Endevco 10Q 2003 Q1 Quarterly report

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

FORM 10-QSB

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED MARCH 31, 2003.

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 000-10056
ADAIR INTERNATIONAL OIL AND GAS, INC.
(Exact name of registrant as specified in its charter)

Texas	74-2142545
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.

2425 Fountainview, Suite 215, Houston, TX 77057
(Address of principal executive offices, including zip code)

(713) 977-4662
(Registrant's telephone number, including area code)

Securities registered under Section 12(b) of the Exchange Act:
None

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

The aggregate market value of common stock held by non-affiliates of the registrant at March 31, 2003, based upon the last closing price on the OTCBB on March 31, 2003, was $3,000,000. As of March 31, 2003, there were 150,000,000 shares of common stock outstanding. The total number of shares authorized for the Corporation is 150,000,000.
Transitional Small Business Disclosure Format: [ ] Yes [X] No

ADAIR INTERNATIONAL OIL AND GAS, INC.
AND SUBSIDIARIES

TABLE OF CONTENTS
MARCH 31, 2003

PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements.
Consolidated Balance Sheets - March 31, 2003 (Unaudited) and December 31, 2002	2

Consolidated Statements of Operations (Unaudited) - Three Months Ended March 31, 2003 and 2002	3

Consolidated Statement of Changes in Shareholders' Equity - Three Months Ended March 31, 2003 (Unaudited)	4

Consolidated Statements of Cash Flows (Unaudited) - Three Months Ended March 31, 2003 and 2002	5

Notes to Consolidated Financial Statements (Unaudited)	6 - 12

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	13 - 19

PART II - OTHER INFORMATION
ITEM 1. through ITEM 6	20 - 22

SIGNATURES	23

PART I - FINANCIAL INFORMATION

Adair International Oil & Gas, Inc. and Subsidiaries
Consolidated Balance Sheets
March 31, 2003 Compared to December 31, 2002

	03/31/2003	12/31/2002
ASSETS (Unaudited)
Current Assets
Cash and Cash Equivalents	$ 96	$ 251
Accounts Receivable	527,080	527,080
Other Current Assets	25,000	25,000
Prepaid Expenses	1,628,397	1,628,215
Total Current Assets	2,180,573	2,180,546
Investments
Letter of Credit Deposit	868,930	867,094
Property and Equipment
Oil and Gas Properties and Equipment	8,215,862	7,368,377
Furniture and Equipment	-	-
Total Property and Equipment	8,215,862	7,368,377
Less Accumulated Depreciation	-	-
Net Property and Equipment	8,215,862	7,368,377
Total Assets	$11,265,365	$10,416,017

LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities
Accounts Payable	$ 2,616,318	$ 2,592,494
Joint Venture Cash Calls Payable	3,168,926	2,321,441
Current Portion of Notes Payable	425,886	425,886
Current Portion of Capital Leases	-	-
Unearned Revenue	2,000,000	2,000,000
Accrued Expenses	91,201	64,262
Taxes Payable	160,501	160,501
Total Current Liabilities	8,462,832	7,564,584
Shareholders Equity
Common Stock without Par Value: 150,000,000 shares authorized	24,964,398	24,964,398
Accumulated Deficit	(22,161,865)	(22,112,965)
Total Shareholder's Equity	2,802,533	2,851,433
Total Liablilities and Shareholder's Equity	$11,265,365	$ 10,416,017

See accompanying notes to consolidated financial statements.

Adair International Oil & Gas, Inc. and Subsidiaries
Consolidated Statements of Operations
Three Months Ended March 31, 2003 and 2002.
(Unaudited)

	03/31/2003	03/31/2002
Revenues
Oil & Gas Royalties	$ 499	-
Technical Services	-	-
Consulting Fees and Other	20,000	-
Administrative and Other Fees	-	-
Total Revenues	$ 20,499	-

Costs and Expenses
General and Administrative	$ 44,296	$ 353,436
Salaries and Wages Paid in Stock	-	187,667
Other Expenses Paid in Stock	-	27,923
Depreciation and Depletion	-	40,000
Interest Expense	26,939	8,392
Other	-	78,980
Total Costs and Expenses	71,235	617,418
Interest and Other Income	1,836	8,082
Net Income (Loss)	$ (48,900)	$ (609,336)
Net Loss Per Common Share:
Basic and Diluted	$ (0.0002)	$ (0.01)

See accompanying notes to consolidated financial statements.

Adair International Oil & Gas, Inc. and Subsidiaries
Consolidated Statement of Changes in Shareholders' Equity
Three Months Ended March 31, 2003
(Unaudited)

	Common Shares	Stock $ Amount	Accumulated Deficit	Total
Issuances of Shares
December 31, 2002	150,000,000	$24,964,398	$ (22,112,965)	$ 2,851,433
For Cash	-	-	-	-
For Salaries	-	-	-	-
Other Company Obligations	-	-	-	-
Net Loss			(48,900)	(48,900)
March 31, 2003	150,000,000	$24,964,398	$ (22,161,865)	$ 2,802,533

See accompanying notes to consolidated financial statements.

Adair International Oil & Gas, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2003 and 2002
(Unaudited)

Cash Fows from Operating Activity	03/31/2003	03/31/2002
Net Income (Loss)	$ (48,900)	$ (609,336)
Adjustments to Reconcile Net Loss to Net Cash
Depreciation and Depletion	-	40,000
Issuance of Stock for Expenses	-	215,590
Write off of assets	-	-
Changes in Working Capital Accounts
Decrease in Accounts Receivable	-
Prepaid Expenses	(182)
Decrease in Current Portion of Capitalized Leases	-
Accounts Payable	23,824	(94,970)
Joint Venture Cash Calls	847,485
Accrued Expenses	26,939
Taxes Payable	-	88,071
Other	-	(153,063)
Total Adjustments	898,485	95,628
Net Cash Provided (Used) by Operating Account	849,166	(513,708)

Cash Flows Used in Investing Activities
Investment in Oil and Gas Properties	(847,485)
Purchase of Furniture and Equipment	-	-
Net Cas Provided (Used) by Investing Activities	(847,485)	-
Cash Flows from Financing Activities
Pledged Investment Account	(1,836)	-
Common Shares Issued for Cash	-	538,962
Accelerated Leases	-	-
Borrowings under Note and Credit Agreement	-	(17,397)
Net Cash Provided by Financing Activities	(849,321)	521,565
Net Change in Cash and Cash Equivalents	(155)	7,857
Cash and Cash Equivalents
Beginning of the Period	251	5,103
End of the Period	96	12,960

See accompanying notes to consolidated financial statements.

ADAIR INTERNATIONAL OIL AND GAS, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements March 31, 2003

NOTE 1. Summary of Significant Accounting Policies

Basis of Presentation -- Adair International Oil and Gas, Inc., ("the Company") was incorporated under the laws of the state of Texas on November 7, 1980. The consolidated financial statements include the accounts of Adair International Oil and Gas, Inc. and its wholly owned subsidiaries, Adair Exploration, Inc., Adair Yemen Exploration Limited, Superior Geophysical Inc, and Adair Colombia Oil and Gas, S.A. ("The Company"). All intercompany balances and transactions have been eliminated, as necessary, in consolidation.

Cash and Cash Equivalents -- The Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents.

Oil and Gas Properties -- The Company follows the full cost method of accounting for its oil and gas properties. Accordingly, all costs associated with acquisition, exploration and development of oil and gas reserves, including directly related overhead costs, are capitalized. All capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, are amortized on the unit-of-production method using estimates of proved reserves. Investments in unproved properties and major development projects are not amortized until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is deducted from the capitalized costs to be amortized, and recorded in an impairment expense.In addition, the capitalized costs are subject to a "ceiling test" which limits such costs to the aggregate of the "estimated present value" discounted at a 10-percent interest rate of future net revenues from proved reserves, based on current economic and operating conditions, plus the lower of cost or fair market value of unproved properties. Depletion of oil and gas properties is computed using all capitalized costs and estimated future development and abandonment costs, exclusive of oil and gas properties not yet evaluated, on a unit of production method based on estimated proved reserves.

Earnings Per Share -- Basic earnings per share are computed by dividing earnings (loss) by the weighted average number of common shares outstanding adjusted for conversion of common stock equivalents, where applicable, outstanding during the period. The Company had no stock options or other common stock equivalents outstanding as of September 30, 2002 or for the period then ended.

Geophysical Data and Intellectual Property -- The carrying value of the geophysical data and intellectual property acquired in the acquisition of Partners In Exploration, Inc. It is the policy of the Company to carry these as other assets until such time as the Company is engaged in an exploration activity or under contract for geophysical analysis, which utilizes specific proprietary data. At such time the asset would be classified as either costs as those incurred under the full cost method of accounting for oil and gas properties or costs incident to geophysical analysis contracts.

Income Taxes -- The Company accounts for income taxes pursuant to the asset and liability method of computing deferred income taxes. Deferred tax assets and liabilities are established for the temporary differences between the financial reporting bases and the tax bases of the Company's assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. When necessary, valuation allowances are established to reduce deferred tax assets to the anticipated amount. No provision is made for current or deferred income taxes because the Company has an excess net operating loss carry-forward.

properties, including the estimated future costs to develop proved reserves, are amortized on the unit-of-production method using estimates of proved reserves. Investments in unproved properties and major development projects are not amortized until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is deducted from the capitalized costs to be amortized, and recorded in an impairment expense. In addition, capitalized costs are subject to a "ceiling test" which limits such costs to the aggregate of the "estimated present value" discounted at a 10-percent interest rate of future net revenues from proved reserves, based on current economic and operating conditions, plus the lower of cost or fair market value of unproved properties. Depletion of oil and gas properties is computed using all capitalized costs and estimated future development and abandonment costs, exclusive of oil and gas properties not yet evaluated, on a unit of production method based on estimated proved reserves.

Property and equipment -- The cost of other categories of property and equipment are capitalized at cost and depreciated using the "straight-line" method over their estimated useful lives for financial statement purposes as follows:

Furniture / office equipment - 7 years

Computer software / equipment - 5 years

No depreciation and amortization was expensed for the period ending March 31, 2003 due to a loss incurred from the abandonment of property and equipment during the previous year.

Income Taxes -- The Company accounts for income taxes pursuant to the asset and liability method of computing deferred income taxes. Deferred tax assets and liabilities are established for the temporary differences between the financial reporting bases and the tax bases of the Company's assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. When necessary, valuation allowances are established to reduce deferred tax assets to the amount expected to be realized. No provision is made for current or deferred income taxes because the Company has an excess net operating loss carry-forward.

Use of Estimates -- Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates. In the first quarter of 2003, the management estimated sales prices, costs, and statutory income tax rates in calculating future net cash flows of proven oil and gas reserves.

ADAIR INTERNATIONAL OIL AND GAS, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements March 31, 2003

NOTE 2. Oil and Gas Properties

Colombia - At December 31, 2001, the Company's Chimichagua gas field contained proven nonproducing gas reserves as described in the Note titled, "Supplemental Oil and Gas Disclosures."which was disclosed in Form 10K/SB for the year ending December 31, 2001 which is herein included by reference. This prospect has a cost basis of $3,000,000 and was purchased in fiscal 1997 by issuing 6,000,000 Common shares valued at $0.50 per share. The Company has identified several options for the Colombia investment. One option involves Adair supplying gas to fuel a power plant providing revenues under a long-term gas purchase contract. Realization of the value of reserves is contingent upon the Company concluding an agreement to construct a power plant utilizing gas from the field. Another option involves selling the Company's interest in Colombia for cash, trade or other consideration.

Yemen - The Company's interest in the Republic of Yemen consists of a 30% working interest in Sabatain Block 20. Operator of the project is Occidental Yemen Sabatain, Inc. In the event of discovery of commercial quantities of oil, existing pipelines and production infrastructure will be utilized to allow for early production exports and timely cash flow. The project Opperator has assessed the Company for cash calls in the amount of $2,747,508 which were due as of March 31, 2003. As of the balance sheet date, the Company was subject to litigation for alleged default of the joint operating agreement.

NOTE 3. Non-monetary Stock Transactions

Included in the Company's consolidated statement of operations for the three month periods ended March 31, 2003 and 2002, were expenses that were paid with Company stock. The shares and amounts were all established under the sole financial management of John W. Adair and Jalal Alghani, the previous Directors and Officers of the Corporation. Stock issued in lieu of cash is summarized as follows for the three month periods ended March 31, 2003 and 2002:

	2003		2002
Nature of Transaction	Shares	Amount	Shares	Amount
Salaries	-	-	5,553,594	$187,667
Other costs and expenses	-	-	558,086	$ 27,923
Total	-	-	6,111,680	$ 215,590

NOTE 4. Revenues

During the first quarter of 2003 the Company received consulting fees of $20,000 and royalty income of $499.

NOTE 5. Commitments and Contingencies

Exploration of Block 20 in the Republic of Yemen

On April 3, 2000, Adair Yemen Exploration Limited (Adair Yemen), a wholly owned subsidiary of the Company, together with Saba Yemen Oil Company Limited (Saba), Occidental Yemen Sabatain, Inc. (Occidental), The Yemen Company For Investment In Oil and Minerals (YICOM), and the Ministry of Oil and Mineral Resources (MOMR), entered into a Production Sharing Agreement (PSA) in the Sabatain Area, Block 20, in the Marib-Shabwa Governorates, Republic of Yemen. On September 2, 2000, the President of Yemen signed decree number 21, which passes into law the Production Sharing Agreement for Block 20. This decree establishes the effective date for the Participation Agreement among Adair Yemen, Saba, and Occidental (the Parties).

The Participation Agreement was signed by the Parties on March 31,2000. The agreement provides for the general financial arrangements among the parties with regard to the PSA and other joint management and operating agreements. The basic financial provisions of all the agreements are discussed below. The PSA provides for a signature bonus in the amount of $400,000 which was secured by a irrevocable letter of credit to the MOMR and to be drawn on the effective date. The Parties effected the letter of credit on May 3, 2000, through the Yemen Commercial Bank. The PSA further provides for the annual payment of a training, institutional, and social bonus to be paid annually over the six year exploration period: the first being payable on the effective date. The PSA requires a basic work program in the amount of $8,300,000 to be secured by an irrevocable letter of credit with the MOMR within 30 days of the effective date. The Parties are to provide for the instrument in proportion to their respective interests (Occidental 50%, Adair Yemen 30%, and Saba 20%) except for the first $4,000,000 cost of 3D seismic which is to be paid by Occidental.

Under the PSA, revenues derived from the commercial development of the project are in the form of royalties on a sliding percentage scale of from 3% on production under 25,000 barrels per day to 10% on production over 100,000 barrels per day. The royalties are further defined as "Cost Oil" and "Share Oil." Cost oil is up to 50% of the royalty to reimburse exploration, development, operating costs, pipeline tariffs, and general and administrative expense to the Parties. Share oil is payable to the Parties on a sliding scale of from 37% on production under 12,500 barrels per day to 18% on production over 100,000 barrels per day. The share oil is subject to a carried interest to YICOM of 5% born by the Parties in proportion to their interest. Adair Yemen, therefore, has a net revenue interest (NRI) of 28.5% under the PSA.

Legal Proceedings for the Period Ending March 31, 2003

The Company is a party to various claims and litigation. On August 5, 2002 at the Shareholders Meeting, the Company's shareholders elected an entirely new Board of Directors. On August 8, 2002 the new Board of Directors appointed a Litigation Committee who subsequently engaged independent legal counsel to review the merits and allegations of all current and pending litigation. This Litigation Committee was charged with the duty to ascertain what legal actions are in the best interest of the Company and to make recommendations to the Board of Directors for their review and implementation. Due to the circumstances of being named by prior management as a party adverse to the Company in some of this pending litigation, Mr. Boyce recused himself from the Litigation Committee and its deliberations. Although no assurances can be given, the Company believes that resolution of many of the outstanding legal problems can be reached by direct negotiation with the parties involved.

Occidental Yemen Sabtain, Inc. and Saba Yemen Oil CompanyLtd. v. Adair Yemen Exploration, Ltd. - Adair Yemen Exploration, Ltd. is a wholly owned subsidiary of the Company. It was named as the Respondent in the matter of Occidental Yemen Sabatain, Inc. ("Occidental") and Saba Yemen Oil Company Ltd. ("Saba") v. Adair Yemen Exploration, Ltd. ("Adair Yemen") in a Request for Arbitration filed with the International Chamber of Commerce in Paris, France on July 10, 2001. The Claimants, Occidental and Saba assert that Adair Yemen breached various agreements to which Occidental, Saba and Adair Yemen are parties and are requesting that Adair Yemen forfeit and reassign their 30% working interest in the project to Occidental and Saba. Immediately following the election of a new Board of Directors for the Company on August 5, 2002, it was discovered that the legal counsel representing the Company in this proceeding (both in Houston and in Paris, France) had resigned from the case due to non-payment of fees. After being able to review the facts surrounding the case and the arguments presented previously on behalf of the Company, the Company's new management decided to change the course of the legal argument. On September 15, 2002, the Company submitted a legal brief to the Arbitration Tribunal outlining a legal position based in equity. In December 2002, new legal counsel was retained by the Company to prepare and argue the case at the Final Hearing before the Tribunal on January 22-23, 2003 in Paris. At the Final Hearing, on behalf of the Respondent, Mr. Richard G. Boyce presented a witness statement and was examined by the Claimants as well as by the Tribunal. Additionally, witnesses from the Claimants also presented statements and were examined by the Respondent's legal counsel and the Tribunal. During the hearing, legal agruments were presented orally by legal counsel for both Claimant and Respondent. Final written submissions were presented to the Tribunal on March 28, 2003. The Company is currently awaiting a final judgement and notice of award which is anticipated in June 2003.

The Company has vigorously defended this lawsuit involving this major asset of the Company. Depending on the terms of award, a judgement in favor of the Claimants (Occidental and Saba) might result in material damage to the Company.

Adair Exploration, Inc. and Adair Yemen Exploration, Ltd. v. Occidental Oil and Gas Corporation, Richard G. Boyce, Gene L. Ackerman, and David C. Crandall. - Adair's wholly owned subsidiaries, Adair Exploration, Inc. ("AEI") and Adair Yemen Exploration, Limited ("Adair Yemen") filed a lawsuit in a Texas State District Court in Houston, Texas against Occidental Oil and Gas Corporation ("Occidental"), and several former employees: Richard G. Boyce, Gene L. Ackerman, and David C. Crandall. The lawsuit alleges that breaches of fiduciary duties and usurpation of corporate opportunities as well as other civil wrongs were committed by the former employees. This lawsuit was removed to Federal Court in the Southern District of Texas by defendants and has been stayed pending the outcome of the arbitration proceedings. After careful review by the Litigation Committee established by the new Board of Directors, it was recommended to the Board that in light of ongoing settlement negotiations with Occidental it would not be in the best interest of the Company to pursue this lawsuit. On October 31, 2002 the Board of Directors authorized this case to be non-suited and dismissed with prejudice. A notice of non-suit was filed with the Court and the case was dismissed with prejudice.

Adair International Oil & Gas, Inc. vs. John W. Adair, Jalal Alghani and Vivian Quintero vs. Adair International Oil & Gas, Inc., etal - Cause No. 2001-63909, 55th District Court, Harris County, Texas. The Company's claims in the suit against John W. Adair ("Adair"), Jalal Alghani ("Alghani") and Vivian Quintero ("Quintero") involve allegations of fraud, conspiracy and breach of fiduciary duties owed to the Company by Mr. Adair and Mr. Alghani while they were officers and directors of the Company prior to their removal from the AIGI Board of Directors at the Company's annual shareholders meeting on August 5, 2002. The Company's claims in the suit against Quintero involve allegations of fraud, conspiracy and breach of fiduciary duties while she was employed by the Company as office manager and personal assistant to Adair when he was Chairman of the AIGI Board of Directors.

After the Company's claims were filed in the suit, Mr. Adair, Mr. Alghani and Ms. Quintero filed "counter claims" against the Company alleging standing to sue as shareholders of the Company. Their allegations against the Company and a long list of others include the following counts; "fraud, breaches of fiduciary duties, conspiracy to breach fiduciary duties, defamation, conspiracy to commit defamation, proxy fraud, conspiracy to commit proxy fraud, tortious interference, usurpation of corporate opportunities, vicarious liability/vice principal, uspecified actual and exemplary damages." These counter claims were filed against the Company on November 9, 2002. The Company has vigorously denied and is defending these allegations.

Mr. Adair, Mr. Alghani and Ms. Quintero have also filed the above described "counter claims" against Richard G. Boyce, Larry Swift, Gene Ackerman, David Crandall, Chris Dittmar, John A. Brush, Charles R. Close, and Shareholders Committed to Restoring Equity Group, Inc. ("SCORE"). The Company's Board of Directors have determined that it is in the best interest of the Company to assume the defense of and to indemnify these individuals and SCORE.

Although some discovery in this case was secured before the change of control of the Company occurred as a result of the Annual Shareholders Meeting on August 5, 2002, there has been no further formal discovery to date other than the Company and Mr. Boyce's responses to requested discovery. The Company will continue to vigorously pursue this complex case.

Briar Patch Partners, Ltd. v. Adair International Oil & Gas, Inc., Adair Exploration, Inc., Partners In Exploration, Inc., Partners In Exploration, L.L.C., and Richard G. Boyce. - The Company was named as the defendant in the matter of Briar Patch Partners, Ltd. v. Adair International Oil & Gas, Inc., Cause No. 01-06351, 95th Judicial District Court, Dallas County, Texas. Briar Patch Partners, the landlord holding the lease on the property in Dallas, Texas where Adair Exploration, Inc., "the lessee", formerly maintained an office, filed a lawsuit against the Company regarding the failure of the lessee to pay the rent as well as other related claims. On February 10, 2003 an Agreed Judgement was signed by all Parties in the total amount of $235,306.15 against the Defendants. This total amount included the principal amount remaining on the lease, plaintiff's attorney's fees and court costs. Additionally on February 10, 2003, a Settlement Agreement was signed by all Parties which outlines the terms of settlement and payment schedule. These documents have been filed by the Plaintiff with the court.

Adair International Oil & Gas, Inc. v. Richard G. Boyce and Larry Swift. - At the direction of previous management, the Company filed a lawsuit against Messrs. Boyce and Swift in the 55th Judicial District Court in Harris County, Texas, Cause No. 2001-63909. The Company sued Messrs. Boyce and Swift for defamation, tortuous interference, conversion, breach of fiduciary duty and conspiracy. Messrs. Boyce and Swift have filed answers denying the Company's allegations. Mr. Boyce filed a counterclaim claiming defamation by the Company. After careful review of the merits of this case by the Litigation Committee established by the new Board of Directors, it was recommended to the Board that this case be non-suited and dismissed with prejudice. A notice of non-suit was filed with the Court and the case was dismissed with prejudice.

L. Bruce Hinton and Billie Turmenne v. John W. Adair, Jalal Alghani, Vivian Llerena Quintero, Adel Alzamir and Alghani Investment Group, Inc. - This case was filed on January 30, 2002 in the 80th Judicial Court, Harris County, Texas (Cause No. 2002-03286). The suit alleged fraud by the Defendants who have each participated in a scheme and course of business that was operated to deliberately deceive the Plaintiffs by disseminating false information and misleading statements, including concealing material adverse facts about the Corporation. The plaintiffs dismissed this case by non-suit, so that the Company can bring suit on behalf of all shareholders against these defendants.

Adair International Oil & Gas, Inc. v. Richard G. Boyce - Under the previous management, the Company filed a lawsuit against Mr. Richard G. Boyce in the 55th Judicial District Court in Harris County, Texas, Cause No. 2002-37894. The Company sued Mr. Boyce alleging fraudulent misrepresentation of the value of Partners In Exploration, Inc. during the merger of that entity with the Company. After careful review of the merits of this case, the Litigation Committee established by the new Board of Directors, it was recommended to the Board that this case be non-suited and dismissed with prejudice. A notice of non-suit was filed with the Court and the case was dismissed with prejudice.

3000 Richmond Limited Partnership v. Superior Geophysical, Inc. - Adair International Oil & Gas, Inc., Superior Geophysical, Inc. ("Superior") John W. Adair, Jalal Alghani, Bill Wiseman, and Gary Tolar, Cause No. 2002-15641, in the 333rd Judicial District Court in Harris County, Texas were sued by Superior's landlord, 3000 Richmond Limited Partnership, as co-tenants for breach of the lease agreement and for back rent owed on Superior's leasehold. On May 14, 2003 an Agreed Judgement was signed by all Parties in the total amount of $439,115.02 against the Defendants. This total amount included the principal amount remaining on the lease, plaintiff's attorney's fees and court costs. Additionally on May 14, 2003, a Settlement Agreement was signed by all Parties which outlines the terms of settlement and payment schedule. These documents have been filed by the Plaintiff with the court.

Declaratory Judgment, Pace Global Energy Services, LLC v. Adair International Oil & Gas, Inc. - On December 26, 2001, John W. Adair signed a confessed promissory note in the amount of $281,458.21 stating that the Company owed that amount to Pace Global Energy Services, LLC ("Pace") in payment for certain consulting services related to the Teawaya Energy project and/or other power projects in the U.S. As a result of non payment by the Company on that promissory note, in February 2002, Pace sued Adair International Oil & Gas, Inc. in Federal District Court in the Eastern District of Virginia (Cause No. 02-133-A) for unpaid consulting service expenses. On September 9, 2002 Pace received a declaratory judgment against the Company in the amount of $281,485.21 payable with interest at nine (9%) per annum until paid plus all attorney's fees and other costs actually incurred for the collection of the judgment. Subsequently, the Company has signed a Settlement Agreement with Pace which outlines terms of payment acceptable to all parties.

Unrecorded Notes and Liabilities - The following claims were made against the Company by its prior officers and alleged employees:

Payee	Date	Amount	Description
John W. Adair	07/30/02	$ 133,517	Promissory Note
Jalal Alghani	07/30/02	$ 188,395	Promissory Note
Dr. Ike Igbo	01/17/02	$ 78,000	Salary and Bonus
		-----------
Total		$ 399,912

Defaulted Loan Agreements

The Company was in default of the following loan agreements as of December 31, 2002.

Creditor	Status of Note	Amount
JP Morgan Chase	Default	$ 50,000
JP Morgan Chase	Default	94,428
Pace Global Note*	Default	281,458
Total		$ 425,886

* This is a confessed judgment promissory note dated December 26,2001 held by Pace Global Energy Services, LLC. However, this note is the subject of a Settlement Agreement, which outlines terms of repayment acceptable to all parties, see note on page 41.

Lease Commitments

The Company leases property and equipment under various operating leases. Aggregate minimum lease payments under existing non-capitalized long-term leases are estimated to be $220,867, $221,331, $200,031, and $127,075 for the years 2003-2006, respectively.

Concentrations

The Company maintains a cash balance at a financial institution. At certain times, the Company's cash balances exceed the federally insured amounts. The Company has not experienced losses relating to its cash.

NOTE 6 - SUPPLEMENTARY OIL AND GAS INFORMATION (UNAUDITED)

	Yemen	Colombia	Total
Oil and Gas Properties	1,394,444	3,000,000	4,394,444
Geophysical Data and other property	3,400,000	--	3,400,000
Capitalized Costs	3,168,926	--	3,168,926
Less accumulated depletion and depreciation	--	--	--
Less impairment loss	(2,747,508)	--	(2,747,508)
	------------	------------	------------
Total	$ 5,215,862	$ 3,000,000	$ 8,215,862
	=========	=========	========

ADAIR INTERNATIONAL OIL AND GAS, INC. AND SUBSIDIARIES
March 31, 2003

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report, including Management's Discussion and Analysis of Financial Condition and Results of Operations, includes certain forward-looking statements. The forward-looking statements reflect the Company's expectations, objectives and goals with respect to future events and financial performance. They are based on assumptions and estimates, which the Company believes are reasonable. However, actual results could differ materially from anticipated results. Important factors that may impact actual results include, but are not limited to, commodity prices, political developments, market and economic conditions, industry competition, the weather, changes in financial markets and changing legislation and regulations. The forward-looking statements contained in this report are intended to qualify for the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended. The notes to Consolidated Financial Statements sections contain information that is pertinent to the following analysis.

GENERAL COMMENTS ON COMPANY BUSINESS PLAN

In a proxy statement filed with the SEC and dated May 31, 2002 the SCORE Group disclosed a Business Plan for the Company based on publicly available information that had been released by the former management. Since the Annual Shareholder's Meeting on August 5, 2002, the Company's new management has been focused on resolving the myriad of short-term issues that faced the Company. The Company's Officers and Directors have also established good corporate governance and full disclosure of information surrounding the key factors that effect investment decisions. However not all of management's efforts have gone into those endeavors at the expense of implementing that stated Business Plan on behalf of the shareholders. As market conditions change, the Company's management will adapt to the dynamics of the market while continuing to follow the general outline of that stated Business Plan as directed by the Board of Directors. The following discussions are intended to inform shareholders regarding the status of each of the identified projects that the Company has previously announced.

Financing

Financing plans announced in the proxy statement utilizing the Company's interest in the Teawaya Energy Center as collateral for a short-term loan of up to $5,000,000 are not viable in today's market. In addition due to the external circumstances discussed more fully below, the Teawaya Energy Center project may not be built. These facts preclude any further discussion of financing based on this project.

Discussions have been underway with investment entities since August 2002 to secure the financing necessary to support the Yemen Block 20 project. Contingent on an award in favor of the Company by the Arbitration Tribunal regarding the Yemen Block 20 interest, the Company has negotiated an agreement with an investor to secure and support this project. This commitment is subject to the investor's due diligence, terms of the final award and the state of world affairs at the time of possible closing. There is no assurance that the Company will be able to secure this financing. Due to the uncertainties of the negotiation process, the material terms of such financing arrangements ultimately might not be acceptable to the Company's Board of Directors, the financing entities, Occidental or Saba or the Yemen Government therefore, there is a risk that this financing may not be obtained. Depending on the terms of award, a judgment in favor of the Claimants (Occidental and Saba) might result in material damage to the Company.

Producing Property Acquisition - Gulf of Mexico

As previously announced in the proxy statement, negotiations have continued between the Company and a privately held oil company in Houston, Texas that operates a gas-producing platform in the Gulf of Mexico. These discussions have focused on several strategies utilizing a portion of this property to revitalize the Company. Initial discussions have centered on the concept of the Company earning an equity interest in the property. The cash flow generated from this investment is projected to be sufficient to cover ongoing overhead costs and to provide working capital for the Company. Due to the uncertainties of the negotiation process, the final terms of this project ultimately might not be acceptable to the Company's Board of Directors, and therefore, there is risk that this project may not be obtained.

Power Development

The Company intends to pursue the development of power projects in both domestic and international venues. The business model for this industry is currently undergoing a transformation. The Company's new management is currently investigating several new opportunities in addition to those discussed below and has identified qualified individuals that will be hired at an appropriate time to identify and pursue power development projects.

Teawaya Energy Center, Southern California - The Company and Calpine Corporation of San Jose, California signed a Site Development Agreement in July 1999, with respect to a power plant site located on the Torres Martinez Indian reservation which is near Palm Springs, California. Located half way between the major population centers of Los Angeles and San Diego, the $275 million dollar 600 megawatt Teawaya Energy Center (TEC) was to be sited on reservation land belonging to the Torres Martinez Desert Cahuilla Indians.

Since the signing of the Site Development Agreement, power industries as a whole and the California markets specifically have suffered tremendous turmoil and change. In the wake of the Enron Corp. scandal, the power shortages experienced in California during the summer of 2001 now appear to be more contrived than real. In addition, over the last year, the finances and share prices of many large power companies have drastically declined. These factors and other negative trends in the overall economy, have profoundly affected investor confidence in all aspects of the power industry. The net effect of these outside factors has placed the Teawaya Energy Center project on indefinite hold. While many of the essential elements of the project are now permitted and Calpine maintains a substantial investment in the Teawaya site including the costs of pre-construction engineering, permitting, purchase of right of way and air quality credits, Calpine has informed the Company that they do not intend to pursue the development of this site.

The Company continues to believe that the long-term need for new power plants will be significant, particularly as the national economy recovers and older, less efficient generating assets need to be replaced. Currently, the Company does not anticipate any near term positive economic impact from this project.

Pointe Noire Gas Feasibility Study, Republic of Congo - The Company and the Republic of Congo government signed a Feasibility Study for the Creation of an Industrial Free Trade Zone at Point Noire, Republic of Congo. The Company's new management has discussed this project personally with the President of the Republic of Congo and as a result is very committed and excited about bringing this project to completion. A detailed work program has already been developed and technical experts to assist with the project have been identified, contracted and are currently working on the initial draft of the study for presentation to the Congolese government.

Oil and Gas Exploration

Block 20, Republic of Yemen - In April 2000, Adair Yemen, Occidental, Saba and YICOM signed a Production Sharing Agreement with the Ministry of Oil in Yemen for exploration rights in Yemen Block 20. Since that time an aggressive exploration program has been conducted by the Operator of the project, first by Adair Yemen and then by Occidental, the current Operator of the project. Approximately 1,825 kilometers of existing 2D seismic data was reprocessed and approximately 550 square kilometers of new 3D seismic was acquired, processed and interpreted in 2001 and 2002. As of March 31, 2003, Occidental as operator of the block has drilled three (3) dry exploratory wells on the block. Due to the conditions of financial default (see discussion below) Adair Yemen has not had access to the 3D seismic data nor did the Company have any technical input into the selection of these drilling locations. It is the considered technical opinion of the Company that none of these three wells tested any of the seven prospects identified and discussed in ITEM 2. Therefore the Company still believes that the Yemen Block 20 project is viable, prospective and is well worth the effort required to reinstate the working interest.

Block 20 Financial Default - Owing to the fact that a Letter of Credit, required by Yemen Block 20 project agreements was not posted in a timely fashion by the Company while under the sole financial management of John W. Adair and Jalal Alghani, the previous Directors and Officers of the Company, Adair Yemen suffered financial default on their previously agreed commitments to the project. Further, as a result of the financial default, the Company currently stands to lose its entire 30% participating interest in the project. This participating interest is now the subject of a lawsuit filed by project partners Occidental and Saba which are seeking reassignment of Adair Yemen's interest in the project to the other two parties as a result of the Company's financial default under terms of the partnership's operating agreement, the Joint Management Agreement ("JMA"). As is required by the JMA, this lawsuit was filed with the International Chamber of Commerce ("ICC") in Paris, France for settlement by arbitration.

Block 20 Legal Proceedings - Immediately following the election of a new Board of Directors for the Company on August 5, 2002, it was discovered that the legal counsel representing the Company in this proceeding (both in Houston and in Paris, France) had resigned from the case due to non-payment of fees. After being able to review the facts surrounding the case and the arguments presented previously on behalf of the Company, the Company's new management decided to change the course of the legal argument. On September 15, 2002, the Company submitted a legal brief to the Arbitration Tribunal outlining a legal position based in equity. The case relates to Claimants (Occidental and Saba) seeking an ICC award whereby Adair Yemen forfeits its 30% working interest in Block 20 in the Republic of Yemen. Respondent (Adair Yemen) argues that such forfeiture is illegal since it is based upon enforcement of a provision, which under English law is penal and therefore void; alternatively, under English laws of equity, the ICC tribunal should grant equitable relief subject to Adair Yemen paying all outstanding moneys owed in accordance with the JMA currently in force between the parties.

In December 2002, new legal counsel was retained by the Company to prepare and argue the case at the Final Hearing before the Tribunal on January 22-23, 2003 in Paris. At the Final Hearing, on behalf of the Respondent, Mr. Boyce presented a witness statement and was examined by the Claimants as well as by the Tribunal. Additionally, witnesses from the Claimants also presented statements and were examined by the Respondent's legal counsel and the Tribunal. During the hearing, legal agruments were presented orally by legal counsel for both Claimant and Respondent.

Final written submissions were presented to the Tribunal on March 28, 2003. The Company is currently awaiting a final judgement and notice of award which is anticipated in June 2003.

Contingent on an award in favor of the Company by the Arbitration Tribunal regarding the Yemen Block 20 interest, the Company has negotiated an agreement with an investor to secure and support this project. This commitment is subject to the investor's due diligence at the time of possible closing. There is no assurance that the Company will be able to secure this financing. Depending on the terms of award, a judgement in favor of the Claimants (Occidental and Saba) might result in material damage to the Company.

Chimichagua Prospect, Colombia - Immediately following the election of a new Board of Directors for the Company on August 5, 2002, it was discovered that while under the sole financial management of Mr. Adair and Mr. Alghani, the previous Directors and Officers of the Corporation, the minimum capital required ($30,000) for the registration and incorporation of Adair Colombia Oil & Gas, S.A. had not been funded. Furthermore, none of the general and administrative expenses for the Company had been paid. Consequently, the Colombia government was in the process of revoking the Company's Chimichagua concession. As of the end of this reporting period, the Company's new management has commenced negotiations with the Colombia national oil company, Ecopetrol, S.A., to legalize the Company in Colombia and present a program of activities for the concession. Due to the fact that former management long neglected this project and due to the difficult economics of commercializing this stranded gas reserve there is a risk that the process of negotiation will not lead to a successful conclusion. There is also a risk that financing will not be found to support this venture.

STATUS OF COMPANY UPON CHANGE OF MANAGEMENT

On August 5, 2002, Adair International Oil & Gas, Inc. (the "Company or "AIGI") held its Annual Shareholders Meeting. At this meeting, the AIGI shareholders, who had previously been properly noticed and informed by opposing proxy statements distributed by the Company's management and the SCORE Group, Inc. (" SCORE Group"), voted to select a new Board of Directors for the Company's current calendar year. Upon announcement of the results of the balloting, by the Inspector of Election at approximately 5:00 pm local time, the SCORE Group Nominees were duly elected by the Company's shareholders to each serve as Directors for a term of one year. Elected to serve were Mr. Richard G. Boyce, Mr. John A. Brush and Mr. Charles R. Close.

Immediately upon election, the Board of Directors met on August 5, 2002 and by resolution of the Board appointed Richard G. Boyce as Acting President and Chris A. Dittmar as Acting Chief Financial Officer and Corporate Secretary. These individuals were duly authorized to conduct the daily business of the corporation, subject to review and approval by the Board of all significant commitments and decisions. The Board issued specific instructions to the newly appointed acting officers to immediately secure all bank accounts, stock issuance and corporate financial records.

On August 6, 2002, Mr. Boyce, Mr. Dittmar and Mr. Larry Swift arrived at the Company's offices located at 3000 Richmond Avenue, Suite 100, Houston Texas 77098 to find that the landlord had changed the locks to the offices and was denying further access due to rent deficiencies. Upon negotiations with the landlord, an agreement was reached to allow the Company's new management team access to the property. An initial walk through of the offices with the landlord indicated that computers, files and certain company property had been removed from the premises. Photographic evidence of the status of the office was taken at that time. Upon additional investigation it was found that the corporate computer network was not accessible due to password control. A review of the video tape retrieved from the surveillance cameras operated by the building security revealed that most of the property missing had been removed from the building by the Company's previous management and employees beginning in the early afternoon of August 5, 2002 while the shareholders meeting was still underway. As recorded by the surveillance tapes, these activities continued until approximately 7:00 pm that same evening.

Upon discovery of this situation the Company's new management contacted John W. Adair's and Jalal Alghani's personal attorney, Mr. Paul D. Smith, of the firm of Axelrod, Smith and Kirshbaum, LLP and requested return of those items removed from the office that were believed to be the property of the Company. Mr. Smith informed the Company that his clients believed that everything taken was their personal property and that nothing belonging to the Company was missing. Mr. Adair and Mr. Alghani were immediately terminated with cause from their positions as executives with the Company, and all other employees were informed that the Company no longer required their services. Mr. Smith has since resigned as the attorney for the Company as well as for Mr. Adair and Mr. Alghani.

The Company's new management then completed a complete physical inventory of the office. Once access was gained to the corporate computer network, it was determined that digital financial accounting records and key stock issuance records had been deleted from the network server and that the backup tapes had been confiscated by previous management. In addition, many physical files had been removed from the office. During the ensuing weeks, the Company's new management has worked diligently to inform creditors and financial institutions of the Corporation. Additionally, Company bank accounts and stock issuance authorizations have been secured.

The decision was made to immediately downsize any and all overhead costs and to attempt to minimize outstanding liabilities due to numerous ongoing commitments made by previous management. Actions taken in this regard include:

Return of five (5) leased luxury automobiles to the leasing entity.
Return of leased office and residential furniture to the leasing entity.
Cancellation of John W. Adair's personal apartment lease in Houston.
Cancellation of any credit cards or charge accounts in the name of the Corporation or guaranteed by the Company.
Return of leased computer equipment to the leasing entity.
Return of leased telephone equipment to the leasing entity.
Moved the physical contents of the Company's offices at 3000 Richmond to a shared office location at 2425 Fountainview Drive, Suite 215, Houston, Texas 77057.
Vacated the Company's offices at 3000 Richmond to allow building management the opportunity to mitigate the Company's damages by re-leasing the office space.

Mr. Dittmar, in his capacity as Chief Financial Officer, reported the following key facts to the Board of Directors::

All of the Corporation's 150 million authorized Common Stock shares have been issued while under the sole financial management of John W. Adair and Jalal Alghani, the previous Directors and Officers of the Corporation. This leaves the Company without any means to raise capital through the sale of Common Stock until such time as additional shares are authorized by a vote of the shareholders.

John W. Adair and Jalal Alghani authorized and issued a total of 98,195,384 shares of Common Stock to individuals and entities valued at $13,732,033.22 with the Company receiving no direct monetary benefit from these individuals and entities.

SCHEDULE OF CERTAIN SHARES ISSUED AT FAIR MARKET VALUE RECONCILED TO DEPOSITS IN COMPANY ACCOUNTS

FOR THE PERIOD 1998 THROUGH 2002

Year	Shares	Fair Market Value (FMV)	Gross Deposits	AIGI Income	Deposits Net Of AIGI Income	Net Deposits Less FMV
1998	14,801,600	$ 2,851,346.50	$ 1,085,570.09	$ 38,453.00	$ 1,047,117.09	$ (1,804,229.41)

1999	12,726,256	1,200,382.61	642,564.33	33,008.00	609,556.33	(590,826.28)

2000*	5,542,108	4,644,102.52	1,754,544.06	1,250,312.00	504,232.06	(4,139,870.46)

2001	25,519,551	3,798,025.52	2,876,582.41	807,695.00	2,068,887.41	(1,729,138.11)

2002	39,605,869	1,238,176.07	855,697.99	--	855,697.99	(382,478.09)
	-------------	------------------	-----------------	-----------------	-----------------	-------------------
TOTALS	98,195,384	$ 13,732,033.22	$ 7,214,958.88	$ 2,129,468.00	$ 5,085,490.88	$ (8,646,542.34)
	=========	============	===========	===========	===========	============

*Note: during the year 2000 the company changed from a FYE 05/31/00 to a calendar year. Calendar year 2000 in this schedule includes the results from the first 7 months of FYE 05/31/00.

Identified Parties
Shares
FMV
Remarks
125% R-144 Stock Scam 2,655,610 $ 722,523.45
These shares were issued to John W. Adair and Jalal Alghani in exchange for
free trading shares.
AIG Inc. 55,657,822 6,980,359.62 Alghani Investment Group, Inc. (AIG, Inc.) is a Bahamian company created by
Jalal Alghani.
Gibca Investments, Inc. 19,105,869 573,176.07 Gibca Investments, Inc. is a Bahamian company created by Jalal Alghani.

Mohammed Y. I. Al-Akwa 10,300,000 1,069,000.00 Mohammed Y. I. Al-Akwa is Jalal Alghani's brother-in-law.

Adel Alzamir 10,476,083 4,386,974.08 Adel Alzamir is Jalal Alghani's cousin and President of AIG, Inc.
------------- ------------------
Totals 98,195,384 $ 13,732,033.22
========= ============

A total amount of $859.00 was found in the Company's checking accounts on August 6, 2002.
An inventory of the physical assets of the office indicated that property valued at $42,649 was missing and removed by previous management. Police reports have been filed with the Houston Police Department and are under review by their Burglary and Theft Division.
Digital and physical financial records of the Company had been deleted or removed from the office by previous management. However, the Company's new management has been able to restore the deleted computer files and is in the process of completing its investigation and compiling evidence supporting the U.S. Securities and Exchange Commission ("SEC") and Racketeer Influenced and Corrupt Organization ("RICO") Federal statute violations committed by the previous management.

RESULTS OF OPERATIONS

QUARTER ENDED MARCH 31, 2003 COMPARED TO QUARTER ENDED MARCH 31, 2002

In 2003 versus 2002, revenues increased from zero in 2002 to $20,499 in 2003. Revenue from Oil & Gas Royalties increased $499 due to proper accounting. Consulting fees increased from zero to $20,000. This increase is due to a short term consulting contract obtained by the Company.

Costs and Expenses - Expenses decreased from $617,418 during 2002 to $71,235 in 2003. A decrease of $546,183. There were several reasons for this decrease. General and Adminstrative expense decreased from $353,436 in 2002 to $44,926 in 2003. This decrease is due to new management's overall commitment to maintaining low overhead. Salaries and wages paid in stock decreased from $187,667 in 2003 to zero in 2003. This is due to a decrease in personnel expense instituted by the Company's new management. Other Expenses Paid in Stock decreased from $27,923 in 2002 to zero in 2003. This is due to new management's efforts to reduce overhead wherever possible. Depreciation and depletion expense decreased from $40,000 in 2002 to zero in 2003. This decrease is due to the abandonment of associated assets during 2002. Interest expense increased from $8,392 in 2002 to $26,939 in 2003. This increase of $18,547 is due primarily to interest on cash calls for Block 20 in Yemen left unpaid by previous management. Other Expenses decreased from $78,980 in 2002 to zero in 2003. This decrease is due to new management's overall commitment to maintaining low overhead.

The Board of Directors curtailed all activities of Superior Geophysical, Inc., Adair Exploration, Inc. and Adair Power, LLC to end the financial drain on the Company from these subsidiaries.

LIQUIDITY AND CAPITAL RESOURCES

The Company currently has nominal cash reserves, no cash flow from operations, and no ability to secure financing through the sale of securities without further shareholder authorization.

The Company has historically suffered from a working capital deficit and until the shareholders replaced the Board of Directors at the Annual Shareholders Meeting on August 5, 2002, the Company's previous management depended almost entirely on illegal activities involving the sale of common stock to obtain working capital. During the first eight months of 2002, previous management placed 52,919,705 shares of Common stock into the public market place. This unprecedented dilution of the existing shareholders of the Company resulted in all 150,000,000 of the Company's authorized shares of Common stock being issued. As a result of the previous Board's actions, the Company will not be able to raise capital through the sale of Common stock until such time as the shareholders authorize additional shares of stock at the next scheduled Annual Shareholders Meeting. It is the intent of new management to hold the next Annual Shareholders Meeting during the third quarter of 2003.

During the interim period, the Company's Directors and Officers have agreed to manage the company deferring cash compensation until such time as the financial condition of the Company improves.

The Company continues to investigate financing opportunities to support new projects through project based financing.

There are no assurances, however, that the Company can raise the necessary capital to enable it to continue to develop its Business Plan or that it will be able to generate sufficient revenue growth and improvements in working capital. As no revenue is currently generated from operations, the Company will have to raise additional working capital. No assurance can be given that funds will be available from any source when needed by the Company or, if available upon terms and conditions reasonably acceptable to the Company.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is a party to various claims and litigation. On August 5, 2002 at the Shareholders Meeting, the Company's shareholders elected an entirely new Board of Directors. On August 8, 2002 the new Board of Directors appointed a Litigation Committee who has engaged independent legal counsel to review the merits and allegations of all current and pending litigation. This Litigation Committee has been charged with the duty to ascertain what legal actions are in the best interest of the Company and to make recommendations to the Board of Directors for their review and implementation. Due to the circumstances of being named by prior management as a party adverse to the Company in some of this pending litigation, Mr. Richard G. Boyce recused himself from the Litigation Committee and its deliberations. Although no assurances can be given, the Company believes that resolution of many of the outstanding legal problems can be reached by direct negotiation with the parties involved.

Occidental Yemen Sabtain, Inc. and Saba Yemen Oil CompanyLtd. v. Adair Yemen Exploration, Ltd. - Adair Yemen Exploration, Ltd. is a wholly owned subsidiary of the Company. It was named as the Respondent in the matter of Occidental Yemen Sabatain, Inc. ("Occidental") and Saba Yemen Oil Company Ltd. ("Saba") v. Adair Yemen Exploration, Ltd. ("Adair Yemen") in a Request for Arbitration filed with the International Chamber of Commerce in Paris, France on July 10, 2001. The Claimants, Occidental and Saba are claiming that Adair Yemen breached various agreements to which Occidental, Saba and Adair Yemen are parties and are requesting that Adair Yemen forfeit and reassign their 30% working interest in the project to Occidental and Saba. Immediately following the election of a new Board of Directors for the Company on August 5, 2002, it was discovered that the legal counsel representing the Company in this proceeding (both in Houston and in Paris, France) had resigned from the case due to non-payment of fees. After being able to review the facts surrounding the case and the arguments presented on behalf of the Company, the Company's new management decided to change the course of the legal argument. On September 15, 2002, the Company submitted a legal brief to the Arbitration Tribunal outlining a legal position based in equity. In December 2002, new legal counsel was retained by the Company to prepare and argue the case at the Final Hearing before the Tribunal on January 22-23, 2003 in Paris. At the Final Hearing, on behalf of the Respondent, Mr. Richard G. Boyce presented a witness statement and was examined by the Claimants as well as by the Tribunal. Additionally, witnesses from the Claimants also presented statements and were examined by the Respondent's legal counsel and the Tribunal. During the hearing, legal agruments were presented orally by legal counsel for both Claimant and Respondent. Final written submissions were presented to the Tribunal on March 28, 2003. The Company is currently awaiting a final judgement and notice of award which is anticipated in June 2003.

Adair Exploration, Inc. and Adair Yemen Exploration, Ltd. v. Occidental Oil and Gas Corporation, Richard G. Boyce, Gene L. Ackerman, and David C. Crandall. - Adair's wholly owned subsidiaries, Adair Exploration, Inc. ("AEI") and Adair Yemen Exploration, Limited ("Adair Yemen") filed a lawsuit in a Texas State District Court in Houston, Texas against Occidental Oil and Gas Corporation ("Occidental"), and several former employees: Richard G. Boyce, Gene L. Ackerman, and David C. Crandall. The lawsuit alleges that breaches of fiduciary duties and usurpation of corporate opportunities as well as other civil wrongs were committed by the former employees. This lawsuit was removed to Federal Court in the Southern District of Texas by defendants and has been stayed pending the outcome of the arbitration proceedings. After careful review by the Litigation Committee established by the new Board of Directors, it was recommended to the Board that in light of ongoing settlement negotiations with Occidental it would not be in the best interest of the Company to pursue this lawsuit. On October 31, 2002 the Board of Directors authorized this case to be non-suited and dismissed with prejudice. A notice of non-suit was filed with the Court and the case was dismissed with prejudice.

Briar Patch Partners, Ltd. v. Adair International Oil & Gas, Inc., Adair Exploration, Inc., Partners In Exploration, Inc., Partners In Exploration, L.L.C., and Richard G. Boyce. - The Company was named as the defendant in the matter of Briar Patch Partners, Ltd. v. Adair International Oil & Gas, Inc., Cause No. 01-06351, 95th Judicial District Court, Dallas County, Texas. Briar Patch Partners, the landlord holding the lease on the property in Dallas, Texas where Adair Exploration, Inc., "the lessee", formerly maintained an office, has filed a lawsuit against the Company regarding the failure of the lessee to pay the rent as well as other related claims. On February 10, 2003 an Agreed Judgement was signed by all Parties in the total amount of $235,306.15 against the Defendants. This total amount included the principal amount remaining on the lease, plaintiff's attorney's fees and court costs. Additionally on February 10, 2003, a Settlement Agreement was signed by all Parties which outlines the terms of settlement and payment schedule. These documents have been filed by the Plaintiff with the court.

Adair International Oil & Gas, Inc. v. Richard G. Boyce and Larry Swift. - Under the previous management, the Company filed a lawsuit against Messrs. Boyce and Swift in the 55th Judicial District Court in Harris County, Texas, Cause No. 2001-63909. The Company sued Messrs. Boyce and Swift for defamation, tortuous interference, conversion, breach of fiduciary duty and conspiracy. Messrs. Boyce and Swift have filed answers denying the Company's allegations. Mr. Boyce filed a counterclaim claiming defamation by the Company. After careful review of the merits of this case by the Litigation Committee established by the new Board of Directors, it was recommended to the Board that this case be non-suited and dismissed with prejudice. A notice of non-suit was filed with the Court and the case was dismissed with prejudice.

L. Bruce Hinton and Billie Turmenne v. John W. Adair, Jalal Alghani, Vivian Llerena Quintero, Adel Alzamir and Alghani Investment Group, Inc. - This case was filed on January 30, 2002 in the 80th Judicial Court, Harris County, Texas (Cause No. 2002-03286). The suit alleged fraud by the Defendants who have each participated in a scheme and course of business that was operated to deliberately deceive the Plaintiffs by disseminating false information and misleading statements, including concealing material adverse facts about the Corporation. The plaintiffs dismissed this case by non-suit, so that the Company could bring suit on behalf of all shareholders against the defendants.

3000 Richmond Limited Partnership v. Superior Geophysical, Inc. - Adair International Oil & Gas, Inc., Superior Geophysical, Inc. ("Superior") John W. Adair, Jalal Alghani, Bill Wiseman, and Gary Tolar, Cause No. 2002-15641, in the 333rd Judicial District Court in Harris County, Texas were sued by Superior's landlord, 3000 Richmond Limited Partnership, as co-tenants for breach of the lease agreement and for back rent owed on Superior's leasehold. On May 14, 2003 an Agreed Judgement was signed by all Parties in the total amount of $439,115.02 against the Defendants. This total amount included the principal amount remaining on the lease, plaintiff's attorney's fees and court costs. Additionally on May 14, 2003, a Settlement Agreement was signed by all Parties which outlines the terms of settlement and payment schedule. These documents have been filed by the Plaintiff with the court.

ITEM 2. CHANGES IN SECURITIES
None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.

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

It is anticipated that during the third quarter of 2003, a Shareholders Meeting will be convened to seek shareholder approval for a name change of the Corporation. In addition the Company's shareholders may be requested to approve an increase in the authorized shares of common stock for the Corporation or some other change in the securities currently held and issued by the Company. At that meeting, the Company's shareholders may also be requested to approve additional Directors to serve on the Board of Directors.

The Shareholders Meeting will be noticed to all shareholders and a proxy statement will be distributed.

ITEM 5. OTHER INFORMATION

Officer Compensation - At a special called meeting of the Board of Directors held August 13, 2002 the Board approved compensation for several individuals who have assumed roles of management for the Company. As a Board member, Mr. Boyce recused himself from these deliberations to avoid a potential conflict of interest. Compensation was discussed and set for Mr. Richard G. Boyce as acting President, Mr. Chris A. Dittmar as acting Chief Financial Officer and Corporate Secretary. The salaries are commensurate with the amounts paid to the previous management. Further, the Board stipulated, again with Mr. Boyce recusing himself in his capacity as a Director, that the Company shall only owe these funds to these individuals in the event that the Corporation either receives funds or regains the ability to issue stock in lieu of cash. Finally, the Board stipulated these individuals will have the option to determine what portion of their compensation they are to receive in cash or stock. If the option is chosen to receive stock in lieu of cash, the conversion rate shall be the average monthly closing price per month of employment.

Richard G. Boyce	48	Acting President	$240,000
Chris A. Dittmar	55	Acting Chief Financial Officer and Corporate Secretary	$240,000

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

CERTIFICATIONS

I, Richard G. Boyce, certify that:

1. This report fully complies with the requirements of Section 13(a) or a5(d) of the Exchange Act;

and

2. the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the issuer.

/s/ Richard G. Boyce

President and Director

May 15, 2003

I, Chris A. Dittmar, certify that:

1. This report fully complies with the requirements of Section 13(a) or a5(d) of the Exchange Act;

and

2. the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the issuer.

/s/ Chris A. Dittmar

Chief Financial Officer

May 15, 2003

The following table details the events reported in the first quarter of 2003 by the Company on Form 8-K. Each filing is incorporated herein by reference.

Filing Date	Description
3-28-2003	Change in the Registrant's Certifying Accountant

ADAIR INTERNATIONAL OIL AND GAS, INC. AND SUBSIDIARIES
FORM 10-QSB
March 31, 2003

SIGNATURES
In accordance with the requirements of Section 13 of 15(d) of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on May 15, 2003.

ADAIR INTERNATIONAL OIL AND GAS, INC.

/s/ Richard G. Boyce
------------------------------
Richard G. Boyce
President and Director.

/s/ Chris A. Dittmar

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

Chris A. Dittmar

Chief Financial Officer and Corporate Secretary

CERTIFICATIONS

I, Richard G. Boyce, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Adair international Oil & Gas, Inc.;

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 quarterly 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
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 quarterly 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: 05/15/03

/s/ Richard G. Boyce

President and Director

I, Chris A. Dittmar, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Adair international Oil & Gas, Inc.;

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;

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: 05/15/03

/s/ Chris A. Dittmar

Chief Financial Officer and Corporate Secretary

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Legalese
Litigous
Readability	7th grade Avg

Endevco (ENDE) Inactive 10-Q2003 Q1 Quarterly report

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