AvStar Aviation Group, Inc. – ‘10-K’ for 12/31/01

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Annual Report   —   Form 10-K
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Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                         50    228K 

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 FORM 10-K

ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE

 SECURITIES EXCHANGE ACT OF 1934

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE

 SECURITIES EXCHANGE ACT OF 1934

 For Fiscal Year Ended
 December 31, 2001
Commission File #0-30503

PANGEA PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
COLORADO
(State or other jurisdiction of incorporation or organization)

76-0635938
(IRS Employer Identification Number)

5090 Richmond Avenue, #425, Houston, Texas 77056
(Address of principal executive offices)(Zip Code)

(910) 457-1121
 (Registrant's telephone no., including area code)

 6776 Southwest Freeway, Suite 620, Houston, Texas 77074
(Former name, former address and former fiscal year, if changed since last
 report)

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON STOCK, $0.001
 par value

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 [ ]                                                                  

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Check if there is no disclosure of delinquent filers in response to Item 405 of 
Regulation S-B not contained in this form, and no disclosure will be contained, 
to the best of the registrant's knowledge, in definitive proxy or information   
statements incorporated by reference in Part III of this Form 10-K or any       
amendment to this Form 10-K. ( )                                                
Revenues for year ended December 31, 2001: $34,251                              
Aggregate market value of the voting common stock held by non-affiliates of the 
registrant as of April 10, 2002, was: $1,135,828                                
Number of shares of the registrant's common stock outstanding as of April 10,   
2002 was: 52,186,900.                                                           

4/15/2002                        Pangea 2001 10-K                        Page 2 

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PART I

ITEM 1. DESCRIPTION OF BUSINESS                                                 

GENERAL INFORMATION ABOUT PANGEA                                                
Pangea Petroleum Corporation is a publicly traded company listed on the OTC     
Electronic Bulletin Board under the symbol "PAPO." We are an independent energy 
company with a business plan focused on exploration and drilling as well as the 
purchase, re-engineering, exploitation and development of proven oil and gas    
properties as a core business activity. Pangea has a subsidiary, Mass Energy.   
The Company structure will remain small through the use of carefully selected   
consultants, contractors and service companies.                                 

Pangea's business objective is to use capital and established proven technology 
to create value by generating production from established reserves that are of  
little interest to the major companies in the industry. Initially, the Company  
will focus on mature petroleum provinces in the United States that have adequate
production and distribution infrastructures. In most cases, the Company will    
invest in projects to a sufficient degree to maintain decision-making control   
while leaving routine operating responsibility in the hands of competent        
partners and/or contractors. Producing properties may be resold after enhanced  
production is established as appropriate to establish and maintain maximum asset
value.                                                                          

PANGEA PETROLEUM ORGANIZATION.                                                  
We are a Colorado corporation incorporated on March 11, 1997 under the name Zip 
Top, Inc. On December 11, 1998, we changed our name to Pangea Petroleum         
Corporation. Until our acquisition of Mass Energy, Inc. in October 2000, we     
operated as a development stage company                                         

BUSINESS STRATEGY                                                               
Our business strategy contemplates exploration and drilling as well as the      
purchase, re-engineering, exploitation and development of proved oil and gas    
properties as a core business activity. Our strategy will continue to include   
exploration and development drilling programs designed to use under-balanced    
horizontal drilling technologies and to use three dimensional ("3-D") seismic   
technology with comprehensive integration of subsurface control, production,    
engineering, and other data, as available, as a means of reducing risks.        

REVENUE MODEL                                                                   
Revenue potential and asset enhancement will be the guiding principal for all   
our investments. Projects will be selected and developed in a manner that will  
minimize capital required and maximize the utilization of existing production   
and collection infrastructure and geologic data. We will try to minimize risk by
producing from known reserves and other reserves made available by work-overs   
and other established techniques. Revenue streams from product sales will be    
enhanced by the careful selection and priorization of projects.                 

4/15/2002                        Pangea 2001 10-K                        Page 3 

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The key financial assumption in our business plan is that a significant number  
of attractive energy investments will continue to be available for purchase and 
appropriate technology will be available through service companies and          
consultants to develop these properties. The planned mix of investments will    
support a predictable, growing revenue stream from product sales and augmented  
by income from the sale of enhanced productive properties.                      

Pangea will create value in three ways. First of all, we will develop a market  
leading position in the identification and exploitation of under-producing oil  
and gas reserves in established energy provinces such as the State of Texas.    
Using a judicial mix of current, proven technology and capital, Pangea will     
optimize production from established reserves. First-rate service companies that
have been selected from an approved group of merit-based companies will         
implement approved projects. Revenue streams will be maximized by carefully     
marketing the products through a combination of spot and contract sales and in  
some cases product sales will be hedged.                                        

The second major thrust for value creation will be the enhanced asset value     
realized from the development of the under-utilized reserves acquired by        
purchase. These reserves can                                                    
frequently be produced for a number of years and then re-sold in the market     
place for greater value because of enhanced production and timing.              

The final thrust will be the formation of strategic alliances and partnerships  
that will enable Pangea to play a greater role in the development of older      
reserves than it could achieve on its own. These partnerships might take the    
form of jointly owned reserves, production sharing agreements with service      
companies in return for production guarantees, or some combination of these and 
other shared business arrangements. Pangea's organization will fully utilize    
strategic marketing to fully implement its business plan. We will select a      
strategic marketing consultant to guide us through this process. Pangea intends 
to become a significant participant in select market niches in the energy       
industry. The niches include the development of under producing oil and natural 
gas reserves with capital and technology, the resale of improved and re-packaged
producing properties and participation in the final production stage and        
disposition of select offshore projects. We will create value for our           
shareholders by leading the market in our niches and maintaining a strong       
financial base.                                                                 

RISK FACTORS                                                                    

Going Concern Risk                                                              
------------------                                                              

We have had and could have losses, deficits and deficiencies in liquidity, which
could impair our ability to continue as a going concern.                        

4/15/2002                        Pangea 2001 10-K                        Page 4 

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In Note #2 to our consolidated financial statements, our independent auditors   
have indicated that certain factors raise substantial doubt about our ability to
continue as a going concern. Since its inception, the Company has suffered      
recurring losses from operations and has been dependent on existing stockholders
and new investors to provide the cash resources to sustain its operations.      
During the years ended December 31, 2001, 2000 and 1999, the Company reported   
net losses and negative cash flows from operations as follows:                  

                                                                [Download Table]

                                         2001          2000         1999   
                                     ------------  ------------  ----------
                                                                           
Net loss                             $(9,000,347)  $(6,502,646)  $(659,769)
Negative cash flows from operations  $  (396,624)  $(1,573,624)  $(519,222)

The Company's continuing negative operating results have produced a working     
capital deficit of $(2,051,528) at December 31, 2001 and have caused the Company
to become severely delinquent on various accounts payable. Vendors have         
initiated legal actions against Mass Energy, Inc. to force payment of past due  
accounts, but Mass Energy, Inc. lacks the cash resources to make such payments. 
Accordingly, the results of such legal actions cannot be predicted. These       
factors raise substantial doubt about the Company's ability to continue as a    
going concern.                                                                  

The Company's strategic plan for dealing with its cash flow problems is         
currently being developed, but may include additional private placements of the 
Company's common stock, the abandonment of unprofitable projects and the        
exchange of common stock for settlement of vendor accounts. There can be no     
assurance that any of the plans developed by the Company will produce cash flows
sufficient to overcome current liquidity problems.                              

The Company's long-term viability as a going concern is dependent on certain key
factors,  as  follows:                                                          

    -    The Company's ability to obtain adequate sources of outside financing
        to convince vendors to drop legal actions against the Company and to
  allow the Company to continue forward with current exploration
efforts.                                                    

   -    The Company's ability to locate, prove and produce from economically
viable oil and gas reserves.                                

     -    The Company's ability to ultimately achieve adequate profitability and
cash flows to sustain continuing operations.                

IMPLEMENTATION OF BUSINESS STRATEGY DEPENDENT ON ADDITIONAL FINANCING           

We must obtain outside financing to fund the expansion of our operations and to 
meet our obligations as they become due. Any additional debt or equity financing
may be dilutive to the interests of our stockholders. Such outside financing    
must be provided from the sale of equity securities, borrowing, or other sources

4/15/2002                        Pangea 2001 10-K                        Page 5 

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of third party financing. Further, the sale of equity securities would          
substantially dilute our existing stockholders' interests, and borrowings from  
third parties could result in our assets being pledged as collateral. Loan      
terms, which would increase our debt service requirements, could restrict our   
operations. There is no assurance that we can obtain financing on favorable     
terms.                                                                          

INDUSTRY                                                                        

The petroleum industry is a global industry that is fundamental to all economic 
activity. It is composed of the down stream sector (refining, marketing,        
products and derivatives) and the upstream sector that is focused on finding and
producing crude oil and natural gas. Oil and natural gas are commodities that   
are found throughout the world and they have been produced in increasing        
quantities since the mid 19th century. The exploration, production and          
transportation of these materials in the modern era generate an enormous        
appetite for capital because quantities sufficient to fuel the world's economic 
machine are rapidly becoming more difficult to find and expensive to produce.   
Consequently, a few global corporations and state energy companies dominate the 
industry. These companies tend to concentrate their investments on very large   
prospects and to quickly abandon less productive, older reserves.               

The production technology in the petroleum industry has improved tremendously in
recent years, however commercial quantities of oil and gas are frequently left  
in place when fields are abandoned. This fact is particularly true in older     
reservoirs that were abandoned before modern technologies were available.       
Additionally, the economic level of interest varies with company size. A small  
company such as Pangea is frequently willing to devote resources to a field that
is not of interest to a major oil and gas company.                              

Mature energy provinces such as the United States have many productive fields   
with production and collection infrastructure in place that can be purchased.   
The infrastructure represents a significant required investment if production is
to continue. These fields offer investment potential for those companies willing
to commit capital and appropriate technology. The technology is readily         
available from consultants, service companies, and other groups established to  
support the petroleum production sector.                                        

This plan will target the petroleum niche composed of fields with established   
reserves that require capital and/or technology in order to enhance or restore  
production.                                                                     

ABOUT MASS ENERGY                                                               
Mass Energy, Inc. is a wholly owned subsidiary since October 2000.  Mass Energy 
is a Texas corporation organized on November 24, 1997. Mass Energy currently has
no real operations.  While their business strategy was focused on the           
exploration and drilling, they incurred significant debt in drilling of one     
well.  There is currently sufficient money to sustain them into the first       

4/15/2002                        Pangea 2001 10-K                        Page 6 

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quarter of 2002; however, Mass Energy will not have money to develop further    
projects without a substantial capital infusion.  Since Mass Energy sold the    
majority of their assets in December 2001, it is not anticipated that they will 
be able to obtain additional working capital or to continue meeting their debt  
obligations.                                                                    

M&R Exploration Company and Mass Energy, Inc., both Texas business corporations,
merged effective November 1, 1997. The plan of merger was adopted in accordance 
with the Texas Business Corporations Act. Under the terms of the merger, M&R    
Exploration Company was the surviving corporation. The plan of merger provided  
for the change of the corporate name to Mass Energy, Inc.                       

In 2001, Mass Energy drilled on leases in Starr and Jackson, County, Texas.     
Drilling initially produced results on the Jackson County, Texas lease that     
proved to be uneconomical to continue production. Substantial debt was incurred 
in the drilling of this lease and there are currently outstanding liens on the  
well totaling approximately $824,946.59. Additionally several lawsuits have been
filed against Mass Energy for payment of debts incurred in the drilling of this 
well. These lawsuits assert claims which total approximately $479,672.00.       

In December 2001, Mass Energy sold their interest in leases in Jackson County,  
Texas  and Starr County, Texas.  Mass Energy retained a back-in working interest
in both of these properties.  Additionally, the lease in Shelby County, Texas   
was sold by Mass Energy.                                                        

Currently, Mass Energy has no operations nor do they intend to start drilling on
any new prospects in the foreseeable future.  The Company is presently          
evaluating various alternatives in response to the litigation and is considering
various alternatives with respect to Mass Energy.                               

JOINT OPERATIONS WITH OTHERS; NON-OPERATOR STATUS                               
We own less than 100% of the working interest in our oil and gas holdings.      
Operations are likely to be conducted jointly with other working interest       
owners. Joint operating arrangements are customary in the oil and gas industry  
and are generally conducted pursuant to a joint operating agreement whereby a   
single working interest owner is designated the operator. We could possibly be a
non-operating working interest owner in other wells in the future. For          
properties where we own less than 50% of the working interest, drilling and     
operating decisions may not be entirely within our control. If we disagree with 
the decision of a majority of working interest owners, we may be required, among
other things, to postpone the proposed activity, relinquish or farm-out its     
interest or decline to participate. If we decline to participate, we might be   
forced to relinquish our interest or may be subject to certain non- consent     
penalties, as provided in the applicable operating agreement. Such penalties    
typically allow participating working interest owners to recover from the       
proceeds of production, if any, an amount equal to 200%-500% of the             
non-participating working interest owner's share of the cost of such operations.

4/15/2002                        Pangea 2001 10-K                        Page 7 

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Under most operating agreements, the operator is given direct and full control  
over all operations on the property and is obligated to conduct operations in a 
workman-like manner; however the operator is usually not liable to the working  
interest owners for losses sustained or for liabilities incurred, except those  
resulting from its own gross negligence or willful misconduct. Each working     
interest owner is generally liable for its share of the costs of developing and 
operating jointly owned properties. The operator is required to pay the expenses
of developing and operating the property and will invoice working interest      
owners for their proportionate share of such costs. In instances where we are a 
non-operating working interest owner, we may have a limited ability to exercise 
control over operations and the associated costs of such operations. The success
of our investment in such non-operated activities may, therefore, be dependent  
upon a number of facts that are outside of our direct control.                  

Under most operating agreements and the laws of certain states, operators of oil
and gas properties may be granted liens on the working interests of other       
non-operating owners in the well to secure the payment of amounts due to the    
operator. The bankruptcy or failure of the operator or other working interest   
owners to pay vendors who have supplied goods or services applicable to wells   
could result in filing of mechanics' and materialmens' liens which would        
encumber the well and the interests of all joint owners. At this time, we do not
have any joint operating agreements.  However, we may in the future conduct     
operations jointly with other working interest owners pursuant to a joint       
operating agreement whereby a single working interest owner is designated the   
operator.                                                                       

MARKETS AND CUSTOMERS                                                           
The revenue generated by our operations are highly dependent upon the prices of,
and demand for crude oil and natural gas. Historically, the markets for crude   
oil and natural gas have been volatile and are likely to continue to be volatile
in the future. The prices received by the Company for its crude oil and natural 
gas production and the level of such production are subject to wide fluctuations
and depend on numerous factors beyond our control including seasonality, the    
condition of the United States economy (particularly the manufacturing sector), 
foreign imports, political conditions in other oil-producing and natural        
gas-producing countries, the actions of the Organization of Petroleum Exporting 
Countries and domestic regulation, legislation and policies. Decreases in the   
prices of crude oil and natural gas could have an adverse effect on the carrying
value of any proved reserves or revenue from operations in the future.          

COMPETITION                                                                     
We operate in a highly competitive environment. Competition is particularly     
intense with respect to the acquisition of desirable undeveloped crude oil and  
natural gas properties. The principal competitive factors in the acquisition of 
such undeveloped crude oil and natural gas properties include the staff and data
necessary to identify, investigate and purchase such properties, and the        
financial resources necessary to acquire and develop such properties. We compete
with major and independent crude oil and natural gas companies for properties   

4/15/2002                        Pangea 2001 10-K                        Page 8 

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and the equipment and labor required to develop and operate such properties.    
Many of these competitors have financial and other resources substantially      
greater than ours.                                                              

Our principal competitors include major integrated oil companies and their      
marketing affiliates and national and local gas gatherers, brokers, marketers   
and distributors of varying sizes, financial resources and experience. Certain  
competitors, such as major crude oil and natural gas companies, have capital    
resources and control supplies of natural gas substantially greater than the    
Company. Smaller local distributors may enjoy a marketing advantage in their    
immediate service areas. We compete against other companies in our natural gas  
processing business both for supplies of natural gas and for customers to which 
we sell our products. Competition for natural gas supplies is based primarily on
location of natural gas gathering facilities and natural gas gathering plants,  
operating efficiency and reliability and ability to obtain a satisfactory price 
for products recovered. Competition for customers is based primarily on price   
and delivery capabilities.                                                      

REGULATORY MATTERS                                                              
Our operations are affected from time to time in varying degrees by political   
developments and federal, state, provincial and local laws and regulations. In  
particular, oil and gas production operations and economics are, or in the past 
have been, affected by price controls, taxes, conservation, safety,             
environmental, and other laws relating to the petroleum industry, by changes in 
such laws and by constantly changing administrative regulations.                

PRICE REGULATIONS                                                               
In the recent past, maximum selling prices for certain categories of crude oil, 
natural gas, condensate and NGLs in the United States were subject to federal   
regulation. In 1981, all federal price controls over sales of crude oil,        
condensate and NGLs were lifted. In 1993, the Congress deregulated natural gas  
prices for all "first sales" of natural gas. As a result, all sales of our      
United States produced crude oil, natural gas, condensate and NGLs may be sold  
at market prices, unless otherwise committed by contract.                       

STATE AND OTHER REGULATION                                                      
All of the jurisdictions in which we lease or own producing crude oil and       
natural gas properties have statutory provisions regulating the exploration for 
and production of crude oil and natural gas, including provisions requiring     
permits for the drilling of wells and maintaining bonding requirements in order 
to drill or operate wells and provisions relating to the location of wells, the 
method of drilling and casing wells, the surface use and restoration of         
properties upon which wells are drilled and the plugging and abandoning of      
wells. Our operations are also subject to various conservation laws and         
regulations. These include the regulation of the size of drilling and spacing   
units or proration units and the density of wells that may be drilled and the   
unitization or pooling of crude oil and natural gas properties. In this regard, 
some states and provinces allow the forced pooling or integration of tracts to  
facilitate exploration while other states and provinces rely on voluntary       
pooling of lands and leases. In addition, state and provincial conservation laws

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establish maximum rates of production from crude oil and natural gas wells,     
generally prohibit the venting or flaring of natural gas and impose certain     
requirements regarding the ratability of production. Some states, such as Texas 
and Oklahoma, have, in recent years, reviewed and substantially revised methods 
previously used to make monthly determinations of allowable rates of production 
from fields and individual wells. The effect of these regulations is to limit   
the amounts of crude oil and natural gas we can produce from its wells, and to  
limit the number of wells or the location at which we can drill.                

State and provincial regulation of gathering facilities generally includes      
various safety, environmental, and in some circumstances, non-discriminatory    
take requirements, but does not generally entail rate regulation. In the United 
States, natural gas gathering has received greater regulatory scrutiny at both  
the state and federal levels in the wake of the interstate pipeline             
restructuring under Order 636. For example, on August 19, 1997, the Texas       
Railroad Commission enacted a Natural Gas Transportation Standards and Code of  
Conduct to provide regulatory support for the State's more active review of     
rates, services and practices associated with the gathering and transportation  
of gas by an entity that provides such services to others for a fee, in order to
prohibit such entities from unduly discriminating in favor of their affiliates. 

In the event we conduct operations on federal or Indian oil and gas leases, such
operations must comply with numerous regulatory restrictions, including various 
non-discrimination statutes, and certain of such operations must be conducted   
pursuant to certain on-site security regulations and other permits issued by    
various federal agencies. In addition, in the United States, the Minerals       
Management Service ("MMS") has recently issued a final rule to clarify the types
of costs that are deductible transportation costs for purposes of royalty       
valuation of production sold off the lease. In particular, MMS will not allow   
deduction of costs associated with marketer fees, cash out and other pipeline   
imbalance penalties, or long-term storage fees. Further, the MMS has been       
engaged in a three-year process of promulgating new rules and procedures for    
determining the value of oil produced from federal lands for purposes of        
calculating royalties owed to the government. The oil and gas industry as a     
whole has resisted the proposed rules under an assumption that royalty burdens  
will substantially increase. We cannot predict what, if any, effect any new rule
will have on its operations.                                                    

ENVIRONMENTAL MATTERS                                                           
Our operations are subject to numerous federal, state, provincial and local laws
and regulations controlling the generation, use, storage, and discharge of      
materials into the environment or otherwise relating to the protection of the   
environment. These laws and regulations may require the acquisition of a permit 
or other authorization before construction or drilling commences; restrict the  
types, quantities, and concentrations of various substances that can be released
into the environment in connection with drilling, production, and gas processing
activities; suspend, limit or prohibit construction, drilling and other         
activities in certain lands lying within wilderness, wetlands, and other        
protected areas; require remedial measures to mitigate pollution from historical
and on-going operations such as use of pits and plugging of abandoned wells;    

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restrict injection of liquids into subsurface strata that may contaminate       
groundwater; and impose substantial liabilities for pollution resulting from our
operations. Environmental permits required for our operations may be subject to 
revocation, modification, and renewal by issuing authorities. Governmental      
authorities have the power to enforce compliance with their regulations and     
permits, and violations are subject to injunction, civil fines, and even        
criminal penalties. We believe that it is in substantial compliance with current
environmental laws and regulations, and that we will not be required to make    
material capital expenditures to comply with existing laws. Nevertheless,       
changes in existing environmental laws and regulations or interpretations       
thereof could have a significant impact on us as well as the oil and gas        
industry in general, and thus we are unable to predict the ultimate cost and    
effects of future changes in environmental laws and regulations.                

In the United States, the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), also known as "Superfund," and comparable state       
statutes impose strict, joint, and several liability on certain classes of      
persons who are considered to have contributed to the release of a "hazardous   
substance" into the environment. These persons include the owner or operator of 
a disposal site or sites where a release occurred and companies that generated, 
disposed or arranged for the disposal of the hazardous substances released at   
the site. Under CERCLA such persons or companies may be retroactively liable for
the costs of cleaning up the hazardous substances that have been released into  
the environment and for damages to natural resources, and it is common for      
neighboring land owners and other third parties to file claims for personal     
injury, property damage, and recovery of response costs allegedly caused by the 
hazardous substances released into the environment. The Resource Conservation   
and Recovery Act ("RCRA") and comparable state statutes govern the disposal of  
"solid waste" and "hazardous waste" and authorize imposition of substantial     
civil and criminal penalties for failing to prevent surface and subsurface      
pollution, as well as to control the generation, transportation, treatment,     
storage and disposal of hazardous waste generated by oil and gas operations.    
Although CERCLA currently contains a "petroleum exclusion" from the definition  
of "hazardous substance," state laws affecting our operations impose cleanup    
liability relating to petroleum and petroleum related products, including crude 
oil cleanups. In addition, although RCRA regulations currently classify certain 
oilfield wastes which are uniquely associated with field operations as "non-    
hazardous," such exploration, development and production wastes could be        
reclassified by regulation as hazardous wastes thereby administratively making  
such wastes subject to more stringent handling and disposal requirements. We    
currently own or lease properties that for many years have been used for the    
exploration and production of oil and gas. Although we utilize standard industry
operating and disposal practices, hydrocarbons or other wastes may be disposed  
of or released on or under the properties owned or leased by us or on or under  
other locations where such wastes have been taken for disposal. In addition,    
many of these properties have been operated by third parties whose treatment and
disposal or release of hydrocarbons or other wastes was not under our control.  
These properties and the wastes disposed thereon may be subject to CERCLA, RCRA,
and analogous state laws. Our operations are also impacted by regulations       
governing the disposal of naturally occurring radioactive materials ("NORM").   

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The Company must comply with the Clean Air Act and comparable state statutes    
which prohibit the emissions of air contaminants, although a majority of our    
activities are exempted under a standard exemption. Moreover, owners, lessees   
and operators of oil and gas properties are also subject to increasing civil    
liability brought by surface owners and adjoining property owners. Such claims  
are predicated on the damage to or contamination of land resources occasioned by
drilling and production operations and the products derived from them, and are  
usually causes of action based on negligence, trespass, nuisance, strict        
liability and fraud.                                                            

United States federal regulations also require certain owners and operators of  
facilities that store or otherwise handle oil to prepare and implement spill    
prevention, control and countermeasure plans and spill response plans relating  
to possible discharge of oil into surface waters. The federal Oil Pollution Act 
("OPA") contains numerous requirements relating to prevention of, reporting of, 
and response to oil spills into waters of the United States. For facilities that
may affect state waters, OPA requires an operator to demonstrate $10 million in 
financial responsibility. State laws mandate crude oil cleanup programs with    
respect to contaminated soil.                                                   

We are not currently involved in any administrative, judicial or legal          
proceedings arising under domestic or foreign federal, state, or local          
environmental protection laws and regulations, or under federal or state common 
law, which would have a material adverse effect on our financial position or    
results of operations. Moreover, we maintain insurance against costs of clean-up
operations, but it is not fully insured against all such risks. A serious       
incident of pollution may, as it has in the past, also result in the suspension 
or cessation of operations in the affected area.                                

TITLE TO PROPERTIES                                                             
As is customary in the crude oil and natural gas industry, we make only a       
cursory review of title to undeveloped crude oil and natural gas leases at the  
time they are acquired by us. However, before drilling commences, we require a  
thorough title search to be conducted, and any material defects in title are    
remedied prior to the time actual drilling of a well begins. To the extent title
opinions or other investigations reflect title defects, we, rather than the     
seller of the undeveloped property, is typically obligated to cure any title    
defect at its expense. If we were unable to remedy or cure any title defect of a
nature such that it would not be prudent to commence drilling operations on the 
property, we could suffer a loss of its entire investment in the property. We   
believe that we have good title to our oil and gas leases.                      

STRATEGIC ALLIANCE WITH PARADIGM ADVANCED TECHNOLOGIES                          
In the summer of 2000, Pangea entered into a strategic alliance with Paradigm   
Advanced Technologies to jointly operate Worldlink USA, LLC, a development stage
company (that we previously owned) that owns and licenses video streaming       
technology and a library of concerts previously broadcast over the Internet.    
Paradigm is a development stage company engaged in the business of developing,  

4/15/2002                        Pangea 2001 10-K                        Page 12

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marketing, and selling digital image and interactive global positioning system  
tracking technology.                                                            

RECENT FINANCING                                                                

In December 2000, January 2001 and February 2001, we entered into certain       
Securities Purchase Agreements with Generation Capital Associates, STL Capital  
Partners, LLC Greenwood Partners, L.P. and The Apmont Group, Inc. The terms of  
the securities purchase agreements are summarized below.                        

                                                        [Enlarge/Download Table]

     Purchaser        Purchase Price    Maximum Amount       Maximum Amount of       
                                          Of Shares           Warrants (1)(2)        
-------------------  -----------------  ---------------  --------------------------- 
                                                                                     
Generation Capital                                                                   
Associates             $600,000        1,600,000         3,450,000 A Warrants (3)    
                                                         3,450,000 B Warrants (3)    

STL Capital                                                                          
Partners, LLC          $250,000          666,667         1,333,333 A Warrants        
                                                         1,333,333 B Warrants        

Greenwood                                                                            
Partners, L.P.         $200,000          533,333         1,066,666 A Warrants        
                                                         1,066,666 B Warrants        

The Apmont                                                                           
Group, Inc.            $250,000          550,000 (7)     1,100,000 C Warrants (5) (7)
                                                         1,100,000 D Warrants (6) (7)

Totals               $1,300,000        3,350,000         5,924,999 A Warrants (4)    
                                                         5,924,999 B Warrants (4)    
                                                         1,100,000 C Warrants (5) (7)
                                                         1,100,000 D Warrants (6) (7)

<FN>                                                                                 
(1) Upon exercise, each A Warrant is convertible into one share of our Common        
Stock and one B Warrant. The A Warrants and B Warrants are both exercisable for      
5 years commencing December 29, 2000.                                                

(2) Upon exercise, each B Warrant is convertible into one share of our Common        
Stock. The B Warrants are not "callable."                                            

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(3) Includes 250,000 A Warrants issued to Generation Capital Associates as a         
document preparation fee to the Company. As stated in (1) above, each A Warrant      
is convertible into one share of our Common Stock and one B Warrant. As stated       
in (2) above, each B Warrant is convertible into one share of our Common Stock.      

(4) Includes 75,000 A Warrants issued to M. Richard Cutler as an escrow agent        
fee. As stated in (1) above, each A Warrant is convertible into one share of our     
Common Stock and one B Warrant. As stated in (2) above, each B Warrant is            
convertible into one share of our Common Stock.                                      

(5) Upon exercise, each C Warrant is convertible into one share of our Common        
Stock and one D Warrant. The C Warrants and D Warrants are both exercisable for      
5 years commencing February 8, 2001.                                                 

(6) Upon exercise, each D Warrant is convertible into one share of our Common        
Stock. The D Warrants are not "callable."                                            

(7) Includes 50,000 shares and 100,000 C Warrants issued to Bathgate, McColley       
Capital Group LLC as a finders fee. As stated in (5) above, each C Warrant is        
convertible into one share of our Common Stock and one D Warrant. As stated in       
(6) above, each D Warrant is convertible into one share of our Common Stock.         
Each A Warrant has a maximum exercise price of $0.75 and a minimum exercise          
price of $0.05. If this Registration Statement is not declared effective by          
April 13, 2001, the exercise price is $0.375. We can purchase or "call" the A        
Warrants at $.05 per Warrant on 30 days notice if our Common Stock has a closing     
bid price of at least $2.75 for 20 consecutive trading days after this               
Registration Statement is declared effective by the SEC. Each B Warrant has an       
exercise price of $1.75. If this Registration Statement is not declared              
effective by April 13, 2001, the exercise price is $0.375.                           

Each C Warrant has a maximum exercise price of $1.00 and a minimum exercise     
price of $0.05. We can purchase or "call" the C Warrants at $.05 per warrant on 
30 days notice if our common stock has a closing bid price of at least $2.75 for
20 consecutive trading days after this Registration Statement is declared       
effective by the SEC. Each D Warrant has an exercise price of $1.75. Each C     
Warrant has the exercise price is $0.50.                                        

The Warrant holders and the Company are presently negotiating certain terms of  
the Warrants to exchange some of their Warrants for other securities of our     
Company.  The outcome of these negotiations is unknown.                         

Notwithstanding the above, the Warrant Agreements that we signed with the above 
parties do not allow any of the parties to exercise Warrants that would cause   
such party to be the beneficial owner of more than 5% of our then outstanding   
shares of Common Stock. This restriction shall not prevent any such party from  
acquiring more than 5% of our shares of Common Stock as long as such party does 
not beneficially own more than 5% at any given time. The maximum amount of      

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shares of our Common Stock that can be acquired under the Securities Purchase   
Agreements are as follows: Generation Capital Associates - 8,500,000; Greenwood 
Partners, LP - 2,666,665; STL Capital Partners, LLC - 3,333,333, and The Apmont 
Group, Inc. - 2,500,000.                                                        

The Securities Purchase Agreements provide that if the average bid price of our 
Common Stock is less than $.50 for the 30 trading days commencing on the earlier
of the effective date of this Registration Statement or 105 days from the first 
traunch closing date (specifically, the first trauch closing date was December  
29, 2000), the A Warrants and B Warrants both become "cashless" with a strike   
price of $.01.                                                                  

With respect to the above described transaction, we have entered into escrow    
agreements with the above parties and M. Richard Cutler, Esq. and David A.      
Rapaport, Esq. as joint escrow agents ("Escrow Agents"). The Escrow Agents will 
hold the maximum amount of shares issuable under the Securities Purchase        
Agreements which is a total of 16,749,998 shares of our Common Stock. To date,  
the Escrow Agents have been issued a total of 16,149,998 shares of our Common   
Stock.                                                                          

EMPLOYEES                                                                       
As of April 10, 2002, Pangea has 1 full-time employee and 1 part-time employee, 
including executive officers, non- executive officers, secretarial and clerical 
personnel and field personnel. Pangea also retains independent geological and   
engineering consultants  and administrative assistance on a limited basis and   
expects to continue to do so in the future.                                     

As of April 10, 2001, Mass Energy has no employees.                             

ITEM 2. DESCRIPTION OF PROPERTY                                                 
-------------------------------                                                 

Pangea's mailing address is 5090 Richmond Avenue #425, Houston, Texas.   Pangea 
formerly officed with Mass Energy at 6776 SW Freeway, Suite 620, Houston, Texas 
77074 until November of 2001 when Mass Energy closed their offices.  With the   
closure of the Mass Energy offices, Pangea will be relocating to new space.     

ITEM 3. LEGAL PROCEEDINGS                                                       
-------------------------                                                       

Mass Energy incurred substantial debt in the drilling of the Jackson County,    
Texas lease and there are currently outstanding liens on the well totaling      
approximately $824,946.59.  Additionally several lawsuits have been filed       
against Mass Energy for payment of debts incurred in the drilling of this well. 
These lawsuits assert claims which total approximately $479,672.                

Several of the lawsuits have recently been filed and are in the early stages of 
discovery. The Company is currently evaluating their response to this           
litigation.                                                                     

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$37,396.38 - Data Wise Solutions, Inc. vs. Mass Energy, Inc., Cause Number      
2001-37198, in the District Court 295 Judicial District Harris County, Texas    

$28,601.53 - Continuous Operations, Inc. vs. Mass Energy, Inc. and Randy Massey 
Individually, Cause Number 757,695, in the County Civil Court at Law Number 2,  
Harris County, Texas                                                            

$112,936.15 - Pyramid Tubular Products, Inc. vs. Mass Energy, Inc. n/k/a Pangea 
Petroleum Corporation and Randy Massey, Individually, Cause Number 857,646, in  
the County Cival Court at Law Number of Three, Harris County, Texas             

$28,601.53 - Soloco Texas, L.P., vs. Mass Energy, Inc., F/K/A M & R Exploration 
Company, Cause Number 01-12-11746                                               
$8,344.59 - Roywell Services, Inc. vs. Mass Energy, Inc., Cause Number          
01-11-11734, in the District Court of Jackson County, Texas 267th Judicial      
District                                                                        

$63,879.23 - Tesco Corporation (US) f/k/a Tesco Drilling Technology, Inc. vs.   
Mass Energy, Inc., Cause Number 01-12-11747, in the District Court of Jackson   
County, Texas 24th Judicial District                                            

$4,668.17 - Sup-R-Jar Inc. vs. Mass Energy, Inc., Cause Number SC42C4000972 L,  
in the Small Claims Court of Harris County, Texas Precinct 4, Place 2           

$195,244.42 - Cactus Drilling Company vs. Mass Energy, Inc., Cause Number       
01-10-11720, in the District Court of Jackson County, Texas 24th Judicial       
District                                                                        

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                     
-----------------------------------------------------------                     
None                                                                            

 PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                
----------------------------------------------------------------                
As of December 31, 2001, Pangea had 52,186,900 shares of common stock           
outstanding and had approximately 383 stockholders of record.                   

The following table sets forth certain information as to the high and low bid   
quotations quoted on the OTC Bulletin Board for 1999, 2000 and 2001 (through    
March 31, 2002). Information with respect to over-the-counter bid quotations    
represents prices between dealers, does not include retail mark-ups, mark-downs 
or commissions, and may not necessarily represent actual transactions.          

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                                                                [Download Table]

                                    Period           High              Low  
                                    --------         ------            -----
                                                                            
                                    1999                                    

First Quarter                                        5.00              1.44 
Second Quarter                                       6.50              1.44 
Third Quarter                                        2.38               .44 
Fourth Quarter                                       1.00               .18 

                                    2000                                    

First Quarter                                        1.94                .19
Second Quarter                                       2.99                .28
Third Quarter                                        2.81               1.19
Fourth Quarter                                       1.78                .63

                                    2001                                    

First Quarter                                        1.72                .63
Second Quarter                                        .81                .26
Third Quarter                                         .041               .10
Fourth Quarter                                        .29                .09

                                    2002                                    

First Quarter                                         .10                .03

The bid price of our common stock was $.028 per share on April 10, 2002.        

OUR TRANSFER AGENT AS OF APRIL 10, 2002 IS:                                     
Olde Monmouth Stock Transfer Co., Inc.
77 Memorial Parkway, Suite 101
Atlantic Highlands, New Jersey 07716

STOCK PRICE PERFORMANCE GRAPH                                                   
The performance graph as set forth below compares the cumulative total          
stockholder return of our common stock from December 31, 1998 through December  
31, 2001, with Standard & Poors 500 Index (our Broad Market Index) and with     
Standard & Poors Oil Composite Index (our Peer Group Index).  The graph assumes 
that the value of the investment in our common stock and each index was $100 on 
December 31, 1998, and that all dividends, if any, were reinvested.  The        
comparisons in this table are not intended to forecast or be indicative of      
possible future price performance.                                              

COMPARISON OF CUMULATIVE TOTAL RETURN OF PANGEA PETROLEUM CORPORATION,          
THE S&P 500 INDEX (BROAD MARKET INDEX) AND THE S&) OIL COMPOSITE INDEX (PEER    
GROUP INDEX)                                                                    

 [GRAPH]

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                                                                [Download Table]

                              1998  1999  2000  2001
                                                    
Pangea Petroleum Corporation   100    12    42     5
Broad Market Index             100   119   107    93
Peer Group Index               100   114   121   105

DIVIDENDS                                                                       
We do not intend to retain future earnings to support our growth. Any payment of
cash dividends in the future will be dependent upon: the amount of funds legally
available therefore; our earnings; financial condition; capital requirements;   
and other factors which our Board of Directors deems relevant.                  

ITEM 6. SELECTED FINANCIAL STATEMENTS                                           

We  have derived the following selected consolidated financial information as of
December  31,  2001 and 2000, and for each of the years in the three-year period
ended  December  31,  2001,  from  our audited consolidated financial statements
included  in  this report.  You should read this information in conjunction with
those  consolidated financial statements and the notes thereto.  We have derived
the  selected  consolidated  financial information as of December 31, 1999, 1998
and  1997,  and  for each of the years in the two-year period ended December 31,
1998,  from  our  audited consolidated financial statements of the Company, that
are  not  included  herein.  Please read "Management' Discussion and Analysis of
Financial  Condition  and  Results  of  Operations".                            

                                                        [Enlarge/Download Table]

                                                       YEAR ENDED DECEMBER 31,                      
                                --------------------------------------------------------------------
                                    2001          2000          1999          1998          1997    
                                ------------  ------------  ------------  ------------  ------------
                                                                                                    
STATEMENT OF OPERATIONS DATA:                                                                       

Sales and operating revenue     $    34,251   $         -   $    33,431   $         -   $         - 

Loss from operations             (9,000,347)   (6,502,646)     (695,769)       (3,362)            - 

Net loss                         (9,000,347)   (6,502,646)     (695,769)       (3,362)            - 

Basic and dilutive net loss                                                                         
  per share                     $     (0.18)  $     (0.27)  $     (0.04)  $     (0.00)  $         - 
                                ============  ============  ============  ============  ============

BALANCE SHEET DATA:                                                                                 

Working capital                 $(2,051,528)  $   362,767   $  (552,228)  $         -   $         - 

Property and equipment, net         460,908     2,440,446        77,021             -             - 

Total assets                        665,808     3,500,793        85,607             -             - 

Notes payable                       519,426       110,000       463,120             -             - 

Stockholders' equity (deficit)   (1,463,924)    2,975,843      (474,219)          317             - 

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

The following is a discussion of our financial condition, results of operations,
liquidity and capital resources. This discussion should be read in conjunction  
with our Consolidated Financial Statements and the notes thereto included       
elsewhere in this Form 10-K.                                                    

FORWARD-LOOKING INFORMATION-GENERAL                                             

This report contains a number of forward-looking statements, which reflect the  
Company's current views with respect to future events and financial performance 
including statements regarding the Company's projections.  These forward-looking
statements are subject to certain risks and uncertainties that could cause      
actual results to differ materially from historical results or those            
anticipated.  In this report, the words "anticipates", "believes", "expects",   
"intends", "future", "plans", "targets" and similar expressions identify        
forward-looking statements.  Readers are cautioned to not place undue reliance  
on the forward-looking statements contained herein, which speak only as of the  
date hereof the Company undertakes no obligation to publicly revise these       
forward-looking statements, to reflect events or circumstances that may arise   
after the date hereof. Additionally, these statements are based on certain      
assumptions that may prove to be erroneous and are subject to certain risks     
including, but not limited to, the Company's dependence on limited cash         
resources, and its dependence on certain key personnel within the Company.      
Accordingly, actual results may differ, possibly materially, from the           
predictions contained herein.                                                   

GENERAL                                                                         
Pangea Petroleum Corporation  ("Pangea" or "Company"), a Colorado corporation,  
was organized on March 11, 1997, as Zip Top, Inc.  On December 11, 1998, the    
Company changed our name to Pangea Petroleum Corporation.  Pangea has one       
subsidiary, Mass Energy, IncPangea is located at 5090 Richmond, #425, Houston,  
Texas 77056. Pangea has a the Company website is www.pangeapetroleum.com.       

Since its inception, the Company has suffered recurring losses from operations  
and has been dependent on existing stockholders and new investors to provide the
cash resources to sustain its operations. During the years ended December 31,   
2001, 2000 and 1999, the Company reported net losses and negative cash flows    
from operations as follows:                                                     

                                     2001          2000         1999
                                    ------------  ------------  ----------
Net loss                             $(9,000,347)  $(6,502,646)  $(659,769) 
Negative cash flows from operations  $  (396,624)  $(1,573,624)  $(519,222) 

The Company's continuing negative operating results have produced a working     
capital deficit of $(2,051,528) at December 31, 2001 and have caused the        
Company's subsidiary Mass Energy, Inc. to become severely delinquent on various 
accounts payable. Vendors have initiated legal actions against Mass Energy, Inc.
to force payment of past due accounts, but Mass Energy, Inc. lacks the cash     
resources to make such payments. Accordingly, the results of such legal actions 
cannot be predicted. These factors raise substantial doubt about the Company's  
ability to continue as a going concern.                                         

The Company's strategic plan for dealing with its cash flow problems is         
currently being developed, but may include additional private placements of the 
Company's common stock, the abandonment of unprofitable projects and the        
exchange of common stock for settlement of vendor accounts. There can be no     
assurance that any of the plans developed by the Company will produce cash flows
sufficient to overcome current liquidity problems.                              

The Company's long-term viability as a going concern is dependent on certain key
factors, as follows:                                                            

     -    The  Company's ability to obtain adequate sources of outside financing
          to  convince  vendors to drop legal actions against the Company and to
          allow  the  Company  to  continue  forward  with  current  exploration
efforts.                                                    

     -    The  Company's  ability to locate, prove and produce from economically
viable  oil  and  gas  reserves.                            

     -    The Company's ability to ultimately achieve adequate profitability and
cash  flows  to  sustain  continuing  operations.           

RESULTS OF OPERATIONS                                                           

To date, the results of the Company oil and gas investments through its         
subsidiary Mass Energy have yielded revenue only $34,000. These revenues are    
substantially less than what the Company expected when investments were made in 
the Jackson County well and in Starr County TX and Kern County CA leases. The   
first Mass Energy well in Jackson County has produced substantially less product
than the Company was lead to believe by experts and the well also incurred a    
very substantial cost over run. Consequently, that well is now judged to be     
non-economic to produce. The Company is currently evaluating its investment in  
Mass Energy and expects to make a decision on that investment before the middle 

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of the year. The Company's Duval County well has produced since the third       
quarter, however revenue from that activity is currently tied up in a legal     
dispute between Pangea and the operator of the well. The Company expects to     
prevail in this case.                                                           

COMPARISON OF YEAR ENDED DECEMBER 31, 2001 TO YEAR ENDED DECEMBER 31, 2000.     

The substantial increased loss of approximately 9 million for 2001 as compared  
to a loss of approximately 6.5 million 2000 is due mainly to two factors. The   
first and most important was the previously discussed cost over-runs associated 
with drilling and completing the Jackson county well and the fact that the well 
was non-economic. The second factor was increased overhead cost associated with 
increased operations of Mass Energy.                                            

COMPARISON OF YEAR ENDED DECEMBER 31, 2000 TO YEAR ENDED DECEMBER 31, 1999.     

The increased loss that is shown in year 2000 results as compared to year end   
1999 results is directly attributed to the re-organization and sale of a portion
of the WorldLink USA asset, the Mass Energy acquisition, the finalization of a  
long term financing package for energy development projects and the greatly     
increased level of energy project spending.                                     

LIQUIDITY AND CAPITAL RESOURCES                                                 

The Company used funds from a long term financing package obtained in late 2000,
capital received from investors and loans from insiders to invest in Mass Energy
projects, to invest in the Duval County well and to operate the Company. The    
Company's Mass Energy subsidiary has accounts payable of more approximately 1.3 
million, Mass Energy also has notes receivables of more than $.2 million and    
property and equipment valued at approximately $.4 million. The receivables may 
not be collectable and the liquidity of Mass is in doubt. The Company has       
essentially no long term debt and assets valued at more than $100,000.          

2002 Outlook                                                                    

The Company is liquid and intends to invest in additional oil and gas projects. 
The Company intends to convert currents assets into cash in order to invest in  
projects.  The investment level will be heavily dependent on securing additional
capital from investors or debt. There is no assurance that additional equity or 
debt financing will be available on terms acceptable to Management. Management  
also believes that the Company will prevail in the previously mentioned legal   
action against the operator of the Duval County well.                           

The market price of the Company's common stock has fluctuated significantly     
since it began to be publicly traded in 1997 and may continue to be highly      
volatile. Factors such as the ability of the Company to achieve development     
goals, ability of the Company to profitably complete energy projects, the       
ability of the Company to raise additional funds, general market conditions and 

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other factors affecting the Company's business that are beyond the Company's    
control may cause significant fluctuations in the market price of the Company's 
common stock. The market prices of the stock of many energy companies have      
fluctuated substantially, often unrelated to the operating or research and      
development performance of the specific companies. Such market fluctuations     
could adversely affect the market price for the Company's common stock.         

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK             
Not applicable.                                                                 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                             
The financial statements of the company are set forth beginning on page F-1.    

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

R.  B.  Bassie  & Co., P.C., Independent Public Accountants, audited our balance
sheets  as  of  December  31,  2000  and  1999  and  the  related  statements of
operations, stockholders' deficit and cash flows for the years then ended.  Such
financial  statements  accompanied our Form 10-K for the year ended December 31,
2000  and  were  filed  with the Securities and Exchange Commission on April 16,
2001.  The  report  of  R.  B.  Bassie & Co., P.C. on such financial statements,
dated  January  26, 2001, except Notes 7 and 12, which are dated March 23, 2001,
did  not  contain  an  adverse  opinion  or  disclaimer  of  opinion and was not
qualified  or  modified as to uncertainty, audit scope or accounting principles.
Our client-auditor relationship with R. B. Bassie & Co., P.C. ceased on or about
March  20                                                                       

Ham,  Langston  &  Brezina, LLP, Certified Public Accountants of Houston, Texas,
was  appointed by the Company on March 26, 2002, pursuant to a recommendation of
our  Chairman  of the Board and Chief Executive Officer, Mr. Charles B. Pollock,
to  audit  our financial statements for our fiscal year ended December 31, 2001.
During  our  two  most  recent  fiscal  years  and the subsequent interim period
preceding  their appointment as independent accountants, neither the Company nor
anyone  on its behalf consulted Ham, Langston & Brezina, L.L.P. regarding either
the  application  of  accounting  principles  to a specified transaction, either
completed  or  proposed,  or the type of audit opinion that might be rendered on
the  Company's  consolidated  financial  statements,  nor  has  Ham,  Langston &
Brezina,  L.L.P.  provided  to  the  Company  a  written  report  or oral advice
regarding  such  principles  or  audit  opinion.                                

During  our  two  most  recent  fiscal  years  and any subsequent interim period
preceding  the  date  of  dismissal,  there  were no disagreements between R. E.
Bassie  &  Co.,  P.C. and us, whether resolved or not resolved, on any matter of
accounting  principles or practices, financial statement disclosure, or auditing
scope  or  procedure,  which,  if  not  resolved, would have caused them to make
reference  to  the  subject  matter of the disagreement in connection with their
reports.                                                                        

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We  have  provided  R.  E. Bassie & Co., P.C. with a copy of this disclosure and
R.E.  Bassie  &  Co.,  P.C.  has  provided  us  with  a  letter addressed to the
Securities  and  Exchange  Commission  agreeing  with  this  disclosure.        

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT:                        

The directors and officers of the Company, as of April 10, 2002, are set forth  
below. The directors hold office for their respective term and until their      
successors are duly elected and qualified. The officers serve at the will of the
Board of Directors.                                                             

DIRECTORS AND EXECUTIVE OFFICERS                                                
Set forth below are the names, ages, and positions of the executive officers and
directors of the Company                                                        

                                                                [Download Table]

Name                      Age     Office                 
-------                  -----    --------               
                                                         
Charles B. Pollock         62     Chief Executive Officer
                                  and Chairman of        
                                  The Board of Directors 

Edward R. Skaggs           36     Director               

AJ Leigh                   54     CFO                    

CHARLES B. POLLOCK, 62 was appointed the Chief Executive Officer and Chairman of
the Board of the Company in June 1999. From January 1994 to September 1995, Mr. 
Pollock was President of Praxair Indonesia, an industrial gas company where his 
responsibilities were those as Chief Executive Officer of such company. From    
October 1995 to August 1996, he was manager of Praxair, Inc., an industrial gas 
company. His responsibilities included strategic marketing and competition      
analysis. From September 1996 to May 1999, Mr. Pollock was self-employed as a   
consultant in which his projects included the acquisition and sale of           
businesses, competitive anlysis and strategic marketing. Mr. Pollock received   
his Bachelor of Science degree in 1962 from North Carolina State University, his
Master of Science degree in Ceramic Engineering from North Carolina State       
University in 1968 and his PhD in Material Engineering from North Carolina State
University in 1972.                                                             

4/15/2002                        Pangea 2001 10-K                        Page 22

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EDWARD R. SKAGGS, was appointed to the Board of Directors of the Company on     
December 18, 2000. Mr. Skaggs has over 10 years of experience in investigations 
and security. In addition, he has extensive experience in retail management     
specifically dealing in personnel issues and security matters. Mr. Skaggs       
started his career as an Assistant District Manager for EZ Mart Store in 1988.  
In June 1991, he left EZ Mart to form an investigative consulting firm, Skaggs &
Associates, Inc. where he continues to work. He received a Bachelor of Arts     
degree in Political Science from Texas Tech University in 1992.                 

AJ LEIGH, III, 54, was appointed as Chief Financial Officer in March of 2002.   
Mr. Leigh, a C.P.A., has been engaged in public accounting for over twenty years
and maintains an office in Houston, Texas.  He received his Bachelor of Science 
Degree in accounting from the University of Southern Mississippi in 1971.       

The Directors named above will serve until the next annual meeting of the       
shareholders of the Company in the year 2002. Directors will be elected for     
one-year terms at each annual shareholder's meeting.                            

All officers and directors listed above will remain in office until the next    
annual meeting of our stockholders, and until their successors have been duly   
elected and qualified. There are no agreements with respect to the election of  
Directors. We have not compensated our Directors for service on our Board of    
Directors, any committee thereof, or reimbursed for expenses incurred for       
attendance at meetings of our Board of Directors and/or any committee of our    
Board of Directors. Officers are appointed annually by our Board of Directors   
and each Executive Officer serves at the discretion of our Board of Directors.  
We do not have any standing committees. Our Board of Directors may in the future
determine to pay Directors' fees and reimburse Directors for expenses related to
their activities.                                                               

None of our Officers and/or Directors have ever filed any bankruptcy petition,  
been convicted of or been the subject of any criminal proceedings or the subject
of any order, judgment or decree involving the violation of any state or federal
securities laws.                                                                

CERTAIN LEGAL PROCEEDINGS                                                       
No existing director, or executive officer of the Company has appeared as a     
party in any legal proceeding material to an evaluation of his ability or       
integrity during the past five years.                                           

4/15/2002                        Pangea 2001 10-K                        Page 23

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COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT                               
Charles B. Pollock untimely filed his Form 5 on February 19, 2002.  Mr. Skaggs  
has not filed a timely Form 5.  Mr. Massey filed an untimely Form 5 on March 15,
2002.  Mr. Leigh has not timely filed one Form 3.                               

                                                        [Enlarge/Download Table]

ITEM 11. EXECUTIVE COMPENSATION                                                                             

SUMMARY COMPENSATION TABLE                                                                                  

                                 Annual Compensation           Long Term Compensation                       
                           ------------------------------  ----------------------------------               
                                                                    Awards           Payouts                
                                                           ------------------------  --------               
     Name and        Year  Salary   Bonus   Other Annual   Restricted   Securities     LTIP      All Other  
Principal Position           ($)     ($)    Compensation      Stock     Underlying   Payouts   Compensation 
                                                 ($)        Award(s)     Options /     ($)          ($)     
                                                               ($)         SARs                             
                                                                            (#)                             
-------------------  ----  -------  ------  -------------  -----------  -----------  --------  -------------
                                                                                                            

  Charles B.         1999   28,000     -0-              0            0           0        -0-            -0-
   Pollock           2000   16,000     -0-              0            0     450,000        -0-            -0-
   CEO and           2001        0     -0-          3,000    1,000,000     300,000        -0-            -0-
Chairman of the                                                                                             
   Board of                                                                                                 
  Directors                                                                                                 
-------------------  ----  -------  ------  -------------  -----------  -----------  --------  -------------
Randall Massey       1999      N/A     N/A            N/A          N/A          N/A       N/A            N/A
     (1)             2000   15,000     N/A              0          -0-   80,000 (1)       N/A            N/A
Director, COO        2001  117,000     -0-            -0-          -0-     400,000        -0-      15,432.90
-------------------  ----  -------  ------  -------------  -----------  -----------  --------  -------------
<FN>                                                                                                        
(1) Randall Massey resigned from all positions with Mass Energy on March 15, 2002.                          
(2) Pangea Stock Options with an exercise price of $1.00 per share.                                         

                                                                [Download Table]

OPTIONS/SAR GRANTS IN LAST FISCAL YEAR:                                          

                   Individual Grants                                             
------------------------------------------------------------  -------------------
Name         Number of   Percent of    Exercise   Expiration  Grant Date Present 
            Securities      Total      of Base       Date          Value ($)     
            Underlying    Options /     Price                                    
             Options/       SARs        ($/sh)                                   
               SARs      Granted to                                              
              Granted     Employees                                              
                (#)       in Fiscal                                              
                            Year                                                 
----------  -----------  -----------  ----------  ----------  -------------------
                                                                                 
Charles B.      475,000          17%  $     1.00  September             0        
Pollock                                             2003                         
----------  -----------  -----------  ----------  ----------  -------------------
Randall         600,000          29%  $     1.00  September             0        
Massey          200,000               $     0.20    2003                         
----------  -----------  -----------  ----------  ----------  -------------------

4/15/2002                        Pangea 2001 10-K                        Page 24

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                                                                [Download Table]

--------------  ------------  ----------------  ----------------  ----------------
Name            Shares         Value Realized   Number of         Value of        
                Acquired on    ($)              Securities        Unexercised In- 
                Exercise (#)                    Underlying        The-Money       
                                                Unexercised       Options/SARs    
                                                Options / SARs    At Fiscal Year- 
                                                At Fiscal Year-   End ($)         
                                                End (#)           Exercisable /   
                                                Exercisable /     Unexercisable   
                                                Unexercisable                     
--------------  ------------  ----------------  ----------------  ----------------
                                                                                  
Charles B.           300,000  $          3,000           175,000                 0
Pollock                                                                           
--------------  ------------  ----------------  ----------------  ----------------
Randall Massey       200,000  $      57,000.00           600,000                 0
--------------  ------------  ----------------  ----------------  ----------------

EMPLOYMENT AGREEMENTS                                                           
We have entered into employment agreement with Mr. Charles Pollock. The         
following sets forth the terms of the employment agreement:                     

Charles B. Pollock--On June 1, 1999, we entered into an employment agreement    
with Mr. Pollock that ends on December 31, 2002 to act as our Chairman of the   
Board of Directors and Chief Executive Officer. Pursuant to the employment      
agreement, Mr. Pollock is paid a salary of $6,000 per month plus an option to   
purchase 50,000 Pangea S-8 shares per month at an exercise price of $1.00 per   
share. In addition, we offered to provide medical benefits (currently not being 
used) for Mr. Pollock. Mr. Pollock also receives as a bonus three (3%) percent  
of the net proceeds received by us upon the successful completion of the sale of
any major company assets (major asset is defined as an asset whose sale price is
$500,000 or more).                                                              

Mr. Massey had an employment agreement that terminated upon his resignation in  
March 2002.                                                                     

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT         

Based upon information received from the persons concerned, each person known to
us to be the beneficial owner of more than five percent of the outstanding      
shares of our Common Stock, each director, each of our executive officers and   
all of our directors and executive officers as a group, owned beneficially as of
April 10, 2002, the number and percentage of outstanding shares of our Common   
Stock indicated in the following table:                                         

4/15/2002                        Pangea 2001 10-K                        Page 25

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Name and Address of                                                             
Beneficial Owner                 Number of Shares (1) (3)  Percentage (2)       

Charles B. Pollock                              1,499,286              2%       
2014 Bonner Bussells Drive                                                      
Southport, NC 28461                                                             

AJ Leigh III                                          -0-            -0-        
6776 SW Freeway, Suite 310                                                      
Houston, TX  77056                                                              

Edward Skaggs                                         -0-            -0-        
PO Box 570611                                                                   
Houston, TX  77257                                                              

All directors and executive officers as a group                                 
(as a group)                                                                    
                                         1,499,286              2%

Rapid Release Research, LLC                     8,505,677          18.03%       
4900 Woodway Drive, Suite 750                                                   
Houston, Texas 77056                                                            

Jacob International Inc.                        5,591,000          11.85%       
4550 Post Oak Place, Suite 175                                                  
Houston, TX  77027                                                              

* Less than 1%                                                                  
(1)     Unless otherwise indicated, all shares are held directly with sole      
voting and investment power.                                                    

(2) Based on 52,186,900 shares of our Common Stock issued and outstanding.      

(3) To date, we have issued 16,149,998 shares of our Common Stock to David      
Rapaport and M. Richard Cutler, as joint escrow agents, in accordance with      
certain Securities Purchase Agreements we have executed with Generation Capital 
Associates, Greenwood Partners, LP STL Capital Partners, LLC, and The Apmont    
Group, Inc. respectively. Neither Messrs. Rapaport or Cutler have any beneficial
ownership in any such shares.                                                   

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.                        

At December 31, 2000, the Company had notes receivable due from Randy Massey in 
the amount of $158,500. The Company recognized approximately $2,500 in interest 
income during the three months ended December 31, 2000 in association with the  
note receivable. Approximately $150,000 of the balance is evidenced by a        
promissory note. Under the note, interest accrues on the unpaid principal at    
6.25% per annum. In addition, Mr. Massey is required to maintain term life      
insurance payable to the Company in an amount sufficient to pay the principal   
and accrued interest in full in the event of the subsidiary former president's  
death. During 2001 Mr. Massey did not make any payments of principal or interest
on these notes receivable.                                                      

At December 31, 2001, the Mass Energy had notes receivable due from Sandstone   
Ventures, Inc., an affiliate of Randy Massey in the amount of $40,000. The      
Company recognized interest is due in association with the note receivable.     
Under the note, interest accrues on the unpaid principal at 7.0% per annum.     

At December 31, 2001 the Company has notes payable to a major stockholder, Rapid
Release Research, of $185,242. Additionally the Company has notes payable to    
Mary Pollock, a former officer and daughter of Charles Pollock of $73,846.      
Finally the Company has notes payable to Charles Pollock of $185,000.           

4/15/2002                        Pangea 2001 10-K                        Page 26

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 PART IV

ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K                                       
-----------------------------------------                                       

(a) The following documents are filed as part of this report:                   
None                                                                            

(b) Reports on Form 8-K                                                         
None                                                                            

4/15/2002                        Pangea 2001 10-K                        Page 27

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SIGNATURES
Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange  
Act of 1934, the undersigned has duly caused this Form 10-K to be signed on its 
behalf by the undersigned, there unto duly authorized, in the City of Houston,  
Texas, on April 15, 2002.                                                       

PANGEA PETROLEUM CORPORATION                                                    
By: /s/ Charles B. Pollock                                                      
Date:  April 11, 2002                                                           

----------------------------------                                              
Charles B. Pollock, Chairman of the Board, and Chief Executive Officer          

Pursuant to the requirements of the Securities Exchange Act of 1933, this report
has been signed below by the following persons on behalf of the registrant and  
in the capacities and on the date indicated.                                    

By: /s/ Charles B. Pollock                                                      
Date:  April 11, 2002                                                           

----------------------------------                                              
Charles B. Pollock, Chairman of the Board, and Chief Executive Officer          

By: /s/ AJ Leigh, III                                                           
Date:  April 11, 2002                                                           

----------------------------------                                              
AJ Leigh, III, Chief Financial Officer                                          

By: /s/ Edward R. Skaggs                                                        
Date:  April 11, 2002                                                           

----------------------------------                                              
Edward R. Skaggs, Director                                                      

4/15/2002                        Pangea 2001 10-K                        Page 28

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PANGEA PETROLEUM CORPORATION
__________

 CONSOLIDATED FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT ACCOUNTANTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

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PANGEA PETROLEUM CORPORATION
 TABLE OF CONTENTS
__________

                                                                            PAGE
                                                                            ----

Reports of Independent Accountants                                           F-3

Consolidated Financial Statements:                                              

Consolidated Balance Sheets as of December 31, 2001                         
    and 2000                                                                 F-5

Consolidated Statements of Operations for the years                         
    ended December 31, 2001, 2000 and 1999                                   F-6

Consolidated Statements of Stockholders' Equity for                         
    the years ended December 31, 2001, 2000 and 1999                         F-7

Consolidated Statements of Cash Flows for the years                         
    ended December 31, 2001, 2000 and 1999                                   F-8

Notes to Consolidated Financial Statements                                  F-11

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 REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders                                      
Pangea Petroleum Corporation                                                    

We  have audited the accompanying consolidated balance sheet of Pangea Petroleum
Corporation  and  subsidiaries  as  of  December  31,  2001  and  the  related  
consolidated  statements  of operations, stockholders' equity (deficit) and cash
flows  for the year then ended.  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 auditing standards generally accepted
in  the  United  States  of  America.  Those  standards require that we plan and
perform  the  audit  to  obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.  We  believe  that  our  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 Pangea
Petroleum  Corporation and subsidiaries as of December 31, 2001, and the results
of  their operations and their cash flows for the year then ended, in conformity
with  accounting  principles generally accepted in the United States of America.

The  accompanying  financial  statements  have  been  prepared assuming that the
Company  will  continue  as  a  going  concern.  As  discussed  in Note 2 to the
financial  statements,  the Company has suffered recurring losses, negative cash
flows from operations and has a net capital deficiency at December 31, 2001 that
raise  substantial  doubt  about  its  ability  to  continue as a going concern.
Management's  plans  with  regard  to  this matter are also discussed in Note 2.
These financial statements do not include any adjustments that might result from
the  outcome  of  this  uncertainty.                                            

                                /s/  Ham,  Langston  &  Brezina,  L.L.P.

Houston,  Texas                                                                 
April  14,  2002                                                                

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INDEPENDENT AUDITORS' REPORT
----------------------------

The Board of Directors and Stockholders:                                        
Pangea Petroleum Corporation                                                    

We  have  audited the consolidated balance sheet of Pangea Petroleum Corporation
and  Subsidiary as of December 31, 2000, and the related consolidated statements
of operations, stockholders' equity and cash flows for the two-year periods then
ended.  These  consolidated  financial  statements are the responsibility of the
Company's  management.  Our  responsibility  is  to  express an opinion on these
consolidated  financial  statements  based  on  our  audits.                    

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

In  our opinion, the consolidated financial statements referred to above present
fairly,  in  all  material  respects, the financial position of Pangea Petroleum
Corporation  and  Subsidiary  as  of December 31, 2000, and the results of their
operations  and  their cash flows for the two years in the period then ended, in
conformity with accounting principles generally accepted in the United States of
America.                                                                        

                            /s/  R.E. Bassie & Co.

Houston, Texas                                                                  
January 26, 2001                                                                

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                                  PANGEA PETROLEUM CORPORATION                               
                                   CONSOLIDATED BALANCE SHEET                                
                                   DECEMBER 31, 2001 AND 2000                                
                                           __________                                        

     ASSETS                                                           2001           2000    
     ------                                                       -------------  ------------
                                                                                             
Current assets:                                                                              
  Cash                                                            $     17,377   $   599,727 
  Accounts receivable, net                                              14,188        77,017 
  Prepaid expenses                                                       1,693         2,939 
  Notes receivable from related parties                                      -       208,034 
                                                                  -------------  ------------

    Total current assets                                                33,258       887,717 
                                                                  -------------  ------------

Property held for investment                                            46,642        46,642 

Investment in Paradigm Advanced Technologies, Inc.                     125,000       125,000 

Property and equipment                                                 562,390     2,579,865 
  Less accumulated depreciation, depletion and amortization           (101,482)     (139,419)
                                                                  -------------  ------------

  Net property and equipment                                           460,908     2,440,446 

Other assets                                                                 -           988 
                                                                  -------------  ------------

      Total assets                                                $    665,808   $ 3,500,793 
                                                                  =============  ============

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

Current liabilities:                                                                         
  Accounts payable                                                $  1,557,590   $   351,458 
  Accrued liabilities                                                   52,716        63,492 
  Notes payable to related parties                                     474,480       110,000 
                                                                  -------------  ------------

    Total current liabilities                                        2,084,786       524,950 
                                                                  -------------  ------------

Notes payable to related parties, net of current portion                44,946             - 
                                                                  -------------  ------------

      Total liabilities                                              2,129,732       524,950 
Commitments and contingencies                                                                

Stockholders' equity (deficit):                                                              
  Preferred stock: $.01 par value; 5,000,000 shares authorized                             - 
  Common stock: $.001 par value; 100,000,000 shares authorized;                              
    52,186,900 and 42,584,900 shares issued and outstanding at                               
    December 31, 2001 and 2000, respectively                            52,187        42,585 
  Additional paid-in capital                                        14,717,956    10,835,978 
  Accumulated deficit                                              (16,218,067)   (7,217,720)
                                                                  -------------  ------------

                                                                    (1,447,924)    3,660,843 
  Less common stock subscriptions receivable                           (16,000)     (685,000)
                                                                  -------------  ------------

      Total stockholders' equity (deficit)                          (1,463,924)    2,975,843 
                                                                  -------------  ------------

        Total liabilities and stockholders' equity (deficit)      $    665,808   $ 3,500,793 
                                                                  =============  ============

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

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                          PANGEA PETROLEUM CORPORATION                                  
                      CONSOLIDATED STATEMENT OF OPERATIONS                              
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999                      
                                   __________                                           

                                                    2001          2000          1999    
                                                ------------  ------------  ------------
                                                                                        
Revenues:                                                                               
  Sales and operating revenues                  $    34,251   $         -   $    33,431 
  Interest income                                    12,555         4,953             - 
                                                ------------  ------------  ------------

    Total revenues                                   46,806         4,953        33,431 
                                                ------------  ------------  ------------

Costs and expenses:                                                                     
  Exploration-dry hole and abandonment expense    4,874,253     1,377,967             - 
  Cost of sales                                      14,994        28,284        71,105 
  Selling, general and administrative             4,012,818     3,842,010       208,818 
  Impairment of oil and gas properties              116,364       552,550        75,653 
  Depreciation, depletion and amortization            6,945         4,939        12,774 
  Acquisition costs                                       -        79,250       236,000 
  (Gain) loss on disposition of assets              (17,218)            -        61,000 
  Interest expense                                   38,997       622,599        63,850 
                                                ------------  ------------  ------------

    Total costs and expenses                      9,047,153     6,507,599       729,200 
                                                ------------  ------------  ------------

        Net loss                                $(9,000,347)  $(6,502,646)  $  (695,769)
                                                ============  ============  ============

Basic and diluted net loss per common share     $     (0.18)  $     (0.27)  $     (0.04)
                                                ============  ============  ============

Weighted average common shares                   49,025,431    24,304,257    17,784,313 
                                                ============  ============  ============

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

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                                        PANGEA PETROLEUM CORPORATION                                                     
                          CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)                                       
                            FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999                                         
                                                 __________                                                              

                                                                                                                TOTAL    
                                                                   ADDITIONAL                   STOCK       STOCKHOLDERS'
                                                COMMON STOCK        PAID-IN       RETAINED   SUBSCRIPTIONS     EQUITY    
                                              SHARES    AMOUNT      CAPITAL       EARNINGS     RECEIVABLE    (DEFICIT)   
                                            ----------  -------  --------------  ----------  --------------  ----------  
                                                                                                                         
Balance, December 31, 1998                  17,724,000  $17,724  $        1,581  $ (19,305)  $            -  $       -   

Common stock issued for cash under private                                                                               
  placement                                     50,000       50         106,450          -                -    106,500   

Common stock issued for services                35,000       35          74,515          -                -     74,550   

Common stock issued for property                50,000       50          40,450          -                -     40,500   

Net loss                                             -        -               -   (695,769)               -   (695,769)  
                                            ----------  -------  --------------  ----------  --------------  ----------  

Balance at December 31, 1999                17,859,000  $17,859  $      222,996  $(715,074)  $            -  $(474,219)  
                                            ==========  =======  ==============  ==========  ==============  ==========  

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

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                                             PANGEA PETROLEUM CORPORATION                                                      
                               CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)                                        
                                 FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999                                          
                                                      __________                                                               

                                                                                                                     TOTAL     
                                                                     ADDITIONAL                     STOCK        STOCKHOLDERS' 
                                                   COMMON STOCK       PAID-IN      RETAINED     SUBSCRIPTIONS       EQUITY     
                                                 SHARES    AMOUNT     CAPITAL      EARNINGS      RECEIVABLE        (DEFICIT)   
                                               ----------  -------  -----------  ------------  ---------------  ---------------
                                                                                                                               
Balance at December 31, 1999                   17,859,000  $17,859  $   222,996  $  (715,074)  $            -   $     (474,219)

Common stock issued for cash under private                                                                                     
  placement                                    15,055,645   15,056    1,746,084            -         (685,000)       1,076,140 

Common stock issued for investor relations                                                                                     
  services                                      2,789,372    2,789    2,705,621            -                -        2,708,410 

Common stock issued for contractual services      154,750      155      237,150            -                -          237,305 

Common stock issued to acquire oil and gas                                                                                     
  property                                        325,000      325      454,675            -                -          455,000 

Stock options exercised for cash                1,156,000    1,156    1,362,577            -                -        1,363,733 

Common stock issued to convert debt to equity   3,245,133    3,245    1,233,875            -                -        1,237,120 

Common stock issued to acquire Mass Energy,                                                                                    
  Inc.                                          2,000,000    2,000    2,748,000            -                -        2,750,000 

Issuance of warrants                                    -        -      125,000            -                -          125,000 

Net loss                                                -        -            -   (6,502,646)               -       (6,502,646)
                                               ----------  -------  -----------  ------------  ---------------  ---------------

Balance at December 31, 2000                   42,584,900  $42,585  $10,835,978  $(7,217,720)  $     (685,000)  $    2,975,843 
                                               ==========  =======  ===========  ============  ===============  ===============

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

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                                              PANGEA PETROLEUM CORPORATION                                                    
                                CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)                                      
                                  FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999                                        
                                                       __________                                                             

                                                                                                                    TOTAL     
                                                                  ADDITIONAL                       STOCK        STOCKHOLDERS' 
                                               COMMON     STOCK     PAID-IN      RETAINED      SUBSCRIPTIONS       EQUITY     
                                               SHARES    AMOUNT     CAPITAL      EARNINGS       RECEIVABLE        (DEFICIT)   
                                             ----------  -------  -----------  -------------  ---------------  ---------------
                                                                                                                              
Balance at December 31, 2000                 42,584,900  $42,585  $10,835,978  $ (7,217,720)  $     (685,000)  $    2,975,843 

Common stock issued for cash                  3,633,333    3,633      608,867             -          685,000        1,297,500 

Common stock issued upon exercise of stock                                                                                    
  options                                     2,225,000    2,225    1,152,775             -          (16,000)       1,139,000 

Common stock issued to acquire assets           100,000      100      152,900             -                -          153,000 

Common stock issued for services              1,585,667    1,586      900,604             -                -          902,190 

Common stock issued to compensate employees   2,058,000    2,058      689,682             -                -          691,740 

Issuance of compensatory stock options                -        -      377,150             -                -          377,150 

Net loss                                              -        -            -    (9,000,347)               -       (9,000,347)
                                             ----------  -------  -----------  -------------  ---------------  ---------------

Balance at December 31, 2001                 52,186,900  $52,187  $14,717,956  $(16,218,067)  $      (16,000)  $   (1,463,924)
                                             ==========  =======  ===========  =============  ===============  ===============

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

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                                   PANGEA PETROLEUM CORPORATION                                    
                               CONSOLIDATED STATEMENT OF CASH FLOWS                                
                       FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999                        
                                            __________                                             

                                                                 2001          2000         1999   
                                                             ------------  ------------  ----------
                                                                                                   
Cash flows from operating activities:                                                              
  Net loss                                                   $(9,000,347)  $(6,502,646)  $(695,769)
  Adjustments to reconcile net loss to net cash                                                    
    used in operating activities:                                                                  
    Depreciation expense                                           6,945         4,939      12,774 
    Gain on sale of assets                                       (17,218)            -           - 
    Bad debt expense                                             208,034             -           - 
    Dryhole costs and impairment of unproved properties        4,990,617     1,584,407      75,653 
    Stock issued as compensation for services                  1,593,930     2,945,715           - 
    Issuance of compensatory stock options                       377,150       245,233           - 
    Accrued interest converted to equity                               -       622,449           - 
    Notes payable issued for compensation                        172,838             -           - 
    Note payable issued for accrued interest                      11,008             -           - 
    Changes in operating assets and liabilities, net of                                            
      effects of acquisition:                                                                      
      Accounts receivable                                         62,829       268,875      (7,598)
      Prepaid expenses                                             1,246         2,950           - 
      Other assets                                                   988             -        (988)
      Accounts payable and accrued liabilities                 1,195,356      (584,246)     96,706 
      Advances from joint interest parties                             -      (161,300)          - 
                                                             ------------  ------------  ----------

        Net cash used in operating activities                   (396,624)   (1,573,624)   (519,222)
                                                             ------------  ------------  ----------

Cash flows from investing activities:                                                              
  Cash acquired in acquisition of Mass Energy, Inc.                    -       494,868           - 
  Proceeds from sale of property and equipment                    17,218             -           - 
  Purchase of investment real estate                                   -       (46,642)          - 
  Capital and exploratory expenditures                        (2,865,024)            -     (90,898)
                                                             ------------  ------------  ----------

        Net cash provided by (used in) investing activities   (2,847,806)      448,226     (90,898)
                                                             ------------  ------------  ----------

Cash flows from financing activities:                                                              
  Proceeds from the sale of common stock                       2,436,500     2,194,640      90,500 
  Proceeds from advances from related parties                          -      (708,066)    357,620 
  Proceeds from notes payable to related parties                 255,580       238,551     162,000 
  Payments of notes payable to related parties                   (30,000)            -           - 
                                                             ------------  ------------  ----------

         Net cash provided by financing activities             2,662,080     1,725,125     610,120 
                                                             ------------  ------------  ----------

Net increase (decrease) in cash and cash equivalents            (582,350)      599,727           - 

Cash and cash equivalents at beginning of year                   599,727             -           - 
                                                             ------------  ------------  ----------

Cash and cash equivalents at end of year                     $    17,377   $   599,727   $       - 
                                                             ============  ============  ==========

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

1.   ORGANIZATION  AND  SIGNIFICANT  ACCOUNTING  POLICIES                       
----------------------------------------------------                  

ORGANIZATION                                                          
------------                                                          

     Pangea  Petroleum  Corporation  (the  "Company"), is a Colorado corporation
     engaged  in  oil  and  gas  exploration  and  development.  The Company was
     originally incorporated in 1997 as Zip Top, Inc. and subsequently adopted a
     name change to Pangea Petroleum Corporation. On April 26, 2000, the Company
     was recapitalized when the Company acquired the non-operating public shell,
     Segway  II  Corporation. Segway II Corporation had no significant assets or
     liabilities  at  the  date of acquisition and, accordingly, the transaction
     was  accounted  for  as  a  recapitalization.  In  October 2000 the Company
     acquired  its  wholly  owned  subsidiary,  Mass  Energy, Inc. (See Note 3).

PRINCIPLES  OF  CONSOLIDATION                                         
-----------------------------                                         

     The consolidated financial statements presented herein include the accounts
     of  the  Company  and  its predecessor, Zip Top, Inc., and its wholly owned
     subsidiary,  Mass  Energy,  Inc.,  after  elimination  of  all  significant
intercompany  accounts  and  transactions.                            

ACCOUNTING  ESTIMATES                                                 
---------------------                                                 

     The  preparation  of  financial  statements  in  conformity with accounting
     principles  generally  accepted  in  the  United States of America requires
     management  to  make  estimates  and  assumptions  that affect the reported
     amounts  of  assets and liabilities at the date of the financial statements
     and  the  reported  amounts  of  revenue  and expenses during the reporting
     period.  Actual  results could differ from those estimates. These estimates
     mainly  involve  the useful lives of property and equipment, the impairment
     of  unproved  oil  and gas properties, the valuation of deferred tax assets
and  the  realizability  of  accounts  receivable.                    

OIL  AND  GAS  PRODUCING  ACTIVITIES                                  
------------------------------------                                  

     The  Company  follows the "successful efforts" method of accounting for its
     oil  and  gas  properties.  Under  this  method of accounting, all property
     acquisition  costs  (cost  to  acquire  mineral  interests  in  oil and gas
     properties)  and  costs (to drill and equip) of exploratory and development
     wells  are  capitalized when incurred, pending determination of whether the
     well has found proved reserves. If an exploratory well has not found proved
     reserves  in  commercial quantities, the costs associated with the well are
     charged  to expense. The costs of development wells are capitalized whether
     productive or nonproductive. Geological and geophysical costs and the costs
     of  carrying and retaining undeveloped properties are expensed as incurred.
     Management  estimates  that  the  salvage value of lease and well equipment
     will approximately offset the future liability for plugging and abandonment
     of  the  related  wells.  Accordingly,  no  accrual for such costs has been
recorded.                                                             

     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 average holding period.
     Capitalized  costs  of  producing  oil and gas properties after considering
     estimated  dismantlement and abandonment costs and estimate salvage values,
     are  depreciated and depleted by the unit-of-production method. On the sale
     or retirement of a complete unit of a proved property, the cost and related
     accumulated  depreciation,  depletion, and amortization are eliminated from
     the property accounts, and the resultant gain or loss is recognized. On the
     retirement  or  sale  of  a  partial  unit  of proved property, the cost is
     charged  to  accumulated  depreciation,  depletion, and amortization with a
    resulting  gain  or  loss  recognized  in  the  statement  of  operations.

     On  the sale of an entire interest in an unproved property for cash or cash
   equivalent,  gain  or  loss  on  the  sale  is  recognized,  taking  into
     consideration  the  amount  of  any recorded impairment if the property had
     been  assessed  individually. 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.                                                   

OTHER  PROPERTY  AND  EQUIPMENT                                       
-------------------------------                                       

     Property  and  equipment  is stated at cost. Depreciation is computed using
     the straight-line method over the estimated useful lives of 5 years for ITD
  Units  and  3  to  5  years  for  office  furniture  and  equipment  and
     transportation and other equipment. Additions or improvements that increase
     the  value or extend the life of an asset are capitalized. Expenditures for
     normal  maintenance  and  repairs  are  expensed as incurred. Disposals are
     removed  from  the  accounts  at cost less accumulated depreciation and any
gain  or  loss  from  disposition  is  reflected  in  operations.     

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

1.   ORGANIZATION  AND  SIGNIFICANT  ACCOUNTING  POLICIES,  CONTINUED           
----------------------------------------------------------------      

IMPAIRMENT  OF  LONG-LIVED  ASSETS                                    
----------------------------------                                    

     In  the  event  facts  and  circumstances  indicate the carrying value of a
     long-lived  asset,  including  associated  intangibles, may be impaired, an
     evaluation of recoverability is performed by comparing the estimated future
     undiscounted  cash  flows associated with the asset to the asset's carrying
     amount to determine if a write-down to market value or discounted cash flow
     is  required.  Based  upon a recent evaluation by management, an impairment
     write-down  of  the  Company's long-lived assets was recorded to write such
assets  down  to  their  estimated  net  realizable  value.           

REAL  ESTATE  HELD  FOR  INVESTMENT                                   
-----------------------------------                                   

     Real  estate  held  for  investment is carried at the lower of cost or fair
     market  value.  Management  assesses  the  value  of  real  estate held for
     investment  on  a quarterly and annual basis to determine if any impairment
     to  this net realizable value has occurred. Management closely monitors any
     changes  in  the  real estate market, which would indicate that a change in
     the  value  of its holdings has occurred and also obtains independent third
party  appraisals  on  its  holdings  on  an  as-needed  basis.       

CASH  AND  CASH  EQUIVALENTS                                          
----------------------------                                          

     For  purposes of reporting cash flows, the Company considers all short-term
     investments  with  an  original  maturity  of  three  months  or  less when
purchased  to  be  cash  equivalents.                                 

FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS                               
---------------------------------------                               

     The  Company  includes  fair  value  information  in the notes to financial
     statements  when  the  fair value of its financial instruments is different
     from  the  book  value.  When  the  book  value approximates fair value, no
additional  disclosure  is  made.                                     

CONCENTRATION  OF  CREDIT  RISK                                       
-------------------------------                                       

     Financial instruments which subject the Company to concentrations of credit
     risk include cash and cash equivalents and accounts receivable. The Company
     maintains  its  cash and cash equivalents with major financial institutions
     selected  based  upon  management's  assessment  of  the  banks'  financial
     stability.  Balances  periodically  exceed  the $100,000 federal depository
     insurance  limit.  The  Company has not experienced any losses on deposits.
     Accounts  receivable  generally  arise  from sales of services to customers
     operating  in  the  United States. Collateral is generally not required for
     credit  granted.  As  of  December  31,  2001,  all  of the Company's trade
     receivables were due from one customer. During the years ended December 31,
     2001  and  1999,  100%  of  the  Company's  revenues  was received from two
customers.                                                            

OIL  AND  GAS  REVENUES                                               
-----------------------                                               

     Oil  and  gas  revenues  are  recorded  under the sales method. The Company
     recognizes  oil  and  gas  revenues  as production occurs. As a result, the
     Company  accrues  revenue  relating to production for which the Company has
not  received  payment.                                               

EARNINGS  PER  SHARE                                                  
--------------------                                                  

     The  Company  has  adopted  SFAS No. 128, which provides for calculation of
     "Basic" and "Diluted" earnings per share. Basic earnings per share includes
     no  dilution  and  is  computed  by dividing net income available to common
     shareholders  by  the  weighted  average  common shares outstanding for the
     period.  Diluted  earnings  per  share  reflect  the  potential dilution of
     securities  that  could share in the earnings of an entity similar to fully
diluted  earnings  per  share.                                        

STOCK  BASED  COMPENSATION                                            
--------------------------                                            

    SFAS  No.  123,  "Accounting  for  Stock-Based  Compensation"  established
     financial  accounting  and  reporting  standards  for  stock-based employee
     compensation  plans. It defined a fair value based method of accounting for
     an  employee  stock  option or similar equity instrument and encouraged all
     entities to adopt that method of accounting for all of their employee stock
     compensation  plans  and  include  the  cost  in  the  income  statement as
     compensation  expense.  However,  it  also  allows an entity to continue to
     measure  compensation  cost for those plans using the intrinsic value based
     method  of  accounting  prescribed  by  Accounting Principles Board ("APB")
     Opinion  No.  25,  "Accounting  for Stock Issued to Employees". The Company
     accounts  for  compensation  cost for stock option plans in accordance with
APB  Opinion  No.  25.                                                

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

1.   ORGANIZATION  AND  SIGNIFICANT  ACCOUNTING  POLICIES,  CONTINUED           
----------------------------------------------------------------      

INCOME  TAXES                                                         
-------------                                                         

     The Company uses the liability method in accounting for income taxes. Under
     this  method,  deferred  tax assets and liabilities are determined based on
     differences  between financial reporting and income tax carrying amounts of
     assets  and  liabilities  and  are measured using the enacted tax rates and
     laws that will be in effect when the differences are expected to reverse. A
     valuation allowance, if necessary, is provided against deferred tax assets,
based  upon  management's  assessment  as  to  their  realization.    

NEW  ACCOUNTING  PRONOUNCEMENTS                                       
-------------------------------                                       

     In June 2001, the Financial Accounting Standards Board issued SFAS No. 142,
     "Goodwill  and  Other  Intangible  Assets".  SFAS  No.  142  eliminates the
     amortization  of  goodwill  and requires that goodwill be reviewed annually
     for  impairment.  SFAS  No.  142  also  requires  that  the useful lives of
     previously  recognized  intangible  assets  be reassessed and the remaining
     amortization periods be adjusted accordingly. SFAS No. 142 is effective for
     fiscal years beginning after December 15, 2001 and affects all goodwill and
     other  intangible  assets  recorded  on the Company's balance sheet at that
   date,  regardless  of  when  the  assets  were  initially  recorded.  The
     implementation of SFAS No. 142 is not expected to have a material impact on
the  Company's  results  of  operations  or  financial  position.     

     In  June  2001,  the  FASB  issued  SFAS  No.  143,  "Accounting  for Asset
     Retirement  Obligations".  SFAS  No. 143 addresses accounting and reporting
     for  obligations  associated  with  the  retirement  of tangible long-lived
     assets  and  the  associated  asset  retirement  costs.  This  statement is
     effective  for fiscal years beginning after June 15, 2002. The Company does
     not  expect the implementation of SFAS No. 143 to have a material impact on
the  Company's  results  of  operation  or  financial  position.      

     In  July  2001,  the  FASB  issued SFAS No. 144, "Impairment or Disposal of
     Long-Lived  Assets",  which  is  effective for fiscal years beginning after
     December  15,  2001.  The  provisions  of  this  statement provide a single
     accounting  model for impairment of long-lived assets. The Company does not
     expect  the implementation of SFAS No. 144 to have a material impact on the
Company's  results  of  operation  or  financial  position.           

RECLASSIFICATIONS                                                     
-----------------                                                     

     Certain prior year amounts in the 2000 consolidated balance sheet have been
     reclassified  to  conform  to  the  2001 presentation. In 2000, the Company
     recorded  215,000  shares  of  its common stock as issued for conversion of
     note  payable.  However,  the  common  stock  was never issued and the note
     payable  is still outstanding. The accompanying December 31, 2000 financial
     statements  include a reclassification reducing common stock and additional
     paid-in  capital  and  increasing  notes  payable  and  accounts payable by
   $75,000.  This  reclassification  had  no  impact  on  the  statement  of
operations.                                                           

     In  addition,  certain items in the 2000 and 1999 financial statements have
been  reclassified  to  conform  to  the  2001  presentation.  These  
     reclassifications  had  no  effect on the Company's financial position, net
loss  or  cash  flows.                                                

2.   GOING  CONCERN  CONSIDERATIONS                                             
------------------------------                                        

     Since  its  inception,  the  Company  has  suffered  recurring  losses from
     operations  and  has  been  dependent  on  existing  stockholders  and  new
     investors  to  provide the cash resources to sustain its operations. During
     the  years ended December 31, 2001, 2000 and 1999, the Company reported net
losses  and  negative  cash  flows  from  operations  as  follows:    

                                                                [Download Table]

                                         2001          2000         1999   
                                     ------------  ------------  ----------
                                                                           
Net loss                             $(9,000,347)  $(6,502,646)  $(659,769)
Negative cash flows from operations  $  (396,624)  $(1,573,624)  $(519,222)

     The Company's continuing negative operating results have produced a working
     capital  deficit  of  $(2,051,528) at December 31, 2001 and have caused the
     Company's  subsidiary  Mass  Energy,  Inc. to become severely delinquent on
     various accounts payable. Vendors have initiated legal actions against Mass
     Energy,  Inc.  to force payment of past due accounts, but Mass Energy, Inc.
     lacks the cash resources to make such payments. Accordingly, the results of
     such  legal  actions  cannot  be predicted. These factors raise substantial
     doubt  about  the  Company's  ability  to  continue  as  a  going  concern.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

2.   GOING  CONCERN  CONSIDERATIONS,  CONTINUED                                 
------------------------------------------                            

     The  Company's  strategic  plan  for dealing with its cash flow problems is
     currently being developed, but may include additional private placements of
     the  Company's  common  stock, the abandonment of unprofitable projects and
     the  exchange  of common stock for settlement of vendor accounts. There can
     be no assurance that any of the plans developed by the Company will produce
cash  flows  sufficient  to  overcome  current  liquidity  problems.  

     The  Company's  long-term  viability  as  a  going  concern is dependent on
certain  key  factors,  as  follows:                                  

     -    The  Company's ability to obtain adequate sources of outside financing
          to  convince  vendors to drop legal actions against the Company and to
          allow  the  Company  to  continue  forward  with  current  exploration
efforts.                                                    

     -    The  Company's  ability to locate, prove and produce from economically
viable  oil  and  gas  reserves.                            

     -    The Company's ability to ultimately achieve adequate profitability and
cash  flows  to  sustain  continuing  operations.           

3.   ACQUISITION  OF  MASS  ENERGY,  INC.  AND  RECAPITALIZATION                
-----------------------------------------------------------           

     On  October  5,  2000,  the  Company acquired Mass Energy, Inc., a Houston,
     Texas based oil and gas exploration company, in a transaction accounted for
     as  a purchase (the "Purchase"). The purchase price was 2,000,000 shares of
     the  Company's  restricted  common  stock issued in exchange for all of the
     outstanding common stock of Mass Energy, Inc. The $4,521,856 purchase price
     was allocated to the assets acquired and liabilities assumed based on their
     estimated  fair  values  at  the  date  of  acquisition. The purchase price
allocation  was  based  on  valuations  and  estimates.               

     Following  is the purchase price allocation in connection with the purchase
of  Mass  Energy,  Inc.:                                              

                                                                [Download Table]

                                                          
Assets Acquired:                                          
----------------                                          
  Current assets                                $  848,585
  Noncurrent assets                                198,500
  Oil and gas properties                         3,458,696
  Other property and equipment, net                 16,075
                                                ----------

    Total assets acquired                       $4,521,856
                                                ==========

Liabilities Assumed and Consideration Given:              
--------------------------------------------              
  Current liabilities                           $1,771,856
  Common stock issued                            2,750,000
                                                ----------

    Total liabilities assumed and other                   
      consideration given                       $4,521,856
                                                ==========

     Mass  Energy, Inc.'s results of operations are included in the accompanying
     consolidated  financial  statements from October 5, 2000 and throughout the
     year  ended  December  31,  2001.  Following is the Company's unaudited pro
     forma results of operations for the years ended December 31, 2000 and 1999,
     as  if  the  Purchase would have been consummated as of January 1, 2000 and
1999:                                                                 

                                                                [Download Table]

PROFORMA  INFORMATION                                                 
---------------------                                                 

                                                2000          1999    
                                            ------------  ------------
                                                                      
Sales                                       $         -   $   835,207 

Loss from operations                        $(5,830,791)  $  (655,326)

Net loss applicable to common shareholders  $(6,416,583)  $  (800,311)

Basic and diluted net loss per share        $      (.24)  $      (.04)

Weighted average shares outstanding          25,947,941    19,784,313 
                                            ============  ============

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
________

4.   ACCOUNTS RECEIVABLE, NET                                                   
------------------------                                              

     Accounts receivable at December 31, 2001 and 2000 consist of the following:

                                                                [Download Table]

                                               2001        2000   
                                             ---------  ----------
                                                                  
Accounts receivable-joint interest billings  $  3,961   $ 160,257 
Other accounts receivable                      40,716      21,494 
                                             ---------  ----------

                                               44,677     181,751 
Less allowance for doubtful accounts          (30,489)   (104,734)
                                             ---------  ----------

                                             $ 14,188   $  77,017 
                                             =========  ==========

5.   NOTES  RECEIVABLE  FROM  RELATED  PARTIES                                  
-----------------------------------------                             

     Notes receivable from related parties at December 31, 2001 and 2000 consist
     of  demand  notes receivable from the former owner of Mass Energy, Inc. and
     from  a  company  that  he owns. These notes bear interest at rates ranging
     from  6.25%  to  7%  per year and are uncollateralized. The notes are fully
     reserved at December 31, 2001. Following is an analysis of notes receivable
from  related  parties.                                               

                                                                [Download Table]

                                      2001       2000  
                                   ----------  --------
                                                       
Contractual balance                $ 190,000   $190,000
Accrued interest                      30,489     18,034
                                   ----------  --------

                                     220,489    208,034
Less allowance for doubtful notes   (220,489)         -
                                   ----------  --------

                                   $       -   $208,034
                                   ==========  ========

6.   PROPERTY  HELD  FOR  INVESTMENT                                            
-------------------------------                                       

     Property  held  for  investment consists of a parcel of real estate in Fort
     Bend  County,  Texas.  The  Company  holds  a 40% ownership interest in the
property  in  joint  ownership  with  certain  related  parties.      

7.   INVESTMENT  IN  PARADIGM  ADVANCED  TECHNOLOGIES,  INC.                    
-------------------------------------------------------               

     During  the  year  ended  December  31,  1999,  the  Company  owned 100% of
     WorldLink  USA,  Inc.  ("WorldLink"),  a  company that owns and/or licenses
     certain  streaming  video  technology  and a library of concerts previously
     broadcast  over  the internet. At December 31, 1999, the Company determined
     that  its  investment  in  WorldLink  was no longer economically viable and
initiated  a  search  for  a  purchaser  or  partner.                 

     On  September 7, 2000, the Company entered into an agreement (the "Exchange
     Agreement")  with  Paradigm  Advanced Technologies, Inc. ("Paradigm") under
     which the Company agreed to contribute the WorldLink assets to a new Nevada
     limited  liability  company,  WorldLink  USA,  LLC,  to be 50% owned by the
     Company  and  Paradigm  but to be operated by Paradigm. In exchange for the
     contribution  of  the  WorldLink  assets  to  the  LLC  and the granting to
     Paradigm  of  a  warrant for purchase of 12,500,000 shares of the Company's
     common  stock  at  $1  per  share, the Company received 7,300,000 shares of
     Paradigm  common  stock  and  a  warrant  to  acquire  12,500,000 shares of
     Paradigm  stock  at  $1  per  share.  The  warrants issued and the Paradigm
     warrants  received  in  the  Exchange  Agreement may not be exercised until
after  the  second  anniversary  of  the  Exchange  Agreement.        

     The  Company's investment in Paradigm common stock and warrants is reported
     in  the accompanying balance sheet as of December 31, 2001 and 2000, at its
     estimated fair value at the date of the Exchange Agreement of $125,000. The
     Company  reports  its  investment  in  Paradigm  using  the cost method and
     periodically  compares  the  carrying  value  of its investment to the fair
market  value  to  determine  whether  a  write-down  is  necessary.  

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

8.   PROPERTY AND EQUIPMENT                                                     
----------------------                                                

     Property  and  equipment consists of the following at December 31, 2001 and
2000:                                                                 

                                                                [Download Table]

                                                       2001        2000    
                                                    ----------  -----------
                                                                           
  Unproved oil and gas properties, not subject to                          
    amortization (successful efforts method)        $ 454,246   $2,426,839 
  Machinery and equipment                             108,144      153,026 
                                                    ----------  -----------

                                                      562,390    2,579,865 
Less accumulated depreciation, depletion and                               
  amortization                                       (101,482)    (139,419)
                                                    ----------  -----------

    Net property and equipment                      $ 460,908   $2,440,446 
                                                    ==========  ===========

    During  the  year  ended  December  31,  2001  substantially  all  of  the
     exploration projects in which the Company is involved resulted in dry holes
     or  were  productive  at  an  economically unacceptable level. Accordingly,
     during  the  year  ended  December 31, 2001, the Company recorded dry hole,
     abandonment  and  impairment  charges  totaling $4,990,617. During the year
     ended  December  31,  2000  and  1999,  such charges totaled $1,930,517 and
$75,653,  respectively.                                               

9.   NOTES PAYABLE TO RELATED PARTIES                                           
--------------------------------                                      

     Notes  payable  to related parties consist of the following at December 31,
2001  and  2000:                                                      

                                                                [Download Table]

                                                          2001       2000   
                                                       ----------  ---------
                                                                            
Notes payable to stockholders of the Company, bearing                       
  interest from the prime rate (4.75% at December 31,                       
  2001) to 20% per year, interest due monthly and                           
  principal due on demand.  The notes are not collat-                       
  eralized.                                            $ 260,338   $ 35,000 

Note payable to a stockholder of the Company, bearing                       
  interest at the prime rate (4.75% at December 31,                         
  2001), interest due quarterly, principal of $9,100                        
  due on January 10, 2002 and $6,600 per quarter for                        
  each quarter thereafter until its maturity on                             
  October 10, 2004, when all unpaid principal and                           
  interest is due.  The note is not collateralized.       73,846          - 

Notes payable to an affiliated company, bearing int-                        
  erest at 18% per year, principal and interest due                         
  on demand.  The notes are not collateralized.          185,242     25,000 
                                                       ----------  ---------

                                                         519,426     60,000 
Less current portion                                    (474,480)   (60,000)
                                                       ----------  ---------

Long-term portion of notes payable to related parties  $  44,946   $      - 
                                                       ==========  =========

     Included  in  accrued  liabilities at December 31, 2001 and 2000 is accrued
     interest  owed  to these related parties of $28,648 and $-0-, respectively.

     Future  annual  maturities  of  the  notes payable to related parties as of
December  31,  2001  are  as  follows:                                

YEAR ENDED                                                                      
DECEMBER 31,                                                                    
-------------                                                                   

2002            $474,480                                                
2003              26,400                                                
2004              18,546                                                
--------                                

519,426                               
========                                

F-16

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PANGEA PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

10.   INCOME  TAXES                                                             
-------------                                                       

     The Company has incurred losses since its inception and, therefore, has not
     been  subject to federal income taxes. As of December 31, 2001, the Company
     had  net  operating  loss  ("NOL") carryforwards for income tax purposes of
     approximately  $19,400,000  which expire in various tax years through 2021.
     Under  the  provisions of Section 382 of the Internal Revenue Code, the net
     operating loss carryforwards resulting from the acquisition of Mass Energy,
     Inc.  and the ownership change in the Company when it recapitalized in 2000
     could  severely limit the Company's ability to utilize its NOL carryforward
     to  reduce future taxable income and related tax liabilities. Additionally,
  because  United  States  tax  laws  limit  the  time  during  which  NOL
     carryforwards may be applied against future taxable income, the Company may
     be unable to take full advantage of its NOL for federal income tax purposes
should  the  Company  generate  taxable  income.                      

     The  composition  of  deferred  tax  assets  and the related tax effects at
December  31,  2001  and  2000  are  as  follows:                     

                                                                [Download Table]

                                               2001          2000    
                                           ------------  ------------
                                                                     
Net operating losses                       $ 6,600,594   $ 3,636,083 
Basis of property and equipment                227,430       213,589 
Allowance for doubtful accounts and notes                            
  receivable                                    74,966             - 
Other                                           26,945        26,945 
                                           ------------  ------------

  Total deferred tax assets                  6,929,935     3,876,617 

Less valuation allowance                    (6,929,935)   (3,876,617)
                                           ------------  ------------

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

     The difference between the income tax benefit in the accompanying statement
     of  operations  and  the  amount  that  would  result  if  the U.S. Federal
     statutory  rate  of  34%  were  applied to pre-tax loss for the years ended
December  31,  2001,  2000  and  1999  is  as  follows:               

                                                        [Enlarge/Download Table]

                                   2001                   2000                1999        
                         ---------------------  ---------------------  -------------------
                            AMOUNT        %        AMOUNT        %       AMOUNT       %   
                         ------------  -------  ------------  -------  ----------  -------
                                                                                          
Benefit for income tax                                                                    
  at federal statutory                                                                    
  rate                   $(3,060,118)  (34.0%)  $(2,210,899)  (34.0%)  $(236,561)  (34.0%)
Non-deductible expenses        6,800         -        6,146         -          -         -
Increase in valuation                                                                     
  allowance                3,053,318      34.0    2,204,753      34.0    236,561      34.0
                         ------------  -------  ------------  -------  ----------  -------

                         $         -       - %  $      -  _       - %  $    -  _       - %
                         ============  =======  ============  =======  ==========  =======

11.  COMMITMENTS AND CONTINGENCIES                                              
-----------------------------                                         

OPERATING LEASE                                                       
---------------                                                       

     The  Company  leases office space under an operating lease which expires in
     2003. At December 31, 2001, the future annual lease payments required under
the  noncancellable  operating  lease  are  as  follows:              

YEAR ENDED                                                                  
DECEMBER 31,                                                                  
-------------                                                                 

2002           $44,360                                                
2003            37,191                                                
-------                                 

81,551                                
=======                                 

     Rent  expense  incurred under operating leases for the years ended December
     31,  2001,  2000  and  1999 was $38,423, $15,191 and $19,900, respectively.

EMPLOYMENT  AGREEMENT                                                 
---------------------                                                 

     The  Company has entered into an employment agreement with its Chairman and
     Chief Executive Officer for a period of one year through December 31, 2002.
     The  employment agreement provides for a salary of $10,000 per month, which
     the  Company  may defer and pay, plus accrued interest at the prime rate on
     amounts  deferred,  in the form of common stock of the Company based on 30%
of  the  closing  bid  price.                                         

F-17

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PANGEA PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

11.  COMMITMENTS AND CONTINGENCIES, CONTINUED                                   
----------------------------------------                              

LEGAL PROCEEDINGS                                                     
-----------------                                                     

     During  the  year  ended  December  31,  2001, various vendors that provide
     services  and  supplies to the Company initiated legal actions to force the
   Company  to  pay  past  due  amounts.  These  legal  actions  pertain  to
     approximately  $480,000  of  the  Company's  accounts  payable  and accrued
     liabilities and all balances claimed by the vendors have been fully accrued
at  December  31,  2001.                                              

     The  Company  may  also  be  periodically  subject to legal proceedings and
     claims that arise in the ordinary course of its business. In the opinion of
     management,  such  legal  proceedings and claims will not materially affect
     the financial position, results of operations or cash flows of the Company.

12.  STOCKHOLDERS'  EQUITY                                                      
---------------------                                                 

PREFERRED  STOCK                                                      
----------------                                                      

     The  Company's  articles  of  incorporation authorize the issuance of up to
     5,000,000  shares  of  preferred  stock, with a par value of $.01 and other
     characteristics  determined  by  the  Company's  board  of directors. As of
     December  31,  2001  and  2000,  there  was  no  preferred  stock issued or
outstanding.                                                          

COMMON  STOCK                                                         
-------------                                                         

     During the years ended December 31, 2001, 2000 and 1999, the Company issued
     shares for cash under private placements of securities, for compensation to
     employees  and  consultants, for acquisition of properties, for acquisition
     of  Mass Energy, Inc. and for conversion of debt to equity. These issuances
     are  shown on the accompanying statement of stockholders' equity (deficit).

     Included  in  stock  issuances  for  the  year ended December 31, 2001 were
     shares  issued  under  a  Securities  Purchase  Agreement  (the "Securities
     Purchase  Agreement")  whereby  the  Company  issued  12,650,000  shares of
     restricted  common stock to an escrow agent (the "Escrowed Shares") for the
     benefit  of  four  investor  groups in exchange for $1,300,000 in cash. The
     terms  of  the Securities Purchase Agreement required the Company to file a
     Registration  Statement  with  the  Securities  and  Exchange Commission to
     register  the  Escrowed  Shares and included provisions for the issuance of
     four  series  of  warrants  with  exercise  prices  to  be  set  based on a
     combination  of  certain future events and the performance of the Company's
     common  stock.  Following  is  an  analysis of shares and warrants issuable
under  the  Securities  Purchase  Agreement.                          

                                                                [Download Table]

                                MAXIMUM                                   
                                PURCHASE   NUMBER OF     MAXIMUM NUMBER   
       PURCHASER                 PRICE      SHARES        OF WARRANTS     
-----------------------------  ----------  ---------  --------------------
                                                                          
Generation Capital Associates  $  600,000  1,600,000  3,450,000 A Warrants
                                                      3,450,000 B Warrants

STL Capital Partners, LLC         250,000    666,667  1,333,333 A Warrants
                                                      1,333,333 B Warrants

Greenwood Partners, L.P.          200,000    533,333  1,066,666 A Warrants
                                                      1,066,666 B Warrants

The Apmont Group, Inc.            250,000    550,000  1,100,000 C Warrants
                                                      1,100,000 D Warrants

Escrow Agent Fee                        -          -     75,000 A Warrants
                                                         75,000 B Warrants
                               ----------  ---------  -----------         

  Total                        $1,300,000  3,350,000   14,049,998 Warrants
                               ==========  =========  ===========         

STOCK  OPTIONS                                                        
--------------                                                        

     The  Company  periodically issues incentive stock options to key employees,
     officers,  and  directors  to  provide additional incentives to promote the
     success of the Company's business and to enhance the ability to attract and
     retain  the services of qualified persons. The issuance of such options are
     approved by the Board of Directors. The exercise price of an option granted
     is  determined  by the fair market value of the stock on the date of grant.

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PANGEA PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

12.  STOCKHOLDERS'  EQUITY,  CONTINUED                                          
---------------------------------                                     

     The  Company  has elected to follow Accounting Principles Board Opinion No.
     25,  "Accounting  for  Stock  Issued  to  Employees"  (APB  25) and related
     Interpretations  in  accounting  for its employee stock options because, as
     discussed  below,  the alternative fair value accounting provided for under
     FASB Statement No. 123, "Accounting for Stock-Based Compensation", requires
     use  of  option valuation models that were not developed for use in valuing
     employee  stock  options.  Under  APB  25,  if  the  exercise  price of the
     Company's  employee  stock  options  is greater than or equal to the market
     price of the underlying stock on the date of grant, no compensation expense
     is  recognized.  During  the  year  ended  December  31, 2001, compensation
     expense of $377,150 was recognized related to the issuance of stock options
     with  a  market price exceeding the exercise price on the date of grant. No
compensation  expense  was  recognized  in  2000  or  1999.           

     Proforma  information  regarding  net  income  and  earnings  per  share is
     required  by  Statement  123, and has been determined as if the Company had
     accounted  for  its  employee  stock options under the fair value method of
     that  Statement. The fair value for these options was estimated at the date
     of  grant  using  a  Black-Scholes  option pricing model with the following
     weighted-average  assumptions  used  for  grants  in 2001, 2000 and 1999 as
follows:                                                              

                                                                [Download Table]

                                DECEMBER 31,     
                     ----------------------------
                       2001      2000      1999  
                     --------  --------  --------
                                                 
Dividend yield             0%        0%        0%
Expected volatility      185%      185%      169%
Risk free interest         5%     53.6%     48.7%
Expected lives       3 years   3 years   3 years 

    The  Black-Scholes  option  valuation  model  was  developed  for  use  in
     estimating  fair value of traded options which have no vesting restrictions
     and  are  fully  transferable. In addition, option valuation models require
     the  input  of  highly  subjective assumptions including the expected stock
     price  volatility.  Because  the  Company's  employee  stock  options  have
     characteristics  significantly  different from those of traded options, and
     because  changes  in the subjective input assumptions can materially affect
     the  fair  value  estimate, in management's opinion, the existing models do
     not  necessarily provide a reliable single measure of the fair value of its
employee  stock  options.                                             

     For  purposes  of  proforma  disclosures,  the  estimated fair value of the
     options is included in expense over the option's vesting period or expected
life.                                                                 

                                                                [Download Table]

                                         2001           2000           1999    
                                     -------------  -------------  ------------
                                                                               
Net loss as reported                 $ (9,000,347)  $ (6,502,646)  $  (695,769)

Adjustment calculated in accordance                                            
  with SFAS 123                        (1,435,800)    (3,642,330)     (892,044)
                                     -------------  -------------  ------------

Proforma net loss                    $(10,436,147)  $(10,144,976)  $(1,587,813)
                                     =============  =============  ============

Loss per common share, as reported   $      (0.18)  $      (0.27)  $     (0.04)

Proforma and diluted net loss per                                              
  common share                       $      (0.21)  $      (0.42)  $     (0.09)

     A  summary  of  the Company's stock option activity and related information
 for  the  years  ended  December  31,  2001,  2000  and  1999  follows:

F-19

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PANGEA PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

12.  STOCKHOLDERS'  EQUITY,  CONTINUED                                          
---------------------------------                                     

                                                                [Download Table]

                                           NUMBER OF   WEIGHTED 
                                            SHARES      AVERAGE 
                                             UNDER     EXERCISE 
                                            OPTION       PRICE  
                                          -----------  ---------
                                                                
Balance outstanding at January 1, 1999             -   $       -

  Issued                                     920,000   $    0.91
  Exercised                                        -           -
  Cancelled                                        -           -
  Expired                                          -           -
                                          -----------           

Balance outstanding at December 31, 1999     920,000   $    0.91
                                          -----------           

  Issued                                   3,862,500   $    2.97
  Exercised                               (1,156,000)  $    0.97
  Cancelled                                 (350,000)  $    4.14
  Expired                                    (20,000)  $    3.00
                                          -----------           

Balance outstanding at December 31, 2000   3,256,500   $    2.97
                                          -----------           

  Issued                                   3,118,500   $    0.64
  Exercised                               (2,225,000)  $    0.52
  Cancelled                                        -           -
  Expired                                          -           -
                                          -----------           

Balance outstanding at December 31, 2001   4,150,000   $    2.55
                                          ===========           

     All  outstanding  stock  options  are  exercisable  at December 31, 2001. A
     summary  of  outstanding  stock  options  are  December  31,  2001 follows:

                                                                [Download Table]


                                      REMAINING                  
NUMBER OF COMMON                     CONTRACTED                  
STOCK EQUIVALENTS  EXPIRATION DATE  LIFE (YEARS)  EXERCISE PRICE 
-----------------  ---------------  ------------  ---------------
                                                                 
          350,000  November 2003             1.8  $          0.50
          230,000  November 2003             1.8             1.00
          600,000  November 2003             1.8             2.00
        1,500,000  November 2003             1.8             5.00
           40,000  December 2003             1.9             1.00
          350,000  January 2004              2.0             1.00
          370,000  February 2004             2.1             1.00
          160,000  March 2004                2.2             1.00
          100,000  April 2004                2.3             1.00
          125,000  May 2004                  2.3             1.00
          150,000  June 2004                 2.4             1.00
           75,000  July 2004                 2.5             1.00
           50,000  August 2004               2.6             1.00
           50,000  September 2004            2.7             1.00
-----------------                                                

        4,150,000                                                
=================                                                

     Effective  in March 2002, the Company adopted a Stock Option and Grant Plan
     (the  "Plan")  under  which  incentive  stock  options, non-qualified stock
     options,  restricted  stock, and common stock of the Company may be granted
     from  time  to  time  to employees and consultants of the Company. The Plan
     allows  for  grants to other individuals contributing to the success of the
     Company  at the discretion of the Company's board of directors. The purpose
     of  the  Plan is to provide additional incentives to promote the success of
     the  Company and to enhance the Company's ability to attract and retain the
     services  of  qualified  individuals.  The  Company  has reserved 5,000,000
     shares  of  stock  for issuance under the Plan and up to 400,000 additional
     shares will be reserved and available for issuance under the Plan each year
beginning  in  2003  and  continuing  until  2012.                    

STOCK  WARRANTS                                                       
---------------                                                       

     A  summary  of the Company's stock warrant activity and related information
  for  the  years  ended  December  31,  2001,  2000  and  1999  follows::

F-20

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PANGEA PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

12.  STOCKHOLDERS'  EQUITY,  CONTINUED                                          
---------------------------------                                     

                                                                [Download Table]

                             NUMBER OF                               
                               SHARES                                
                               UNDER       EXERCISE       WEIGHTED   
                              WARRANT       PRICE      AVERAGE PRICE 
                             ----------  ------------  --------------
                                                                     
Warrants outstanding at                                              
  December 31, 1999                   -  $          -  $            -

  Issued                              -  $          -  $            -
  Canceled                            -  $          -  $            -
  Exercised                           -  $          -  $            -
                             ----------                              

Warrants outstanding at                                              
  December 31, 1999                   -  $          -  $            -

  Issued to Paradigm Ad-                                             
    vanced Technologies,                                             
    Inc.                     12,500,000  $       1.00  $         1.00
  Issued in connection with                                          
    financing arrangement    14,049,998  $0.375-$0.50  $         0.43
  Canceled                            -  $          -  $            -
  Exercised                           -  $          -  $            -
                             ----------                              

Warrants outstanding at                                              
  December 31, 2000          26,549,998  $       1.00  $         0.71

  Issued                              -  $          -  $            -
  Canceled                            -  $          -  $            -
  Exercised                           -  $          -  $            -
                             ----------                              

Warrants outstanding at                                              
  December 31, 2001          26,549,998  $       1.00  $         0.71
                             ==========                              

     The  warrants  issued  in connection with the financing arrangement are all
     exercisable for five years and include various provisions that could reduce
     the  exercise  price. The Company is currently negotiating to establish the
final  terms.                                                         

13.  RELATED  PARTY  TRANSACTIONS                                               
----------------------------                                          

     During  the  years  ended December 31, 2001, 2000 and 1999, the Company was
  engaged  in  various  transactions  with  related  parties  as  follows:

          In November 2001, the Company entered into a consulting agreement with
          a  stockholder  to  provide  recordkeeping  and  other  administrative
          services.  The  total compensation due under the three month agreement
         is  $15,303,  of  which  $10,303  was  incurred  and  paid  in  2001.

          During  2000,  the  Company paid health insurance costs on behalf of a
          company owned by a stockholder. The Company's balance sheet includes a
          receivable from that stockholder of $8,857 and $13,824 at December 31,
          2001  and  2000,  respectively,  related  to insurance expense paid on
behalf  of  this  related  party.                           

          During  2000,  the  Company  incurred  a  broker's fee of $25,000 to a
          company  owned  by  a  stockholder  in  connection  with the Company's
          acquisition of Segway II Corporation (See Note 1). This amount has not
          been paid and is included in accounts payable at December 31, 2001 and
2000.                                                       

          In  addition  to  the  transactions  and balances described above, the
          Company  has  various  related party notes receivable (See Note 5) and
       notes  payable  (See  Note  9)  at  December  31,  2001  and  2000.

14.  NON-CASH  INVESTING  AND  FINANCING  ACTIVITIES                            
-----------------------------------------------                       

          During  the  years ended December 31, 2001, 2000 and 1999, the Company
          engaged  in  various  non-cash  financing  and investing activities as
follows:                                                    

F-21

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PANGEA PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

14.  NON-CASH  INVESTING  AND  FINANCING  ACTIVITIES,  CONTINUED                
-----------------------------------------------------------           

                                                        [Enlarge/Download Table]

                                                                        2001       2000      1999  
                                                                      --------  ----------  -------
                                                                                                   
  Common stock issued to acquire property                             $153,000  $  455,000  $74,515

  Acquisition of Mass Energy, Inc. in exchange                                                     
    for common stock, net of $494,868 of cash                                                      
    acquired                                                                 -   2,255,132        -

  Common stock issued in exchange for sub-                                                         
    scription receivable                                                16,000     685,000        -

  Debt converted to common stock                                             -   1,312,120        -

Following is an analysis of cash paid for interest and income taxes:                               

  Cash paid for interest                                              $      -  $        -  $     -

  Cash paid for income taxes                                                 -           -        -


F-22

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K’ Filing		Date		First		Last			Other Filings
		10/10/04		44
		12/31/02		25		45			10KSB,  NT 10-K
		6/15/02		41
Filed on:		4/17/02
		4/15/02		28
		4/14/02		31
		4/11/02		28					8-K
		4/10/02		2		25
		3/31/02		16					10QSB,  NT 10-Q
		3/26/02		21
		3/15/02		24
		2/19/02		24					5
		1/10/02		44
For Period End:		12/31/01		1		49			NT 10-K
		12/15/01		41
		4/16/01		21					10-K
		4/13/01		14
		4/10/01		15
		3/23/01		21
		2/8/01		14					S-1
		1/26/01		21		32
		12/31/00		5		49			10-K,  NT 10-K
		12/29/00		13		15
		12/18/00		23
		10/5/00		42					3,  8-K,  8-K/A
		9/7/00		43
		4/26/00		39					3,  8-K12G3,  8-K12G3/A
		1/1/00		42
		12/31/99		5		49
		6/1/99		25
		1/1/99		42		48
		12/31/98		17		18
		12/11/98		3		19
		12/31/97		18
		11/24/97		6
		11/1/97		7
		8/19/97		10
		3/11/97		3		19
									List all Filings