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, 2002 Commission File No. 0-6694

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

            COLORADO                                            84-0627918
  (State or other jurisdiction                                 (IRS Employer
of incorporation or organization)                         Identification Number)

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

       Registrant's telephone number, including area code: (915) 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 [X] 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 25, 2002, the aggregate market value of the registrant's  common
stock  held by  non-affiliates  (using  the  closing  bid  price of  $6.00)  was
approximately $3,234,264.

     The number of shares  outstanding  of the  registrant's  common stock as of
June 25, 2002 was 1,739,622.

                       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 8, 2002. Such Information  Statement will be filed with the Commission
not later than July 30, 2002.

<PAGE>

                                TABLE OF CONTENTS

                                     PART 1
                                     ------

Item 1.    Business .........................................................  3
Item 2.    Properties .......................................................  6
Item 3.    Legal Proceedings ................................................  9
Item 4.    Submission of Matters to a Vote of Security Holders ..............  9

                                     PART II

Item 5.    Market for the Registrant's Common Equity and Related
           Stockholder Matters .............................................. 10
Item 6.    Selected Financial Data .......................................... 10
Item 6A.   Selected Quarterly Financial Data ................................ 11
Item 7.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations .............................. 11
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk ....... 14
Item 8.    Financial Statements and Supplementary Data ...................... 15
Item 9.    Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosures ............................. 30

                                    PART III

Item 10.   Directors and Executive Officers of the Registrant ............... 30
Item 11.   Executive Compensation ........................................... 30
Item 12.   Security Ownership of Certain Beneficial Owners and Management ... 30
Item 13.   Certain Relationships and Related Transactions ................... 31

                                     PART IV

Item 14.   Exhibits, Financial Statement Schedules and Reports on Form 8-K .. 31
Signatures .................................................................. 32

                                        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  continues  to  focus on the
exploration for and development of natural gas and crude oil 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, 2002,  gas reserves  constituted  approximately  88% of the
Company's total proved reserves and approximately 74% of the Company's  revenues
for fiscal  2002.  Revenues  from oil and gas royalty  interests  accounted  for
approximately 19% of the Company's revenues for fiscal 2002.

     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 3% of the Company's  discounted  future net cash flows from proved
reserves  as of March  31,  2002,  and for  fiscal  2002,  approximately  22% of
revenues and 14% 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 13% of the Company's  discounted future net cash flows from proved
reserves  as of March  31,  2002,  and for  fiscal  2002,  approximately  14% of
revenues and 7% of production costs.

     EL CINCO GAS FIELD properties,  encompassing  1,873 gross acres,  1,349 net
acres, with 6 producing wells at this time in Pecos County,  Texas,  account for
approximately 61% of the Company's discounted future

                                        3
<PAGE>

net cash flows from proved  reserves as of March 31,  2002.  This is a multi-pay
area where most of the leases  have  potential  reserves  in two zones.  Of this
amount  approximately 44% 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 19  producing  wells and four
shut-in  wells.  The Company  owns  partial  interests  in an  additional  1,559
producing wells located in the states of Texas, New Mexico, Oklahoma, Louisiana,
Arkansas,   Wyoming,  Kansas,  Colorado,  Alabama,  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)
                  ----                   ---------    --------
                  2002 ...............      21,139     467,013
                  2001 ...............      18,545     503,773
                  2000 ...............      19,334     540,793
                  1999 ...............      49,573     482,948
                  1998 ...............      63,800     432,343

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 with significantly larger financial and other resources.
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:

                                                         2002     2001     2000
                                                         ----     ----     ----
Sid Richardson Energy Services, Co.
  (formerly Koch Midstream Services Company)              24%      39%      35%

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

                                        4
<PAGE>

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
and there is no assurance that the less stringent  regulatory  approach recently
pursued by FERC,  Congress and the states will  continue  indefinitely  into the
future.

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.  The
Company believes it is in compliance,  in all material respects, with applicable
environmental  requirements.  Although future environmental  obligations are not
expected to have a material  impact on the results of  operations  or  financial
condition of the Company,  there can be no assurance  that future  developments,
such as increasingly  stringent  environmental laws or enforcement thereof, will
not cause the Company to incur material environmental liabilities or costs.

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, 2002,  the Company had one  full-time  and three  part-time
employees. The Company believes that relations with these

                                        5
<PAGE>

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, 2002, 2001 and 2000 are based on evaluations  prepared
by Joe C. Neal and Associates, Petroleum Consultants. For information concerning
costs incurred by the 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.

     In estimating  reserves as of March 31, 2002,  average prices of $23.00 per
barrel for oil and $3.00 per mcf (thousand cubic feet) for gas were used,  which
were the  average  actual  prices  in  effect  on that  date  for the  Company's
production.  For the  years  ending  March  2001  and 2000  the  prices  used in
estimating  reserves  were  $24.42  and  $27.74 per barrel for oil and $5.43 and
$2.47 per mcf (thousand cubic feet) for gas, respectively.

     The Company filed form 8-K on May 23, 2002  disclosing  oil and gas reserve
estimates.  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,
                                            --------------------------------------------
                                                2002            2001            2000
                                            ------------    ------------    ------------
Oil (Bbls):
<S>                                         <C>             <C>             <C>
     Proved developed - Producing                143,003         145,954         138,839
     Proved developed - Non-producing              1,404          88,700              --
     Proved undeveloped                           92,900              --              --
                                            ------------    ------------    ------------
         Total                                   237,307         234,654         138,839
                                            ============    ============    ============

                                        6
<PAGE>

<CAPTION>
Natural gas (Mcf):
<S>                                         <C>             <C>             <C>
     Proved developed - Producing              3,822,715       4,447,379       4,165,396
     Proved developed - Non-producing          1,336,190       1,889,833         589,951
     Proved undeveloped                        5,023,328           8,234              --
                                            ------------    ------------    ------------
         Total                                10,182,233       6,345,446       4,755,347
                                            ============    ============    ============

Present value of estimated future
     net revenues before income taxes       $ 11,925,260    $ 15,988,820    $  6,144,644
                                            ============    ============    ============
</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  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, 2002:

                                              Gross        Net
                                             --------    --------
                Oil ......................      1,263          14
                Gas ......................        315          10
                                             --------    --------
                Total Productive Wells ...      1,578          24
                                             ========    ========

     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, 2002 material undeveloped acreage owned by
the Company was  approximately  12,070 gross and 2,643 net acres all of which is
in the state of Texas.

                                        7
<PAGE>

     The following table sets forth the approximate  developed  acreage in which
the Company held a leasehold mineral or other interest at March 31, 2002.

                                                         Developed Acres
                                                      ---------------------
                                                       Gross         Net
                                                      ---------------------
     Texas ......................................      111,275        3,629
     New Mexico .................................       16,514          145
     North Dakota ...............................       23,999           18
     Louisiana ..................................       21,961           28
     Oklahoma ...................................       38,202          126
     Montana ....................................        7,508            4
     Kansas .....................................        7,240           21
     Wyoming ....................................        1,798            4
     Colorado ...................................        1,040            1
     Alabama ....................................          320            1
     Arkansas ...................................          320           --
                                                      --------     --------
     Total ......................................      230,177        3,977
                                                      ========     ========

DRILLING ACTIVITIES

     The following table sets forth the drilling activity of the Company for the
years ended March 31, 2002, 2001 and 2000.

                                               Years ended March 31,
                                   ---------------------------------------------
                                        2002            2001            2000
                                   -------------   -------------   -------------
                                   Gross     Net   Gross     Net   Gross     Net
                                   -----    ----   -----    ----   -----    ----
Exploratory Wells
     Productive                        2     .01       1     .08       1     .01
     Nonproductive                     1     .09       2     .48      --      --
                                    ----    ----    ----    ----    ----    ----
         Total                         3     .10       3     .56       1     .01
                                    ====    ====    ====    ====    ====    ====
Development Wells
     Productive                       12     .13       1     .02       1      .6
     Nonproductive                    --      --      --      --      --      --
                                    ----    ----    ----    ----    ----    ----
         Total                        12     .13       1     .02       1      .6
                                    ====    ====    ====    ====    ====    ====

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, 2002, 2001 and 2000.

<TABLE>
<CAPTION>
                                                        Years ended March 31,
                                            --------------------------------------------
                                                2002            2001            2000
                                            ------------    ------------    ------------
<S>                                         <C>             <C>             <C>
Oil (a):
    Production (Bbls)                             21,139          18,545          19,334
    Revenue                                 $    456,108    $    531,751    $    416,405
    Average Bbls per day                              58              51              53
    Average sales price per Bbl             $      21.58    $      28.67    $      21.54
Gas (b):
    Production (Mcf)                             467,013         503,773         540,793
    Revenue                                 $  1,312,452    $  2,560,459    $  1,262,556
    Average Mcf per day                            1,279           1,380           1,478
    Average sales price per Mcf             $       2.81    $       5.08    $       2.33
Production cost:
    Production cost                         $    648,820    $    526,032    $    542,789
    Equivalent Bbls (c)                           98,975         102,507         109,466
    Production cost per equivalent Bbl      $       6.56    $       5.13    $       4.96
    Production cost per sales dollar        $       0.37    $       0.17    $       0.32
Total oil and gas revenues                  $  1,768,560    $  3,092,210    $  1,678,961
</TABLE>

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

                                       8
<PAGE>

ITEM 3.   LEGAL PROCEEDINGS

     The  Company  is a  plaintiff  in two class  action  lawsuits  against  gas
purchasers  involving  contract price disputes.  The Company does not expect any
expenses of a material  nature to arise from these class action  claims.  One of
these  lawsuits  has been settled with a judgment in the  Company's  favor.  The
exact settlement amount is being calculated and is estimated to be approximately
$150,000 net to the Company. The second lawsuit, in which the Company is a named
plaintiff is still pending.  No amounts have been accrued for these items in the
Company's consolidated financial statements for the year ended March 31, 2002.

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, 2002.

EXECUTIVE OFFICERS OF THE REGISTRANT

     The following table sets forth certain information concerning the executive
officers of the Company as of March 31, 2002.

       Name             Age                         Position
------------------      ---      -----------------------------------------------
Nicholas C. Taylor       64      President and Chief Executive Officer
Donna Gail Yanko         57      Vice President and Corporate Secretary
Tamala L. McComic        33      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.

                                        9
<PAGE>

                                     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, 2002 the Company had 1,402 shareholders of
record and 1,766,566 shares outstanding.

                           PRICE RANGE OF COMMON STOCK

                                                              Bid Price
                                                        ----------------------
                                                          High           Low
                                                        --------      --------
      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
      2001:  (1)
             April - June 2000                           4.875         4.375
             July - September 2000                       4.5625        4.50
             October - December 2000                     6.375         4.5625
             January - March 2001                        6.75          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 25, 2002, the bid price was $6.00.

     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,
                                  --------------------------------------------------------------------------------
                                      2002             2001             2000             1999             1998
                                  --------------------------------------------------------------------------------
<S>                               <C>              <C>              <C>              <C>              <C>
Statement of Operations:
Operating revenues                $  1,778,583     $  3,099,966     $  1,686,266     $  1,510,005     $  2,106,338
Operating income (loss)                252,101        1,881,776          498,384         (281,099)      (1,558,335)
Other income (expense)                 (54,706)         (92,160)        (104,737)        (144,675)        (134,891)
Net income (loss)                 $    189,291     $  1,539,458     $    393,647     $   (425,774)    $ (1,323,657)
Net income (loss) per
     share - basic (1)            $       0.11     $       0.86     $       0.22     $      (0.24)    $      (0.75)
Net Income (loss) per
     share - diluted (1)          $       0.11     $       0.86     $       0.22     $      (0.24)    $      (0.75)
Weighted average shares
     outstanding - basic (1)         1,768,314        1,784,825        1,785,618        1,785,618        1,754,227
Weighted average shares
     outstanding - diluted (1)       1,768,579        1,787,503        1,785,618        1,785,618        1,754,227

Balance Sheet:
Property and equipment, net       $  5,895,429     $  4,009,852     $  3,459,522     $  3,749,400     $  4,078,053
Total assets                         6,347,965        4,961,360        3,863,319        4,043,015        4,542,486
Total debt                           1,710,000          600,000        1,200,000        1,784,000        1,822,000
Stockholders' equity              $  4,276,042     $  4,046,452     $  2,567,228     $  2,173,581     $  2,599,355

Cash Flow:
Cash provided by operations       $    899,977     $  1,903,345     $    722,088     $    532,171     $  1,118,566

EBITDA (2)                        $    702,978     $  2,263,376     $    927,326     $    635,260     $  1,252,539
</TABLE>

                                       10
<PAGE>

(1)  Amounts have been  adjusted to reflect the 10% stock  dividend  effected on
     February 1, 2002.
(2)  EBITDA (as used herein) represents earnings before interest expense, income
     taxes, depreciation, depletion and amortization.  Management of the Company
     believes that EBITDA may provide additional information about the Company's
     ability  to  meet  its  future  requirements  for  debt  service,   capital
     expenditures  and working capital.  EBITDA is a financial  measure commonly
     used in the oil and gas industry and should not be  considered in isolation
     or as a  substitute  for net  income,  operating  income,  cash  flows from
     operating  activities  or  any  other  measure  of  financial   performance
     presented in accordance with generally accepted accounting principles or as
     a measure of the Company's profitability or liquidity.

ITEM 6A.  SELECTED QUARTERLY FINANCIAL DATA

<TABLE>
<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 (loss)                        $   48,988    $  (32,538)    $  (26,012)    $  198,852
Net income (loss) per share-basic(1)     $     0.03    $    (0.02)    $    (0.01)    $     0.11
Net income (loss per share-diluted(1)    $     0.03    $    (0.02)    $    (0.01)    $     0.11

                                                              FISCAL 2001
                                         ------------------------------------------------------
                                          4TH QTR       3RD QTR        2ND QTR        1ST QTR
                                         ----------    ----------     ----------     ----------
Net sales                                $  989,050    $  798,110     $  712,243     $  592,807
Gross profit                             $  839,481    $  662,781     $  562,402     $  501,514
Net income                               $  495,205    $  408,516     $  357,301     $  278,436
Net income per share-basic(1)            $     0.28    $     0.23     $     0.20     $     0.16
Net income per share-diluted(1)          $     0.28    $     0.23     $     0.20     $     0.16
</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 2002,  the Company  primarily  used cash  provided by  operations
($899,977) and borrowings on the line of credit ($1,160,000) to fund oil and gas
property acquisitions and development ($2,247,424).  Working capital as of March
31, 2002 was $347,204.  In February 2002, the Company  declared and issued a 10%
stock dividend  resulting in an additional  160,566 shares of stock issued. As a
result of the stock dividend, common stock increased $80,283, additional paid in
capital increased $722,548 and retained earnings decreased by $802,831 resulting
in a deficit of $206,286 in the retained earnings account at March 31, 2002. The
stock  dividend was issued  pursuant to  favorable  earnings for the year ending
March 31, 2001. There are no current plans to issue any further such dividends.

                                       11
<PAGE>

     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.

     On April 30, 2001,  the Company  acquired a 0.0164%  royalty  interest in a
producing  gas unit  containing  9,538  acres in Reagan and Upton  Counties  for
$12,500.

     In April 2001, the Company acquired  additional joint venture  interests in
properties  located in various  counties and states for  $174,000,  adjusted for
revenues and expenses from January 1, 2001,  the effective  date,  through April
29, 2001, date of closing.

     In May 2001,  the Company  acquired a 12.5%  working  interest(  9.375% net
revenue  interest)  in 9,412 acres in Edwards  County,  Texas for  approximately
$125,400.  The initial well drilled on this acreage by a third party operator at
an  approximate  cost  to the  Company  of  $129,000  was put on  production  in
mid-February,  2002. A six-mile gas pipeline was completed on this acreage at an
approximate cost to the Company of $25,000. The Company participated in drilling
a second  well at an  approximate  cost to the  company  of  $52,000,  which was
plugged and abandoned.  The Company  expects to participate in the drilling of a
third well in mid-July, 2002.

     In June 2001,  the Company  assumed  operations and acquired an approximate
88.35%  working  interest and 62.7285% net revenue  interest in a producing  gas
well in Hutchinson County, Texas for $36,860, adjusted for revenues and expenses
from April 1, 2001, the effective  date. The Company also acquired  non-operated
working  interests,  ranging  from  .8512% to 3.75% with net  revenue  interests
ranging from .6816% to 3.267%, in 21 producing and 7 inactive wells in Limestone
and Freestone Counties,  Texas for $200,000,  adjusted for revenues and expenses
from April 1, 2001, the effective date.

     In March 2002, the Company acquired 867.40 gross acres, 605.01 net acres in
Pecos  County,  Texas for  approximately  $107,000.  The Company had  possibly 5
re-entries  and  4  proven  undeveloped  drilling  locations  on  this  acreage.
Development of these  properties has begun in fiscal 2002. An engineering  study
by reservoir  engineers credit significant  proven undeveloped  reserves to this
acreage.

     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.

                                       12
<PAGE>

RESULTS OF OPERATIONS

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 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.

FISCAL 2001 COMPARED TO FISCAL 2000

     Oil and gas sales  increased from $1,678,961 in 2000 to $3,092,210 in 2001,
an increase of $1,413,249 or 84%.  This increase was primarily  attributable  to
the increase in oil and gas prices during the year,  offset in part by decreased
production.  The average oil price  increased  from $21.54 in 2000 to $28.67 per
bbl in 2001,  an  increase  of  $7.13  per bbl or 33%.  The  average  gas  price
increased  from $2.33 in 2000 to $5.08 per mcf in 2001, an increase of $2.75 per
mcf of 118%. Oil production decreased from 19,334 bbls in 2000 to 18,545 bbls in
2001, a decrease of 789 bbls or 4%. Gas production decreased from 540,793 mcf in
2000 to 503,773 mcf in 2001, a decrease of 37,020 mcf or 7%.

     Production  costs  decreased  from  $542,789 in 2000 to $526,032 in 2001, a
decrease of $16,757 or 3%.

     Depreciation, depletion and amortization decreased from $426,102 in 2000 to
$377,761  in 2001,  a decrease of $48,341 or 11%,  due  primarily  to  increased
reserves attributable to higher gas prices and property acquisitions.  There was
no impairment of oil and gas properties in fiscal 2000 or 2001.

     General and  administrative  expenses  increased  from  $218,991 in 2000 to
$314,397 in 2001,  an increase of $95,406 or 44%.  This  increase was  primarily
attributable to increased salaries and benefits ($40,700),  compensation related
to  stock  options  granted  to  consultants  ($24,700),   and  engineering  and
geological costs ($15,100), franchise taxes ($4,900) and a bad debt ($5,000).

                                       13
<PAGE>

     Interest  expense  decreased  from  $107,577 in 2000 to $95,999 in 2001,  a
decrease  of $11,578 or 11%.  This  decrease  was  primarily  attributable  to a
reduction in amounts borrowed during 2001.

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,  2002,  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 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 $17,100.

                                                Year ended March 31,
                                    --------------------------------------------
                                        2002            2003            2004
                                    ------------    ------------    ------------
Variable rate bank debt             $         --    $         --    $  1,710,000

     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,  2002 the
Company's  largest credit risk associated with any single purchaser was $33,706.
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. 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

                                       14
<PAGE>

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 2002, the Company's  pretax income would have changed by $211.
If the  average gas price had  increased  or  decreased  by one cent per mcf for
fiscal 2002, the Company's pretax income would have changed by $4,670.

     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.

     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,  fires,  releases of toxic  gases and other  environmental
hazards  and  risks,  any of which  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 ...................    16
    Consolidated Balance Sheets ..........................................    17
    Consolidated Statements of Operations ................................    18
    Consolidated Statements of Changes in Stockholders' Equity ...........    19
    Consolidated Statements of Cash Flows ................................    20
    Notes to Consolidated Financial Statements ...........................    21

                                       15
<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,  2002  and  2001 and the  related
consolidated statements of operations,  stockholders' equity, and cash flows for
each of the three years in the period  ended  March 31,  2002.  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,  2002 and 2001 and the  results of
their  operations and their cash flows for each of the three years in the period
ended March 31, 2002 in conformity with accounting principles generally accepted
in the United States of America.


GRANT THORNTON LLP

Oklahoma City, Oklahoma
May 24, 2002

                                       16
<PAGE>

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

                                                      2002             2001
                                                  ------------     ------------
ASSETS
   Current assets
      Cash and cash equivalents                   $     44,958     $    378,816
      Accounts receivable:
        Oil and gas sales                              229,257          489,217
        Trade                                           49,644            1,074
        Related parties                                    523            8,059
        Income taxes receivable                        104,030               --
      Prepaid costs and expenses                        24,124           74,342
                                                  ------------     ------------
          Total current assets                         452,536          951,508

   Property and equipment, at cost
      Oil and gas properties, using
        the full cost method                        13,886,798       11,557,980
      Other                                             28,781           23,600
                                                  ------------     ------------
                                                    13,915,579       11,581,580
      Less accumulated depreciation,
        depletion, and amortization                  8,020,150        7,571,728
                                                  ------------     ------------

          Property and equipment, net                5,895,429        4,009,852
                                                  ------------     ------------

                                                  $  6,347,965     $  4,961,360
                                                  ============     ============

LIABILITIES AND STOCKHOLDERS' EQUITY
   Current liabilities
      Accounts payable - trade                    $    105,332     $     77,776
      Income taxes payable                                  --           51,637
                                                  ------------     ------------
          Total current liabilities                    105,332          129,413

   Long-term debt                                    1,710,000          600,000

Deferred income tax liability                          256,591          185,495

   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 and 1,621,387 shares
        issued at March 31, 2002 and
        2001, respectively                             883,283          810,693
      Additional paid-in capital                     3,599,045        2,900,097
      Retained earnings (accumulated deficit)         (206,286)         407,254
      Treasury stock, at cost                               --          (71,592)
                                                  ------------     ------------

          Total stockholders' equity                 4,276,042        4,046,452
                                                  ------------     ------------

                                                  $  6,347,965     $  4,961,360
                                                  ============     ============

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

                                       17
<PAGE>

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

<TABLE>
<CAPTION>
                                                            2002             2001             2000
                                                        ------------     ------------     ------------
<S>                                                     <C>              <C>              <C>
Operating revenues:
   Oil and gas                                          $  1,768,560     $  3,092,210     $  1,678,961
   Other                                                      10,023            7,756            7,305
                                                        ------------     ------------     ------------

          Total operating revenues                         1,778,583        3,099,966        1,686,266

Operating expenses:
   Production                                                648,820          526,032          542,789
   Depreciation, depletion,
      and amortization                                       448,422          377,761          426,102
   General and administrative                                429,240          314,397          218,991
                                                        ------------     ------------     ------------
          Total operating expenses                         1,526,482        1,218,190        1,187,882
                                                        ------------     ------------     ------------
                                                             252,101        1,881,776          498,384
Other income (expense):
   Interest income                                             2,455            3,839            2,840
   Interest expense                                          (57,161)         (95,999)        (107,577)
                                                        ------------     ------------     ------------
          Net other expense                                  (54,706)         (92,160)        (104,737)
                                                        ------------     ------------     ------------
Earnings before income taxes                                 197,395        1,789,616          393,647
Income tax expense:
   Current                                                   (62,992)          64,663               --
   Deferred                                                   71,096          185,495               --
                                                        ------------     ------------     ------------
                                                               8,104          250,158               --
                                                        ------------     ------------     ------------
Net earnings                                            $    189,291     $  1,539,458     $    393,647
                                                        ============     ============     ============

Net earnings per share:
   Basic                                                $       0.11     $       0.86     $       0.22
   Diluted                                              $       0.11     $       0.86     $       0.22

Weighted average outstanding shares:
   Basic                                                   1,768,314        1,784,825        1,785,618
   Diluted                                                 1,768,579        1,787,503        1,785,618
</TABLE>

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

                                     18
<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, 1999          $    811,644     $         --     $  2,875,399     $ (1,513,462)    $  2,173,581
   Net earnings                           --               --               --          393,647          393,647
                                ------------     ------------     ------------     ------------     ------------

Balance, March 31, 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
                                ============     ============     ============     ============     ============
</TABLE>

                                 Share Activity
                                 --------------

<TABLE>
<CAPTION>
                                                            2002             2001             2000
                                                        ------------     ------------     ------------
<S>                                                     <C>              <C>              <C>
Common stock issued
   At beginning of year                                    1,621,387        1,623,289        1,623,289
      Issued                                                 160,566                4               --
      Cancelled                                              (15,387)          (1,906)              --
                                                        ------------     ------------     ------------
   At end of year                                          1,766,566        1,621,387        1,623,289

Held in treasury
   At beginning of year                                      (11,254)              --               --
      Acquisitions, at cost                                  (22,533)         (11,254)              --
      Issued for property                                     18,400               --               --
      Cancellation, returned to
        unissued                                              15,387               --               --
                                                        ------------     ------------     ------------
   At end of year                                                 --          (11,254)              --
                                                        ------------     ------------     ------------
Common shares outstanding at end
   of year                                                 1,766,566        1,610,133        1,623,289
                                                        ============     ============     ============
</TABLE>

         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 CASH FLOWS
                              Year ended March 31,

<TABLE>
<CAPTION>
                                                            2002             2001             2000
                                                        ------------     ------------     ------------
<S>                                                     <C>              <C>              <C>
Cash flows from operating activities:
   Net earnings                                         $    189,291     $  1,539,458     $    393,647
   Adjustments to reconcile net earnings
      to net cash provided by operating
      activities:
        Deferred income taxes                                 71,096          185,495               --
        Stock-based compensation                              48,730           24,700               --
        Depreciation, depletion, and amortization            448,422          377,761          426,102
        (Increase) decrease in accounts receivable           114,896         (218,054)         (97,247)
        Increase in accounts payable                          28,964              901            1,007
        (Increase) decrease in prepaid assets                 50,215          (58,553)          (1,421)
        Increase(decrease) in income taxes payable           (51,637)          51,637               --
                                                        ------------     ------------     ------------

          Net cash provided by operating activities          899,977        1,903,345          722,088

Cash flows from investing activities:
   Additions to oil and gas properties                    (2,247,423)        (936,293)        (803,554)
   Proceeds from sale of assets                                   --               --          667,692
   Additions to other property and equipment                  (5,181)          (1,014)            (712)
                                                        ------------     ------------     ------------

          Net cash used in investing activities           (2,252,604)        (937,307)        (136,574)

Cash flows from financing activities:
   Borrowings                                              1,160,000               --          248,174
   Principal payments on long-term debt                      (50,000)        (600,000)        (832,174)
   Purchases and retirements of common stock                 (91,231)         (84,934)              --
                                                        ------------     ------------     ------------

          Net cash (used in) provided by
            financing activities                           1,018,769         (684,934)        (584,000)
                                                        ------------     ------------     ------------

Net increase (decrease) in cash
   and cash equivalents                                     (333,858)         281,104            1,514

Cash and cash equivalents
   at beginning of year                                      378,816           97,712           96,198
                                                        ------------     ------------     ------------

Cash and cash equivalents
   at end of year                                       $     44,958     $    378,816     $     97,712
                                                        ============     ============     ============

   Interest paid                                        $     55,022     $     99,044     $    109,255
   Income taxes paid                                    $     92,675     $         --     $         --

Non-cash investing and financing activities:
   Issuance of common stock in exchange
      for oil and gas properties                        $     82,800     $         --     $         --
</TABLE>

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

                                       20
<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.  Costs  are  amortized  using the
     units-of-production  method  based  upon  estimates  of proved  oil and gas
     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  (Loss)  Per  Common  Share.  Basic  earnings  (loss) per share is
     computed by dividing net earnings (loss) by the weighted  average number of
     shares outstanding during the period.  Diluted earnings (loss) per share is
     computed by dividing net earnings (loss) by the weighted  average number of
     common  shares  and  dilutive   potential  common  shares  (stock  options)
     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

                                       21
<PAGE>

     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:

                                             2002          2001          2000
                                          ----------    ----------    ----------
    Weighted average number
        of common shares
        outstanding, basic                 1,768,314     1,784,825     1,785,618
    Incremental shares from
        the assumed exercise of
        dilutive stock options                   265         2,678            --
                                          ----------    ----------    ----------
    Dilutive potential common
         shares                            1,768,579     1,787,503     1,785,618
                                          ==========    ==========    ==========

     Outstanding  options to purchase  180,000,  150,000,  and 200,000 shares at
     March 31,  2000,  2001,  and 2002,  respectively,  were not included in the
     computation of diluted net earnings per share because the exercise price of
     the options 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, 2002, 2001, or 2000.

                                       22
<PAGE>

     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 are recognized
     when the product is  transported  from the well site.  Gas  imbalances  are
     accounted for under the sales method whereby  revenues are recognized based
     on production 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.  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.

     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 2000 and
     2001 financial statements to conform with the 2002 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
     for fiscal years  beginning  after June 15, 2002.  The Company is currently
     assessing the impact of SFAS No. 143;  however,  at this time,  the Company
     does not  believe  the impact of this  statement  will be  material  to its
     financial position or results of operations.

                                       23
<PAGE>

     SFAS No. 144,  "Accounting  for the  Impairment  or Disposal of  Long-Lived
     Assets," is effective for the Company for the fiscal year  beginning  April
     1, 2002 and  addresses  accounting  and  reporting  for the  impairment  or
     disposal  of  long-lived  assets.  SFAS No. 144  supersedes  SFAS No.  121,
     "Accounting  for the  Impairment  of Long-Lived  Assets and for  Long-Lived
     Assets to Be Disposed Of", and APB Opinion No. 30,  "Reporting  the Results
     of  Operations  -  Reporting  the  Effects  of  Disposal  of a Segment of a
     Business".  SFAS No. 144 retains the fundamental provisions of SFAS No. 121
     and  expands  the  reporting  of  discontinued  operations  to include  all
     components of an entity with operations that can be distinguished  from the
     rest of the entity and that will be eliminated from the ongoing  operations
     of the entity in a disposal transaction.  Management has not yet determined
     the  effect,  if any,  adoption  of this  new  statement  will  have on the
     Company's financial position or 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.  Effective August 6, 2001, the borrowing base
     was  increased to  $3,500,000,  with  scheduled  monthly  reductions of the
     available  borrowing base of $49,000 per month beginning September 5, 2001,
     and the  maturity  date was  extended to August 15,  2003.  As of March 31,
     2002,  debt  outstanding  under  this  agreement  was  $1,710,000  and  the
     borrowing  base  was  $3,157,000.   No  required   principal  payments  are
     anticipated for the next twelve months. 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 (8% and 4.75% at
     March 31, 2001 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 - INCOME TAXES

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

                                                         2002           2001
                                                      ----------     ----------
    Deferred tax assets:
      Percentage depletion carryforwards              $  317,174     $  258,661
      Vacation accrual                                       691          1,108
      Deferred compensation                               22,763             --
      Net operating loss carryforwards                    87,481             --
                                                      ----------     ----------
                                                         428,109        259,769
    Deferred tax liabilities:
      Excess financial accounting bases over
        tax bases of property and equipment             (684,700)      (445,264)
                                                      ----------     ----------

      Net deferred tax assets (liabilities)           $ (256,591)    $ (185,495)
                                                      ==========     ==========

     As of March 31, 2002, the Company has a net operating loss  carryforward of
     approximately  $283,000,  which expires in 2022,  and  statutory  depletion
     carryforwards of approximately $1,023,000, which do not expire.

                                       24
<PAGE>

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

                                        2002            2001            2000
                                     ----------      ----------      ----------

Tax expense at statutory rate        $   67,114      $  608,469      $  133,840
Decrease in valuation allowance              --        (196,469)        (75,349)
Depletion in excess of basis            (58,513)        (80,864)             --
Effect of graduated rates                (5,922)        (53,688)        (31,492)
Revision of prior year estimates          7,657              --              --
Other                                    (2,232)        (27,290)        (26,999)
                                     ----------      ----------      ----------

                                     $    8,104      $  250,158      $       --
                                     ==========      ==========      ==========

Effective tax rate                            4%             14%             --
                                     ==========      ==========      ==========

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

     In fiscal 2002,  2001, and 2000, one purchaser  accounted for 24%, 39%, and
     35%, respectively, of revenues.

NOTE E - OIL AND GAS COSTS

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

                                                 Year ended March 31,
                                      ------------------------------------------
                                         2002            2001            2000
                                      ----------      ----------      ----------

Property acquisition costs
   Proved                             $  649,021      $  267,589      $  243,591
   Unproved                           $  280,745      $  177,305      $   91,020
Exploration costs                     $   46,907      $   34,995      $   21,104
Development costs                     $1,353,553      $  456,404      $  447,839

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

                                          2002           2001           2000
                                       -----------    -----------    -----------

Proved oil and gas properties          $13,462,406    $11,309,873    $10,531,259
Unproved oil and gas properties            424,392        248,107         99,644
                                       -----------    -----------    -----------
                                        13,886,798     11,557,980     10,630,903
Less accumulated depreciation,
  depletion, and amortization            7,999,539      7,555,356      7,181,648
                                       -----------    -----------    -----------
                                       $ 5,887,259    $ 4,002,624    $ 3,449,255
                                       ===========    ===========    ===========

     Depreciation,  depletion,  and amortization  amounted to $4.49,  $3.65, and
     $3.86 per  equivalent  barrel of  production  for the years ended March 31,
     2002, 2001, and 2000, respectively.

                                       25
<PAGE>

NOTE F - 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
     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,  common  stock  was
     increased by $80,283, additional paid-in capital was increased by $722,548,
     and retained earnings was decreased by $802,831.

NOTE G - EMPLOYEE BENEFIT PLAN

     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  2002,  options for 30,000  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.

     Additional  information with respect to the Plan's stock option activity is
     as follows:

                                                                     Weighted
                                                       Number        Average
                                                     of Shares    Exercise Price
                                                     ---------    --------------
Options outstanding, at April 1, 1999                    90,000     $     7.61
  Granted                                                90,000           5.25
  Exercised                                                  --             --
  Forfeited                                                  --             --
                                                     ----------     ----------

                                       26
<PAGE>

Options outstanding, at March 31, 2000                  180,000     $     6.43
  Granted                                                60,000           6.75
  Exercised                                                  --             --
  Forfeited                                                  --             --
                                                     ----------     ----------
Options outstanding, at March 31, 2001                  240,000           6.51
  Granted                                                30,000           4.00
  Exercised                                                  --             --
  Forfeited                                             (40,000)          6.81
                                                     ----------     ----------
Options outstanding, at March 31, 2002                  230,000     $     6.13
                                                     ==========     ==========

Options exercisable at March 31, 2000                    22,500     $     7.61
Options exercisable at March 31, 2001                    67,500     $     6.82
Options exercisable at March 31, 2002                   105,000     $     6.61

     Weighted  average  grant date fair value of stock  options  granted  during
     fiscal 2000, 2001, and 2002 were $2.65, $2.33, and $1.29, respectively. The
     value  for 2001 and 2002 was  determined  using a  Binomial  option-pricing
     model,  while the amounts for 2000 were determined using the  Black-Scholes
     option-pricing model. Both models value 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  Black-Scholes  and  Binomial  models were as follows for stock
     options granted in fiscal 2002, 2001 and 2000:

                                                   2002       2001       2000
                                                  ------     ------     ------
     Expected volatility                          27.24%     29.86%     29.40%
     Expected dividend yield                       0.00%      0.00%      0.00%
     Risk-free rate of return                      4.70%      5.25%      6.43%
     Expected life of options                    7 years    10 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.
     Because  the  Company's   employee   stock  options  have   characteristics
     significantly  different from those of traded options,  and because changes
     in the subjective  input  assumptions can materially  affect the fair value
     estimate,  in management's  opinion, the existing models do not necessarily
     provide a reliable  single  measure of the fair value of its employee stock
     options.

     The following tables summarize  information about stock options outstanding
     and exercisable at March 31, 2002:

                            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               70,000             6.53                  $7.61
  $6.75                     50,000             8.82                  $6.75
  $5.25                     80,000             7.97                  $5.25
  $4.00                     30,000             9.48                  $4.00
                       -----------
                           230,000

                                       27
<PAGE>

                            Stock Options Exercisable

                                    Number of              Weighted
             Range of                Shares                Average
          Exercise Prices          Exercisable          Exercise Price
          ---------------          -----------          --------------
            $7.50-$7.75              52,500                 $7.61
            $6.75                    12,500                 $6.75
            $5.25                    40,000                 $5.25

     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 compensation cost
     related to stock options awarded to independent  consultants  based on fair
     value of the options at date of grant.  Total  compensation cost related to
     these awards  recognized for fiscal 2002 was $48,730.  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:

                                         2002            2001            2000
                                      ----------      ----------      ----------
Net earnings:
    As reported                       $  189,291      $1,539,458      $  393,647
    Pro forma                         $  116,731      $1,424,064      $  291,027

Basic earnings
per share:
    As reported (1)                   $     0.11      $     0.86      $     0.22
    Pro forma (1)                     $     0.07      $     0.80      $     0.16

Diluted earnings
per share:
    As reported (1)                   $     0.11      $     0.86      $     0.22
    Pro forma (1)                     $     0.07      $     0.80      $     0.16

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

NOTE H - 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 on a monthly  basis  subject to usual trade terms.  The
     billings  totaled $43,827,  $37,884,  and $56,775 for the years ended March
     31, 2002, 2001, and 2000, respectively. All of such properties were sold in
     October 2001.

     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  $23,627,
     $25,787,  and $8,386 for the years ended March 31,  2002,  2001,  and 2000,
     respectively.

     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

                                       28
<PAGE>

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

NOTE I - 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, with no provision for price and
     cost escalators, except by contractual agreement. The estimates as of March
     31, 2002,  2001, and 2000 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>
                                    2002                              2001                              2000
                        -----------------------------     -----------------------------     -----------------------------
                            Bbls             Mcf              Bbls             Mcf              Bbls             Mcf
                        ------------     ------------     ------------     ------------     ------------     ------------
<S>                     <C>              <C>              <C>              <C>              <C>              <C>
Proved reserves,
  beginning of year          235,000        6,345,000          139,000        4,755,000          194,000        4,194,000
Revision of previous
  estimates                  (70,000)      (1,204,000)         (15,000)         (10,000)          13,000         (471,000)
Purchase of minerals
  in place                    55,000        2,864,000          108,000        1,706,000            3,000        1,403,000
Extensions and
  discoveries                 38,000        2,644,000           21,000          398,000            1,000          174,000
Production                   (21,000)        (467,000)         (18,000)        (504,000)         (19,000)        (541,000)
Sales of minerals
  in place                        --               --               --               --          (53,000)          (4,000)
                        ------------     ------------     ------------     ------------     ------------     ------------
Proved reserves,
  end of year                237,000       10,182,000          235,000        6,345,000          139,000        4,755,000
                        ============     ============     ============     ============     ============     ============

PROVED DEVELOPED RESERVES (UNAUDITED):

Beginning of year            235,000        6,337,000          139,000        4,755,000          194,000        4,194,000
End of year                  144,000        5,159,000          235,000        6,337,000          139,000        4,755,000
</TABLE>

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

<TABLE>
<CAPTION>
                                                               March 31,
                                             ----------------------------------------------
                                                 2002             2001             2000
                                             ------------     ------------     ------------
<S>                                          <C>              <C>              <C>
Future cash inflows                          $ 36,005,000     $ 40,179,000     $ 15,590,000
Future production and
  development costs                           (12,217,000)      (9,988,000)      (4,414,000)
Future income taxes (a)                        (5,228,000)      (7,182,000)      (2,249,000)
                                             ------------     ------------     ------------
Future net cash flows                          18,560,000       23,009,000        8,927,000
Annual 10% discount for
  estimated timing of cash flows               (9,256,000)     (10,824,000)      (4,019,000)
                                             ------------     ------------     ------------
Standardized measure of
  discounted future net cash flows           $  9,304,000     $ 12,185,000     $  4,908,000
                                             ============     ============     ============
</TABLE>

                                       29
<PAGE>

     (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.

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

<TABLE>
<CAPTION>
                                                               March 31,
                                             ----------------------------------------------
                                                 2002             2001             2000
                                             ------------     ------------     ------------
<S>                                          <C>              <C>              <C>
Sales of oil and gas produced,
  net of production costs                    $ (1,120,000)    $ (2,566,000)    $ (1,136,000)
Net changes in price and production costs      (7,145,000)       5,104,000        2,310,000
Changes in previously estimated
  development costs                               (59,000)         (20,000)          22,000
Revisions of quantity estimates                (1,862,000)        (148,000)        (281,000)
Net change due to purchases and sales of
  minerals in place                             3,685,000        5,939,000        1,164,000
Extensions and discoveries,
  less related costs                            2,121,000          975,000          187,000
Net change in income taxes                      1,183,000       (2,567,000)        (821,000)
Accretion of discount                           1,599,000          614,000          349,000
Changes in timing of estimated cash
  flows and other                              (1,283,000)         (54,000)          44,000
                                             ------------     ------------     ------------
Changes in standardized measure                (2,881,000)       7,277,000        1,838,000

Standardized measure, beginning of year        12,185,000        4,908,000        3,070,000
                                             ------------     ------------     ------------
Standardized measure, end of year            $  9,304,000     $ 12,185,000     $  4,908,000
                                             ============     ============     ============
</TABLE>

NOTE J - SUBSEQUENT EVENTS

     The  Company  is a  plaintiff  in a  lawsuit  for the  recovery  of  unpaid
     royalties.  The suit,  McCall et al vs.  Exxon  Company  U.S.A.  et al, No.
     13,435,  in the 109th  Judicial  District Court of Winkler  County,  Texas,
     resulted in a final judgment in favor of the plaintiff class on May 9, 2002
     for an  aggregate  payment of $20  million for  claimed  unpaid  royalties.
     Preliminary  estimate of the Company's  share of such  judgment  amounts to
     approximately   $150,000.   This  amount  has  not  been  recorded  in  the
     accompanying consolidated financial statements.

     On May 20, 2002 the Company  purchased 26,944 shares of its $.50 par value,
     Common  Capital  stock at an aggregate  purchase  price of $110,526 for the
     treasury account.

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, 2002.

     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, 2002.

                                       30
<PAGE>

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, 2002.

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, 2002.

                                     PART IV
                                     -------

ITEM 14.  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.

          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.
   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).
   10.3   Partial  Assignment,  Bill of Sale and Conveyance between Mexco Energy
          Corporation and Shenandoah Petroleum  Corporation dated April 21, 1999
          (previously  filed as exhibit  10.1 and  incorporated  by reference to
          Form 8-K dated April 21, 1999).
   21     Subsidiaries  of  the  Company   (incorporated  by  reference  to  the
          Company's Annual Report on Form 10-K dated June 24, 1998).

     (b)  Reports on Form 8-K.

          A report on Form 8-K, dated May 23, 2002, was filed by the Company for
     the year ended March 31, 2002 under Item 5. Other Events.

                                       31
<PAGE>

                                   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 21, 2002,  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
    Controller, Treasurer
    and Assistant Secretary


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


/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

                                       32
<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.
10.3***   Partial Assignment, Bill of Sale and Conveyance between Mexco
          Energy Corporation and Shenandoah Petroleum Corporation dated
          April 21, 1999.
21*       Subsidiaries of the Company.

*    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.
***  Previously  filed as exhibit 10.1 and incorporated by reference to Form 8-K
     dated April 21, 1999.
**** Incorporated by reference to the Company's Annual Report on Form 10-K dated
     June 14, 2001.

                                       33