FORM 10-QSB

                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D. C. 2054

        (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                      SECURITIES EXCHANGE ACT OF 1934
              For the quarterly period ended December 31, 1996
                                              ------------------

                                     OR

      (   ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                      SECURITIES EXCHANGE ACT OF 1934
          For the transition period from __________ to ___________

                       Commission file number 0-11732
                                             --------
                     APPALACHIAN OIL & GAS COMPANY, INC
           (Exact name of registrant as specified in its charter)
           ------------------------------------------------------

      UTAH                                        87-0382031
     ------                                       ------------
(State or other jurisdiction of                   (IRS Employer
Incorporation or organization)                     identification No.)

701 Second Avenue North, Nashville, TN              37201 
--------------------------------------             -------
(Address of principal executive offices)          (Zip Code)

Registrants telephone number, including area code (615) 254-4789
                                                  ---------------


Former name, former address and former fiscal year, if changed since last
report.

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or such shorter period that the
registrant was required to file such report(s), and (2) has been subject to
such filing requirements for the past 90 days.

Yes     X           No
     ------              -------

The total number of shares outstanding as of  December 31, 1996 was
3,135,795.                                   -------------------
----------
<PAGE>
                    APPALACHIAN OIL & GAS COMPANY, INC.
                                 Form 10-Q
                     Six Months Ended December 31, 1996

<TABLE>
<CAPTION>
                                   INDEX
                                   -----
                                                                      Page 
                                                                     ------
<S>                                                                <C>     
PART I      Financial Information
     
     ITEM 1 Financial Statements
     
        Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . 2 

        Statements of Operations . . . . . . . . . . . . . . . . . . . 4 

        Statements of Cash Flows . . . . . . . . . . . . . . . . . . . 5 

        Note to Financial Statements . . . . . . . . . . . . . . . . . 6 

        Management's Discussion and Analysis of
        the Statement of Income. . . . . . . . . . . . . . . . . . . . 7 

PART II Other Information

     ITEM 1 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . 8 

     ITEM 2 Changes in Securities. . . . . . . . . . . . . . . . . . . 8 

     ITEM 3 Defaults upon Senior Securities. . . . . . . . . . . . . . 8 

     ITEM 4 Submission of Matters to a Vote of Security Holders. . . . 8 

     ITEM 5  Other Information . . . . . . . . . . . . . . . . . . . . 8 

     ITEM 6 Exhibits and Reports on Form 8-K . . . . . . . . . . . . . 8 


     SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 

</TABLE>
<PAGE>
                       Appalachian Oil & Gas Company, Inc.
                                 Balance Sheets
                        December 31, 1996 & June 30, 1996
<TABLE>
<CAPTION>
                                                          December           June 
                                                          31, 1996       30, 1996 
                                                       ------------   ------------
<S>                                                    <C>            <C>
Current Assets
--------------
  Cash & Cash Equivalents                              $    78,078    $   104,123 
  Accounts Receivable - Trade                                7,862         30,437 
                                                       ------------   ------------
      Total Current Assets                                  85,940        134,560 

Property & Equipment
--------------------
  Oil & Gas Properties                                     140,184        140,184 
  Other Property & Equipment                               326,574        326,574 
                                                       ------------   ------------
      Total Property & Equipment                           466,758        466,758 

  Less Accumulated Depreciation, Depletion
   & Amortization                                          322,209        313,727 
                                                       ------------   ------------
      Net Property & Equipment                             144,549        153,031 
                                                       ============   ============

</TABLE> 

                           See Accompanying Notes
<PAGE>
                      Appalachian Oil & Gas Company, Inc.
                           Balance Sheets -Continued-
                       December 31, 1996 & June 30, 1996

<TABLE>
<CAPTION>
                                                          December           June 
                                                          31, 1996       30, 1996 
                                                       ------------   ------------
<S>                                                    <C>            <C>
Current Liabilities
-------------------
  Accounts Payable:
   Trade                                               $       -0-    $    12,345 
  Accrued Expenses                                             500          2,000 
                                                       ------------   ------------
      Total Current Liabilities                                500         14,345 

Commitments & Contingencies
---------------------------
  Stockholders' Equity
  Common Stock, Par Value $0.01 Per Share, 
   100,000,000 Shares Authorized, 3,135,795 
   Shares Issued & Outstanding                              31,358         31,358 
  Additional Paid In Capital                             1,814,342      1,814,342 
  Retained Deficit                                     ( 1,615,711)   ( 1,572,454)
                                                       ------------   ------------
      Total Stockholders' Equity                           229,989        273,246 
                                                       ------------   ------------
      Total Liabilities & Stockholders' Equity         $   230,489    $   287,591 
                                                       ============   ============

</TABLE>

                             See Accompanying Notes

<PAGE>
                      Appalachian Oil & Gas Company, Inc.,
                Consolidated Statement of Operations (Unaudited)
            For the Six Month Periods Ended December 31, 1996 & 1995
           and the Three Month Periods Ended December 31, 1996 & 1995

<TABLE>
<CAPTION>
                                Six Month Periods Ended  Three Month Periods Ended 
                                 December      December      December     December 
                                 31, 1996      31, 1995      31, 1996     31, 1995 
                              ------------  ------------  ------------ ------------
<S>                           <C>          <C>           <C>           <C>
Revenues
--------
  Oil & Gas Sales             $    19,438  $    115,707  $      8,809  $   215,385 
  Other                             2,255            35         1,157        1,752 
                              ------------  ------------  ------------ ------------
       Total Revenues              21,693       115,742         9,966      217,137 
                              ------------  ------------  ------------ ------------
Costs & Expenses
----------------
  Other Operating Expenses          8,184        23,661         5,176       61,316 
  Depreciation, Depletion & 
     Amortization                   8,482        17,362         4,241       34,724 
  Interest                            -0-         4,018           -0-        9,502 
  General & Administrative         48,284        25,644        28,943       71,581 
                              ------------  ------------  ------------ ------------
       Total Costs &
        Expenses                   64,950        70,685        38,360      177,123 
                              ------------  ------------  ------------ ------------
       Net Income (Loss)      ($   43,257) $     45,057  ($    28,392) $    40,014 
                              ============  ============  ============ ============

       Earnings (Loss) Per 
       Share                  $       .00  $        .01  $        .00  $      0.01 

</TABLE>

                                See Accompanying Notes

<PAGE>
                 Appalachian Oil & Gas Company, Inc., and Subsidiary
                  Consolidated Statement of Cash Flows (Unaudited)
               For the Six Month Periods Ended December 31, 1996 & 1995

<TABLE>
<CAPTION>
                                                               Six-Month Periods  
                                                               Ended December 31, 
                                                               1996          1995 
                                                        ------------  ------------
<S>                                                     <C>           <C>
Cash Flows from Operating Activities
------------------------------------
  Net Income (Loss)                                     ($   43,257)  $    40,014 
  Adjustments to Reconcile Net Income (Loss) to 
     Net Cash Provided by Operating Activities:
       Depreciation, Depletion & Amortization                 8,482        34,724 
       Rounding                                                   0             1 
  Changes in Operating Assets & Liabilities:
     (Increase) Decrease in Accounts Receivable              22,575   (    52,771)
     Increase (Decrease) in Accounts Payable            (    12,345)  (    72,296)
     Increase (Decrease) in Accrued Expenses            (     1,500)  (     1,119)
                                                        ------------  ------------
       Net Cash Provided by Operating Activities        (    26,045)  (    51,447)
                                                        ------------  ------------
Cash Flows from Investing Activities
------------------------------------
  Purchases of Property & Equipment                             -0-   (    29,391)
                                                        ------------  ------------
       Net Cash Used in Operating Activities                    -0-   (    29,391)
                                                        ------------  ------------
Cash Flows from Financing Activities
------------------------------------
  Increase in Note Payable Stockholder                          -0-        37,700 
  Proceeds from Notes Payable                                   -0-   (     2,628)
  Proceeds from Long-Term Debt                                  -0-   (    12,371)
  Increase in Cash in Bank-Overdraft                            -0-        45,535 
                                                        ------------  ------------
       Net Cash Used in Financing Activities                    -0-        68,236 
                                                        ------------  ------------
       Increase (Decrease) in Cash & 
       Cash Equivalents                                 (    26,045)  (    12,602)

       Cash & Cash Equivalents,
       Beginning of Period                                  104,123        12,602 
                                                        ------------  ------------
       Cash & Cash Equivalents,
       End of Period                                    $    78,078   $       -0- 
                                                        ============  ============

</TABLE>

                             See Accompanying Notes

<PAGE>
                    Appalachian Oil & Gas Company, Inc.
                        Note to Financial Statements


NOTE #1 - Statement Preparation
-------------------------------

The Company has prepared the accompanying financial statements with interim
financial reporting requirements promulgated by the Securities & Exchange
Commission.  The information furnished reflects all adjustments which are,
in the opinion of management, necessary for a fair presentation of
financial position and results of operations. 

The financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the
Company's December 31, 1996 10-K report. 

<PAGE>
                    MANAGEMENT'S DISCUSSION AND ANALYSIS


Liquidity and Capital Resources
-------------------------------

On February 1, 1996, the Company sold 60.00% of all its rights, title and
interest to its oil leases and related equipment to K. Petroleum, Inc., an
Ohio Corporation.  It is the Company's intention to sell the remaining
40.00% of these assets as well. 

The Company no longer operates or directs the operations of the oil and gas
wells and is dependent upon K-Petroleum, Inc., for its 40% of revenues
(royalties) from the well production.

The Company hopes to sell the remaining 40% and seeks to find a new
business activity.  The Company believes it has sufficient cash for the
next years operations.

Results of Operations
---------------------

The Company now has limited cash flows from its 40% interest in the oil and
gas wells.  It seeks to obtain from K-Petroleum, Inc., production report to
explain the dramatic decrease in gross revenues.  To date K-Petroleum,
Inc., has resisted releasing these reports.  The Company continues to use,
as frugally as possible, its cash reserves to meet the current expenses.





<PAGE>
                        PART II - OTHER INFORMATION
                        ----------------------------


Item 1    Legal Proceedings. . . . . . . . . . . . . . . . . . . . . .None 

Item 2    Changes in the Rights of the Company's Security Holders. . .None 

Item 3    Defaults by the Company on its Senior Securities . . . . . .None 

Item 4    Results of Votes of Security Holders . . . . . . . . . . . .None 

Item 5    Other Information. . . . . . . . . . . . . . . . . . . . . .None 

Item 6    Exhibits and Reports on Form 8-K . . . . . . . . . . . . . .None 
<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.


      /S/ April 21, 1999                     /S/ Raymond A. Connelly
Date: ------------------               By:  ------------------------
                                             Raymond A. Connelly