  between Falcon Bay Operating,  LLC and the Company in the course of
the Exploration Agreement.

During  the  year  ending  March  31,  2002,   the  Company   entered  into  two
transactions,  respectively,  with a Company  director  and employee and a trust
related  to but not  controlled  by said  director  and  employee.  In the first
transaction, the Company purchased oil and gas lease rights representing 369 net
acres for cash consideration of $83,000. In the second transaction,  the Company
exchanged 18,400 shares of its $.50 par value common stock for oil and gas lease
rights representing 368 net acres

                                       32
<PAGE>

with a value of approximately $83,000. Such acreage is available for exploration
and production of oil and gas.

NOTE L - OIL AND GAS RESERVE DATA (UNAUDITED)

The  estimates of the Company's  proved oil and gas reserves,  which are located
entirely  within  the  United  States,  were  prepared  in  accordance  with the
guidelines established by the Securities and Exchange Commission and FASB. These
guidelines  require that reserve  estimates be prepared under existing  economic
and  operating  conditions  at year-end,  with no  provision  for price and cost
escalators, except by contractual agreement. The estimates as of March 31, 2003,
2002, and 2001 are based on evaluations  prepared by Joe C. Neal and Associates,
Petroleum Consultants.

Management  emphasizes that reserve  estimates are inherently  imprecise and are
expected  to  change  as new  information  becomes  available  and  as  economic
conditions in the industry  change.  The following  estimates of proved reserves
quantities  and related  standardized  measure of  discounted  net cash flow are
estimates only, and do not purport to reflect  realizable  values or fair market
values of the Company's reserves.

CHANGES IN PROVED RESERVE QUANTITIES (UNAUDITED):

<TABLE>
<CAPTION>
                                     2003                              2002                              2001
                         -----------------------------     -----------------------------     -----------------------------
                             Bbls             Mcf              Bbls             Mcf              Bbls             Mcf
                         ------------     ------------     ------------     ------------     ------------     ------------
<S>                      <C>              <C>              <C>              <C>              <C>              <C>
Proved reserves,
    beginning of year         237,000       10,182,000          235,000        6,345,000          139,000        4,755,000
Revision of previous
    estimates                 (66,000)      (1,746,000)         (70,000)      (1,204,000)         (15,000)         (10,000)
Purchase of minerals
    in place                       --           22,000           55,000        2,864,000          108,000        1,706,000
Extensions and
    discoveries                 2,000           12,000           38,000        2,644,000           21,000          398,000
Production                    (23,000)        (539,000)         (21,000)        (467,000)         (18,000)        (504,000)
Sales of minerals
    in place                       --               --               --               --               --               --
                         ------------     ------------     ------------     ------------     ------------     ------------
Proved reserves,
    end of year               150,000        7,931,000          237,000       10,182,000          235,000        6,345,000
                         ============     ============     ============     ============     ============     ============

<CAPTION>
PROVED DEVELOPED RESERVES (UNAUDITED):
<S>                      <C>              <C>              <C>              <C>              <C>              <C>
Beginning of year             144,000        5,159,000          235,000        6,337,000          139,000        4,755,000
End of year                    94,000        4,518,000          144,000        5,159,000          235,000        6,337,000
</TABLE>

STANDARDIZED  MEASURE OF  DISCOUNTED  FUTURE NET CASH FLOWS  RELATING  TO PROVED
RESERVES (UNAUDITED):

<TABLE>
<CAPTION>
                                                          March 31,
                                       ----------------------------------------------
                                           2003             2002             2001
                                       ------------     ------------     ------------
<S>                                    <C>              <C>              <C>
Future cash inflows                    $ 49,820,000     $ 36,005,000     $ 40,179,000
Future production and
   development costs                    (13,284,000)     (12,217,000)      (9,988,000)
Future income taxes (a)                  (8,444,000)      (5,228,000)      (7,182,000)
                                       ------------     ------------     ------------
Future net cash flows                    28,092,000       18,560,000       23,009,000
Annual 10% discount for
   estimated timing of cash flows       (12,120,000)      (9,256,000)     (10,824,000)
                                       ------------     ------------     ------------
Standardized measure of
   discounted future net cash flows    $ 15,972,000     $  9,304,000     $ 12,185,000
                                       ============     ============     ============
</TABLE>

(a)  Future  income taxes are computed  using  effective tax rates on future net
     cash  flows  before  income  taxes  less  the tax  bases of the oil and gas
     properties and effects of statutory depletion.

                                       33
<PAGE>

CHANGES IN STANDARIZED  MEASURE OF DISCOUNTED  FUTURE NET CASH FLOWS FROM PROVED
RESERVES (UNAUDITED):

<TABLE>
<CAPTION>
                                                           Year ended March 31,
                                             ----------------------------------------------
                                                 2003             2002             2001
                                             ------------     ------------     ------------
<S>                                          <C>              <C>              <C>
Sales of oil and gas produced,
       net of production costs               $ (1,833,000)    $ (1,120,000)    $ (2,566,000)
Net changes in price and production costs      12,946,000       (7,145,000)       5,104,000
Changes in previously estimated
       development costs                          512,000          (59,000)         (20,000)
Revisions of quantity estimates                (5,103,000)      (1,862,000)        (148,000)
Net change due to purchases and sales of
       minerals in place                           77,000        3,685,000        5,939,000
Extensions and discoveries,
       less related costs                          87,000        2,121,000          975,000
Net change in income taxes                     (2,180,000)       1,183,000       (2,567,000)
Accretion of discount                           1,193,000        1,599,000          614,000
Changes in timing of estimated cash
       flows and other                            969,000       (1,283,000)         (54,000)
                                             ------------     ------------     ------------
Changes in standardized measure                 6,668,000       (2,881,000)       7,277,000

Standardized measure, beginning of year         9,304,000       12,185,000        4,908,000
                                             ------------     ------------     ------------

Standardized measure, end of year            $ 15,972,000     $  9,304,000     $ 12,185,000
                                             ============     ============     ============
</TABLE>

ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
          FINANCIAL DISCLOSURES

          None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The  information   required  regarding  Directors  of  the  Registrant  and
compliance  with  Section  16(a)  of the  Securities  Exchange  Act of  1934  is
incorporated by reference to the Company's  Information Statement for its Annual
Meeting of Stockholders,  which will be filed with the Commission not later than
July 30, 2003.

     Pursuant to Item 401(b) of Regulation S-K, the information required by this
item with respect to executive officers of the Company is set forth in Part I of
this report.

ITEM 11. EXECUTIVE COMPENSATION

     The information required in this item is incorporated by reference from the
Company's  Information  Statement for its Annual Meeting of Stockholders,  which
will be filed with the Commission not later than July 30, 2003.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information required in this item is incorporated by reference from the
Company's  Information  Statement for its Annual Meeting of Stockholders,  which
will be filed with the Commission not later than July 30, 2003.

                                       34
<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required in this item is incorporated by reference from the
Company's  Information  Statement for its Annual Meeting of Stockholders,  which
will be filed with the Commission not later than July 30, 2003.

ITEM 14.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

     In  September  2002,  the Board of Directors  adopted a policy  designed to
establish  disclosure  controls  and  procedures  that are  adequate  to provide
reasonable assurance that we will be able to collect,  process and disclose both
financial and  non-financial  information,  on a timely basis, in our reports to
the SEC and other communications with our stockholders.  Disclosure controls and
procedures include all processes  necessary to ensure that material  information
is  recorded,  processed,  summarized  and  reported  within  the  time  periods
specified in the SEC's rules and form, and is accumulated  and  communicated  to
our management,  including our chief executive and chief financial officers,  to
allow timely decisions regarding required disclosures.

     With respect to our disclosure controls and procedures:

     o    We have evaluated the  effectiveness  of our  disclosure  controls and
          procedures within 90 days prior to the filing of this report;

     o    This  evaluation  was  conducted  under the  supervision  and with the
          participation  of our  management,  including our chief  executive and
          chief financial officers; and

     o    It is the  conclusion  of our  chief  executive  and  chief  financial
          officers that these  disclosure  controls and procedures  operate such
          that material  information  flows to the  appropriate  collection  and
          disclosure  points in a timely  manner and are  effective  in ensuring
          that material  information  is  accumulated  and  communicated  to our
          management  and  is  made  known  to the  chief  executive  and  chief
          financial  officers,  particularly  during  the  period in which  this
          report  was  prepared,   as  appropriate  to  allow  timely  decisions
          regarding required disclosures.

Changes in Internal Controls

     There were no significant  changes in internal controls or in other factors
that could  significantly  affect internal  controls  subsequent to the date the
controls were evaluated. No significant deficiencies or material weaknesses were
identified  in  the  evaluation  of  our  internal  controls  and  therefore  no
corrective actions have been taken.

                                     PART IV
                                     -------

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a)  1. and 2. Financial Statements and Schedules.

     See "Index to  Consolidated  Financial  Statements"  set forth in Item 8 of
this Form 10-K.

                                       35
<PAGE>

     No schedules  are required to be filed because of the absence of conditions
under which they would be required or because the  required  information  is set
forth in the financial statements or notes thereto referred to above.

          (a) 3. Exhibits.

Exhibit
Number
------

   3.1    Articles of Incorporation  (incorporated by reference to the Company's
          Annual Report on Form 10-K dated June 24, 1998).

   3.2    Bylaws adopted December 5, 2002.

  10.1    Stock  Option Plan  (incorporated  by  reference  to the  Amendment to
          Schedule 14C Information Statement filed on August 13, 1997).

  10.2    Bank Line of Credit (incorporated by reference to the Company's Annual
          Report on Form 10-K dated June 24, 1998).

    21    Subsidiaries  of  the  Company   (incorporated  by  reference  to  the
          Company's Annual Report on Form 10-K dated June 24, 1998).

  99.1    Certification  Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002.

  99.2    Certification  Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002.

          (b)  Reports on Form 8-K.

               A report on Form 8-K,  dated  December 5, 2002,  was filed by the
          Company for the year ended March 31, 2003 under Item 5. Other Events.

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange  Act of 1934,  the  Company has duly caused this report to be signed on
behalf of the undersigned thereunto duly authorized.

                                       MEXCO ENERGY CORPORATION

                                       Registrant

                                       By: /s/ Nicholas C. Taylor
                                           -------------------------------
                                           Nicholas C. Taylor
                                           President and Chief Executive Officer

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report has been signed below as of June 26, 2003,  by the  following  persons on
behalf of the Company and in the capacity indicated.

/s/ Nicholas C. Taylor
----------------------------------
    Nicholas C. Taylor
    President, Chief Executive Officer
    and Director

/s/ Donna Gail Yanko
----------------------------------
    Donna Gail Yanko
    Vice President, Operations
    and Director

/s/ Tamala L. McComic
----------------------------------
    Tamala L. McComic
    Vice President, Treasurer
    and Assistant Secretary

/s/ Thomas Graham, Jr.
----------------------------------
    Thomas Graham, Jr.
    Chairman of the Board of Directors

                                       36
<PAGE>

/s/ Thomas R. Craddick
----------------------------------
    Thomas R. Craddick
    Director

/s/ William G. Duncan, Jr.
----------------------------------
    William G. Duncan, Jr.
    Director

/s/ Arden Grover
----------------------------------
    Arden Grover
    Director

/s/ Jack D. Ladd
----------------------------------
    Jack D. Ladd
     Director

                                       37
<PAGE>

I, Nicholas C. Taylor, certify that:

1.   I  have   reviewed  this  annual  report  on  Form  10-K  of  Mexco  Energy
     Corporation;

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

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

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

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

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

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

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

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

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

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

June 26, 2003                           /s/ Nicholas C. Taylor
                                        ------------------------------
                                        Nicholas C. Taylor
                                        President

                                       38
<PAGE>

I, Tamala L. McComic, certify that:

1.   I  have   reviewed  this  annual  report  on  Form  10-K  of  Mexco  Energy
     Corporation;

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

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

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

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

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

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

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

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

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

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

June 26, 2003                           /s/ Tamala L. McComic
                                        ------------------------------
                                        Tamala L. McComic
                                        Vice President, Treasurer,
                                        and Assistant Secretary

                                       39
<PAGE>

                                INDEX TO EXHIBITS

Exhibit
Number         Exhibit                                                Page
------         -----------------------------------                    ----
   3.1*        Articles of Incorporation.
   3.2***      Bylaws.
  10.1**       Stock Option Plan.
  10.2*        Bank Line of Credit.
    21*        Subsidiaries of the Company.
  99.1***      Certification  Pursuant  to 18 U.S.C.  Section  1350,  as adopted
               pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  99.2***      Certification  Pursuant  to 18 U.S.C.  Section  1350,  as adopted
               pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*    Incorporated by reference to the Company's Annual Report on Form 10-K dated
     June 24, 1998.
**   Incorporated  by  reference to the  Amendment  to Schedule 14C  Information
     Statement filed on August 13, 1998.
***  Filed with the Company's Annual Report on Form 10-K dated June 26, 2003.

                                       40
<PAGE>