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

                                   FORM 10-KSB

            ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                      For the year ended December 31, 2000
                         Commission File Number 0-29613


                         TIDELANDS OIL & GAS CORPORATION
                 (Name of small business issuer in its charter)


           Nevada                                         66-0549380
  (State or other jurisdiction of                     (I. R. S. Employer
   incorporation or organization)                     Identification No.)


               13330 Leopard St., Suite 26, Corpus Christi, TX 78410
                     (Address of principal executive office)

                                 (361) 241-2244
                           (Issuer's Telephone Number)

        Securities Registered Pursuant of Section 12(b) of the Act: None

          Securities Registered Pursuant of Section 12(g) of the Act:
                         Common Stock, $0.001 Par Value



Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Securities  Exchange  Act of 1934  during the  preceding  12
months (or for such shorter period that the registrant was required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days. Yes [X] No [ ]

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

The issuer had operating revenues of $175,270 for the year ended December 31,
2000.

This report contains a total of _ pages. The Exhibit Index appears on page __.

As of December 31, 2000,  there were  20,728,948  shares of the issuer's  common
stock  outstanding.  The aggregate market value of the 13,535,198  shares of the
issuer's  voting stock held by  non-affiliates  was $ 4,195,911 based on the low
bid price on that date as reported by the NASD OTC  Electronic  Bulletin  Board.
The sum excludes the shares held by officers,  directors, and stockholders whose
ownership  exceeded 10% of the outstanding  shares at December 31, 2000, in that
such persons may be deemed  affiliates  of the Company.  This  determination  of
affiliate  status  is not  necessarily  a  conclusive  determination  for  other
purposes.

<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
                                   FORM 10-KSB

                                December 31, 2000

                                                                            Page
                                                                            ----

PART I.......................................................................  3

ITEM 1.  Business............................................................  3
ITEM 2.  Properties..........................................................  5
ITEM 3.  Legal Proceedings...................................................  6
ITEM 4.  Submission of Matters to vote of Security Holders...................  6

PART II......................................................................  6

ITEM 5.  Market for Common Equity and Related Stockholder Matters............  6
ITEM 6.  Management's Discussion and Analysis of Financial
             Condition and Results of Operations.............................  7
ITEM 7.  Financial Statements................................................  8
ITEM 8.  Changes In and Disagreements With Accounting and
             Financial Disclosure............................................  8

PART III.....................................................................  8

ITEM 9.  Directors, Executive Officers, Promoters, and Control
           Persons: Compliance With Section 16(a) of the Exchange Act........  8
ITEM 10.  Executive Compensation.............................................  9
ITEM 11.  Security Ownership of Certain Beneficial Owners and Management..... 10
ITEM 12.  Certain Relationships and Related Transactions..................... 10

PART IV...................................................................... 11

ITEM 13.  Exhibits and Reports on Form 8-K................................... 11
SIGNATURES................................................................... 11
EXHIBIT INDEX................................................................ 11



                                       2
<PAGE>

                                     PART I

ITEM 1.   Business.

         Business Overview.

         Tidelands Oil & Gas Corporation (the  "Company"),  formerly known as C2
Technologies,  Inc., was  incorporated  under the laws of the State of Nevada on
February 25, 1997. C2 Technologies, Inc. changed its name to Tidelands Oil & Gas
Corporation on November 19, 1998. As of December 31, 2000, the Company had three
operating   subsidiaries   Tidelands  Oil  Corporation   (TOC),   Tidelands  Gas
Corporation (TGC) and Rio Bravo Energy, LLC.

         Tidelands Oil Corporation  was formed in May 1985.  Since inception and
until  recently,  Tidelands  Oil  Corporation  has devoted  virtually all of its
efforts to acquiring  control of leases which comprise the remaining  portion of
the Sacatosa Field in Maverick County, Texas. These lease acquisitions have been
completed  and are located in between  Conoco's  3000 wells to the north and the
development  program which The Exploration  Company (TXCO) is undertaking to the
south.  These oil and gas leases directly offset Conoco's 3000 wells. The Conoco
wells have  produced  in excess of  40,000,000  barrels of oil and 20BCF of gas.
Tideland's  leases  originally  comprised  approximately  156 oil and gas  wells
scattered across the leases with the largest concentration being on the northern
portion of the acreage  offsetting  Conoco.  During the year ended  December 31,
2000,  Tidelands conveyed,  to The Exploration  Company,  all its wells which it
believed were not economically feasible to develop in order to avoid the cost of
plugging and  abandoning  them.  As a result of this action,  Tidelands  now has
approximately 40 wells. Tidelands has been involved in a reworking program which
is approximately 90% complete to place all of the wells back into production.


                                       3
<PAGE>

         Tidelands Gas  Corporation  was formed on August 29, 1996 primarily for
the  purpose  of  acquiring  the  Delhi  Pipeline   System  for  use  as  a  gas
transportation  outlet  and to  develop  the  shallow  gas  reserves  underlying
Tideland's leases.

         During 1998 and 1999,  Tidelands  Gas  Corporation  organized two Texas
Limited  Liability  companies,  Rio  Bravo  Energy,  LLC  and its  wholly  owned
subsidiary,  Sonora Pipeline, LLC. Prior to December 2000, Tidelands owned fifty
percent of Rio Bravo Energy,  LLC. On December 1, 2000,  Tidelands purchased the
remaining  fifty  percent of Rio Bravo  Energy,  LLC.  Funding of  $660,000  was
provided by RAI Funding,  LLC to purchase the  additional  fifty  percent of Rio
Bravo Energy, LLC.

         Rio Bravo Energy, LLC was formed on August 10, 1998, for the purpose of
acquiring and operating the Chittim Gas Processing Plant which it purchased from
Conoco, Inc. This plant processes natural gas from Conoco's Sacatosa Field which
comprises  approximately  3000 wells.  It also processes  natural gas from Merit
Energy's Pena Creek Field,  which consists of  approximately  300 wells. The gas
plant has the capability to fractionate  the natural gas into  commercial  grade
propane and butane.

         Sonora  Pipeline,  LLC, a wholly owned  subsidiary of Rio Bravo Energy,
LLC was formed in January  1999,  to operate the Sonora  Pipeline  network  that
delivers  natural gas to the Rio Bravo Chittim Gas  Processing  Plant.  Sonora's
pipeline network consists of approximately 80 miles of gas pipeline.

         Sonora will transport gas from other gas suppliers to the Rio Bravo gas
plant.  The plant will process the natural gas into gas products such as natural
gasoline,  propane, and butane and sell the residue gas from the tailgate of the
plant.

         Sonora  Pipeline  and Rio Bravo  will  transport  and  process  gas for
suppliers such as Merit Energy,  Conoco and Cantor  Petroleum,  Inc. The maximum
operating capacity of the gas plant is 10 million cubic feet of gas per day. The
Sonora  Pipeline  capacity is greater  than the gas  processing  plants  present
capacity.  At this time,  the gas plant is processing  600,000 cubic feet of gas
per day.

         Rio Bravo  currently  sells to two  major  companies  located  in South
Texas.  Rio Bravo  intends to ship a  significant  amount of propane  and butane
products  to Mexico  and to sell  natural  gasolines  to Enron Oil  Trading  and
Transportation Company.

         Tidelands Oil & Gas Corporation formed Reef International  Transmission
& Storage LLC in March 2001. In April 2001,  Tidelands  changed the name to Reef
International,  LLC.  The purpose  for  forming  Reef was to use this entity for
permitting  an  international  multi-fuel  pipeline  crossing  between Texas and
Mexico to transport  natural gas products into Mexico for local  distribution in
the City of Piedras Negras,  Mexico.  Reef's intentions are to transport propane
and butane to the Mexico storage  facilities via pipeline thus eliminating truck
traffic  thru  the city  and  traffic  on the  international  bridges.  Reef has
combined with a joint venture industry partner,  Rainbow Investments,  to assist
in the financing, development and operations of this project.

Competition

         Tidelands   will  actively   compete  for  reserve   acquisitions   and
exploration/exploitation  leases,  licenses, gas suppliers and petroleum product
purchasers.  This competition will be against  companies with greater  financial
and other resources.  Competitive factors will include price, contract terms and
quality  of  service,  including  pipeline  connection  times  and  distribution
efficiencies  and financial  resources.  The Company will face  competition from
other producers and suppliers,  including competition from other local and world
wide energy suppliers.



                                       4
<PAGE>

Employees

The Company has four  employees,  including the Company  officers and utilizes a
contract plant operating company and seven contract field personnel.


ITEM 2.   Properties

         Rio Bravo  Energy,  LLC owns and  operates  the Chittim Gas  Processing
Plant which is located in Maverick, County, Texas.

         Sonora  Pipeline,  LLC owns the Sonora Pipeline  network  consisting of
approximately  80 miles of  pipeline.  In  December  2000,  Tidelands  purchased
majority and control  from Hudson SVD,  LLC. of Rio Bravo  Energy,  LLC the 100%
owner of Sonora Pipeline, LLC.

Table 1.          Net Proved and Proved Developed Reserve Summary

Natural Gas (Mcf)

         Proved developed and Undeveloped reserves                     0

         Proved Developed reserves                                     0

         Production                                                    0

Oil (BBLS)

         Proved developed and undeveloped reserves               549,334

         Proved developed reserves                               549,334

         Production                                                3,641

Acreage

         The following table summarizes our developed and undeveloped acreage at
December 31, 2000 in Texas.

Table 2.          Acreage

Location                       Developed            Undeveloped        Total
--------                    --------------        --------------       -----
                            Gross     Net         Gross     Net
                            -----    -----        -----    -----

Oil                           499      375            0        0         375
                            -----    -----        -----    -----       -----

Gas                             0        0            0        0           0
                            -----    -----        -----    -----       -----

Producing Wells

         The following table reflects the Company's  ownership  interests in gas
and oil wells located in Texas at December 31, 2000.

Table 3.
                            Gross     Net
                            -----    -----

Oil                            40       30
                            -----    -----

Gas                             0        0
                            -----    -----



                                       5
<PAGE>

Drilling and Acquisition Activities

         During the years ended  December  31, 2000 and 1999,  we  conducted  no
drilling activity.

Present Activities

         No drilling  operations  are presently in process.  Current  activities
include reworking our oil wells and placing them back into production, gathering
gas for the Sonora  Pipeline  and  processing  the gas through the Rio Bravo gas
plant.


ITEM 3.   Legal Proceedings

             None.

ITEM 4.   Submission of Matters to vote of Security Holders

No matters  were brought to a vote of the  Security  Holders  during the quarter
ended December 31, 2000.


                                     PART II

ITEM 5.   Market for Common Equity and Related Stockholder Matters

         Our common stock is traded on the OTC Electronic  Bulletin  Board.  The
following  table sets forth the high and low bid prices of our common  stock for
each quarter for the years 1998,  1999 and 2000.  The quotations set forth below
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not represent actual transactions.

Common Stock:

         Our common  stock  trades  Over-the-Counter  (OTC) on the OTC  Bulletin
Board under the symbol TIDE. Table1. sets forth the high and low bid information
for each fiscal  quarter  beginning  with  September 30, 1998,  the first quoted
quarter.  These quotations reflect inter-dealer prices,  without retail mark-up,
mark-down or commission and may not represent  actual  transactions.  These data
provided by NASDAQ Trading and Market Services.

Table 1.

Bid Information
--------------------------------------------------------------------------------

Fiscal Quarter Ended                High                      Low
--------------------------------------------------------------------------------

December 31, 2000                   0.41                      0.31
September 30, 2000                  0.47                      0.25
June 30, 2000                       0.75                      0.40
March 31, 2000                      1.81                      0.53
December 31, 1999                   3.46                      1.25
September 30, 1999                  4.00                      0.875
June 30, 1999                       1.50                      0.375
March 31, 1999                      0.70                      0.40
December 31, 1998                   0.875                     0.125

--------------------------------------------------------------------------------

         The  Company  has 81  active  shareholders  of its  common  stock as of
December 31, 2000 holding 20,728,948 common shares.


                                       6
<PAGE>

Dividends and Dividend Policy

         A ten percent  common stock dividend was declared on December 28, 1999.
An additional 1,385,959 shares were issued to existing  shareholders.  There are
no restrictions imposed on the Company which limit its ability to declare or pay
dividends on its common stock.  No cash  dividends have been declared or paid to
date and none are expected to be paid in the foreseeable future.

         We expect to continue to retain all  earnings  generated  by our future
operations  for the  development  and  growth  of our  business.  The  Board  of
Directors will determine  whether or not to pay dividends in the future in light
of our earnings, financial condition, capital requirements and other factors.

Recent Sales of Unregistered Securities

         During the period  October 1 through  December  31,  2000,  we sold the
following securities in exempt transactions not requiring registration:

         On December  31,  2000,  the  Company  issued  1,072,745  shares to Pan
Pacific  Investments  as  repayment  of  $227,925  debt and  $7,844  of  accrued
interest.  The shares were issued in a private  transaction  pursuant to Section
4(2) of the Securities Act of 1933, as amended, (the "Securities Act").

         On December 8, 2000 , the Company issued  1,785,714  shares to Goodbody
International,  Inc. in consideration of arranging for financing and the payment
of $1,886. These shares were issued in a private transaction pursuant to Section
4(2) of the Securities Act.

         On October 1, 2000 , the Company  issued  150,000  shares for  services
rendered at a value of $23,800.  The shares were issued in a private transaction
pursuant to Section 4(2) of the Securities Act.

ITEM 6.   Plan of Operation

         The Company's  plan of operations  has been  refocused  towards our gas
processing plant and pipeline interest along with a new  international  pipeline
crossing.

         The Company has restructured its operations,  by conveying non-economic
wells.  Tidelands  Oil has conveyed the  non-economic  wells to The  Exploration
Company (TXCO),  thereby avoiding the plugging liability imposed by the State of
Texas. These conveyances leave us with our most economic wells.

         Tidelands Gas has also conveyed to The  Exploration  Company all of its
non- economic gas well bores in order to avoid the plugging  liabilities imposed
by the State of Texas.

         Rio Bravo  Energy  plans to  increase  the volume of gas shipped to the
plant by acquiring additional gas for processing with increased shipments of gas
products to end-user customers.

         Reef  International,  LLC was formed to obtain permits and construct an
international  pipeline  crossing  between  Texas and Mexico.  The pipeline will
transport  natural  gas to Piedra  Negras,  Mexico for  distribution  by CONAGAS
(Cianacional DE Gas, S.A. DE C.V.).  Reef will also transport propane and butane
products  into Mexico  storage  facilities  with this  pipeline.  Reef is in the
permitting process of this project.

         The  Company  forecasts,  for the  next  twelve  months,  its net  cash
requirements  to be  approximately  $600,000.  This  net cash  flow  requirement
consists primarily of the Company's short term repayments.  Current and expected
increased  production  from its  operations  should  provide  the  Company  with
sufficient revenues to cover its expenses.

         On May 1, 2001, the Company secured a three year 10% $1,000,000 Line of
Credit to meet its future cash flow  requirements.  The Company  agreed to issue
200,000  shares of restricted  common stock as  consideration  for providing the
Line of Credit.

         It is anticipated  that significant  revenues from Reef  International,
LLC will begin in the third quarter of 2002.


                                       7
<PAGE>

ITEM 7.   Financial Statements


                                TABLE OF CONTENTS




INDEPENDENT AUDITOR'S REPORT ......................................      F-2

CONSOLIDATED FINANCIAL STATEMENTS:
    Consolidated Balance Sheet ....................................      F-3
    Statements of Consolidated Stockholders' (Deficit) ............      F-4
    Statements of Consolidated Operations .........................      F-5
    Statements of Consolidated Cash Flows .........................      F-6
    Notes to Consolidated Financial Statements ....................   F-7 - F-16


SUPPLEMENTAL INFORMATION (UNAUDITED)...............................  F-17 - F-23





                                      F-1

<PAGE>

                              BAUM & COMPANY, P.A.
                        1515 UNIVERSITY DRIVE, SUITE 209
                          CORAL SPRINGS, FLORIDA 33071




                           IDEPENDENT AUDITOR'S REPORT

Board of Directors
Tidelands Oil & Gas Corporation
Corpus Christi, Texas

We have audited the accompanying  consolidated  balance sheet of Tidelands Oil &
Gas Corporation as of December 31, 2000, and the related consolidated statements
of  stockholders'  (deficit),  operations,  and cash  flows for the years  ended
December 31, 2000 and 1999.  These  consolidated  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
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 audit provides a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Tidelands Oil & Gas Corporation as of December 31, 2000 and the results of their
consolidated  operations and their  consolidated  cash flows for the years ended
December 31, 2000 and 1999 in  conformity  with  generally  accepted  accounting
principles.


/s/ Baum & Company
------------------
Baum & Company, P.A.
Coral Springs, Florida
May 10, 2001




                                       F-2

<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2000

                                     ASSETS
                                     ------
Current Assets:
      Cash                                                     $   312,509
      Accounts Receivable                                          145,523
      Inventory (Note 1)                                            18,212
      Prepaid Expenses (Note 4)                                    102,772
                                                               -----------
         Total Current Assets                                      579,016
                                                               -----------

Oil and Gas Properties, Net (Notes 1,5)                            900,683
                                                               -----------

Other Assets:
      Deposits and Organizational Costs, Net                         1,594
      Investments (Notes 1,6)                                       10,764
      Intangible Assets, Net (Notes 1,3,7)                          56,712
      Due From Related Parties                                       6,214
                                                               -----------
         Total Other Assets                                         75,284
                                                               -----------

         Total Assets                                          $ 1,554,983
                                                               ===========

                     LIABILITIES AND STOCKHOLDERS' (DEFICIT)
                     ---------------------------------------

Current Liabilities:
      Accounts Payable and Accrued Expenses                    $   762,469
      Current Maturities of Long-Term Debt (Note 9)                679,552
                                                               -----------

         Total Current Liabilities                               1,442,021

Long-Term Debt  (Note 9)                                            37,000

Due to Related Parties (Note 8)                                    850,000
                                                               -----------

         Total Liabilities                                       2,329,021
                                                               -----------

Commitments and Contingencies (Note 13,14)

Stockholders' Deficit
      Common Stock, $.001 Par Value Per Share,
        100,000,000 Shares Authorized, 20,728,948 Shares
        Issued and Outstanding                                      20,729
      Paid-in Capital in Excess of Par Value                     1,872,418
      Subscriptions Receivable                                     (67,500)
      Accumulated (Deficit)                                     (2,599,685)
                                                               -----------
         Total Stockholders' (Deficit)                            (774,038)
                                                               -----------

         Total Liabilities and Stockholders' (Deficit)         $ 1,554,983
                                                               ===========



           See Accompanying Notes to Consolidated Financial Statements
                                       F-3

<PAGE>
<TABLE>
<CAPTION>

                         TIDELANDS OIL & GAS CORPORATION
               STATEMENTS OF CONSOLIDATED STOCKHOLDERS' (DEFICIT)
                     YEARS ENDED DECEMBER 31, 2000 AND 1999

                                                                   Paid-In
                                                                  Capital In
                                                                  Excess of     Accumulated
                                        Shares        Amount      Par Value      (Deficit)
                                     -----------   -----------   -----------    -----------
<S>                                  <C>           <C>           <C>            <C>
Balance As Previously Reported
December 31, 1998                     13,225,960   $    13,226   $ 3,283,092    $  (239,936)

Restatement (Note 2)                        --            --      (3,123,579)      (509,748)
                                     -----------   -----------   -----------    -----------

Balance December 31, 1998-Restated    13,225,960        13,226       159,513       (749,684)

Issuance of Common Stock               2,608,570         2,608     1,358,094           --

Stock Dividends                        1,585,959         1,586        (1,586)          --

Net (Loss) - Restated (Note 2)              --            --            --         (895,444)
                                     -----------   -----------   -----------    -----------

Balance December 31, 1999-Restated    17,420,489   $    17,420   $ 1,516,021    $(1,645,128)

Issuance of Common Stock               3,308,459         3,309       356,397           --

Net (Loss)                                  --            --            --         (954,557)
                                     -----------   -----------   -----------    -----------

Balance December 31, 2000             20,728,948   $    20,729   $ 1,872,418    $(2,599,685)
                                     ===========   ===========   ===========    ===========

</TABLE>

          See Accompanying Notes to Consolidated Financial Statements
                                       F-4
<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
                      STATEMENTS OF CONSOLIDATED OPERATIONS
                                   YEARS ENDED


                                                   December 31,    December 31,
                                                        2000            1999*
                                                        ----            ----
Revenues:
      Oil and Gas Sales                            $     75,620    $     29,799
      Other                                              10,286          15,500
      Gas Processing Sales                               89,364            --
                                                   ------------    ------------

         Total Revenues                                 175,270          45,299
                                                   ------------    ------------

Operating Expenses:
      Lease Operating                                   216,780         121,787
      Purchases                                          71,833            --
      Depreciation, Depletion and Amortization           30,109          19,087
      Interest                                           14,225          34,870
      General and Administrative                        609,691         516,317
                                                   ------------    ------------

         Total Operating Expenses                       942,638         692,061
                                                   ------------    ------------
         Operating (Loss)                              (767,368)       (646,762)
                                                   ------------    ------------

Non-Operating Expenses:
      Company's Share of Equity Method in
       Investee's Losses                                 33,835          28,282
      Loss on Expiration of Leases                       24,209            --
      Loss on Disposal of Oil and Gas Properties        129,145            --
      Litigation Settlement                                --           220,400
                                                   ------------    ------------
         Total Non-Operating Expenses                   187,189         248,682
                                                   ------------    ------------

         (Loss) Before Provision For
           Income Taxes                                (954,577)       (895,444)
Provision For Income Taxes                                 --              --
                                                   ------------    ------------

           Net (Loss)                              $   (954,577)   $   (895,444)
                                                   ============    ============

Net (Loss) Per Common Share, Basic                 $     (0.050)   $     (0.058)
                                                   ------------    ------------

Weighted Average Number of Common
     Shares Outstanding, Basic                       19,074,719      15,323,224
                                                   ============    ============

Net (Loss) Per Common Share, Diluted               $     (0.046)   $      (.055)
                                                   ------------    ------------
Weighted Average Number of Common
     Shares Outstanding, Diluted                     20,529,719      16,213,224
                                                   ============    ============

*The statement of  consolidated  operations for the year ended December 31, 1999
has been restated. (Note 2)

           See Accompanying Notes to Consolidated Financial Statements
                                       F-5

<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
                      STATEMENTS OF CONSOLIDATED CASH FLOWS
                                   YEARS ENDED


                                                    December 31,  December 31,
                                                       2000          1999*
                                                       ----          -----

Cash Flows Provided (Required) By
   Operating Activities:
      Net (Loss)                                     $(954,557)    $(895,444)
      Adjustments to Reconcile Net (Loss)
           to Net Cash Provided (Required) By
           Operating Activities:

      Depreciation, Depletion and Amortization          30,109        19,087
      Company's Share of Equity Method in
         Investee's Losses                              33,835        28,282
      Loss on Expiration of Leases                      24,209
      Loss on Disposal of Oil & Gas Properties         129,145
      Issuance of Common Stock
         for Services Provided                          31,895        14,210
      Litigation Settlement                                          220,400
      Officers' Salaries                               240,000       240,000
         Changes in
             Accounts Receivable                      (131,158)       (2,676)
             Inventory                                 (18,212)
             Prepaid Expenses                          (90,921)      (11,851)
             Other Assets                                 (750)         (450)
             Accounts Payable and Accrued Expenses     422,010        77,920
             Current Maturities of Long-Term Debt      660,000      (158,071)
             Drilling Advances                         (25,967)
                                                     ---------     ---------
Net Cash Provided (Required)
   by Operating Activities                             349,638      (468,593)
                                                     ---------     ---------

Cash Flows (Required) By Investing Activities:
      Goodwill Arising from Acquisition
         of Investment                                 (57,029)
      Decrease in Investments                          197,086            85
      Contributions to Investments                    (125,943)
      Acquisitions of Oil and Gas Properties          (653,909)      (47,573)
      Proceeds from Disposals of Oil
         and Gas Properties                             76,647
                                                     ---------     ---------

         Net Cash (Required)
            By Investing Activities                   (563,148)      (47,488)
                                                     ---------     ---------




           See Accompanying Notes to Consolidated Financial Statements
                                       F-6

<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
                      STATEMENTS OF CONSOLIDATED CASH FLOWS
                                   YEARS ENDED


                                                December 31,   December 31,
                                                    2000           1999*
                                                    ----           -----

Cash Flows Provided by Financing Activities
      Proceeds from Issuance of Common Stock          1,886        169,575
      Decrease (Increase) Stock
        Subscription Receivable                      71,575       (124,575)
      Issuance of Common Stock to Liquidate
        Short-Term Debt Advances                    227,925        613,965
      Proceeds from (Advances to)
        Related Parties                             173,568        (91,866)
                                               ------------   ------------

Net Cash Provided by Financing Activities           474,954        567,099
                                               ------------   ------------


Net Increase in Cash                                261,444         51,018

Cash at Beginning of Period                          51,065             47
                                               ------------   ------------

Cash at End of Period                          $    312,509   $     51,065
                                               ============   ============

Supplemental Disclosures of
   Cash Flow Information
      Cash Payments for Interest               $      1,145   $     12,515
                                               ============   ============

      Cash Payments for Income Taxes           $          0   $          0
                                               ============   ============

*The  consolidated  cash flows for the year ended  December  31,  1999 have been
restated  (Note 2) and  reclassified  to  conform  with the  December  31,  2000
presentation.


                                       F-7

<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------   ------------------------------------------

         This summary of significant  accounting policies is presented to assist
         in  understanding   these  consolidated   financial   statements.   The
         consolidated  financial  statements  and notes are  representations  of
         management who is responsible for their integrity and objectivity.  The
         accounting  policies  used  confirm to  generally  accepted  accounting
         principles  and have been  consistently  applied in the  preparation of
         these consolidated financial statements.

         Organization
         ------------

         Tidelands Oil & Gas Corporation  (formerly C2 Technologies,  Inc.) (the
         Company) was  incorporated in the state of Nevada on February 25, 1997.
         On  October  21,  1998  the  Company  acquired  all of the  issued  and
         outstanding  capital stock of Tidelands Oil  Corporation  and Tidelands
         Gas  Corporation.  On November 19, 1998,  the legal name of the Company
         was changed to Tidelands Oil and Gas Corporation. On April 19, 2000 the
         Company  entered  into  a  business  combination  agreement  with  OMNI
         Acquisition   Corporation.   (OMNI).   OMNI,   a  Nevada   corporation,
         incorporated  January  12,  2000,  had filed a Form 10-SB  Registration
         statement  with  the   Securities  and  Exchange   Commission  and  was
         classified as a "blank check reporting company".  On May 11, 2000 OMNI,
         a wholly owned subsidiary, was merged into the Company. The Company was
         the  surviving  corporation  and OMNI  the  dissolved  corporation.  On
         December 1, 2000 the Company acquired the remaining equity (50%) of Rio
         Bravo  Energy,   LLC.  (Rio  Bravo).   Accordingly,   Rio  Bravo  is  a
         wholly-owned subsidiary of the Company.

         Nature of Operations
         --------------------

         The Company is engaged in the  transmission  and  processing of natural
         gas in southern Texas. In addition,  the Company operates approximately
         forty oil wells in southern Texas.

         Principles of Consolidation
         ---------------------------

         The  consolidated  financial  statements  include  the  accounts of the
         Company   and   its   wholly-owned   subsidiaries.    All   significant
         inter-company accounts and transactions are eliminated.

         Fair Value of Financial Instruments
         -----------------------------------

         Statement of Financial  Accounting  Standards No. 107 "disclosure about
         fair value of financial  instruments,"  requires the  disclosure of the
         fair value of off-and-on  balance sheet financial  instruments.  Unless
         otherwise  indicated,  the  fair  values  of all  reported  assets  and
         liabilities,  which represent financial  instruments (none of which are
         held for trading  purposes),  approximate  the carrying  values of such
         amounts.

                                      F-8

<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------   ------------------------------------------------------

         Use of Estimates
         ----------------

         The preparation of consolidated financial statements in accordance with
         generally accepted  accounting  principles  requires  management to use
         estimates and make  judgements.  While  management  has  considered all
         available information,  actual amounts could differ from those reported
         as assets,  liabilities,  related revenues,  costs and expenses and the
         disclosed amounts of contingencies.

         Inventories
         -----------

         Inventories  consisting  of natural gas liquids are stated at the lower
         of average  cost or market  using the  first-in  and  first-out  (FIFO)
         method of valuation.

         Concentration of Credit Risk
         ----------------------------

         The  Company's  cash  balances in financial  institutions  at times may
         exceed  federally  insured limits.  At December 31, 2000, the uninsured
         cash  balances  total  $140,903.  The company has not  experienced  any
         losses  in  such  accounts  and  believes  it is  not  exposed  to  any
         significant credit risk on cash.

         Revenue  from  two  customers  amounted  to 100% of net gas  processing
         revenues for the year ended  December 31, 2000.  Amounts due from these
         customers included in accounts receivable were $120,341.

         Investments
         -----------

         The equity method of accounting is used for  investments,  owned 50% or
         less, including corporate joint ventures.  Under this method, equity in
         the net  income  or  losses  of  joint-ventures,  is  reflected  in the
         Company's  revenues  or  expenses  rather  than when  realized  through
         dividends or distributions.

         Oil and Gas Properties
         ----------------------

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




                                      F-9

<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------   ------------------------------------------------------

         Oil and Gas Properties (Continued)
         ----------------------------------

         Unproved oil and gas properties that are  individually  significant are
         periodically assessed for impairment of value, and a loss is recognized
         at the time of impairment by providing an impairment  allowance.  Other
         unproved properties are amortized based on the Company's  experience of
         successful  drilling and average holding period.  Capitalized  costs of
         producing  oil  and  gas  properties,   after   considering   estimated
         dismantlement and abandonment  costs and estimated salvage values,  are
         depleted by the unit-of-production method.

         On the sale or retirement of a complete unit of a proven property,  the
         cost and related accumulated  depreciation and depletion are eliminated
         from  the  property  accounts,  and  the  resultant  gain  or  loss  is
         recognized.  On the  retirement  or sale of a  partial  unit of  proved
         property, the cost is changed to accumulated depreciation and depletion
         with a resulting gain or loss recognized in income.

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

         Support equipment,  facilities and other related equipment are recorded
         at historical cost.  Depreciation of property and equipment is provided
         on the straight-line method over the estimated useful economic lives of
         the related assets.  Maintenance and repairs are charged to operations.
         Additions and betterments,  which extend the useful lives of the assets
         are capitalized.  Upon retirement or disposal, the cost and accumulated
         depreciation are eliminated from the account, and the resulting gain or
         loss is reflected in operations.

         Intangible Assets
         -----------------

         Intangible assets,  which primarily consist of the cost of in excess of
         the fair value of tangible assets and liabilities  acquired (goodwill),
         are amortized, by the straight-line method, over, an estimated economic
         useful life of the underlying  values of the assets acquired of fifteen
         years.






                                      F-10

<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------   ------------------------------------------------------

         Long-Lived Assets
         -----------------

         Statement of Financial  Accounting Standards 121 (SFAS 121) "Accounting
         for the  Impairment of  Long-Lived  Assets to be Disposed Of," requires
         that  long-lived  assets to be held and used by the Company be reviewed
         for impairment  whenever  events or changes in  circumstances  indicate
         that the related carrying amount may not be recoverable. When required,
         impairment losses on assets to be held and used are recognized based on
         the fair value of the asset and long-lived assets to be disposed of are
         reported  at the lower of  carrying  amount or fair  value less cost to
         sell.

         The  requirements of SFAS 121 and the evaluation by the Company did not
         have a significant  effect on the  consolidated  financial  position or
         results of consolidated operations.

         Income Taxes
         ------------

         The Company  accounts for income taxes in accordance  with Statement of
         Financial Accounting  Standards 109 (SFAS 109).  "Accounting for Income
         Taxes,"  which  requires the  establishment  of a deferred tax asset or
         liability for the  recognition of future  deductions or taxable amounts
         and operating  loss  carryforwards,  deferred tax expense or benefit is
         recognized as a result of the change in the deferred asset or liability
         during the year. If necessary,  the Company will  establish a valuation
         allowance  to reduce any  deferred  tax asset to an amount  which will,
         more likely than not, be realized.

         Net Earnings Per Common Share
         -----------------------------

         The  Company  accounts  for  earnings  per  share  in  accordance  with
         statement of Financial  Accounting  Standard 128 ("SFAS 128") "Earnings
         per Share".  Basic  earnings  per share is based upon the net  earnings
         applicable to common shares after preferred  dividend  requirements and
         upon the weighted  average number of common shares  outstanding  during
         the  period.  Diluted  earnings  per share  reflects  the effect of the
         assumed  conversions  of  convertible  securities and exercise of stock
         options  only in the  periods  in which  such  affect  would  have been
         dilutive.




                                      F-11

<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

NOTE 2 - RESTATEMENT - CHANGE IN ACCOUNTING PRINCIPLE
------   --------------------------------------------

         On October  12, 1998 the Company  (formerly  known as C2  Technologies,
         Inc.),   Tidelands  Oil   Corporation  and  Tidelands  Gas  Corporation
         (Tidelands  Oil  Corporation  and  Tidelands  Gas  Corporation  related
         through  common  ownership)  entered  into  a  purchase  agreement  "C2
         Agreement." C2 Technologies,  Inc., an inactive Nevada corporation, was
         listed on the U.S. Over-The-Counter Market and Trading Under the Symbol
         "CTTG".  Pursuant to the terms of the C2 agreement,  the Company issued
         8,635,000 shares of its restricted  common stock in exchange for all of
         the  outstanding  shares of Tidelands Oil Corporation and Tidelands Gas
         Corporation.  As a result of this transaction,  the former shareholders
         of Tidelands Oil  Corporation  and Tidelands Gas  Corporation  wound up
         owning a majority of the Company's voting equity.  This transaction was
         originally accounted by the purchase method.

         During  the  fourth  quarter  of the year  2000 the  management  of the
         Company  reviewed  the  criteria of the above  transaction.  Management
         determined  that  to  present  a  more  accurate  financial   statement
         presentation,   the  Company  would  change  the   accounting  of  this
         transaction from the purchase method to accounting for this transaction
         as a  reverse  acquisition.  As a result of this  change in  accounting
         principle  the  prior  years  financial  results  of the  Company  were
         restated as follows:

                                                Paid-In Capital
                                                  In Excess of   Accumulated
                                                   Par Value      (Deficit)
                                                  -----------    -----------

        Balance as Previously Reported
          December 31, 1998                       $ 3,283,092    $  (239,936)
        Reversal of Value of Goodwill And
           Restatement of Accumulated (Deficit)    (3,123,579)      (613,630)
        Prior Period Adjustments - Other                              57,167
        Reversal of Amortization of
          Goodwill Expense                                            46,715
                                                  -----------    -----------
        Balance December 31, 1998-Restated        $   159,513    $  (749,684)
                                                  ===========    ===========

        For the Year Ended December 31, 1999:
          Net (Loss) as Previously Reported                      $(1,082,035)
          Reversal of Amortization of
             Goodwill Expense                                        186,591
                                                                 -----------
          Net (Loss) - Restated                                  $  (895,444)
                                                                 ===========




                                      F-12

<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000



NOTE 2 - RESTATEMENT - CHANGE IN ACCOUNTING PRINCIPLE
------   ---------------------------------------------
             (CONTINUED)

         Net (Loss) Per Common Share - Basic-
           As Previously Reported                           $   (0.070)
         Reduction As a Result of Restatement                    0.012
                                                            ----------
         Net (Loss) Per Common Share -
             Basic - Restated                               $   (0.058)
                                                            ==========

         Net (Loss) Per Common Share - Diluted -
             As Previously Reported                         $   (0.067)
         Reduction As a Result of Restatement               $    0.012
                                                            ----------
         Net (Loss) Per Common Share - Diluted - Restated   $   (0.055)
                                                            ==========


NOTE 3 - ACQUISITIONS
------   ------------

         On April 19,  2000 the  company  entered  into a  business  combination
         agreement with OMNI Acquisition  Corporation (OMNI), an inactive Nevada
         corporation,  incorporated  January 12, 2000, in which the Company will
         acquire OMNI in a share exchange  transaction  followed by a short form
         merger.  On February  18,  2000,  OMNI filed a Form 10-SB  Registration
         Statement  with  the   Securities  and  Exchange   Commission  and  was
         classified as a "blank check reporting company".

         Pursuant to the business combination  agreement,  the Company exchanged
         250,000  shares  of  restricted  common  stock,  valued  at  $250,  for
         5,000,000 issued and outstanding shares of OMNI. OMNI had $-0- revenues
         and $-0- assets.  The company  accounted  for this  transaction  by the
         purchase  method.  On May 11, 2000 OMNI merged  into the  Company.  The
         Company  was the  surviving  corporation  and  OMNI  was the  dissolved
         corporation.

         On December 1, 2000,  the Company  acquired  the  remaining  50% of its
         investment in Rio Bravo Energy,  LLC. (Rio Bravo) and its  wholly-owned
         subsidiary  Sonora  Pipeline,  LLC.,  for a  total  purchase  price  of
         $505,558.  The purchase of Rio Bravo was  accounted for by the purchase
         method,  whereby the underlying assets acquired and liabilities assumed
         are  recorded at their fair  value.  The excess of the amount paid over
         the fair value of Rio  Bravo's  identifiable  net  assets was  $57,029,
         which has been reflected in the balance sheet as goodwill.  The company
         expects to benefit from the goodwill  acquired over a period of fifteen
         years.




                                      F-13

<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 3 - ACQUISITIONS (CONTINUED)
------   ------------------------

         In  accordance  with  Accounting   Principle  Board  Opinion  #16,  the
         unaudited proforma condensed  consolidated results of operations of the
         Company are as follows:

                         Tidelands Oil & Gas Corporation
                 Condensed Consolidated Statement of Operations
                          Year Ended December 31, 2000
                                   "Pro Forma"
                                   (Unaudited)

         Revenues                                      $          1,153,109
                                                       --------------------

         Costs and Expenses                            $          2,138,943
                                                       --------------------

         Net (Loss)                                    $           (985,834)
                                                       ====================

         Net (Loss) Per Common Share                   $              (.052)
                                                       ====================

         Weighted Average shares Outstanding           $         19,074,719
                                                       ====================


NOTE 4 - PREPAID EXPENSES
------   -----------------

         As  of  December  31,  2000  prepaid  expenses  of  $102,772  consisted
         primarily of closing costs  associated with a December 7, 2000 one-year
         loan  agreement.  These closing costs will be expensed  during the year
         ending December 31, 2001.

NOTE 5 - OIL AND GAS PROPERTIES
------   ----------------------

         A summary of oil and gas properties at December 31, 2000 is as follows:


                                                                   Estimated
                                                                 Economic Life
                                                                 -------------
        Proved Properties - Leases              $   207,279            -
        Support Equipment                           255,191       3-10 Years
        Processing Plant                            431,560         15 Years
        Pipeline                                    166,410         15 Years
                                                -----------

             Total                                1,060,040
        Less Accumulated Depreciation and
          Depletion                                 159,757
                                                -----------
            Net Oil and Gas Properties          $   900,683
                                                ===========


                                      F-14

<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 6 - INVESTMENTS
------   -----------

         A summary of  investments  in Joint Ventures at December 31, 2000 is as
         follows:

                                   Ownership
                                   Percentage
                                   ----------

         GT-Pla J.V. 96              5.978%        $   1,124
         G-Halsell J.V. 96           4.5%              9,640
                                                   ---------

                                                   $  10,764
                                                   =========

         The  Company's   potential  exposure  to  loss,  with  respect  to  its
         investments  in Joint  Ventures is  generally  limited to its  positive
         investments  and  advances.  However,  in some cases the Company may be
         otherwise  obligated  to make  capital  contributions  or  loans to the
         ventures to make up cash flow deficits.  The Company's maximum exposure
         to  credit  and  market  risk is not  determinable  with any  degree to
         accuracy as determination of the ultimate amounts is dependent upon the
         manager  of  the  joint  ventures  to  optimize  cash  flows  from  the
         operations  of the projects  and  increase  the value of the  projects.
         However,  management does not believe that the Company's exposure would
         significantly exceed the aggregate of the exposure described above.

         On  January  22,  2001,  the  Company  acquired  an  additional  26.68%
         ownership  percentage of GT-Pla J.V. 96 and 20% ownership percentage of
         G-Halsell J.V. 96.

NOTE 7 - INTANGIBLE ASSETS
------   -----------------

         A summary of intangible assets at December 31, 2000 is as follows:

                 Goodwill                               $      57,029
                 Less Accumulated Amortization                    317
                                                        -------------

                                                        $      56,712
                                                        =============

         The Company  evaluates the  amortization  period of  intangibles  on an
         ongoing basis, in light of any changes in business  conditions,  events
         or  circumstances,  that  may  indicate  the  potential  impairment  of
         intangible assets.





                                      F-15

<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000



NOTE 8 - RELATED PARTY TRANSACTIONS
------   --------------------------

         The Boards of Directors of the Company's wholly-owned  subsidiaries had
         previously  approved annual officers' salaries of $240,000 for services
         provided.  At  December  31,  2000  the  cumulative  amount  of  unpaid
         officers' salaries is as follows:

                     Service Provided For
                   Year Ended December 31,                       Amount
                   -----------------------                       ------

                        1997 and Prior                         $  310,000
                        1998                                       60,000
                        1999                                      240,000
                        2000                                      240,000
                                                               ----------
                                                               $  850,000
                                                               ==========

         At December 31, 2000, cumulative non-interest bearing advances due from
         officers and stockholders of the Company amount to $6,214.

         In June,  2000 the Company engaged a director of the Company to perform
         consulting   services  pursuant  to  a  $3,000  a  monthly   consulting
         agreement.  For the year December 31, 2000 the Company incurred $24,000
         for these services.

NOTE 9 - LONG-TERM DEBT
------   --------------

         A summary of notes payable at December 31, 2000 is as follows:

         Note Payable, Secured, Interest Prime
            Rate Plus 5%, Maturing December 2001               $     660,000

         Note Payable, Unsecured, Non-Interest
            Bearing, Payable on Demand                                19,552

         Note Payable, Unsecured, 6% Interest,
            Maturing January 2002                                     37,000
                                                               -------------
                                                                     716,552
         Less:  Current Maturities                                   679,552
                                                               -------------

                   Total Long-Term Debt                        $      37,000
                                                               =============




                                      F-16

<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 10 - INCOME TAXES
-------   ------------

         At December  31, 2000 the Company had  cumulative  net  operating  loss
         carryforwards  of  approximately  $1,964,000,  to offset against future
         federal taxable income, that expire in the years through 2020.

         The  company  files  a  consolidated   income  tax  return  and  timing
         differences between the recognition of certain income and expense items
         for  income  tax  purposes  and  financial  reporting  purposes  are as
         follows:

         Cumulative benefit of net operating loss
            carryforwards                                    $   2,208,000
         Officers' salary deductions in excess of
           tax deduction                                          (240,000)
         Tax depreciation less than book depreciation               (4,000)
                                                             -------------

                                                             $  (1,964,000)
                                                             =============

         Total deferred tax asset                            $     785,000
         Less valuation allowance                                  785,000
                                                             -------------
         Net deferred tax asset                              $           0
                                                             -------------

         It is currently undeterminable as to when the Company will benefit from
         the deferred tax asset.

NOTE 11 - COMMON STOCK TRANSACTIONS
-------   -------------------------

         (a) The Company  issued  60,000  shares of  restricted  common stock to
         settle a 1999 contract dispute at a value of $98,000.

         (b) The Company issued  250,000  shares of restricted  common stock for
         the OMNI acquisition valued at $250. See Note 3 Acquisitions.

         (c) The company  issued an  aggregate of 150,000  shares of  restricted
         common stock for services rendered at a value of $23,800.

         (d) The Company issued 1,072,745  shares of restricted  common stock in
         cancellation of current year cash advances,  pursuant to the terms of a
         line of credit, at a value of $235,770.

         (e) The Company issued 1,785,714 shares of restricted  common stock for
         financial consulting services at a value of $1,886.

         (f) the Company cancelled 10,000 shares of previously issued restricted
         common stock for correction of a prior year settlement.

                                      F-17

<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000






NOTE 12 - STOCK OPTIONS
-------   -------------

         As of December 31, 2000 the Company had outstanding  previously  issued
         stock options as follows:

               Shares          Option Price            Expiration Date
               ------          ------------            ---------------

                40,000           $  2.50            January 13, 2001 (Expired)
                40,000              2.50            February 15, 2001 (Expired)
                50,000               .45            January 10, 2002
              --------
               130,000

NOTE 13 - LEASES
-------   ------

         The  Company  entered  into two  operating  leases  for the  rental  of
         facilities  (a) executive  office,  monthly rent of $1,350,  short-term
         lease,  (b)  field  office,  monthly  rent of  $400,  12/01/00  through
         12/01/12.

         In addition,  the Company leases  compressors under a monthly lease for
         $3,845 monthly.

         Future minimum lease payments required under  non-cancelable  operating
         leases are as follows:

                     Year Ending December 31,                    Amount

                                2001                          $      4,800
                                2002                          $      4,800
                                2003                          $      4,800
                                2004                          $      4,800
                                2005                          $      4,800
                               Thereafter                     $     32,400
                                                              ------------
                                                              $     56,400
                                                              ============

         Rent expense for the years ended December 31, 2000 and 1999 were $9,671
         and $ -0- respectively.




                                     F-18

<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000



NOTE 14 - COMMITMENTS AND CONTINGENCIES
-------   -----------------------------

         The  Company  is subject to the laws and  regulations  relating  to the
         protection  of the  environment.  The  Company's  policy  is to  accrue
         environmental and cleanup related costs of a non-capital nature when it
         is both probable that a liability has been incurred and when the amount
         can be  reasonably  estimated.  Although it is not possible to quantify
         with any degree of  certainty  the  financial  impact of the  Company's
         continuing   compliance   efforts,   management   believes  any  future
         remediation or other compliance  related costs will not have a material
         adverse  effect on the  financial  condition  or  reported  results  of
         operations of the Company.

NOTE 15 - LITIGATION SETTLEMENTS
-------   ----------------------

         On March 8, 2000 the Company  settled a $98,000 prior contract  dispute
         by the issuance of 60,000  shares of the  Company's  restricted  common
         stock.

NOTE 16 - SUBSEQUENT EVENTS
-------   -----------------

         In January  2001 the  Company  acquired an  additional  26.68 and 20.00
         ownership  percentage  in GT-PLA  J.V. 96 and  6-Halsell  J.V. 96 joint
         ventures, respectively. The Company issued 150,000 shares of restricted
         common stock and signed a short-term promissory note for $75,000.

         In March 2001 the Company formed Reef  International,  Inc.  (REEF),  a
         limited liability corporation.  Reef will be acquiring and constructing
         pipelines  to  transport  natural  gas  products  from  the  Rio  Bravo
         processing  plant to Mexico.  In April of 2001 the Company  exchanged a
         50% interest in Reef for financial assistance from Rainbow Investments,
         Inc.  for  the   construction  of  this   international   pipeline  and
         acquisition  of  connecting   pipelines.   Reef  is  currently  in  the
         permitting stage of operations.

         In May of  2001  the  Company  secured  a  three-year,  $1,000,000,  8%
         interest-bearing  line of  credit.  In  consideration  for this line of
         credit the Company issued 200,000 shares of restricted common stock.





                                      F-19

<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
                      CONSOLIDATED SUPPLEMENTAL INFORMATION
                          YEAR ENDED DECEMBER 31, 2000
                                   (UNAUDITED)




Capitalized  Costs Relating to Oil and Gas Producing  Activities at December 31,
--------------------------------------------------------------------------------
2000 (Note 2)
-------------


Proved Properties (leases)                              $      207,279
Support Equipment                                              255,191
                                                        --------------
   Total                                                       462,470
Less Accumulated Depreciation and Depletion                    137,110
                                                        --------------
   Net Oil and Gas Properties                           $      325,360
                                                        ==============

Costs  Incurred in Oil and Gas Producing  Activities for the Year Ended December
--------------------------------------------------------------------------------
31,
---

                                                    2000              1999
Property Acquisition Costs - Proved
  Properties and Support Equipment           $       72,764     $      47,573
                                             ==============     =============


Results of Operations  for Oil and Gas Producing  Activities for the Years Ended
--------------------------------------------------------------------------------
December 31, (Note 2)
---------------------
                                                    2000         1999

Oil and Gas Sales                                 $  75,620    $  29,799
Production Costs                                    216,780     (121,787)
Depreciation and Depletion                          (26,211)     (18,830)
                                                  ---------    ---------
                                                   (167,371)    (110,818)
Income Tax Expense                                        0            0
                                                  ---------    ---------
Results of Operations for Oil and Gas Producing
  Activities (Excluding Corporate Overhead,
  Losses of Joint Ventures and Other
  Non-Operating Expenses                          $(167,371)   $(110,818)
                                                  =========    =========




                                      F-20

<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
                      CONSOLIDATED SUPPLEMENTAL INFORMATION
                          YEAR ENDED DECEMBER 31, 2000
                                   (UNAUDITED)



Reserve Information
-------------------

The following estimate of proved reserve and proved developed reserve 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. The Company emphasizes that reserve estimates are inherently
imprecise and that estimates of new discoveries are more imprecise than those of
producing oil and gas properties.  Accordingly,  those estimates are expected to
change as future information  becomes  available.  All of the Company's reserves
are located in the state of Texas.

Proved  reserves are estimated  reserves of crude oil (including  condensate and
natural gas  liquids)  and  natural gas that  geological  and  engineering  data
demonstrate  with  reasonable  certainty to be  recoverable in future years from
known  reservoirs  under  existing  economic and  operating  conditions.  Proved
developed  reserves are those expected to be recovered  through  existing wells,
equipment, and operating methods.

The  standardized  measure of  discounted  future net cash flows is  computed by
applying  year-end  prices of oil and gas (with  consideration  of price changes
only to the extent provided by contractual arrangements) to the estimated future
production of proved oil and gas reserves,  less estimated  future  expenditures
(based on year-end  costs) to be included in developing and producing the proved
reserves,  less estimated future income tax expenses (based on year-end statuary
tax  rates)  to be  incurred  on  pretax  net cash  flows  less tax basis of the
properties and available credits, and assuming continuation of existing economic
conditions. The estimated future net cash flows are then discounted, pursuant to
the  requirements of Statement of Financial  Accounting  Standards 69 (SFAS 69),
"Disclosures About Oil and Gas Producing Activities," using a rate of 10 percent
a year to reflect the estimated timing of the future cash flows.






                                      F-21

<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
                      CONSOLIDATED SUPPLEMENTAL INFORMATION
                          YEAR ENDED DECEMBER 31, 2000
                                   (UNAUDITED)
                                   -----------


Reserve Information (continued)
------------------------------


                                             (OIL BBLS)       GAS (MCF)
                                            ------------    ------------

Proved Developed and Undeveloped Reserves
   Beginning of Year                           6,983,060      19,995,825
   Production/Disposition                     (6,433,726)    (19,995,825)
                                            ------------    ------------
   End of Year (Notes A and B)                   549,334               0
                                            ============    ============
Proved Developed Reserves
   Beginning of Year                           3,917,907       2,934,851
   End of Year (Notes A and B)                   549,334               0
                                            ------------    ------------

Standardized Measure of Discounted Future
  Net Cash Flows at December 31, 2000

Future Cash Inflows                         $ 14,024,497    $       --
Future Production Costs                       (3,434,216)           --
Future Development Costs                               0            --
Future Income Tax Expense                     (4,052,124)           --
                                            ------------    ------------

Future Net Cash Flows                          6,538,157            --
   10% Annual Discount for Estimated
      Timing of Cash Flows                    (2,544,111)           --
                                            ------------    ------------
Standardized Measures of
      Discounted Future Net
   Cash Flows Relating to Proved
      Oil and Gas Reserves                  $  3,994,046    $       --
                                            ============    ============

The following  reconciles the change in the  standardized  measure of discounted
future net cash flow during 2000.
Beginning of Year                           $  3,994,046    $       --
Oil and Gas Produced Including
   Excess Production Costs                       (74,271)           --
                                            ------------    ------------
End of Year                                 $  3,919,775    $       --
                                            ============    ============




                                      F-22

<PAGE>

                         TIDELANDS OIL & GAS CORPORATION
                 NOTES TO CONSOLIDATED SUPPLEMENTAL INFORMATION
                          YEAR ENDED DECEMBER 31, 2000
                                   (UNAUDITED)
                                   -----------



NOTE - A
----

The  reduction  of proved  developed  and  undeveloped  reserves  Gas (MCF) from
January  1,  2000  through  December  31,  2000  resulted  from  the  production
performance of the gas wells that were drilled in prior years. Actual production
rates of the  wells  did not  meet the  engineering  projections  and  continued
operations would be uneconomical.  Subsequently, the wells were shutoff awaiting
plugging  and  abandonment  as required by the State of Texas.  These wells were
transferred  to  The  Exploration   Company  (TXCO)  who  assumed  the  plugging
liabilities of all of the wells,  this relieving the Company from  approximately
$150,000 in plugging and abandonment  costs.  These actions  resulted in writing
off the proved developed and undeveloped  reserves (Gas) MCF as unrecoverable at
an economic rate.

NOTE - B
----

The  reduction of the proved  developed and  undeveloped  reserves of oil (BBLS)
from January 1, 2000 through  December 31, 2000 resulted from the disposition of
all the  non-economical  wells to TXCO in  exchange  for the  assumption  of the
plugging and abandonment  costs relieving the Company of approximately  $200,000
in plugging and abandonment costs.

The reduction  consists of writing off 6,430,085  barrels of oil under the wells
transferred  to TXCO and actual oil  production of $3,641  barrels of oil during
the year  2000.  In  accordance  with new  regulations  of the State  Regulatory
Commission an operator must file extensions for all wells that are inactive,  or
not in  production  in order to obtain an exception to plugging a well at a cost
of $3.00 per foot of depth of each well.  This cost is prohibitive as an average
2000 foot well would cost $6,000 just to remain  inactive.  The Company disposed
of 116 of its inactive wells and retained 40 of its producing wells.










                                      F-23

<PAGE>

ITEM 8.   Changes  In  and  Disagreements  With  Accountants  on  Accounting and
          Financial Disclosure.

         None

                                    PART III


ITEM 9.   Directors,  Executive  Officers,  Promoters,  and   Control   Persons:
          Compliance With Section 16(a) of the Exchange Act

The  following  table lists the names,  ages,  and  positions  of the  executive
officers  and  directors  of the  Company  that  served  during the year  ending
December 31, 2000. All officers and directors have been appointed to serve until
their successors are elected and qualified. Additional information regarding the
business experience,  length of time served in each capacity,  and other matters
relevant to each individual is set forth following the table.

Name               Age      Position or officer               Appointment Date
--------------------------------------------------------------------------------

Michael Ward       45       Director, President              October  21, 1998
Royis Ward         67       Director, Secretary/Treasurer    October  21, 1998
Ahmed Karim        29       Director, Vice President         October  21, 1998
Allen Alderson     51       Director                         November 25, 1998

         Michael Ward is the President,  Chief Executive Officer and Director of
the Company and Chief Executive  Officer of Tidelands Gas  Corporation.  Michael
Ward has served in his present  capacities  since October 21, 1998. Mr. Ward has
more than 25 years of diversified experience as an oil and gas professional.  He
was educated in business  management and administration at Southwest Texas State
University and the University of Texas.  He has wide  experience in the capacity
in which he successfully served in operating oil and gas companies in the United
States.  During the past 20 years,  he has been  associated  with Century Energy
Corporation where his duties and  responsibilities  were production and drilling
superintendent and supervised 300 re-completions and new drills in Duval County,
Texas. In association with Omega Minerals, Inc., where he was vice president and
part owner,  he  operated  65 wells in 23  counties in South and West Texas:  17
wells in Seminole and Osage  Counties,  Oklahoma,  44 wells in Neosho and Wilson
Counties,  Kansas and 125 wells in Brown,  Pike,  Schuyler  and Scott  Counties.
Illinois.  He was president and owner of Major  Petroleum  Company.  He drilled,
completed  and produced 42 wells in South and West Texas  counties.  The company
was sold. With Tidelands Oil  Corporation,  his duties included  supervising and
performing  remedial  well  work,  work-overs  and  economic  evaluation  of the
corporate  properties.  The  primary  area of interest  was in Maverick  County,
Texas. He has performed  project  financing  analysis and consulting of refinery
acquisitions  for the Yemen  government.  Currently,  he is negotiating  new gas
purchase and sale contracts,  supervising and administering the sale of gas line
connections and hookups.

                                       8
<PAGE>

         Royis Ward is the Secretary/Treasurer and a Director of the Company and
the President of Tidelands Oil  Corporation.  Mr. Ward has served in his present
capacities  since  October  21,  1998.  He has been  engaged  in the oil and gas
industry  since  graduation  from Tyler Junior  College,  Tyler,  Texas in 1952.
Initially,  he was  employed  as a  production  superintendent  and  landman for
Coffield  &  Guthrie,  Inc.,  a  large  independent  oil and  gas  operator  and
thereafter placed in charge of pipeline and drilling  operations from 1952-1955.
In 1955.  he began to develop oil and gas  properties  for his own account as an
independent  oil and gas operator  throughout the southwest  until 1962. At that
time, he became President of Omega Petroleum Corporation, Shreveport, Louisiana.
Thereafter,  he  continued  as an  independent  oil  and gas  operator  drilling
individual in excess of 50 wells in the South Texas Area. In 1968, he became the
President and CEO of Omega Minerals, Inc. and was instrumental in acquiring vast
oil and gas properties by drilling,  development, and re-acquisitions.  In 1985,
Tidelands Oil Corporation,  a Texas  Corporation,  was formed for the purpose of
drilling and developing oil and gas properties in South Texas.

         Ahmed  Karim  Vice  President  and  director  of the  Company.  He is a
graduate   of  Simon   Fraser   University.   He  holds  a  degree  in  Business
Administration, specializing in marketing and international business. Since 1995
his  business   experience  includes  work  with  Quest  Investments  Group  and
Interworld  Trade and Finance  where his  responsibilities  included  marketing,
finance and investor relations.

         Mr. Allen Alderson is a member of the Company's board of directors.  He
was previously  President of Falco Energy Services,  L.L.C. (FES), a natural gas
marketing  and  transportation  company  formed  in 1995  with its  headquarters
located  in  Shreveport,  Louisiana.  Falco  Energy  Services  is engaged in the
marketing,  transportation  and  processing  of natural gas with emphasis on the
development and operation of natural gas pipeline systems.

         Mr. Alderson  attended  Louisiana Tech University and the University of
Texas at Austin,  graduating with a Bachelor of Science Degree in Finance. He is
a  member  of the  Independent  Petroleum  Association  of  America,  the  Texas
Independent  Producers  and  Royalty  Owners  Association,  the  Houston  Energy
Association and is a charter member of the Natural Energy Services Association.

Royis Ward is the father of Michael Ward.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

         Section  16(a) of the  Securities  Exchange  Act of 1934  requires  the
Company's directors and executive officers, and persons who own more than 10% of
the Company's Common Stock, to file with the Securities and Exchange  Commission
initial  reports of  beneficial  ownership  and reports of changes in beneficial
ownership of Common Stock of the Company.  Officers,  directors and greater than
10%  shareholders  are required by the  Securities  and Exchange  Commission  to
furnish the  Company  with copies of all section  16(a)  reports  they file.  No
reports were filed by the officers, directors or 10% or greater shareholders.

ITEM 10.  Executive Compensation

The following sets forth the compensation of the officers of the Company in the
year ended December 31, 2000.

Executive Officer Compensation

The Company has three executive  officers,  Michael Ward,  Royis Ward and Ahmmed
Karim.  Michael Ward's annual salary is $120,000.  Royis Ward's annual salary is
$120,000.


                                       9
<PAGE>

The company  has not paid any of these  salaries to date and the amounts due are
accruing.

Director Compensation

No  compensation  was paid by the  Company  to any  Directors  for any  services
provided  during the year ended December 31, 2000.  There are no other formal or
informal  understandings  or  arrangements  relating to  compensation;  however,
Directors  may be reimbursed  for all  reasonable  expenses  incurred by them in
conducting  Company  business.  The company has retained Mr. Allen Alderson as a
consultant compensating him $3,000 monthly.

ITEM 11.   Security Ownership of Certain Beneficial Owners and Management

The  following  table sets forth the Common Stock  ownership  information  as of
December 31, 2000, with respect to(i) each person known to the Company to be the
beneficial  owner of more  than 5% of the  Company's  Common  Stock;  (ii)  each
director  of the  Company;  and  (iii) all  directors,  executive  officers  and
designated  stockholders  of the  Company  as a group.  This  information  as to
beneficial ownership was furnished to the Company by or on behalf of the persons
named.  Unless  otherwise  indicated,  each has sole voting and investment power
with respect to the shares  beneficially  owned.  The  percentages  are based on
20,728,948 shares issued and outstanding as of December 31, 2000.

Title of Class      Name and Address        Amount and Nature        Percent of
--------------      ----------------        -----------------           Class
                                                                        -----

Common              Michael Ward              3,513,125                16.94%
                    9309 North Star
                    Corpus Christi, TX

Common              Royis Ward                3,513,125                16.94%
                    5902 Fenway
                    Corpus Christi, TX

Common              Allen Alderson              165,000                 0.79%
                    6857 N. Lakeshore Dr.
                    Shreveport, LA 71107

Common              Ahmed Karim                   2,500                 0.0001%
                    1532 Woods Dr.
                    N. Vancouver, B.C.
                    Canada V7R 1A9

Directors as a group owned 34.7% of the Company's issued and outstanding stock.


ITEM 12.  Certain Relationships and Related Transactions

         The Company  granted  common  stock  options on January 10, 1999 to its
officers and directors  totaling 1,650,000 common shares excisable on, or before
January 10, 2000. None of the options were exercised.

         The  Company  granted  common  stock  options on  November  11, 1999 to
directors Allen Alderson and Danny Vines.  Danny Vines a former Company Director
resigned  earlier this year.  The options are  exercisable in three 50,000 share
blocks each at an exercise price of 45 cents per share.  Mr. Alderson  exercised
all of his options.  Mr. Vines  exercised  100,000  share options and has 50,000
shares remaining unexercised.

         The Board of Director of the Company previously approved the accrual of
officer  salaries  totaling  $850,000 for services  rendered by Michael Ward and
Royis Ward during 2000 and previous years. These salaries remain unpaid.


                                       10
<PAGE>

         As of December 31, 2000, the cumulative  non-interest  bearing advances
due from  Michael and Royis Ward,  as officers and  directors  of the  Company's
wholly owned subsidiaries, totaled $ 6,214.00.


                                     PART IV

ITEM 13.  Exhibits and Reports on Form 8-K

(a)      Reports on Form 8-K.


     1.   Current  Report on Form 8-K not filed during the last quarter of the
          fiscal year.


(b)      Exhibits

         3.1      Articles of Incorporation of Tidelands Oil & Gas Corporation.,
                  a Nevada corporation, formerly C2 Technologies, Inc.
         3.2      Articles  of  Amendment   Tidelands  Oil  &  Gas  Corporation,
                  formerly C2 Technologies, Inc.
         3.3      Bylaws of Tidelands Oil & Gas Corporation
         21       List of Subsidiaries


                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) to the Securities  Exchange
Act of 1934,  the Company has duly caused this Form 10-KSB Report for the period
ending  December  31,  2000  to be  signed  on its  behalf  by the  undersigned,
thereunto duly authorized on this 15th day of May, 2001.


                                            TIDELANDS OIL & GAS CORPORATION


                                            BY: /s/ Michael Ward
                                               ---------------------------
                                               Michael Ward, President


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Company and in
the capacities and on the dates indicated.


Date: May 15, 2001                   /s/ Michael Ward
                                    -----------------------------------------
                                    Michael Ward, President, Director


                                     /s/ Royis Ward
                                    ------------------------------------------
                                    Royis Ward, Secretary/Treasurer, Director


                                     /s/ Ahmmed Karim
                                    ------------------------------------------
                                    Ahmmed Karim, Vice President, Director





                                       11