<DOCUMENT>
<TYPE>10KSB/A
<SEQUENCE>1
<FILENAME>hoc10k2002.txt
<TEXT>




                                   FORM 10-KSB/A
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


[X] ANNUAL  REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE ACT OF
    1934 For the fiscal year ended: December 31, 2002



                         Commission file number 000-31553

                            HOUSTON OPERATING COMPANY
                               -------------------
              Delaware                                     76-0307819
- --------------------------------                        -------------------
     (State of incorporation)                           (I.R.S. Employer
                                                        Identification No.)

11145 W. Rockland Dr., Littleton,         80127
- - -------------------------------------------------------
(Address of principal executive offices)

Issuer's telephone number:             (720) 981-0523
                                      -----------------
Securities registered under Section 12(b) of the Exchange Act: None
                                                               -----

Securities registered under Section 12(g) of the Exchange Act: Common Stock,
no par value

(Title of class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period  that the issuer was  required  to file such  reports),  and (2) has been
subject to such filing requirements for the past 90 days.

        Yes X     No
           ----       ----

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the best of issuer's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB.

State issuer's  revenues for its most recent fiscal year: $0 ---

As of December 31, 2002, 709,324 shares of the Company's Common Stock, were held
by non-affiliates. There is a limited  trading market for the Company's Common
Stock, and the market value of the non affiliate owned shares was $248,264 based
on a bid price on December, 31, 2002 of $.35 per share

The  number  of  shares  of Common  Stock of the  registrant  outstanding  as of
December 31, 2002, were 7,795,171

                                       1

<PAGE>


                                TABLE OF CONTENTS

PART I                                                                     PAGE

     Item 1.   Description of Business                                         3
     Item 2.   Description of Property                                        23
     Item 3.   Legal Proceedings                                              23
     Item 4.   Submission of Matters to a Vote of Security Holders            24


PART II

     Item 5.   Market for Common Equity and Related Stockholder Matters       24
     Item 6.   Management's Discussion and Analysis or Plan of Operation      25
     Item 7.   Financial Statements                                           27
     Item 8.   Changes in and Disagreements With Accountants on Accounting    27
               and Financial Disclosure


PART III

     Item 9.   Directors, Executive Officers, Promoters and Control Persons;
               Compliance with Section 16(a) of the Exchange Act              27
     Item 10.  Executive Compensation                                         33
     Item 11.  Security Ownership of Certain Beneficial Owners and Management 34
     Item 12.  Certain Relationships and Related Transactions                 35
     Item 13.  Exhibits and Reports on Form 8-K                               37


SIGNATURES                                                                    38

                                       2


<PAGE>


PART I

ITEM 1.  DESCRIPTION OF BUSINESS.
         ------------------------
GENERAL
- - --------

        The Company was formed in Delaware on August 31, 1989 as a wholly  owned
subsidiary  of  Normandy  Oil  &  Gas  Company,  Inc.  Pursuant  to  a  Plan  of
Reorganization  for Cambridge Oil Company  ("Cambridge")  in Bankruptcy Case No.
88-01859-H5-11  (Chapter 11) in the U.S.  District Court,  Southern  District of
Texas, Houston Division, the Bankruptcy Court entered an Order on April 19, 1990
which approved the Plan.  Houston Oil Company was specifically  formed to effect
the transactions of the Plan.

     The aggregate  number of authorized  shares Houston  Operating  Company has
authority to issue is 60,000,000,  of which  50,000,000  shares are common stock
having a par value of $.001 per  share,  5,000,000  shares are  preferred  stock
having a par value of $.001 per share and 5,000,000  shares are preference stock
having a par value of $.001 per share.  At August 31,  1989,  Houston  Operating
Company had not engaged in any  business  operations  other than  organizational
activities after failing at an initial attempt to finance oil and gas operations
after  emerging as part of a Chapter 11 Bankruptcy  Plan.  At year end,  Houston
Operating Company had no assets or liabilities,  and no income had been received
and no costs had been incurred,  except services of President and administrative
costs for 2000.

       Under the Plan,  Houston issued  approximately two million eight hundred
thousand shares to shareholders and creditors of the Bankrupt debtor,  Cambridge
Oil Company.  Although the Company was formed under the Plan,  the Company could
not  continue  operations  without  significant  capital  funding  and when such
funding was not achieved,  the Company operations were suspended.  No operations
were conducted after 1990 until 1998.

                                       3

<PAGE>


        In  1998  a  large  shareholder,  Richard  W.  Morrell,  of 35  Caroline
Corporation  (a New  York  corporation)  purchased  control  of the  Company  to
complete a share  exchange with  shareholders  of 35 Caroline  Corporation.  The
Company  business  was  proposed to be engaging in recovery and return of leased
automobiles for auto leasing companies.  An SB-2 Registration was filed with the
SEC but was abandoned. Due to accounting problems in consolidating the financial
statements  and  difficulties  in  completing  the purchase  agreement and share
exchange,  the Share  Exchange was  rescinded  in 1999,  with the result that 35
Caroline Corporation was no longer a subsidiary.

     The Company has no  operations  and has had no  operations  in the last two
years.  35  Caroline  Corporation  was  intended  to  be a  subsidiary  and  had
operations,  but due to the  rescission  of the share  exchange,  no  operations
occurred in Houston Operating Company.

        The Company is an inactive company and its only current business plan is
to seek,  investigate,  and, if  warranted,  acquire one or more  properties  or
businesses,   and  to  pursue  other  related  activities  intended  to  enhance
shareholder  value.  The  acquisition of a business  opportunity  may be made by
purchase, merger, exchange of stock, or otherwise, and may encompass assets or a
business  entity,  such as a corporation,  joint venture,  or  partnership.  The
Company has no capital, and it is unlikely that the Company will be able to take
advantage of more than one such  business  opportunity.  The Company  intends to
seek opportunities demonstrating the potential of long-term growth as opposed to
short-term earnings.

     At the present time the Company has not identified any business opportunity
that it plans to pursue, nor has the Company reached any agreement or definitive
understanding  with any person concerning an acquisition.  The Company is filing
Form 10-SB on a voluntary  basis in order to become a 12(g)  registered  company
under the Securities Exchange Act of 1934. As a "reporting company," the Company
may be more attractive to a private  acquisition target because it may be listed
to trade its  shares on the  OTCBB,  and was  listed  under the  symbol  HOOC in
February, 2001.

        It is anticipated that the Company's officers and directors will contact
broker-dealers  and other persons with whom they are acquainted who are involved
in corporate finance matters to

                                        4
<PAGE>


advise them of the  Company's  existence  and to determine  if any  companies or
businesses   they  represent  have  an  interest  in  considering  a  merger  or
acquisition with the Company. No assurance can be given that the Company will be
successful in finding or acquiring a desirable business opportunity,  given that
no funds that are  available  for  acquisitions,  or that any  acquisition  that
occurs will be on terms that are favorable to the Company or its stockholders.

        The  Company's  search will be directed  toward  small and  medium-sized
enterprises which have a desire to become public corporations and which are able
to satisfy,  or anticipate in the reasonably  near future being able to satisfy,
the minimum asset  requirements in order to qualify shares for trading on NASDAQ
or  a  stock   exchange   (See   "Investigation   and   Selection   of  Business
Opportunities").   The  Company  anticipates  that  the  business  opportunities
presented to it will (i) be recently organized with no operating  history,  or a
history of losses attributable to under-capitalization or other factors; (ii) be
experiencing financial or operating  difficulties;  (iii) be in need of funds to
develop a new product or service or to expand into a new market; (iv) be relying
upon an untested product or marketing concept;  or (v) have a combination of the
characteristics   mentioned  in  (i)  through  (iv).  The  Company   intends  to
concentrate its acquisition efforts on properties or businesses that it believes
to be  undervalued.  Given the above factors,  investors  should expect that any
acquisition candidate may have a history of losses or low profitability.

        The  Company  does not  propose to  restrict  its search for  investment
opportunities  to  any  particular  geographical  area  or  industry,  and  may,
therefore,  engage in  essentially  any  business,  to the extent of its limited
resources. This includes industries such as service, finance, natural resources,
manufacturing, high technology, product development, medical, communications and
others. The Company's  discretion in the selection of business  opportunities is
unrestricted,  subject  to the  availability  of  such  opportunities,  economic
conditions, and other factors.

     As a consequence of this  registration of its securities,  any entity which
has an interest in being  acquired by, or merging into the Company,  is expected
to be an entity that desires to become a public  company and  establish a public
trading  market  for  its  securities.  In  connection  with  such a  merger  or
acquisition, it is highly likely that an amount of stock constituting control of
the  Company  would be issued  by the  Company  or  purchased  from the  current
principal shareholders of the Company by the acquiring entity or its affiliates.
If stock is purchased  from the current  shareholders,  the  transaction is very
likely to result in  substantial  gains to them relative to their purchase price
for  such  stock.  The  sale of a  controlling  interest  by  certain  principal
shareholders of the Company could occur at a time when the other shareholders of
the Company remain subject to restrictions on the transfer of their shares.

                                        5
<PAGE>

        Depending upon the nature of the  transaction,  the current officers and
directors  of the Company may resign  management  positions  with the Company in
connection with the Company's acquisition of a business  opportunity.  See "Form
of Acquisition,"  below, and "Risk Factors - The Company - Lack of Continuity in
Management."  In  the  event  of  such  a  resignation,  the  Company's  current
management would not have any control over the conduct of the Company's business
following the Company's combination with a business opportunity.

        It is anticipated that business opportunities will come to the Company's
attention from various  sources,  including its officer and director,  its other
stockholders,   professional   advisors  such  as  attorneys  and   accountants,
securities  broker-dealers,   venture  capitalists,  members  of  the  financial
community,  and others who may present unsolicited proposals. The Company has no
plans,  understandings,  agreements, or commitments with any individual for such
person to act as a finder of opportunities for the Company.

        The  Company  does not  foresee  that it would  enter  into a merger  or
acquisition  transaction  with any business with which its officers or directors
are currently affiliated.  Should the Company determine in the future,  contrary
to foregoing expectations,  that a transaction with an affiliate would be in the
best  interests of the Company and its  stockholders,  the Company is in general
permitted by Colorado law to enter into such a transaction if:

1. The material facts as to the relationship or interest of the affiliate and as
to the  contract  or  transaction  are  disclosed  or are  known to the Board of
Directors, and the Board in good faith authorizes the contract or transaction by
the affirmative vote of a majority of the disinterested  directors,  even though
the disinterested directors constitute less than a quorum; or

                                       6
<PAGE>

2. The material facts as to the relationship or interest of the affiliate and as
to the contract or  transaction  are disclosed or are known to the  stockholders
entitled to vote  thereon,  and the  contract  or  transaction  is  specifically
approved in good faith by vote of the stockholders; or

3. The  contract or  transaction  is fair as to the Company as of the time it is
authorized, approved or ratified, by the Board of Directors or the stockholders.

INVESTIGATION AND SELECTION OF BUSINESS OPPORTUNITIES
- - ------------------------------------------------------

        To a large  extent,  a decision to  participate  in a specific  business
opportunity may be made upon  management's  analysis of the quality of the other
company's  management  and  personnel,  the  anticipated  acceptability  of  new
products  or  marketing  concepts,  the  merit  of  technological  changes,  the
perceived  benefit the Company will derive from becoming a publicly held entity,
and numerous other factors which are difficult,  if not  impossible,  to analyze
through the  application of any objective  criteria.  In many  instances,  it is
anticipated that the historical  operations of a specific  business  opportunity
may not necessarily be indicative of the potential for the future because of the
possible need to shift marketing approaches substantially, expand significantly,
change product emphasis,  change or substantially  augment  management,  or make
other  changes.  The  Company  will be  dependent  upon the owners of a business
opportunity to identify any such problems  which may exist and to implement,  or
be primarily  responsible for the implementation  of, required changes.  Because
the Company may  participate in a business  opportunity  with a newly  organized
firm or with a firm  which is  entering  a new  phase of  growth,  it  should be
emphasized that the Company will incur further risks, because management in many
instances  will not have proved its  abilities  or  effectiveness,  the eventual
market for such company's  products or services will likely not be  established,
and such company may not be profitable when acquired.

        It is  anticipated  that the Company will not be able to diversify,  but
will essentially be limited to one such venture because of the Company's limited
financing.  This lack of  diversification  will not permit the Company to offset
potential losses from one business opportunity against profits from another, and
should be  considered an adverse  factor  affecting any decision to purchase the
Company's securities.

                                       7
<PAGE>

        It is emphasized that management of the Company may effect  transactions
having a potentially adverse impact upon the Company's  shareholders pursuant to
the   authority  and   discretion  of  the  Company's   management  to  complete
acquisitions  without  submitting  any  proposal to the  stockholders  for their
consideration.  Holders of the Company's  securities  should not anticipate that
the  Company  necessarily  will  furnish  such  holders,  prior to any merger or
acquisition, with financial statements, or any other documentation, concerning a
target  company  or its  business.  In some  instances,  however,  the  proposed
participation in a business opportunity may be submitted to the stockholders for
their   consideration,   either  voluntarily  by  such  directors  to  seek  the
stockholders' advice and consent or because state law so requires.

        The analysis of business  opportunities  will be  undertaken by or under
the supervision of the Company's President,  who is not a professional  business
analyst. See "Management." Although there are no current plans to do so, Company
management might hire an outside  consultant to assist in the  investigation and
selection of business opportunities, and might pay a finder's fee. Since Company
management  has no current plans to use any outside  consultants  or advisors to
assist in the investigation and selection of business opportunities, no policies
have been adopted regarding use of such consultants or advisors, the criteria to
be used in selecting such consultants or advisors,  the services to be provided,
the term of service,  or  regarding  the total  amount of fees that may be paid.
However,  because of the limited resources of the Company, it is likely that any
such fee the  Company  agrees  to pay  would  be paid in stock  and not in cash.
Otherwise,  the Company  anticipates that it will consider,  among other things,
the following factors:

1. Potential for growth and  profitability,  indicated by new  technology,
anticipated market expansion, or new products;

2. The Company's  perception of how any particular business  opportunity will be
received by the investment community and by the Company's stockholders;

3. Whether,  following  the business  combination,  the  financial  condition of
the business opportunity  would be, or would have a significant  prospect in the
foreseeable  future of  becoming  sufficient  to enable  the  securities  of the
Company  to  qualify  for  listing on an  exchange  or on a  national  automated
securities quotation system, such as NASDAQ, so as to permit the trading of such
securities to be exempt from the requirements of Rule 15c2-6 recently adopted by
the  Securities  and  Exchange  Commission.  See "Risk  Factors - The  Company -
Regulation of Penny Stocks."

                                       8
<PAGE>

4. Capital  requirements  and anticipated  availability of required funds, to be
provided  by the  Company or from  operations,  through  the sale of  additional
securities,  through  joint  ventures  or  similar  arrangements,  or from other
sources;

5. The extent to which the business opportunity can be advanced;

6.  Competitive  position  as compared to other  companies  of similar  size and
experience  within the  industry  segment as well as within  the  industry  as a
whole;

7. Strength and diversity of existing  management,  or management prospects that
are scheduled for recruitment;

8. The  cost of  participation  by the  Company  as  compared  to the  perceived
tangible and intangible values and potential; and

9. The accessibility of required management expertise, personnel, raw materials,
services, professional assistance, and other required items.

    In regard to the  possibility  that the shares of the Company  would qualify
for listing on NASDAQ,  the current  standards include the requirements that the
issuer of the  securities  that are sought to be listed have total  assets of at
least $4,000,000 and total capital and surplus of at least $2,000,000. Many, and
perhaps most, of the business  opportunities that might be potential  candidates
for a  combination  with the  Company  would  not  satisfy  the  NASDAQ  listing
criteria.

     No one of the factors  described above will be controlling in the selection
of a business  opportunity,  and management  will attempt to analyze all factors
appropriate to each  opportunity and make a determination  based upon reasonable
investigative  measures  and  available  data.  Potentially  available  business
opportunities  may occur in many  different  industries and at various stages of
development,  all of which will make the task of comparative  investigation  and
analysis  of  such  business  opportunities  extremely  difficult  and  complex.
Potential  investors  must  recognize  that,  because of the  Company's  limited
capital  available for  investigation  and  management's  limited  experience in
business analysis,  the Company may not discover or adequately  evaluate adverse
facts about the opportunity to be acquired.

                                       9
<PAGE>

      The  Company is unable to predict  when it may  participate  in a business
opportunity.  It expects,  however,  that the analysis of specific proposals and
the selection of a business opportunity may take several months or more.

       Prior to making a decision to participate in a business opportunity,  the
Company  will  generally  request  that it be provided  with  written  materials
regarding the business  opportunity  containing  such items as a description  of
products,   services  and  company  history;   management   resumes;   financial
information; available projections, with related assumptions upon which they are
based; an explanation of proprietary products and services; evidence of existing
patents,  trademarks, or services marks, or rights thereto; present and proposed
forms of compensation to management;  a description of transactions between such
company and its affiliates during relevant periods; a description of present and
required  facilities;  an  analysis  of  risks  and  competitive  conditions;  a
financial  plan  of  operation  and  estimated  capital  requirements;   audited
financial  statements,  or  if  they  are  not  available,  unaudited  financial
statements,   together  with  reasonable   assurances  that  audited   financial
statements  would be able to be produced within a reasonable  period of time not
to  exceed  60 days  following  completion  of a merger  transaction;  and other
information deemed relevant.

       As part of the Company's investigation,  the Company's executive officers
and directors may meet personally  with management and key personnel,  may visit
and inspect material facilities,  obtain independent analysis or verification of
certain information provided,  check references of management and key personnel,
and take other reasonable investigative measures, to the extent of the Company's
limited financial resources and management expertise.

       It is  possible  that the range of business  opportunities  that might be
available  for  consideration  by the Company  could be limited by the impact of
Securities and Exchange  Commission  regulations  regarding purchase and sale of
"penny stocks." The regulations  would affect,  and possibly impair,  any market
that might develop in the Company's  securities  until such time as they qualify
for listing on NASDAQ or on another  exchange  which would make them exempt from
applicability of the "penny stock" regulations. See "Risk Factors - - Regulation
of Penny Stocks."

                                       10
<PAGE>
        Company  management  believes that various types of potential  merger or
acquisition  candidates might find a business combination with the Company to be
attractive.  These include  acquisition  candidates  desiring to create a public
market for their shares in order to enhance liquidity for current  shareholders,
acquisition  candidates  which have long-term  plans for raising capital through
the public sale of securities and believe that the possible prior existence of a
public  market  for  their  securities  would  be  beneficial,  and  acquisition
candidates  which  plan  to  acquire   additional  assets  through  issuance  of
securities rather than for cash, and believe that the possibility of development
of a public market for their  securities  will be of assistance in that process.
Acquisition  candidates which have a need for an immediate cash infusion are not
likely  to find a  potential  business  combination  with the  Company  to be an
attractive alternative.

        There  are no  loan  arrangements  or  arrangements  for  any  financing
whatsoever relating to any business opportunities.

FORM OF ACQUISITION
- - --------------------

        It is  impossible  to  predict  the  manner  in which  the  Company  may
participate in a business opportunity.  Specific business  opportunities will be
reviewed  as well as the  respective  needs and  desires of the  Company and the
promoters of the opportunity and, upon the basis of that review and the relative
negotiating  strength of the Company and such promoters,  the legal structure or
method deemed by management to be suitable will be selected.  Such structure may
include, but is not limited to leases,  purchase and sale agreements,  licenses,
joint ventures and other contractual arrangements.  The Company may act directly
or indirectly through an interest in a partnership, corporation or other form of
organization.  Implementing such structure may require the merger, consolidation
or  reorganization  of the Company with other  corporations or forms of business
organization,  and although it is likely, there is no assurance that the Company
would  be  the  surviving  entity.  In  addition,  the  present  management  and
stockholders  of the Company  most likely will not have control of a majority of
the voting shares of the Company following a reorganization transaction. As part
of such a  transaction,  the  Company's  existing  directors  may resign and new
directors may be appointed without any vote by stockholders.

        It is likely  that the  Company  will  acquire  its  participation  in a
business opportunity through the issuance of common stock or other securities of
the Company. Although the terms of any such

                                       11
<PAGE>

transaction   cannot  be   predicted,   it  should  be  noted  that  in  certain
circumstances  the criteria for  determining  whether or not an acquisition is a
so-called  "tax free"  reorganization  under the Internal  Revenue Code of 1986,
depends  upon the  issuance to the  stockholders  of the  acquired  company of a
controlling  interest  (i.e.  80% or more) of the common  stock of the  combined
entities  immediately  following  the  reorganization.  If  a  transaction  were
structured to take  advantage of these  provisions  rather than other "tax free"
provisions  provided  under the Internal  Revenue Code,  the  Company's  current
stockholders  would retain in the  aggregate 20% or less of the total issued and
outstanding shares. This could result in substantial  additional dilution in the
equity  of  those  who  were   stockholders   of  the  Company   prior  to  such
reorganization.  Any such  issuance  of  additional  shares  might  also be done
simultaneously  with a sale or transfer  of shares  representing  a  controlling
interest  in the  Company  by the  current  officers,  directors  and  principal
shareholders. (See "Description of Business - General").

        It is anticipated that any new securities  issued in any  reorganization
would  be  issued  in  reliance  upon  exemptions,  if any are  available,  from
registration  under  applicable  federal  and  state  securities  laws.  In some
circumstances,  however, as a negotiated element of the transaction, the Company
may agree to register  such  securities  either at the time the  transaction  is
consummated,  or under certain conditions or at specified times thereafter.  The
issuance of substantial  additional securities and their potential sale into any
trading  market  that  might  develop  in the  Company's  securities  may have a
depressive effect upon such market.

         The Company will  participate in a business  opportunity only after the
negotiation  and  execution of a written  agreement.  Although the terms of such
agreement  cannot  be  predicted,  generally  such an  agreement  would  require
specific  representations and warranties by all of the parties thereto,  specify
certain events of default,  detail the terms of closing and the conditions which
must be satisfied by each of the parties thereto prior to such closing,  outline
the manner of bearing costs if the transaction is not closed, set forth remedies
upon default, and include miscellaneous other terms.

        As a  general  matter,  the  Company  anticipates  that it,  and/or  its
officers and principal  shareholders will enter into a letter of intent with the
management,  principals or owners of a prospective business opportunity prior to
signing a binding agreement. Such a letter of intent will set forth the terms of

                                       12
<PAGE>

the proposed  acquisition but will not bind any of the parties to consummate the
transaction.  Execution  of a letter of intent  will by no means  indicate  that
consummation  of an acquisition is probable.  Neither the Company nor any of the
other  parties  to the  letter  of  intent  will  be  bound  to  consummate  the
acquisition unless and until a definitive  agreement  concerning the acquisition
as described  in the  preceding  paragraph is executed.  Even after a definitive
agreement  is  executed,  it is  possible  that  the  acquisition  would  not be
consummated  should  any  party  elect to  exercise  any right  provided  in the
agreement to terminate it on specified grounds.

        It  is  anticipated  that  the   investigation   of  specific   business
opportunities   and  the   negotiation,   drafting  and  execution  of  relevant
agreements,  disclosure documents and other instruments will require substantial
management time and attention and substantial  costs for accountants,  attorneys
and others.  If a decision  is made not to  participate  in a specific  business
opportunity,  the costs theretofore incurred in the related  investigation would
not be  recoverable.  Moreover,  because  many  providers  of goods and services
require  compensation  at the time or soon  after  the goods  and  services  are
provided, the inability of the Company to pay until an indeterminate future time
may make it impossible to procure goods and services.

        In all probability,  upon completion of an acquisition or merger,  there
will be a change in control  through  issuance of  substantially  more shares of
common stock.  Further,  in conjunction  with an  acquisition  or merger,  it is
likely that  management may offer to sell a controlling  interest at a price not
relative to or reflective of any value of the shares sold by management,  and at
a price which could not be achieved by individual shareholders at the time.

INVESTMENT COMPANY ACT AND OTHER REGULATION
- - --------------------------------------------

        The Company may  participate  in a business  opportunity  by purchasing,
trading or selling  the  securities  of such  business.  The  Company  does not,
however,  intend to  engage  primarily  in such  activities.  Specifically,  the
Company intends to conduct its activities so as to avoid being  classified as an
"investment  company" under the Investment  Company Act of 1940 (the "Investment
Act"),  and  therefore  to  avoid  application  of the  costly  and  restrictive
registration  and other  provisions of the Investment  Act, and the  regulations
promulgated thereunder.

                                       13
<PAGE>

        Section  3(a)  of the  Investment  Act  contains  the  definition  of an
"investment  company," and it excludes any entity that does not engage primarily
in the business of investing, reinvesting or trading in securities, or that does
not engage in the business of investing,  owning, holding or trading "investment
securities"  (defined as "all  securities  other than  government  securities or
securities of  majority-owned  subsidiaries")  the value of which exceeds 40% of
the value of its total assets  (excluding  government  securities,  cash or cash
items).  The Company  intends to implement  its business  plan in a manner which
will  result  in the  availability  of this  exception  from the  definition  of
"investment company." Consequently, the Company's participation in a business or
opportunity  through the  purchase  and sale of  investment  securities  will be
limited.

        The  Company's  plan of  business  may  involve  changes in its  capital
structure,  management,  control and business,  especially  if it  consummates a
reorganization  as  discussed  above.  Each of these areas is  regulated  by the
Investment Act, in order to protect purchasers of investment company securities.
Since the Company will not register as an investment company,  stockholders will
not be afforded these protections.

        Any  securities  which the Company  might  acquire in  exchange  for its
common stock are expected to be  "restricted  securities"  within the meaning of
the  Securities  Act of 1933, as amended (the "Act").  If the Company  elects to
resell such securities, such sale cannot proceed unless a registration statement
has been  declared  effective by the  Securities  and Exchange  Commission or an
exemption from registration is available. Section 4(1) of the Act, which exempts
sales of securities  not involving a  distribution,  would in all  likelihood be
available to permit a private  sale.  Although  the plan of  operation  does not
contemplate resale of securities acquired,  if such a sale were to be necessary,
the Company would be required to comply with the provisions of the Act to effect
such resale.

        An  acquisition  made by the  Company  may be in an  industry  which  is
regulated or licensed by federal,  state or local  authorities.  Compliance with
such regulations can be expected to be a time-consuming and expensive process.

COMPETITION
- - ------------

        The Company expects to encounter substantial  competition in its efforts
to  locate  attractive   opportunities,   primarily  from  business  development
companies,  venture  capital  partnerships  and  corporations,  venture  capital
affiliates  of  large  industrial  and  financial  companies,  small  investment
companies,   and  wealthy   individuals.   Many  of  these  entities  will  have
significantly greater experience, resources and managerial capabilities than the
Company and will  therefore be in a better  position  than the Company to obtain
access to  attractive  business  opportunities.  The Company also will  possibly
experience competition from other public "blank check" companies,  some of which
may have more funds available than does the Company.

                                       14
<PAGE>

NO RIGHTS OF DISSENTING SHAREHOLDERS
- - -------------------------------------

        The  Company  does not  intend  to  provide  Company  shareholders  with
complete  disclosure   documentation  including  audited  financial  statements,
concerning a possible  target  company prior to  acquisition,  because  Colorado
Business Corporation Act vests authority in the Board of Directors to decide and
approve  matters  involving   acquisitions  within  certain  restrictions.   Any
transaction  would be  structured  as an  acquisition,  not a  merger,  with the
Registrant  being the parent company and the acquiree being merged into a wholly
owned subsidiary.  Therefore,  a shareholder will have no right of dissent under
Colorado law.

NO TARGET CANDIDATES FOR ACQUISITION
- - -------------------------------------

        None of the Company's Officers,  Directors,  promoters,  affiliates,  or
associates  have had any  preliminary  contact or  discussion  with any specific
candidate for acquisition. There are no present plans, proposals,  arrangements,
or  understandings  with any  representatives  of the owners of any  business or
company regarding the possibility of an acquisition transaction.

ADMINISTRATIVE OFFICES
- - -----------------------

     The  Company  currently  maintains  a  mailing  address  at 11145  W.  Dr.,
Littleton,  80127 which is the office  address of its  President  and  Director,
Jerry Nelson. The Company's telephone number is (720) 981-0523.  Other than this
mailing  address,  the Company  does not  currently  maintain  any other  office
facilities,  and does not anticipate the need for maintaining  office facilities
at any time in the  foreseeable  future.  The Company pays no rent or other fees
for the use of this mailing address.
                                       15
<PAGE>

EMPLOYEES
- - ----------

        The  Company is an  inactive  company and  currently  has no  employees.
Management of the Company expects to use consultants,  attorneys and accountants
as necessary,  and does not anticipate a need to engage any full-time  employees
so long as it is seeking and  evaluating  business  opportunities.  The need for
employees  and their  availability  will be  addressed  in  connection  with the
decision  whether  or  not  to  acquire  or  participate  in  specific  business
opportunities. There is no current plan under which, remuneration may be paid to
or  accrued  for  the  benefit  of,  the  Company's  officers  prior  to,  or in
conjunction with, the completion of a business acquisition for services actually
rendered,  and the Company has adopted a resolution  and policy which  precludes
payment of any  compensation  or finder's  fees to officers  or  directors.  See
"Executive   Compensation"   and  under  "Certain   Relationships   and  Related
Transactions."

RISK FACTORS
- - -------------

1.  Conflicts of Interest.  Certain  conflicts of interest may exist between the
Company and its officers and directors.  They have other  business  interests to
which they  devote  their  attention,  and may be  expected to continue to do so
although  management time should be devoted to the business of the Company. As a
result,  conflicts  of  interest  may arise that can be  resolved  only  through
exercise of such judgment as is consistent with fiduciary duties to the Company.
See "Management," and "Conflicts of Interest."

        It is  anticipated  that  Company's  officers and directors may actively
negotiate or otherwise  consent to the purchase of a portion of his common stock
as a condition  to, or in  connection  with,  a proposed  merger or  acquisition
transaction.  In this  process,  the  Company's  officers  may  consider his own
personal  pecuniary  benefit  rather than the best  interests  of other  Company
shareholders, and the other Company shareholders are not expected to be afforded
the  opportunity  to  approve  or  consent  to  any  particular   stock  buy-out
transaction. See "Conflicts of Interest."

2. Need For Additional  Financing.  The Company has very limited funds, and such
funds  may  not  be  adequate  to  take  advantage  of  any  available  business
opportunities.  Even if the Company's funds prove to be sufficient to acquire an
interest in, or complete a transaction with, a business opportunity, the Company
may not have enough capital to exploit the opportunity.  The ultimate success of
the Company may depend upon its ability to

                                       16
<PAGE>

raise additional  capital.  The Company has not  investigated the  availability,
source,  or terms that might govern the  acquisition  of additional  capital and
will  not  do so  until  it  determines  a need  for  additional  financing.  If
additional capital is needed, there is no assurance that funds will be available
from any source or, if available,  that they can be obtained on terms acceptable
to the Company.  If not available,  the Company's  operations will be limited to
those that can be financed with its modest capital.

3. Regulation of Penny Stocks.  The Company's  securities,  will be subject to a
Securities  and Exchange  Commission  rule that imposes  special sales  practice
requirements upon  broker-dealers who sell such securities to persons other than
established  customers or accredited  investors.  For purposes of the rule,  the
phrase "accredited investors" means, in general terms,  institutions with assets
in  excess  of  $5,000,000,  or  individuals  having a net  worth in  excess  of
$1,000,000  or having an annual  income that  exceeds  $200,000  (or that,  when
combined with a spouse's income, exceeds $300,000).  For transactions covered by
the rule, the broker-dealer  must make a special  suitability  determination for
the purchaser and receive the purchaser's  written  agreement to the transaction
prior  to  the  sale.   Consequently,   the  rule  may  affect  the  ability  of
broker-dealers to sell the Company's  securities and also may affect the ability
of purchasers in this offering to sell their securities in any market that might
develop therefore.

       In addition,  the Securities and Exchange Commission has adopted a number
of rules to regulate  "penny  stocks." Such rules  include Rules 3a51-1,  15g-1,
15g-2,  15g-3,  15g-4,  15g-5,  15g-6,  15g-7,  and 15g-9  under the  Securities
Exchange  Act of 1934,  as amended.  Because the  securities  of the Company may
constitute "penny stocks" within the meaning of the rules, the rules would apply
to the Company and to its  securities.  The rules may further affect the ability
of owners of Shares to sell the  securities  of the  Company in any market  that
might develop for them.

        Shareholders should be aware that,  according to Securities and Exchange
Commission,  the  market  for penny  stocks has  suffered  in recent  years from
patterns of fraud and abuse. Such patterns include (i) control of the market for
the  security  by one or a few  broker-dealers  that are  often  related  to the
promoter or issuer; (ii) manipulation of prices through prearranged  matching of
purchases and sales and false and misleading press releases; (iii) "boiler room"
practices involving high-pressure sales

                                       17
<PAGE>

tactics and unrealistic price projections by inexperienced  sales persons;  (iv)
excessive  and  undisclosed   bid-ask   differentials  and  markups  by  selling
broker-dealers;  and  (v)  the  wholesale  dumping  of the  same  securities  by
promoters and  broker-dealers  after prices have been  manipulated  to a desired
level,  along with the  resulting  inevitable  collapse of those prices and with
consequent investor losses. The Company's management is aware of the abuses that
have occurred historically in the penny stock market.  Although the Company does
not  expect to be in a  position  to dictate  the  behavior  of the market or of
broker-dealers who participate in the market,  management will strive within the
confines of practical  limitations to prevent the described  patterns from being
established with respect to the Company's securities.

4.Lack of Operating  History.  The Company was formed in August 1989 as a wholly
owned  subsidiary  of Normandy  Oil & Gas  Company,  Inc.  Pursuant to a Plan of
Reorganization  for Cambridge Oil Company in Bankruptcy Case No.  88-01859-H5-11
(Chapter 11) in the U.S.  District Court,  Southern  District of Texas,  Houston
Division, the Bankruptcy Court entered an Order on April 19, 1990 which approved
the Plan. Houston Oil Company was specifically formed to effect the transactions
of the Plan. The Company never had any substantial  operations because of a lack
of capital. Due to the special risks inherent in the investigation, acquisition,
or involvement in a new business opportunity,  the Company must be regarded as a
new or start-up venture with all of the unforeseen  costs,  expenses,  problems,
and difficulties to which such ventures are subject.

5. No Assurance  of Success or  Profitability.  There is no  assurance  that the
Company  will  acquire a  favorable  business  opportunity.  Even if the Company
should become involved in a business opportunity,  there is no assurance that it
will  generate  revenues or profits,  or that the market price of the  Company's
common stock will be increased thereby.

6. Possible  Business - Not  Identified  and Highly  Risky.  The Company has not
identified and has no  commitments to enter into or acquire a specific  business
opportunity  and  therefore  can disclose the risks and hazards of a business or
opportunity that it may enter into in only a general manner, and cannot disclose
the risks and hazards of any specific  business or opportunity that it may enter
into. An investor can expect a potential business opportunity to be quite risky.
The Company's  acquisition of or  participation  in a business  opportunity will
likely be highly  illiquid  and could  result in a total loss to the Company and
its stockholders if the business or opportunity  proves to be unsuccessful.  See
Item 1 "Description of Business."

7. Type of Business  Acquired.  The type of  business to be acquired  may be one
that desires to avoid  effecting  its own public  offering and the  accompanying
expense, delays, uncertainties, and federal and state requirements which purport
to protect  investors.  Because of the  Company's  limited  capital,  it is more
likely than not that any  acquisition  by the Company will involve other parties
whose  primary  interest  is the  acquisition  of control  of a publicly  traded
company.   Moreover,   any  business   opportunity  acquired  may  be  currently
unprofitable or present other negative factors.

                                       18

<PAGE>

8. Impracticability of Exhaustive Investigation. The Company's limited funds and
the lack of full-time  management will likely make it impracticable to conduct a
complete and  exhaustive  investigation  and analysis of a business  opportunity
before the Company  commits its capital or other resources  thereto.  Management
decisions,  therefore, will likely be made without detailed feasibility studies,
independent analysis, market surveys and the like which, if the Company had more
funds  available to it,  would be  desirable.  The Company will be  particularly
dependent in making decisions upon information provided by the promoter,  owner,
sponsor,  or  others  associated  with  the  business  opportunity  seeking  the
Company's participation.  A significant portion of the Company's available funds
may be  expended  for  investigative  expenses  and other  expenses  related  to
preliminary aspects of completing an acquisition transaction, whether or not any
business opportunity investigated is eventually acquired.

9. Lack of Diversification.  Because of the limited financial resources that the
Company  has, it is  unlikely  that the Company  will be able to  diversify  its
acquisitions or operations.  The Company's  probable  inability to diversify its
activities  into  more  than one area  will  subject  the  Company  to  economic
fluctuations within a particular business or industry and therefore increase the
risks associated with the Company's operations.

10.  Reliance upon  Financial  Statements.  The Company  generally  will require
audited financial  statements from companies that it proposes to acquire.  Given
cases where audited financials are not available,  the Company will have to rely
upon  interim  period  unaudited  information  received  from target  companies'
management that has not been verified by outside auditors.  The lack of the type
of independent  verification  which audited financial  statements would provide,
increases the risk that the Company,  in evaluating an  acquisition  with such a
target company, will not have the benefit of full and accurate information about
the  financial  condition  and recent  interim  operating  history of the target
company. This risk increases the prospect that the acquisition of such a company
might  prove to be an  unfavorable  one for the  Company  or the  holders of the
Company's securities.

         Moreover,  the Company will be subject to the  reporting  provisions of
the Securities  Exchange Act of 1934, as amended (the "Exchange  Act"), and thus
will be required to furnish certain information about significant  acquisitions,
including  audited  financial  statements  for any  business  that it  acquires.
Consequently,  acquisition  prospects that do not have, or are unable to provide
reasonable  assurances  that they will be able to obtain,  the required  audited
statements  would  not  be  considered  by the  Company  to be  appropriate  for
acquisition  so long  as the  reporting  requirements  of the  Exchange  Act are
applicable.  Should  the  Company,  during  the time it  remains  subject to the
reporting  provisions of the Exchange Act,  complete an acquisition of an entity
for which audited  financial  statements prove to be  unobtainable,  the Company
would  be  exposed  to  enforcement  actions  by  the  Securities  and  Exchange
Commission (the  "Commission")  and to corresponding  administrative  sanctions,
including  permanent  injunctions  against the Company and its  management.  The
legal and other costs of  defending a Commission  enforcement  action would have
material,  adverse consequences for the Company and its business. The imposition
of  administrative  sanctions  would  subject  the  Company to  further  adverse
consequences.

                                       19
<PAGE>

         In addition, the lack of audited financial statements would prevent the
securities  of the Company from becoming  eligible for listing on NASDAQ,  or on
any existing stock exchange.  Moreover, the lack of such financial statements is
likely to  discourage  broker-dealers  from  becoming or  continuing to serve as
market  makers in the  securities  of the  Company.  Without  audited  financial
statements,  the Company  would almost  certainly be unable to offer  securities
under a registration  statement  pursuant to the Securities Act of 1933, and the
ability of the Company to raise  capital  would be  significantly  limited until
such financial statements were to become available.

11. Other  Regulation.  An acquisition  made by the Company may be of a business
that is  subject  to  regulation  or  licensing  by  federal,  state,  or  local
authorities.  Compliance with such  regulations and licensing can be expected to
be  a   time-consuming,   expensive  process  and  may  limit  other  investment
opportunities of the Company.

12. Dependence upon Management; Limited Participation of Management. The Company
currently  has only one  individual  is are  serving  as its  sole  officer  and
director on a part time basis.  The Company will be heavily  dependent  upon his
skills,  talents,  and abilities to implement its business  plan,  and may, from
time to time,  find that the  inability of the officers and  directors to devote
their full time  attention to the business of the Company  results in a delay in
progress  toward  implementing  its business  plan.  See  "Management."  Because
investors  will  not be  able  to  evaluate  the  merits  of  possible  business
acquisitions  by the  Company,  they should  critically  assess the  information
concerning the Company's officers and directors.

13. Lack of  Continuity in  Management.  The Company does not have an employment
agreement  with  its  officers  and  directors,  and as a  result,  there  is no
assurance they will continue to manage the Company in the future.  In connection
with  acquisition of a business  opportunity,  it is likely the current officers
and directors of the Company may resign  subject to compliance  with Section 14f
of the Securities  Exchange Act of 1934. A decision to resign will be based upon
the identity of the business opportunity and the nature of the transaction,  and
is  likely to occur  without  the vote or  consent  of the  stockholders  of the
Company.

14. Indemnification of Officers and Directors. Delaware Revised Statutes provide
for the indemnification of its directors, officers, employees, and agents, under
certain  circumstances,  against  attorney's fees and other expenses incurred by
them in any  litigation  to  which  they  become  a  party  arising  from  their
association  with or activities on behalf of the Company.  The Company will also
bear  the  expenses  of  such  litigation  for any of its  directors,  officers,
employees,  or agents,  upon such person's promise to repay the Company therefor
if it is ultimately determined that any such person shall not have been entitled
to  indemnification.  This  indemnification  policy could result in  substantial
expenditures by the Company which it will be unable to recoup.

                                       20
<PAGE>

15. Director's  Liability Limited.  Delaware Statutes exclude personal liability
of its directors to the Company and its  stockholders  for monetary  damages for
breach of fiduciary duty except in certain specified circumstances. Accordingly,
the Company will have a much more limited right of action  against its directors
than otherwise  would be the case.  This provision does not affect the liability
of any director under federal or applicable state securities laws.

16. Dependence upon Outside Advisors.  To supplement the business  experience of
its officers and directors,  the Company may be required to employ  accountants,
technical experts, appraisers,  attorneys, or other consultants or advisors. The
selection of any such advisors will be made by the Company's  President  without
any input from  stockholders.  Furthermore,  it is anticipated that such persons
may be engaged on an "as needed" basis  without a continuing  fiduciary or other
obligation to the Company.  In the event the President of the Company  considers
it  necessary  to hire  outside  advisors,  he may elect to hire persons who are
affiliates, if they are able to provide the required services.

17.  Leveraged  Transactions.  There is a possibility  that any acquisition of a
business  opportunity  by the Company may be  leveraged,  i.e.,  the Company may
finance the  acquisition of the business  opportunity  by borrowing  against the
assets of the  business  opportunity  to be acquired,  or against the  projected
future revenues or profits of the business opportunity.  This could increase the
Company's exposure to larger losses. A business  opportunity  acquired through a
leveraged  transaction  is profitable  only if it generates  enough  revenues to
cover the  related  debt and  expenses.  Failure  to make  payments  on the debt
incurred to purchase  the  business  opportunity  could  result in the loss of a
portion or all of the assets  acquired.  There is no assurance that any business
opportunity  acquired through a leveraged  transaction will generate  sufficient
revenues to cover the related debt and expenses.

18. Competition. The search for potentially profitable business opportunities is
intensely  competitive.  The  Company  expects  to  be  at a  disadvantage  when
competing  with  many  firms  that  have  substantially  greater  financial  and
management  resources  and  capabilities  than the  Company.  These  competitive
conditions  will  exist  in  any  industry  in  which  the  Company  may  become
interested.

19. No Foreseeable  Dividends.  The Company has not paid dividends on its common
stock and does not anticipate paying such dividends in the foreseeable future.

20.  Loss of Control by Present  Management  and  Stockholders.  The Company may
consider an  acquisition in which the Company would issue as  consideration  for
the business  opportunity  to be acquired an amount of the Company's  authorized
but  unissued  common  stock that  would,  upon  issuance,  represent  the great
majority of the voting  power and equity of the  Company.  The result of such an
acquisition would be that the acquired

                                       21
<PAGE>

company's  stockholders  and  management  would  control  the  Company,  and the
Company's  management  could be replaced by persons unknown at this time. Such a
merger would result in a greatly reduced  percentage of ownership of the Company
by its current shareholders. In addition, the Company's major shareholders could
sell  control  blocks  of stock at a  premium  price to the  acquired  company's
stockholders.

21. No Public Market  Exists.  There was at year end no active public market for
the Company's common stock, although it was quoted on the OTCBB under the symbol
"HOOC"  and no  assurance  can be given  that a market  will  develop  or that a
shareholder ever will be able to liquidate his investment  without  considerable
delay, if at all. If a market should develop,  the price may be highly volatile.
Factors  such as those  discussed  in this  "Risk  Factors"  section  may have a
significant impact upon the market price of the securities offered hereby. Owing
to the low price of the  securities,  many brokerage firms may not be willing to
effect  transactions  in the  securities.  Even if a  purchaser  finds a  broker
willing  to  effect  a  transaction  in these  securities,  the  combination  of
brokerage commissions, state transfer taxes, if any, and any other selling costs
may exceed the selling price. Further, many lending institutions will not permit
the use of such securities as collateral for any loans.


22.  Rule 144  Sales.  All of the  outstanding  shares of common  stock  held by
present officers and directors are "restricted securities" within the meaning of
Rule 144 under the  Securities  Act of 1933, as amended.  As restricted  shares,
these shares may be resold only pursuant to an effective  registration statement
or  under  the  requirements  of Rule 144 or other  applicable  exemptions  from
registration  under the Act and as required under  applicable  state  securities
laws.  Rule  144  provides  in  essence  that a person  who has held  restricted
securities for one year may, under certain conditions,  sell every three months,
in brokerage  transactions,  a number of shares that does not exceed the greater
of 1.0% of a company's  outstanding  common stock or the average  weekly trading
volume  during the four calendar  weeks prior to the sale.  There is no limit on
the amount of restricted securities that may be sold by a nonaffiliate after the
restricted  securities  have been held by the owner for a period of two years. A
sale under Rule 144 or under any other exemption from the Act, if available,  or
pursuant  to  subsequent  registration  of  shares of  common  stock of  present
stockholders, may have a depressive effect upon the price of the common stock in
any market that may develop.



                                       22
<PAGE>


23. Blue Sky Considerations.  Because the securities  registered  hereunder have
not been registered for resale under the blue sky laws of any state, the holders
of such shares and persons  who desire to  purchase  them in any trading  market
that might develop in the future,  should be aware that there may be significant
state  blue-sky  law  restrictions  upon the  ability of  investors  to sell the
securities and of purchasers to purchase the securities.  Some jurisdictions may
not under  any  circumstances  allow the  trading  or  resale of  blind-pool  or
"blank-check" securities.  Accordingly,  investors should consider the secondary
market for the Company's securities to be a limited one.

24. Blue Sky  Restrictions.  Many states  have  enacted  statutes or rules which
restrict or prohibit the sale or resale of securities of "blank check" companies
to residents so long as they remain  without  specific  business. To the extent
any current  shareholders or subsequent  purchaser from a shareholder may reside
in a state which  restricts  or  prohibits  resale of shares in a "blank  check"
company, warning is hereby given that the shares may be "restricted" from resale
as long as the company is a shell company.

        In the event of a  violation  of state laws  regarding  resale of "blank
check" shares the Company could be liable for civil and criminal penalties which
would be a substantial  impairment to the Company.  At date of this registration
statement, all shareholders' shares bear a "restrictive legend," and the Company
will examine each shareholders'  resident state laws at the time of any proposed
resale of shares now outstanding to attempt to avoid any  inadvertent  breach of
state laws.

Item 2 - DESCRIPTION OF PROPERTY.
         ------------------------

     The Company has no  property.  The Company does not  currently  maintain an
office or any other facilities.  It does currently maintain a mailing address at
11145 W. Rockland Dr., Littleton, CO 80127 which is the address of its President
and Director.  The Company pays no rent for the use of this mailing address. The
Company  does not believe that it will need to maintain an office at any time in
the  foreseeable  future in order to carry out its plan of operations  described
herein.

Item 3 - LEGAL PROCEEDINGS
         -----------------

        The Company is not a party to any pending legal proceedings, and no such
proceedings are known to be contemplated.

        No director, officer or affiliate of the Company, and no owner of record
or beneficial  owner of more than 5.0% of the securities of the Company,  or any
associate of any such director, officer or security holder is a party adverse to
the Company or has a material  interest  adverse to the Company in  reference to
any litigation.

                                       23

<PAGE>

Item 4 - Submission of Matters to a Vote of Security Holders
- - ------------------------------------------------------------

        No matters  were  submitted  by the  Company to a vote of the  Company's
shareholders through the solicitation of proxies or otherwise, during the fourth
quarter of the fiscal year covered by this report.

PART II

Item 5 - Market for Common Equity and Related Stockholder Matters
- - -----------------------------------------------------------------

     (a) The Registrant's common stock is traded in the over-the- counter market
under the symbol HOOC (OTC Bulletin  Board Symbol)  effective in 2001. The table
below sets forth the high and low bid prices of the  Registrant's  common  stock
for the periods indicated. Such prices are inter-dealer prices, without mark-up,
mark-down or commissions and do not necessarily represent actual sales.
Year Ended December 31, 2002:
                                                   High Bid      Low Bid
                                                   --------      -------
          1st quarter                              1.00           .51
          2nd quarter                               .51           .51
          3rd quarter                               .35           .35
          4th quarter                               .35           .35

Year Ended December 31, 2001
                                                   High Bid      Low Bid
                                                   --------      -------
          1st quarter                              No Quotes
          2nd quarter                              1.12           .01
          3rd quarter                              1.25           .50
          4th quarter                              1.00           .50

        The  above  quotations  reflect  inter-dealer  prices,   without  retail
mark-up,  mark-down,  or commission  and may not  necessarily  represent  actual
transactions.

        The Company has not  declared or paid any cash  dividends  on its common
stock and does not anticipate paying dividends for the foreseeable future.

                                       24



<PAGE>

ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS OR
         PLAN OF OPERATIONS.
         -------------------


RESULTS OF OPERATIONS YEAR ENDED DECEMBER 31, 2002 COMPARED TO 2001
- - --------------------------------------------------------------------

     The Company had no revenues in 2002 or 2001.  The company had no  operating
business in the year. The Company incurred $9,226 in general and  administration
expenses in 2002 as compared to $7,051 in expenses in 2001.

     The net loss in 2002 was  ($9,226) as  compared  to  ($7,051) in 2001.  The
losses in 2002 and 2001 were as a result of miscellaneous expenses. The net loss
per  share  each  year  was  less  than  ($.01)  per  share.  The  expenses  was
attributable  to  general  and  administrative   expenses  including  accounting
transfer agent, and Edgar Filing costs.

     For the current fiscal year, the Company anticipates  incurring a loss as a
result  of  general  and  administrative   accounting  expenses,   and  expenses
associated  with  reporting  under  the  Securities  Exchange  Act of 1934,  and
expenses  associated with locating and evaluating  acquisition  candidates.  The
Company  anticipates  that until a business  combination  is  completed  with an
acquisition candidate, it will not generate revenues and may continue to operate
at  a  loss  after  completing  a  business  combination,   depending  upon  the
performance of the acquired business.


LIQUIDITY AND CAPITAL RESOURCES
- - --------------------------------

     The  Company  remains  in an  inactive  stage  and,  since  inception,  has
experienced  significant  liquidity  problems  and has no capital  resources  or
stockholder's  equity.  The Company has $313 current assets in the form of cash
and total assets of $313 but has current liabilities totaling $19,298.

        The Company will carry out its plan of business as discussed  above. The
Company  cannot  predict  to what  extent  its  lack of  liquidity  and  capital
resources will impair the  consummation of a business  combination or whether it
will incur  further  operating  losses  through any  business  entity  which the
Company may eventually acquire.

                                       25

<PAGE>

     During the period from August 31, 1989  (inception)  through  December  31,
2002  the  Company  has  engaged  in  no  significant   operations   other  than
organizational   activities,   acquisition  of  capital  and   preparation   for
registration of its securities under the Securities Act of 1933, as amended.  An
attempt was made to merge with 35 Caroline  Corp. in 1999,  which was rescinded.
No revenues  were  received by the Company  during this period.  The Company has
incurred losses since inception and no revenues. The net cumulative loss is from
inception  to year ended  December  31, 2002 Such losses  will  continue  unless
revenues and business can be acquired by the Company. There is no assurance that
revenues or profitability will ever be achieved by the Company.


Evaluation of Internal and Disclosure Controls
----------------------------------------------

     The  management  of the  company has  evaluated  the  effectiveness  of the
issuer's disclosure controls and procedures as of a date within 90 days prior to
the filing  date of the report  (evaluation  date) and have  concluded  that the
disclosure  controls and procedures are adequate and effective  based upon their
evaluation as of the evaluation date.

     There were no significant  changes in internal controls or in other factors
that could significantly  affect internal controls subsequent to the date of the
most recent evaluation of such,  including any corrective actions with regard to
significant deficiencies and material weaknesses.

NEED FOR ADDITIONAL FINANCING
- - ------------------------------

        The Company does not have capital  sufficient to meet the Company's cash
needs,   including  the  costs  of  compliance  with  the  continuing  reporting
requirements  of the  Securities  Exchange Act of 1934. The Company will have to
seek  loans or equity  placements  to cover  such cash  needs.  In the event the
Company is able to complete a business  combination during this period,  lack of
its  existing  capital  may  be a  sufficient  impediment  to  prevent  it  from
accomplishing  the  goal of  completing  a  business  combination.  There  is no
assurance,  however,  that without funds it will ultimately  allow registrant to
complete a business combination.  Once a business combination is completed,  the
Company's needs for additional financing are likely to increase substantially.

        No commitments to provide  additional funds have been made by management
or  other  stockholders.  Accordingly,  there  can  be  no  assurance  that  any
additional  funds  will be  available  to the  Company  to allow it to cover its
expenses as they may be incurred.

        Irrespective of whether the Company's cash assets prove to be inadequate
to meet the Company's  operational  needs,  the Company might seek to compensate
providers of services by issuances of stock in lieu of cash.

                                       26
<PAGE>


ITEM 7 - FINANCIAL STATEMENTS
- - -----------------------------

        The  response to this item is  submitted  as a separate  section of this
report beginning on page F-1.

ITEM 8 -  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
         ----------------------------------------------

     On April 24, 2001 the Company filed an 8K in which a change of Auditors was
announced. Ostrich and Oppenhiem CPA's resigned, and Michael Johnson & Co. CPA's
became the new auditors.

     Michael Johnson & Company, CPA's of Denver,  Colorado were retained in 2001
as auditors for the Company for fiscal year 2000 and thereafter.

     In  connection  with audits of two most recent fiscal years and any interim
period preceding resignation,  no disagreements exist with any former accountant
on any  matter  of  accounting  principles  or  practices,  financial  statement
disclosure, or auditing scope of procedure,  which disagreements if not resolved
to the  satisfaction  of the  former  accountant would  have  caused him to make
reference  in  connection   with  his  report  to  the  subject  matter  of  the
disagreement(s).

     The decision to change  accountants  was approved by the Board of Directors
as the registrant has no audit committee.

     The principal  accountants'  reports on the financial statements for any of
the past two years  contained no adverse  opinion or a disclaimer of opinion nor
was qualified as to uncertainty,  audit scope, or accounting  principles  except
for the "going concern" qualification.

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(a) FOR THE EXCHANGE ACT

        The directors and executive  officers  currently serving the Company are
as follows:

Name                     Age                   Position Held              Tenure
- - ----------------------------------------------------------------------------
J.R. Nelson              61                    President, Chairman
                                               and Director               Annual

        The  directors  named above will serve until the next annual  meeting of
the Company's stockholders.  Thereafter,  directors will be elected for one-year
terms at the annual stockholders' meeting. Officers will hold their positions at
the pleasure of

                                       27
<PAGE>

the board of directors, absent any employment agreement, of which none currently
exists or is contemplated.  There is no arrangement or understanding between the
directors and officers of the Company and any other person pursuant to which any
director or officer was or is to be selected as a director or officer.

        The  directors  and officers of the Company will devote such time to the
Company's  affairs on an "as needed" basis, but less than 20 hours per month. As
a result,  the actual  amount of time which  they will  devote to the  Company's
affairs is unknown and is likely to vary substantially from month to month.

BIOGRAPHICAL INFORMATION

        J.R. NELSON, age 61, was appointed as President, Chairman and a Director
of Houston  Operating  Company as of August 28, 2000. Mr. Nelson received a B.A.
Degree in  Communications  with an  English  minor  and  additional  courses  in
Psychology. Until 1983 Mr. Nelson was an officer and director of J.R. Nelson and
Associates, Inc., a technical recruiting company with over 250 employees that he
co-founded  in 1971.  After selling  his  ownership  in 1983,  he has since been
self-employed as a business  consultant.  Mr. Nelson is an executive officer and
director of Azonic Corporation, a blank check company.


        Management  will devote  minimal time to the  operations of the Company,
and any time spent will be devoted to screening and assessing and, if warranted,
negotiating to acquire business opportunities.

        None  of  the  Company's   officers   and/or   directors   receives  any
compensation for their  respective  services  rendered to the Company,  nor have
they received such compensation in the past. They all have agreed to act without
compensation  until authorized by the Board of Directors,  which is not expected
to occur  until  the  Company  has  generated  revenues  from  operations  after
consummation of a merger or  acquisition.  As of the date of filing this report,
the Company has no funds available to pay officers or directors.  Further,  none
of the  officers or  directors  is  accruing  any  compensation  pursuant to any
agreement with the Company. No retirement, pension, profit sharing, stock option
or insurance programs or other similar programs have been adopted by the Company
for the benefit of its employees.

                                       28
<PAGE>

        The  Company  has adopted a  resolution  and policy  whereby no officer,
director,  or principal  shareholder  will receive any additional  stock or cash
compensation  for their  services to the Company,  relating to an acquisition or
business combination.

        It is possible  that  persons  associated  with  management  may refer a
prospective  merger or  acquisition  candidate to the Company.  In the event the
Company  consummates  a  transaction  with any entity  referred by associates of
management,  it is possible that such an associate will be compensated for their
referral in the form of a finder's fee. It is anticipated  that this fee will be
either in the form of  restricted  common stock issued by the Company as part of
the  terms  of the  proposed  transaction,  or  will  be in  the  form  of  cash
consideration.  However,  if such  compensation  is in the  form of  cash,  such
payment will be tendered by the  acquisition  or merger  candidate,  because the
Company has insufficient cash available.  The amount of such finder's fee cannot
be  determined  as of the date of filing  this  report,  but is  expected  to be
comparable to  consideration  normally paid in like  transactions.  No member of
management  nor any  principal  shareholder,  of the  Company  will  receive any
finders fee,  either  directly or  indirectly,  as a result of their  respective
efforts to implement the Company's business plan outlined herein.

        The  Company  has  adopted  a  policy  that  its  affiliates,  principal
shareholders,  and  management  shall not be issued further common shares of the
Company, as finders fees or other compensation.


PREVIOUS "BLANK CHECK" OFFERINGS
- - ---------------------------------

        Mr.  Nelson has never been an  executive  officer or director of a blank
check or "blind pool" company which conducted a public offering. Mr. Nelson has,
however,  been an executive officer and director of several  non-reporting blank
check  companies  (those not  required to file  reports  with the SEC),  and his
experience is detailed below.


1.      WILLOW RUN CORPORATION  ("WLLO") - Organized 1995 in Wyoming, Mr. Nelson
        and other  shareholders of WLLO sold shares of WLLO amounting to control
        of WLLO in a private  transaction  for an  aggregate  total of $150,000.
        Otherwise,  no  officer,  director  or  shareholder  of WLLO,  nor their
        respective  affiliates,  sold any stock or received any  compensation or
        other payments from WLLO or in connection  with any  acquisition   later
        made.  Mr. Nelson was not an officer and director of WLLO following such
        stock sale. WLLO subsequently  changed its name to Action Sports,  Inc.,
        and later to United Sports International,  Inc.com, and its common stock
        is quoted on the OTC  Bulletin  Board  under the symbol  WSOX and trades
        sporadically.  WLLO is not at this time a reporting  company and has not
        filed a registration statement with the SEC.

                                       29
<PAGE>

2.      DIVERSIFIED  CAPITAL,   INC.  ("DIVE")  -  Organized  1995  in  Wyoming.
        Effective  on July 7,  1998,  DIVE  acquired  ATC Group  LLC, a Maryland
        limited liability company,  by merger. In the merger, DIVE issued to the
        members  of ATC Group,  LLC a total of  6,200,000  common and  2,066,667
        preferred  shares.  DIVE changed its name to ATC Group, Inc. and then to
        its current  name,  TEK  DigiTel  Corporation,  and its common  stock is
        quoted on the OTC  Bulletin  Board under the symbol TEKI and is actively
        traded. DIVE is not at this time a reporting company and has not filed a
        registration  statement  with the SEC. Mr.  Nelson was not an officer or
        director  of DIVE  following  consummation  of the  merger.  Neither Mr.
        Nelson nor any other officer, director or shareholder of DIVE, nor their
        respective  affiliates,  sold any stock or received any  compensation or
        other payments in connection with the acquisition of ATC Group, LLC.

3.      PROPAINT SYSTEMS, INC. ("PROP") - Organized 1995 in Nevada. Effective on
        June 26, 1998,  PROP acquired APC Telecom,  Inc., a federally  chartered
        Canadian company, in a stock-for-stock  exchange. In the exchange,  PROP
        issued to the  shareholders  of APC  Telecom,  Inc. a total of 5,000,000
        common and 5,000,000  preferred shares.  PROP  subsequently  changed its
        name to APC  Telecommunications,  Inc.  and later to its  current  name,
        Innofone.com,  Incorporated,  and its common  stock is quoted on the OTC
        "pink sheets" under the symbol INNF and trades sporadically. PROP is not
        at this  time a  reporting  company  and has  not  filed a  registration
        statement  with the SEC.  Mr.  Nelson was not an officer or  director of
        PROP following consummation of the exchange.  Neither Mr. Nelson nor any
        other officer,  director or  shareholder  of PROP, nor their  respective
        affiliates,  sold  any  stock  or  received  any  compensation  or other
        payments in connection with the acquisition of APC Telecom, Inc.

4.      BLAZOON SYSTEMS,  INC. ("BLZO") - Organized 1996 in Colorado.  Effective
        on February 26, 1999,  BLZO acquired  Diverse  Capital  Corp., a Florida
        corporation, in a stock-for-stock exchange. In the exchange, BLZO issued
        to the  shareholders of Diverse  Capital Corp. a total 1,235,000  common
        and 625,000  preferred shares.  BLZO subsequently  reincorporated to the
        State of Nevada  and  changed  its name to USA  Digital,  Inc.,  and its
        common stock is quoted on the OTC Bulletin  Board under the symbol UDIG.
        BLZO is subject to the  reporting  requirements  of the  Securities  and
        Exchange Act of 1934.  Mr. Nelson was not an officer or director of BLZO
        following consummation of the exchange. Neither Mr. Nelson nor any other
        officer,   director  or  shareholder  of  BLZO,  nor  their   respective
        affiliates,  sold  any  stock  or  received  any  compensation  or other
        payments in connection with the acquisition made by BLZO.

5.      BORAXX TECHNOLOGIES, INCORPORATED ("BORX") - Organized 1996 in Colorado.
        Mr. Nelson and another shareholder of BORX sold shares of BORX amounting
        to control of BORX in a private  transaction  for an aggregate  total of
        $25,000 in cash. Otherwise, no officer, director or shareholder of BORX,
        nor  their  respective  affiliates,  sold  any  stock  or  received  any
        compensation or other payments in connection with any acquisition  made.
        Mr. Nelson was an officer and director of BORX for a few weeks following
        such stock  sale and then  resigned  those  offices.  BORX  subsequently
        changed its name to QUAD X  Sports.com,  Inc.,  and its common  stock is
        quoted  on the OTC  "pink  sheets"  under  the  symbol  QXXX and  trades
        sporadically.

                                       30

<PAGE>

INDEMNIFICATION OF OFFICERS AND DIRECTORS
- - ------------------------------------------

     As permitted by Delaware Statutes,  the Company may indemnify its directors
and officers against expenses and liabilities they incur to defend,  settle,  or
satisfy any civil or criminal  action  brought  against them on account of their
being or having been Company  directors or officers unless,  in any such action,
they are  adjudged to have acted with gross  negligence  or willful  misconduct.
Insofar as indemnification  for liabilities  arising under the Securities Act of
1933 may be permitted to directors,  officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that, in the
opinion of the  Securities  and Exchange  Commission,  such  indemnification  is
against public policy as expressed in that Act and is, therefore, unenforceable.

EXCLUSION OF LIABILITY
- - -----------------------

        The Delaware General  Corporation Law excludes  personal  liability for
its directors for monetary  damages based upon any violation of their  fiduciary
duties  as  directors,  except  as to  liability  for any  breach of the duty of
loyalty,  acts or  omissions  not in good  faith  or which  involve  intentional
misconduct  or a knowing  violation  of law,  acts in  violation of the Delaware
General  Corporation Law, or any transaction from which a director  receives an
improper personal benefit.  This exclusion of liability does not limit any right
which a director may have to be  indemnified  and does not affect any director's
liability under federal or applicable state securities laws.

CONFLICTS OF INTEREST
- - ----------------------

     The officer and director of the Company will not devote more than a portion
of his time to the affairs of the Company. There will be occasions when the time
requirements  of the  Company's  business  conflict  with the  demands  of other
business and investment activities.  Such conflicts may require that the Company
attempt to employ additional personnel.  There is no assurance that the services
of such  persons  will be  available  or that they can be  obtained  upon  terms
favorable to the Company.

        Conflicts of Interest - General.  Certain of the officers and  directors
of the Company may be directors and/or principal shareholders of other companies
and,  therefore,  could face  conflicts  of interest  with  respect to potential
acquisitions.  In  addition,  officers  and  directors of the Company may in the
future  participate  in  business  ventures  which  could be deemed  to  compete

                                       31

<PAGE>

directly with the Company.  Additional conflicts of interest and non-arms length
transactions may also arise in the future in the event the Company's officers or
directors  are  involved  in the  management  of any firm with which the Company
transacts  business.  The Company's Board of Directors has adopted a policy that
the Company will not seek a merger with, or acquisition  of, any entity in which
management  serve as officers  or  directors,  or in which they or their  family
members own or hold a  controlling  ownership  interest.  Although  the Board of
Directors  could  elect to change this  policy,  the Board of  Directors  has no
present intention to do so. In addition, if the Company and other companies with
which the Company's  officers and directors are  affiliated  both desire to take
advantage of a potential business  opportunity,  then the Board of Directors has
agreed that said  opportunity  should be  available  to each such company in the
order in which  such  companies  registered  or became  current in the filing of
annual reports under the Exchange Act subsequent to January 1, 1997.

        The Company's officers and directors may actively negotiate or otherwise
consent to the purchase of a portion of their common stock as a condition to, or
in  connection  with,  a  proposed  merger  or  acquisition  transaction.  It is
anticipated that a substantial  premium over the initial cost of such shares may
be paid by the purchaser in conjunction with any sale of shares by the Company's
officers and directors which is made as a condition to, or in connection with, a
proposed merger or acquisition transaction.  The fact that a substantial premium
may be paid to the  Company's  officers and  directors  to acquire  their shares
creates a potential  conflict of interest for them in satisfying their fiduciary
duties to the Company and its other shareholders.  Even though such a sale could
result in a substantial  profit to them, they would be legally  required to make
the  decision  based upon the best  interests  of the Company and the  Company's
other shareholders, rather than their own personal pecuniary benefit.

                                       32
<PAGE>

Compliance with Section 16(a) of the Exchange Act

Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
the registrant pursuant to Rule 16a-3(e) during its most recent fiscal year and
Forms 5 and amendments thereto furnished to the registrant with respect to its
most recent fiscal year, and any written representation referred to in paragraph
(b)(2)(i) of this Item.

No person  who,  at any time during the fiscal  year,  was a director,  officer,
beneficial  owner of more than ten percent of any class of equity  securities of
the registrant  registered  pursuant to section 12 of the Exchange Act failed to
file on a timely  basis,  as disclosed in the above Forms,  reports  required by
section  16(a) of the  Exchange Act during the most recent  fiscal year,  except
that J.R. Nelson,  President and Director made delinquent filings of Forms 4 and
5 on April 3, 2002 and  Forms 4/A and 5/A on April 24,  2002 and Forms 4 and 5/A
on January 27, 2003.  Mr Nelson filed a Form 5 on April 4, 2002.


ITEM 10 - EXECUTIVE COMPENSATION.
         -----------------------

                    SUMMARY COMPENSATION TABLE OF EXECUTIVES
                    ----------------------------------------

                           Annual Compensation                 Awards
- - ----------------------------------------------------------------------------

Name and Principal   Year  Salary  Bonus  Other Annual Restricted    Securities
Position                   ($)     ($)    Compensation Stock Award(s) Underlying
                                          ($)                          Options/
                                                                        SARs (#)
- - ----------------------------------------------------------------------------
                     2002      0     0         0           0              0
J.R. Nelson,         2001      0     0         0           0              0
President,           2000      0     0         $4000*      0              0
Director
================================================================================

                                       33

<PAGE>

*4,000,000 shares were issued @ $.001 share for services rendered as President
of the Company.

(1)Resigned in 2001 as Secretary and Director

                             Directors' Compensation
                             -----------------------

Name                  Annual     Meeting  Consulting    Number     Number of
                      Retainer   Fees     Fees/Other    of         Securities
                      Fee ($)    ($)      Fees ($)      Shares     Underlying
                                                        (#)        Options
                                                                   SARs(#)
- - ----------------------------------------------------------------------------
A. Director              0         0        0            0              0
   J.R. Nelson

        Option/SAR Grants Table (None)

        Aggregated Option/SAR Exercises in Last Fiscal Year an FY-End Option/SAR
value (None)

        Long Term Incentive Plans - Awards in Last Fiscal Year (None)

        No officer or director has received  any other  remuneration  in the two
year  period  prior to the filing of this  registration  statement.  There is no
current plan in  existence,  to pay or accrue  compensation  to its officers and
directors for services related to seeking business  opportunities and completing
a merger or  acquisition  transaction,  and the  Board  has  adopted a policy to
preclude such payments.  See "Certain  Relationships and Related  Transactions."
The Company has no stock option, retirement, pension, or profit-sharing programs
for the  benefit of  directors,  officers or other  employees,  but the Board of
Directors may recommend adoption of one or more such programs in the future.



ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT.
         -----------

        The  following  table sets  forth,  as of the date of this  Registration
Statement, the number of shares of common stock owned of record and beneficially
by  executive  officers,  directors  and  persons  who hold  5.0% or more of the
outstanding  common stock of the Company.  Also  included are the shares held by
all executive officers and directors as a group.

                                       34
<PAGE>
                                                 NUMBER OF SHARES      OWNERSHIP
SHAREHOLDERS BENEFICIAL OWNERS                                        PERCENTAGE
- - ----------------------------------------------------------------------------
J.R. Nelson                                       7,085,848           90%
President, Chairman and Director
6521 W. Calhoun Place
Littleton, CO  80123

All directors and executive                       7,085,848           90%
officers as a group (1 person)

Each principal  shareholder has sole investment power and sole voting power over
the shares.


ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
        ----------------------------------------------

     In the two years  prior to the date of this Annual  Report,  the sole share
issuance by the Company was to J.R.  Nelson,  who was appointed as President and
director,  a total of 5,000,000  shares of common stock for a total of $1,000 in
cash and services valued at $4,000.  The shares were subscribed in July 2000 and
issued in the fourth quarter of 2000.  Certificates  evidencing the common stock
issued by the Company to this person have all been  stamped  with a  restrictive
legend, and are subject to stop transfer orders by the Company.

        No officer,  director,  or  affiliate  of the Company has or proposes to
have any  direct or  indirect  material  interest  in any asset  proposed  to be
acquired  by the Company  through  security  holdings,  contracts,  options,  or
otherwise.





                                       35
<PAGE>

        The Company has adopted a policy under which any  consulting or finder's
fee that may be paid to a third party or affiliate  for  consulting  services to
assist management in evaluating a prospective business opportunity would be paid
in stock  or in cash.  Any  such  issuance  of stock  would be made on an ad on
basis.  Accordingly,  the Company is unable to predict whether or in what amount
such a stock issuance might be made.

        There is no current plan in existence, nor will the Company adopt a plan
to pay or accrue compensation to its officers and directors for services related
to  seeking  business  opportunities  and  completing  a merger  or  acquisition
transaction.  The Board of  Directors  has adopted a  resolution  to establish a
policy which  precludes  officers or directors  from  compensation  for services
related to seeking  business  opportunity and completing a merger or acquisition
transaction for the Company.  Under the Resolution and policy,  no cash,  stock,
bonus,  or option  compensation  or awards  will be offered or  approved  by the
Company in conjunction with change of control, or a business  combination of any
type. There will be no finder's fees of any type, cash, stock, bonus, or options
paid to any officer or director or principal  shareholders as part of or related
to or resulting from an acquisition transaction.

       Although  management has no current plans to cause the Company to do so,
it is possible that the Company may enter into an agreement  with an acquisition
candidate requiring the sale of all or a portion of the common stock held by the
Company's  current  stockholders  to the  acquisition  candidate  or  principals
thereof,  or to other individuals or business entities,  or requiring some other
form of payment to the Company's current  stockholders,  or requiring the future
employment  of specified  officers  and payment of salaries to them.  It is more
likely  than  not  that  any  sale  of  securities  by  the  Company's   current
stockholders  to an  acquisition  candidate  would  be at a price  substantially
higher than that  originally paid by such  stockholders.  Any payment to current
stockholders  in the context of an  acquisition  involving  the Company would be
determined  entirely by the largely  unforeseeable  terms of a future  agreement
with an unidentified business entity.

        There are currently no plans, proposals, arrangements, or understandings
with  respect to the sale or issuance of  additional  securities  by the Company
prior to the  location  of an  acquisition  or merger  candidate.  The Board has
adopted a resolution and policy whereby no additional issuances of share will be
made until an arrangement or contract has been made with a target company.

                                       36

<PAGE>


ITEM 13 - Exhibits and Reports on Form 8-K
- - ------------------------------------------

(a) No  Exhibits  are filed  with  this  Annual  Report.  Certain  Exhibits  are
incorporated by reference to Form 10SB file #000-31553.

(b) Reports on Form 8-K

     None.

Incorporated by Reference to Form 10SB file #000-31553

3.1  Articles of Incorporation *

3.2  Bylaws *

10.2 Disclosure  Statement of Cambridge Oil Company,  Debtor in Possession,  and
     Normandy Oil and Gas Company, Inc. and its wholly owned subsidiary, Houston
     Operating Company, Successor to the Debtor Under the Plan *

10.3 Order Confirming Debtor's Plan of Reorganization *

*Previously Filed on Form 10SB, file #000-31553, September 27, 2000.

                                       37
<PAGE>


                                   Signatures

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


                                                    HOUSTON OPERATING COMPANY



Date:   April 4, 2003                             /s/J.R. Nelson
                                                    ----------------------------
                                                    J.R. Nelson, President


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


Date: April 22, 2003                   /s/ J.R. Nelson
                                      ----------------------------------------
                                       J.R. Nelson, President and Sole Director



                                       38
<PAGE>
                       CERTIFICATION PURSUANT TO SECTION
                         302 OF THE SARBANES OXLEY ACT



I, J.R. Nelson, certify that:

1. I have  reviewed  this  annual  report on Form  10-KSB of  Houston  Operating
Company;

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

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

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

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

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

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

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

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

<PAGE>

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

6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: April 22, 2003


/s/J.R. Nelson
-----------------------
J.R. Nelson, President


<PAGE>

                               HOUSTON OPERATING, INC.

                                    FORM 10-K

                          INDEX OF FINANCIAL STATEMENTS



                                                                          Pages

Auditors Report- Michael Johnson & CO                                        F-1

Balance Sheets                                                               F-2

Statements of Operations                                                     F-3

Statements of Changes in Stockholders Deficit                                F-4

Statements of Cash Flows                                                     F-5

Notes to Financial Statements                                          F-6 - F-7


<PAGE>

                         HOUSTON OPERATING COMPANY, INC.

                              Financial Statements
                     Years Ended December 31, 2002 and 2001



<PAGE>



                           MICHAEL JOHNSON & CO., LLC
                          Certified Public Accountants
                        9175 East Kenyon Ave., Suite 100
                             Denver, Colorado 80237

Michael B. Johnson C.P.A.                             Telephone:  (303) 796-0099
Member:  A.I.C.P.A.                                         Fax:  (303) 796-0137
Colorado Society of C.P.A.s



                          INDEPENDENT AUDITOR'S REPORT


To the Board of Directors
Houston Operating Company, Inc.
Littleton, Colorado

We have audited the accompanying balance sheets of Houston Operating Company,
Inc. as of December 31, 2002 and 2001, and the related statement of operations,
cash flows, and changes in stockholders' equity for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Houston Operating Company, Inc.
at December 31, 2002 and 2001, and the results of their operations and their
cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 5 to the
financial statements, conditions exist which raise substantial doubt about the
Company's ability to continue as a going concern unless it is able to generate
sufficient cash flows to meet its obligations and sustain its operations.
Management's plans in regard to these matters are also described in Note 5. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.



Michael Johnson & Co., LLC
Denver, Colorado
March 6, 2003
/s/Michael Johnson & Co., LLC

                                      F-1
<PAGE>
<TABLE>
<CAPTION>

                           HOUSTON OPERATING COMPANY
                                 BALANCE SHEETS
                           DECEMBER 31, 2002 AND 2001



<S>                                                                            <C>                <C>



                                                                                    2002               2001
                                                                               ---------------    ---------------
ASSETS:
Current Assets:
  Cash                                                                                  $ 313              $ 429
                                                                               ---------------    ---------------
     Total Current Assets                                                                 313                429
                                                                               ---------------    ---------------

TOTAL ASSETS                                                                            $ 313              $ 429
                                                                               ===============    ===============

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
  Accounts payable and accrued expenses                                              $ 13,402            $ 6,292
  Advances from shareholders'                                                           5,896              3,896
                                                                               ---------------    ---------------
    Total Current Liabilities                                                          19,298             10,188
                                                                               ---------------    ---------------


Stockholders' Deficit:
  Common stock, $.001 par value; 50,000,000
    shares authorized; 7,795,171 shares issued
     and outstanding, respectively                                                      7,795              7,795
  Additional paid-in capital                                                           38,350             38,350
  Retained deficit                                                                    (65,130)           (55,904)
                                                                               ---------------    ---------------

Total Stockholders' Deficit                                                           (18,985)            (9,759)
                                                                               ---------------    ---------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                             $ 313              $ 429
                                                                               ===============    ===============



</TABLE>
The accompanying notes are an intergral part of these financial statements.


                                      F-2


<PAGE>
<TABLE>
<CAPTION>

                        HOUSTON OPERATING COMPANY, INC.
                            STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

<S>                                                <C>                 <C>



                                                        2002                 2001
                                                   ---------------     -----------------


REVENUES:                                                     $ -                   $ -


OPERATING EXPENSES:
  General and administrative                                9,226                 7,051
                                                   ---------------     -----------------
Total Operating Expenses                                    9,226                 7,051
                                                   ---------------     -----------------

Net Loss from Operations                                   (9,226)               (7,051)
                                                   ---------------     -----------------

Other Income and expenses:
  Interest income                                               -                     -
  Interest expense                                              -                     -
                                                   ---------------     -----------------
                                                                -                     -
                                                   ---------------     -----------------

Net Loss                                                 $ (9,226)             $ (7,051)
                                                   ===============     =================

Weighted average number of
  shares outstanding                                    7,795,171             7,795,171
                                                   ===============     =================

Basic and diluted net loss per share                     $ (0.001)             $ (0.001)
                                                   ===============     =================
</TABLE>
The accompanying notes are an integral part of these financial statements.

                                      F-3

<PAGE>
<TABLE>
<CAPTION>

                        HOUSTON OPERATING COMPANY, INC.
                 STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<S>                                                        <C>               <C>             <C>             <C>          <C>


                                                                                         Additional
                                                               Common Stock                Paid-In         Accumulated
                                                          Shares          Amount           Capital          Deficit          Totals
                                                          ------          ------           -------          -------          ------

Balance -  December 31, 1997                               2,795,171         $ 2,795         $ 28,820        $ (38,874)    $ (7,259)

Net loss for period                                                -               -                -           (1,725)      (1,725)
                                                           ---------         -------         --------        ---------     ---------
Balance - December 31, 1998                                2,795,171           2,795           28,820          (40,599)      (8,984)
                                                           ---------         -------         --------        ---------     ---------
Conversion of loan payable to additional paid-in
 capital                                                           -               -            9,530                -        9,530
Net loss for year                                                  -               -                -           (1,000)      (1,000)
                                                           ---------         -------         --------        ---------     ---------
Balance - December 31, 1999                                2,795,171           2,795           38,350          (41,599)        (454)
                                                           ---------         -------         --------        ---------     ---------
Stock issuance for cash                                    1,000,000           1,000                -                -        1,000
Stock issued for services                                  4,000,000           4,000                -                -        4,000
Net loss for year                                                  -               -                -           (7,254)      (7,254)
                                                           ---------         -------         --------        ----------    ---------
Balance - December 31, 2000                                7,795,171           7,795           38,350          (48,853)      (2,708)
                                                           ---------         -------         --------        ----------    ---------
Net loss for year                                                  -               -                -           (7,051)      (7,051)
                                                           ---------         -------         --------        ----------    ---------
Balance - December 31, 2001                                7,795,171           7,795           38,350          (55,904)      (9,759)
                                                           ---------         -------         --------        ----------    ---------
Net loss for year                                                  -               -                -           (9,226)      (9,226)
                                                           ---------         -------         --------        ----------    ---------
Balance - December 31, 2002                                7,795,171         $ 7,795         $ 38,350        $ (65,130)   $ (18,985)
                                                           =========         =======         ========        ==========    =========

</TABLE>
The accompanying notes are an integral part of these financial statements.

                                      F-4

<PAGE>
<TABLE>
<CAPTION>


                        HOUSTON OPERATING COMPANY, INC.
                            STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

<S>                                                                 <C>                  <C>


                                                                          2002               2001
                                                                    -----------------    --------------

Cash Flows From Operating Activities:
  Net (Loss)                                                                $ (9,226)         $ (7,051)
  Adjustments to reconcile net loss to net cash
    used in operating activities:
  Stock issued for services                                                        -                 -
   Changes in assets and liabilities:
     Increase in accounts payables                                             7,110             4,939
                                                                    -----------------    --------------
                                                                               7,110             4,939
                                                                    -----------------    --------------
Net Cash Used in Operating Activities                                         (2,116)           (2,112)
                                                                    -----------------    --------------

Cash Flow From Financing Activities:
   Sale of stock                                                                   -                 -
   Advances from shareholders                                                  2,000             2,000
                                                                    -----------------    --------------
Net Cash Provided By Financing Activities                                      2,000             2,000
                                                                    -----------------    --------------

Increase (Decrease) in Cash                                                     (116)             (112)

Cash and Cash Equivalents - Beginning of period                                  429               541
                                                                    -----------------    --------------

Cash and Cash Equivalents - End of period                                      $ 313             $ 429
                                                                    =================    ==============



Supplemental Cash Flow Information:
 Cash paid during period for:
  Interest paid                                                                  $ -               $ -
                                                                    =================    ==============
                                                                    =================
  Taxes paid                                                                     $ -               $ -
                                                                    =================    ==============

</TABLE>
The accompanying notes are an integral part of theses financial statements.

                                      F-5

<PAGE>
                         HOUSTON OPERATING COMPANY, INC.
                          Notes To Financial Statements
                                December 31, 2002

NOTE 1 - GENERAL

         Nature of Operations

         Houston Operating Company, Inc. (the "Company") was incorporated under
         the laws of the State of Delaware on August 31, 1989. The Company was
         formed to act as successor to a debtor under a plan of reorganization
         dated April 21, 1990. Under the terms of the plan, the Company issued
         approximately 2.8 million shares of common stock.

         The Company's fiscal year end is December 31.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Basis of Accounting

         The accompanying financial statements have been prepared on the accrual
         basis of accounting in accordance with generally accepted accounting
         principles.

         Estimates

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect certain reported amounts and disclosures.
         Accordingly, actual results could differ from those estimates.

         Cash and Cash Equivalents

         For purposes of the statement of cash flows, the Company considered all
         cash and other highly liquid investments with initial maturities of
         three months or less to be cash equivalents.

         Net earning (loss) per share

         The net (loss) per share has been computed by dividing net income
         (loss) by the weighted average number of common shares and equivalents
         outstanding.

         Income Taxes

         The Company accounts for income taxes under SFAS No. 109, which
         requires the asset and liability approach to accounting for income
         taxes. Under this method, deferred tax assets and liabilities are
         measured based on differences between financial reporting and tax bases
         of assets and liabilities measured using enacted tax rates and laws
         that are expected to be in effect when differences are expected to
         reverse.

         Other Comprehensive Income

         The Company has no material components of other comprehensive income
         (loss) and accordingly, net loss is equal to comprehensive loss in all
         periods.




                                       F-6

<PAGE>

                         HOUSTON OPERATING COMPANY, INC.
                          Notes To Financial Statements
                                December 31, 2002


  NOTE 3 - CAPITAL STOCK TRANSACTIONS:

         Transactions to purchase control of Company

         In July 2000, there was a subscription agreement offering (5) five
         million shares of common stock of HOC for return for $1,000 by the
         buyer.

         If Houston Operating Company has not completed a merger (reverse
         acquisition) on or before June 1, 2001, the Company (HOC) can
         repurchase the five million shares for $1,000. As of December 31, 2002,
         the Company did not repurchase the five million shares.


NOTE 4 - INCOME TAXES

         There has been no provision for U.S. federal, state, or foreign income
         taxes for any period because the Company has incurred losses in all
         periods and for all jurisdictions.

         Deferred income taxes reflect the net tax effects of temporary
         differences between the carrying amounts of assets and liabilities for
         financial reporting purposes and the amounts used for income tax
         purposes. Significant components of deferred tax assets are as follows:

         Deferred tax assets
            Net operating loss carryforwards                          $65,130
            Valuation allowance for deferred tax assets               (65,130)
                                                                       -------
         Net deferred tax assets                                      $     -
                                                                      ==========

        Realization of deferred tax assets is dependent upon future earnings, if
        any, the timing and amount of which are uncertain. Accordingly, the net
        deferred tax assets have been fully offset by a valuation allowance. As
        of December 31, 2002, the Company had net operating loss carryforwards
        of approximately $65,130 for federal and state income tax purposes.
        These carryforwards, if not utilized to offset taxable income begin to
        expire in 2007. Utilization of the net operating loss may be subject to
        substantial annual limitation due to the ownership change limitations
        provided by the Internal Revenue Code and similar state provisions. The
        annual limitation could result in the expiration of the net operating
        loss before utilization.


NOTE 5 - GOING CONCERN:

         The accompanying financial statements have been prepared in conformity
         with generally accepted accounting principles, which contemplates
         continuation of the Company as a going concern. The Company's current
         liabilities exceed current assets by $18,985, and the Company has a
         retained deficit of $65,130 at December 31, 2002.

         The future success of the Company is likely dependent on its ability to
         attain additional capital to find an acquisition to add value to its
         present shareholders and ultimately, upon its ability to attain future
         profitable operations. There can be no assurance that the Company will
         be successful in obtaining such financing, or that it will attain
         positive cash flow from operations. The Company plans to pursue the
         issuance of additional equity securities, and to pursue corporate
         marketing alliances and collaborative agreements, as required meeting
         its cash requirements.

                                       F-7

</TEXT>
</DOCUMENT>
