U. S. Securities and Exchange Commission
                          Washington D. C.  20549

                                FORM 10-KSB

(X)  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934
     For the fiscal year ended June 30, 1997
                               -------------

( )  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE 
     SECURITIES EXCHANGE ACT OF 1934
     For the transition period from ________________ to __________________

                        Commission File No. 0-11732
                                              -------

                    Appalachian Oil & Gas Company, Inc.
                    -----------------------------------
               (Name of Small Business Issuer in its Charter)

      UTAH                                                  87-0382031     
     ------                                                 ----------     
(State of Other Jurisdiction                        (IRS Employer I.D. No.)
 of incorporation or organization)

               701 Second Avenue North  Nashville, TN 37201
               ---------------------------------------------
             (Address of Small Business Issuer in its Charter)

                  Issuer's Telephone Number:(615) 254-4789
                                              --------------
       (Former Name or Former Address, if changed since last Report)

Securities Registered under Section 12(b) of the Exchange Act.
Securities Registered under Section 12(g) of the Exchange Act:

Check whether the Issuer(l) 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 Registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
     (l)  Yes    X    No           (2)  Yes   X    No       
               ------    ------              ------    ------
Check if there is no disclosure of delinquent files in response to Item 40S
of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10KSB. (  )

     State Issuer's revenues for its most recent fiscal year: 51,840 .

                                     1<PAGE>
     The Exhibit Index commences on page 11 .

State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the
average bid and asked prices of such stock, as of a specified date within
the past 60 days.

September 8 1998, $.03. There are approximately 8,135,795 shares of common
------------------------                        ----------
voting stock of the Registrant held by non-affiliates.

(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS) 

Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 12 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court.  
Yes    X       No      
     ------         ------

                 (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the Issuer's classes of
common equity, as of the latest practicable date: 8,135,795 Shares as of
September 8, 1998.

                    DOCUMENTS INCORPORATED BY REFERENCE
                    ------------------------------------

A description of "Documents Incorporated by Reference" is contained in Item
14 of this Report.

     Transitional Small Business Issuer Format   Yes        No    X   
                                                        ------    ------

                                     2
<PAGE>
                    APPALACHIAN OIL & GAS COMPANY, INC.
<TABLE>
<CAPTION>
                                        INDEX
<S>                                                              <C>          
                                                                   Page No. 
                                                                   --------- 
Part I
  Item 1.   Business . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

  Item 2.   Properties . . . . . . . . . . . . . . . . . . . . . . . . . . .7

  Item 3.   Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . .8

  Item 4.   Submission of Matters to a 
            Vote of Securities Holders . . . . . . . . . . . . . . . . . . .9

Part II
  Item 5.   Market for Registrant's Common 
            Equity and Related Matters . . . . . . . . . . . . . . . . . . 10

  Item 6.   Selected Financial Data. . . . . . . . . . . . . . . . . . . . 10

  Item 7.   Management's Discussion and Analysis of Financial
            Conditions and Results of Operations . . . . . . . . . . . . . 11

  Item 8.   Financial Statements and Supplementary Data. . . . . . . . . . 11

  Item 9.   Changes in and Disagreements with Accountants on 
            Accounting and Financial Disclosure. . . . . . . . . . . . . . 11
Part III
  Item 10.  Directors and Executive Officers of the Registrant . . . . . . 12

  Item 11.  Compensation . . . . . . . . . . . . . . . . . . . . . . . . . 13
            
  Item 12.  Security Ownership of Certain Beneficial Owners 
            and Management . . . . . . . . . . . . . . . . . . . . . . . . 13
                          
  Item 13.  Certain Relationships and Related Transactions . . . . . . . . 14

  Item 14.  Exhibits, Financial Statements, Schedules and 
            Reports on Form 10-K . . . . . . . . . . . . . . . . . . . . . 15

            Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
                                     3<PAGE>
                                   PART I
Item 1. Business
----------------
General
-------

In 1981, Dry Creek Exploration, Inc. ("Dry Creek"), the predecessor of
Appalachian Oil & Gas Company, Inc. (the "Company") was incorporated under
the laws of the State of Utah.  Its purpose was to engage in the
acquisition, exploration and development of mineral properties.  Dry Creek
sold 1,165,000 shares of its Common Stock to its promoters for $.00214 per
share, a total of $2,500, and 2,500,000 shares of its Common Stock to other
residents of the State of Utah at $.01 per share, an aggregate of $25,000. 
Dry Creek subsequently purchased from a non-affiliate ten (10) placer
claims, each consisting of one hundred sixty (160) acres located in Utah,
for $20,000.  Having substantially depleted the funds obtained by Dry Creek
from its public offering in the purchase of the mining claims, and unable
thereafter to raise the necessary additional capital for, or to interest
third parties in, the exploration of such claims, Dry Creek conducted no
substantive business activities until its acquisition of assets from
Ratliff Farms, Inc. ("Ratliff") and Universal Energy and Exploration, Inc.
("Universal").

During May 1982, those in control of Dry Creek accepted a proposal from the
management of Ratliff and Universal, two (2) Tennessee corporations under
the common control of James W. Ratliff, whereby their individually owned
shares were acquired by James W. Ratliff and his affiliates and James W.
Ratliff and persons affiliated with him were appointed to the Board of
Directors of Dry Creek.

On June 18, 1982, at a special meeting of Dry Creek's shareholders, and at
which, of the three million six hundred sixty-five thousand (3,665,000)
shares outstanding, two million forty-seven thousand (2,047,000) shares
were represented in person or by proxy, the following actions were
approved:  (i) the name of the Company was changed to Appalachian Oil & Gas
Company, Inc.; (ii) the authorized Common Stock was increased from Fifty
million (50,000,000) to one hundred million (100,000,000) shares; (iii) the
outstanding three million six hundred sixty-five thousand (3,665,000)
shares of Common Stock split on a two for one basis; (iv) individuals who
were officers, directors or affiliates of Ratliff and/or Universal were
elected to comprise the Company's Board of Directors; and, (v) the Company
was thereafter to purchase certain assets of Ratliff and Universal as
described in a brochure presented on behalf of the sellers, in exchange for
five million (5,000,000) shares of its Common Stock, on a post split basis,
subject to satisfying certain conditions relating to the audit of such
assets.

At the time of purchase, Ratliff was a dormant corporation and Universal
was engaged in the acquisition and development of oil and gas properties. 
The Company has continued some of the oil and gas operations so acquired.

From 1982 into late 1985 the Company's activities involved lease
acquisitions and the sale of interests in wells to be drilled on such
leases.  Income was principally derived from the difference between the
aggregate purchase price obtained for the interests in a well sold to
others and the actual cost to drill and complete the particular well.


                                     4<PAGE>

In December 1985, new directors were elected and they continued to drill
wells on developed leases.  The Company also sought to increase its sales
of natural gas from wells in which it held interests.

On August 15, 1989, a group of shareholders filed a complaint for mandamus
and other relief pursuant to section 13D of the Securities and Exchange
Commission regulations to review the books and records of the company and
conduct a shareholders' meeting.  This suit was filed in the Chancery Court
of Hamilton County, Tennessee.  The Court upheld the complaint and allowed
the plaintiffs to review the books and conduct a shareholders' meeting.  At
that time new Directors and Officers were elected by a meeting of the
Shareholders.  

The new management and directors exercised the best efforts to attempt to
rectify a situation of field wells that had gone into disrepair, wells that
were non-productive and field equipment that needed to be replaced or
repaired.  For the year 1991 the shareholders elected Raymond Connelly as
Chairman of the Board and Director, Russell Ratliff as officer and
Director, and Tyler Tait as Secretary and Director.

In 1992, the shareholders elected Raymond Connelly as Chairman of the Board
of the Corporation, John R. (Jack) Tait as President/CEO and Director and
his son, Tyler Tait Secretary and Director.

In September 1992, at the annual meeting of the shareholders of the
Company, Barry L. Fly was elected as a Director of the corporation.  In
January 1993, John R. Tait submitted his resignation as President and
Director of the Company, Tyler Tait submitted his resignation as
Director/Secretary-Treasurer of the Company, and Brent Anderson submitted
his resignation as vice-president of the Company.

In January 1993, upon the acceptance of the resignations of Messrs. Tait,
Tait and Anderson, the Board of Directors of the Company elected Mark S.
Moore and Brad L. Fly as Directors of the Corporation.

Barry L. Fly was elected Secretary of the corporation and Brad L. Fly was
elected as Treasurer of the corporation in January 1993.

In April 1993, William Goodwin accepted the position of President with the
Company.  Mr. Goodwin resigned as President on February 22, 1994.  On March
9, 1994,  Mark S. Moore was elected President and CEO of the corporation by
the Board of Directors.

The Company moved its corporate offices on June 1, 1994, to 240 Mayfield
Drive, Suite #106, Smyrna, Tennessee 37167.

The Company had successfully gained approval of a plan of reorganization
under Chapter 11 of the United States Bankruptcy Code in the United States
Bankruptcy Court for the Southern District of Kentucky.  The plan was
approved by the Court in March 1992.  In January 1993, the Company was able
to successfully satisfy all provisions of the confirmed plan by
successfully satisfying all unsecured debt according to the plan confirmed
by the Untied States Bankruptcy Court for the Southern District of
Kentucky.  The Corporation also successfully made payments of $25,000 per
month to the secured creditor, Valley Bank of Sweetwater, Tennessee on a
monthly basis according to the confirmed plan of reorganization by the
United States Bankruptcy Court.

                                     5<PAGE>

On February 1, 1996, the Company sold 60.0% of all of its rights, title and
interest in machinery and equipment, land, oil and gas well leaseholds to
K. Petroleum, Inc., an Ohio Corporation.  Further, on February 1, 1996, the
Company signed an operating agreement with K. Petroleum, Inc., (KPI), an
Ohio Corporation, whereby KPI, would be sole operator of the properties. 
KPI shall conduct and direct and have full control of all operations and
the properties.  Under terms of the operating agreement KPI shall operate
the properties as an independent contractor on behalf of the parties to the
Agreement.

Since the sale of 60% of the assets to KPI, the Company has conducted no
business other than to pay its creditors with the proceeds of the sale, and
collect the royalties from KPI. 

In December 1995, Mark S. Moore resigned as President and CEO of the
Company.  In January 1996, the Board of Directors appointed Mr. Raymond
Connelly as President and CEO of the Company.  

In January 1996, Mr. Brad L. Fly resigned as Treasurer and Member of the
Board of Directors of Appalachian Oil and Gas Company.

In March 1996, Mr. Brad Fly, was re-appointed to its Board of Directors of
the Company. 

In March 1996, the Board of Directors authorized the sale of an undivided
60% of its assets in Clay County, Kentucky for $450,000 to K Petroleum,
Inc.

In May 1996, Mr. Barry L. Fly, resigned as Secretary and Director and Mr.
Brad L. Fly resigned as a director.  The Board appointed Mr. Bill Jones,
Mr. Turner Snodgrass and Mr. Larry Cortin as Board Members. 

In 1996, the Company moved its offices from Smyrna, Tennessee to Nashville,
Tennessee.

In 1997, Mr. David Cooley was appointed to the Board of Directors.

For the past two years, the Company sales have been solely from royalties
from the production of Natural Gas.  Oil production has been negligible.

Business

Drilling Program
-----------------

During the period after the sale of the 60% interest in its oil and gas
wells, royalties from gas sales have declined and ceased in the fourth
fiscal quarter of the year ended June 30, 1997.  The Company has requested
production records from K Petroleum, but has not been able to obtain them
as of the date of this report.

Competition and Markets
-----------------------

                                     6<PAGE>

The competitive business conditions which affect the Company's Operating
Contractors competitive position in the industry include the price of gas
as determined by supply and demand, the availability of gas from the
Company and other competitors, weather conditions, and the extremely high
cost of the compression and transportation of the gas that is required of
the Operating Contractors because of the existing pressure conditions of
the Company's sole purchaser, Somerset Gas Services.

There are a large number of companies, partnerships and individuals engaged
in exploration, development and production of oil and gas properties in the
area including, but not limited to, Delta Gas, Wiser Oil Company, Petro
Flow, Incorporated, PXT, Incorporated, Southern Gas Company, Incorporated
and Midamco, Incorporated.  

Government Regulation
---------------------

Activities of the Company are regulated by several state and federal
agencies and by several state and federal acts.  The Company is regulated
by the Environmental Protection Agency, the United States Forestry Service,
the United States Department of Agriculture, United States Bureau of Land
Management, Kentucky Public Service Commission, Kentucky Environmental
Protection Agency- Division of Water, and the Kentucky Bureau of Mines and
Minerals.  Specific acts and statutes which govern the Company include the
Federal Environmental Protection Act, the Kentucky Environmental Protection
Act and Clean Water and Air Act, the Kentucky Public Service Commission Law
Annotated, Kentucky revised statutes Chapter 74, and the Commonwealth of
Kentucky, Department of Mines and Minerals permitting drilling operations
and the approval of drilled wells for production.

Government approval of the Company's Operating Agents operation is mandated
pursuant to the Kentucky Public Service Commission Law Annotated, Kentucky
revised statutes Chapter 74.

While existing and probable governmental regulations on the business are
time consuming, the Company believes its Operating Agents to be in
compliance with all regulations and that said compliance has not resulted
in any significant expense or competitive disadvantage to the Company.

Employees
---------

As of June 30, 1997, the Company employed one person,  Patsy Fly as Office
Manager.

Item 2. Properties
------------------
The following table sets forth the approximate gross and net acres of
undeveloped and developed oil and gas properties of the Company at June 30,
1997.  The Company has an undivided 40% interest in these wells.
<TABLE>
<CAPTION>
                                UNDEVELOPED
State          Gross Acres              Net Acres
--------       ------------             ----------
<S>           <C>                      <C>
Kentucky        1,100.00                   908.00
      TOTAL     1,100.00                   908.00


                                     7<PAGE>
                                 DEVELOPED
State          Gross Acres              Net Acres
--------       ------------             ----------
Kentucky         2,910                    2,206
    TOTAL        2,910                    2,206
</TABLE>

The Company's oil and gas interests are located  in Clay County in
Kentucky.

Oil and Gas Wells
-----------------

The table below shows the number of the Company's gross and net oil and gas
wells as of June 30, 1995.  Gross wells are the total number of wells in
which the Company owns a working interest, and net wells refer to the
average of the fractional net revenue interests owned by the Company in
gross wells.  Dry holes are not included.
<TABLE>
<CAPTION>
                 Total     Total            Oil                Gas
State            Gross     Net       Gross     Net       Gross   Net
--------         ------    -------   ------    -----     -----   ------
<S>              <C>       <C        <C>       <C>       <C>     <C>
Kentucky         30        57.245    0         .0000     30      57.245
</TABLE>

The Company has made no attempt to establish a drilling program.

Reserves
--------

Richard M. Russell and Associates, consulting engineers of Nashville,
Tennessee, rendered an engineering evaluation as of June 30, 1995, of the
Company's interest in gas and oil properties.  Since the Company is not
longer actively engaged as an operator of the wells no subsequent
evaluations have been made.

Present Activities
------------------

The Company has no oil and gas activities at this time.

Delivery Commitments
--------------------

The Company has no obligations to provide a fixed or returnable quantity of
oil or gas under existing contracts or agreements.

Item 3. Legal Proceedings
-------------------------

Federal Bankruptcy Court Filing
-------------------------------
On February 1, 1991, the Company filed for relief under Chapter 11 of the
Federal bankruptcy laws in the United States Bankruptcy Court for the
Eastern District of Kentucky.  The Court mandated that the Company
management continue operations as debtor-in-possession.  On March 25, 1992,
a plan of reorganization was approved by the Court and implemented by
Company management. 

                                     8<PAGE>
The plan required final payment to creditors on or before September 25,
1992.  Payment in full was made to all unsecured creditors in January 1993. 
Monthly payments were made on a timely basis according to the provisions of
the confirmed plan to Valley Bank in Sweetwater, Tennessee, the only
secured creditor, in the amount of $25,000 per month until March 11, 1993,
when the indebtedness to Sweetwater Bank was satisfied in full by the
payment of $172,348.49, as a result of the re-financing of the Promissory
Note to the bank with private individuals.  In 1994 the Company received a
court order from the United States Federal Bankruptcy Court in Kentucky
fully dismissing the bankruptcy case, in which the company was recognized
as having fully completed its obligations under the Chapter 11 Plan of
Reorganization and successfully received a full discharge of all
obligations pursuant to the bankruptcy.

Goldeneye, Inc. and Clyde Fuller vs. Appalachian Oil & Gas Company, Inc.
------------------------------------------------------------------------

The case was filed on August 17, 1993 seeking payment of royalties due to
the Leaseholder.  The Operator paid under the terms of the contract and
case was dismissed on March 14, 1994 in Clay County Circuit Court,
Kentucky.

State of Tennessee On the Relation of James E. Ables, et. al. vs. 
Appalachian Oil & Gas Company, Inc. and Clyde M. Fuller.
-----------------------------------------------------------------
      
On August 15, 1989 the plaintiffs (Section 13-D Group) filed a complaint
for mandamus and other relief to be allowed to review the books and records
of the Company and conduct a shareholder meeting, and the defendants (then
Company management) moved for an Order to Restrain plaintiffs from
conducting an adjourned shareholders meeting on December 20, 1989 in
Nashville, Tennessee.  The Defendants appealed the interlocutory denial of
the request for restraining order.  On December 14, 1989 the court ordered
then president Clyde M. Fuller, to post a personal bond for $10,000.00 and
should Court of Appeals deny defendant's application, the bond shall be
liable to pay plaintiffs (13-D Group) their reasonable expenses with
solicitation of proxies caused by staying shareholders meeting of December
10, 1989 together with the costs of the appeal.  The Chancery Court,
Hamilton County, Tennessee denied the appeal and taxed the costs to
defendant/Fuller.

On March 11, 1994, Clyde M. Fuller renewed his petition for release of his
personal bond of $10,000.00.  Plaintiffs (then 13-D Group, now present
Company Management has simultaneously moved the Court to fix damages caused
by defendant in attempting to reverse Order of the Court for the sum of
$24,176.47, or alternatively to the extent of Mr. Fuller's bond. 

On March 22, 1995, the Chancellor of the Chancery Court, Hamilton County
Court Tennessee ruled in favor of the petitioner, Clyde M. Fuller, and
released the personal bond of $10,000.00 to Mr. Fuller by court opinion.

Item 4. Submission of Matters to a Vote of Security Holders
-----------------------------------------------------------
The annual meeting of Shareholders of the Company was held on September 12,
1992.  In addition to the election of directors and the approval of
auditors, the Shareholders approved an amendment to the Articles of
Incorporation to increase the par value of the Common Stock of the Company
from one-tenth of a cent to one cent per share, with a resultant stock
split of one share of the new one cent par value common voting stock for
each ten shares of the old one-tenth of a cent par value common voting
stock issued and outstanding.  Of the shares present at the annual meeting,
36,108,596 voted for the amendment and 3,670 voted against it;  no shares
abstained.  The Board of Directors set the date for the reverse split as
November 20, 1993.
                                     9<PAGE>
On March 29, 1995 the annual meeting of the stockholders of Appalachian Oil
& Gas Company, Inc. was held at the company's corporate headquarters, 240
Mayfield Drive, Suite #106, Smyrna, Tennessee 37167.

In addition to the election of directors and the approval of auditors, the
Shareholders approved changing of the state of incorporation from Utah to
the State of Tennessee.  1,401,330 shares presented at the meeting voted in
favor of these items and 20 shares voted against.

                                  PART II

Item 5. Market for Registrant's Common Equity and Related Matters
-----------------------------------------------------------------

Market Price of Common Stock
----------------------------

The following over-the-counter market quotations reflect inter-dealer
prices, without retain markup, markdown or commission, and may not
necessarily represent actual transactions.  The range of reported high and
low bid quotations was derived from a variety of sources, including
quotations published by the National Quotation Bureau, Inc. and other 
over-the-counter broker/dealers.

<TABLE>
<CAPTION>
For the Quarter Ended              High      Low
----------------------             ----      ----
<S>                                <C>       <C>
September 30, 1996                 .18       .03
December 31, 1996                  .18       .03
March 31, 1997                     .12       .03
June 30, 1997                      .12       .03
</TABLE>

At June 30, 1997, the Company had approximately 750 shareholders of record.

Dividends
---------                 
There have been no dividends declared since the date of the Company's
organization and no dividends are contemplated to be paid in the
foreseeable future.  It will continue to be the Company's policy to expend
any earnings in developing its gas and oil business.

Item 6. Selected Financial Data
-------------------------------
<TABLE>
<CAPTION>

                        06/30/97     06/30/96    06/30/95     06/30/94    06/30/93
<S>                   <C>          <C>         <C>          <C>        <C>        
Revenues                 $48,723     $357,273    $539,395     $721,179  $1,069,097
Income (Loss) from 
 Continuing Operation 
 Per Common Share      ($82,909)    ($73,494)  ($197,130)     $121,727   ($30,771)
Income (Loss) from
 Continuing Operations    (0.03)      (0.02)       (0.05)         0.04     (0.001)
Total Assets            $190,875     $287,591    $633,533     $851,628    $790,615
Long-Term Obligations       $-0-         $-0-    $129,490     $166,242    $434,596
Cash Dividends Declare       N/A          N/A         N/A          N/A         N/A
</TABLE>


                                       10<PAGE>
The gain on sale of assets resulted from the sale of 60.0% of the assets to K.
Petroleum, Inc., (KPI).  The significant decrease in total assets also resulted
from that sale.
     
Item 7. Management's Discussion and Analysis of Financial Conditions and 
------------------------------------------------------------------------
Results of Operations
---------------------

The following discussion should be read in conjunction with the Financial
Statements and their related notes, which are included elsewhere in this
report.

Plan of Operation
-----------------

In 1996, the Company faced with re-occurring losses, decided to sell
controlling interest in its oil and gas wells and to sign an operations
agreement whereby it would receive royalty payments on revenues, if any, for
the 40% interest it owns in 30 gas wells it had heretofore operated.  The
prospect of rising costs and lower gas prices made the decision necessary. 

In 1997, the Operator reported declining production and in May 1998, reported
that production had ceased.  The Company currently seeks verification of those
reports.

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

The Company has decreased its expenses to a base minimum.  It currently has one
employee and rents office space and record storage space from its President. 
At June 30, 1998, the Company was receiving no revenues and was dependent upon
its offices for funds to pay its ongoing expenses.

Item 8. Financial Statements
----------------------------

Financial Statements begin on Page 15. 

Item 9. Changes in and Disagreements with Accountants on Accounting and
-----------------------------------------------------------------------
Financial Disclosure
--------------------
The Company did not re-appoint York, Neel & Company as its Certified Public
Accountant.  There were no disagreements with York, Neel & Company.

The Company appointed Schvaneveldt & Company to perform its certified audit and
assist in the other accounting requirements for the Company. 


                                       11<PAGE>
                                    PART III

Item 10. Directors and Executive Officers of the Registrant
-----------------------------------------------------------

The following list sets forth the names and ages of all Directors and Executive
Officers of the Company, indicates the position held by each and their length
of service.
<TABLE>
<CAPTION>
Name                          Position            Assumed Office
--------------------          ------------        -------------------
<S>                           <C>                 <C>
Raymond A. Connelly           Director/           April 1990 
Age 64                        Chairman            

Turner Snodgrass              Director            May 1996
Age 44

Bill Jones                    Director/           May 1996
Age 67                        Secretary/Treasurer

David Cooley                  Director            1997
Age 35
</TABLE>

The following is a brief resume of the business experience of the Company
Directors and Officers.

Raymond A. Connelly
-------------------

Mr. Connelly is a self-employed businessman.  He has been involved in limited
partnerships promoting oil and gas development since 1985.  He is President and
CEO of First Place Corporation and President of Central Paint and Body Shop in
Nashville, Tennessee.  He has been a Director and Officer of the Company since
1989.  Mr. Connelly, for the last five years, has had business experience in
the areas of oil and gas serving as an officer and director of Appalachian Oil
& Gas, Inc., in the repair of automobiles and sale of automobile parts.

Turner Snodgrass
----------------

Mr. Snodgrass has been a practicing attorney in Nashville, Tennessee since the
year 1980.  His practice is concentrated in general business law.  Mr.
Snodgrass has been an investor in gas and oil for several years.  For the past
four years he has been involved in the development of a 152-unit apartment
complex in Nashville.

Bill Jones
----------

Mr. Jones is a self-employed businessman.  He has been involved in the gas and
oil business since 1964.  He has been involved in numerous other businesses,
but basically gas and oil.  He started Easter Petroleum Corporation in 1969 and
sold his interest in 1991.


                                       12<PAGE>
David Cooley
------------

Mr. Cooley is currently a partner in the firm McNeely, Pigott and Fox, Public
Relations, LLC.  Prior to that Mr. Cooley served as Chief of Staff to Nashville
Mayor Phil Bredesen.  He has also served as Chief Executive to Tennessee Public
Service Commissioner Chairman, Frank Cockran.  Mr. Cooley spent 15 years as a
Political Consultant, mainly in the Southeast.

Item 11. Compensation
---------------------

Annual Compensation Paid to Officers and Directors for Fiscal Year
------------------------------------------------------------------
<TABLE>
<CAPTION>
                                          Other     Restricted Securities
Name &                                    Annual    Stock      Underlying  LTIP
Principal           Fiscal Salary  Bonus  Compen-   Awards     Options/    Payouts
Position            Year   ($)     ($)    sation($) ($)        SARS (#)    ($)
-----------------------------------------------------------------------------------
<S>                 <C>    <C>     <C>    <C>       <C>        <C>         <C>
-----------------------------------------------------------------------------------
Ray S. Connelly     1997   $-0-    $-0-   $-0-      $-0-       $-0-        $-0- 
-----------------------------------------------------------------------------------
Turner Snodgrass    1997   $-0-    $-0-   $-0-      $-0-       $-0-        $-0-
-----------------------------------------------------------------------------------
Bill Jones          1997   $-0-    $-0-   $-0-      $-0-       $-0-        $-0-
-----------------------------------------------------------------------------------
</TABLE>

Item 12. Security Ownership of Certain Beneficial Owners and Management
-----------------------------------------------------------------------

The following sets forth, as of June 30, 1997, certain information regarding
ownership of the common stock of the Company by (i) all persons known by the 
Company to be the beneficial owners of as much as five percent (5%) of the 
outstanding common stock of the company, (ii) each Officer and Director and 
(iii) all Officers and Directors as a group. 

<TABLE>
<CAPTION>
-----------------------------------------------------------------------
               Name & Address of                           Percent of
Title Class    Beneficial Owner            Amount          Class
-----------------------------------------------------------------------
<S>            <C>                         <C>             <C>
Common Stock   Raymond A. Connelly         744,066         17.7
               701 2nd Avenue No.
               Nashville, Tennessee (1)
-----------------------------------------------------------------------
Common Stock   Aymkone PTY, LTD            750,000         17.8
               Sydney, Australia
-----------------------------------------------------------------------
Common Stock   Industrial Resources, Inc.
               Knoxville, Tennessee        240,000          5.7
-----------------------------------------------------------------------
</TABLE>
The Company's directors and executive officer owned a total of 1,734,066 shares
of the Company's common stock.

(1) Includes 722,667 (17.1%) owned by First Place Corporation of Nashville,
Tennessee.  Mr. Connelly is President of First Place Corporation.
                                       13<PAGE>
Changes In Control
------------------

There are no arrangements contemplated at the present time which may result in
the change in control of the small business issuer.

Item 13. Certain Relationships and Related Transactions
-------------------------------------------------------
Raymond Connelly, Director and Chairman of the Board of the Company, is an
Officer and Shareholder of First Place Corporation.  First Place Corporation
owns 722,667 shares of Common Stock. 

There were no material transactions, or series of similar transactions, during
the Company's last three calendar years, or any currently proposed
transactions, or series of similar transactions, to which the Company or any of
its subsidiaries was or is to be a party, in which the amount involved exceeded
$60,000, and in which any promoter or founder or any member of the immediate
family of any of the foregoing persons, had an interest.

There were no reports required by Section 16 (a) that were not filed on a
timely basis.




                                       14<PAGE>



                      Appalachian Oil & Gas Company, Inc.

                              Financial Statements

                              June 30, 1997 & 1996



                                       15<PAGE>
/Letterhead/

                             Schvaneveldt & Company
                          Certified Public Accountant
                       275 East South Temple, Suite #300
                           Salt Lake City, Utah 84111
                                 (801) 521-2392

Darrell T. Schvaneveldt, C.P.A.


                          Independent Auditors Report
                          ---------------------------
Board of Directors
Appalachian Oil & Gas Company, Inc.

       I have audited the accompanying balance sheets of Appalachian Oil & Gas
Company, Inc., as of June 30, 1997, and the related statements of operations,
stockholders' equity, and cash flows for the years ended June 30, 1997 & 1996. 
These financial statements are the responsibility of the Company's management. 
My responsibility is to express an opinion on these financial statements based
on my audit. 

       I conducted my audit in accordance with generally accepted auditing
standards.  Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the  financial statements are free of
material misstatements.  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 the significant
estimates made by management, as well as evaluating the overall financial
statements presentation.  I believe that my audit provides a reasonable basis
for my opinion. 

       In my opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of Appalachian Oil & Gas Company,
Inc., as of June 30, 1997, and the results of its operations and its cash flows
for the years ended June 30, 1997 & 1996, in conformity with generally accepted
accounting principles.



/S/ Darrell Schvaneveldt
Salt Lake City, Utah 
April 6, 1998


                                       16<PAGE>
                      Appalachian Oil & Gas Company, Inc.
                                 Balance Sheets
                         June 30, 1997 & June 30, 1996

<TABLE>
<CAPTION>
                                                       June           June 
                                                   30, 1997       30, 1996 
                                                ------------   ------------
<S>                                            <C>            <C>          

Current Assets
--------------
  Cash & Cash Equivalents                       $    36,954    $   104,123 
  Accounts Receivable - Trade                        17,855         30,437 
                                                ------------   ------------

      Total Current Assets                           54,809        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                                   330,692        313,727 
                                                ------------   ------------

      Net Property & Equipment                      136,066        153,031 
                                                ------------   ------------
      Total Assets                              $   190,875    $   287,591 
                                                ============   ============

</TABLE>

   The accompanying notes are an integral part of these financial statements

                                       17<PAGE>
                      Appalachian Oil & Gas Company, Inc.
                           Balance Sheets -Continued-
                         June 30, 1997 & June 30, 1996
<TABLE>
<CAPTION>
                                                       June           June 
                                                   30, 1997       30, 1996 
                                                ------------   ------------
<S>                                           <C>             <C>          
Current Liabilities
-------------------
  Accounts Payable - Trade                      $       338    $    12,345 
  Accrued Expenses                                      -0-          2,000 
                                                ------------   ------------
      Total Current Liabilities                         338         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                              ( 1,655,163)   ( 1,572,454)
                                                ------------   ------------
      Total Stockholders' Equity                    190,537        273,246 
                                                ------------   ------------
      Total Liabilities & Stockholders' Equity  $   190,875    $   287,591 
                                                ============   ============

</TABLE>

   The accompanying notes are an integral part of these financial statements

                                       18
<PAGE>
                      Appalachian Oil & Gas Company, Inc.
                            Statement of Operations
                 For the Years Ended June 30, 1997, 1996 & 1995
<TABLE>
<CAPTION>
                                          1997          1996          1995 
                                    -----------   -----------   -----------
<S>                                <C>           <C>           <C>         
Revenues
--------
   Oil & Gas Sales                  $   48,723    $  355,225    $  531,943 
   Drilling Programs                       -0-           -0-         2,418 
   Other                                 3,117         2,048         5,034 
                                    -----------   -----------   -----------
      Total Revenues                    51,840       357,273       539,395 

Costs & Expenses
----------------
   Well Abondonments/Impairments           -0-           -0-       121,853 
   Other Operating Expenses             35,530       244,232       220,135 
   Depreciation, Depletion & 
     Amortization                       16,965        52,086        83,245 
   Interest                                -0-        21,232        24,368 
   Loss on Sale of Property & 
     Equipment                             -0-           -0-        11,545 
   General & Administrative             82,054       113,217       275,379 
                                    -----------   -----------   -----------
      Total Costs & Expenses           134,549       430,767       736,525 
      Loss from Operations          (   82,709)   (   73,494)   (  197,130)

Other Income
------------
   Sale of Oil & Gas Leases                -0-       106,834           -0- 
                                    -----------   -----------   -----------
     Net Income (Loss) Before
      Minority Interest             (   82,709)       33,340    (  197,130)
     Minority Interest                     -0-           -0-         2,378 
                                    -----------   -----------   -----------
     Net Income (Loss) After
      Minority Interest             (   82,709)       33,340    (  199,508)
                                    -----------   -----------   -----------
Income Taxes
------------
   Current Tax Expenses                    -0-           -0-           -0- 
   Benefits of Operating Loss
    Carryforwards                          -0-           -0-    (   36,700)
                                    -----------   -----------   -----------

      Total Income Taxes                   -0-           -0-    (   36,700)

      Income (Loss) Before
      Extraordinary Items                  -0-           -0-    (  162,808)

      Extraordinary Item,
      Net Income taxes Of $36,700          -0-           -0-        71,300 
                                    -----------   -----------   -----------
      Net Income (Loss)             ($  82,709)   $   33,340    (  $91,508)
                                    ===========   ===========   ===========
   Income (Loss) Per Share
     Before Extraordinary Item      ($     .03)   $      .01    ($    0.05)
     Extraordinary Item                    -0-           -0-          0.02 
     Net Income (Loss)              ($     .03)   $      .01    ($     .03)
</TABLE>
      The accompanying notes are an integral part of these financial statements
                                          19
<PAGE>
                       Appalachian Oil & Gas Company, Inc.
                        Statement of Stockholders' Equity
                       From July 1, 1993 to June 30, 1997
<TABLE>
<CAPTION>
                                                                      Additional 
                                                 Common     Paid In  Accumulated 
                                    Shares        Stock     Capital      Deficit 
                             ----------------------------------------------------
<S>                           <C>            <C>                    <C>            <C>          
Balance, July 1, 1993            4,202,399     $ 42,024 $ 1,743,676  ($1,636,013)

Common Stock Canceled          ( 1,026,604)   (  10,266)     10,266 

Common Stock Issued                 60,000          600      59,400 

Net Income for the Year
Ended June 30, 1994                                                      121,727 
                             ----------------------------------------------------
Balance, June 30, 1994           3,235,795       32,358   1,813,342  ( 1,514,286)

Net Loss for the Year
Ended June 30, 1995                                                  (    91,508)
                             ----------------------------------------------------
Balance, June 30, 1995           3,235,795       32,358   1,813,342  ( 1,605,794)

Shares Returned to the 
Company for Cancellation       (   100,000)  (    1,000)      1,000 

Net Income for the Year
Ended June 30, 1996                                                       33,340 
                             ----------------------------------------------------
Balance, June 30, 1996           3,135,795       31,358   1,814,342  ( 1,572,454)

Net Loss for the Year 
Ended June 30, 1997                                                  (    82,709)
                             ----------------------------------------------------
Balance, June 30, 1997           3,135,795    $  31,358 $ 1,814,342  ($1,655,163)
                             ====================================================

</TABLE>

   The accompanying notes are an integral part of these financial statements

                                       20<PAGE>
                      Appalachian Oil & Gas Company, Inc.
                            Statement of Cash Flows
                 For the Years Ended June 30, 1997, 1996 & 1995
<TABLE>
<CAPTION>

                                                        1997       1996       1995 
                                                   ---------- ---------- ----------
<S>                                               <C>        <C>        <C>        
Cash Flows from Operating Activities
------------------------------------
  Net Income (Loss)                               ($  82,709)$   33,340 ($  91,508)
  Adjustments to Reconcile Net Income (Loss) to
   Net Cash Provided by Operating Activities
     Depreciation, Depletion & Amortization           16,965     52,086     83,245 
     Well Abandonments & Impairments                     -0-        -0-    121,853 
     Loss on Sale of Property & Equipment                -0-        -0-     11,545 
     Gain on Sale of Properties                          -0- (  106,834)     2,378 
   Changes in Operating Assets & Liabilities                            
     (Increase) Decrease in Accounts Receivable       12,582     42,211      9,518 
     Increase (Decrease) in Accounts Payable       (  12,007)(  107,940)(   85,532)
     Increase (Decrease) in Accrued Expenses       (   2,000)(    3,352)(      303)
                                                   ---------- ---------- ----------
      Net Cash Provided by (Used In)
      Operating Activities                         (  67,169)(   90,489)    51,196 
                                                   ---------- ---------- ----------
Cash Flows from Investing Activities
------------------------------------
  Purchases of Property & Equipment                      -0-        -0-  (  11,810)
  Purchase from Sale of Property & Equipment             -0-    450,000        -0- 
  Purchases of Oil & Gas Properties                      -0-        -0-  (  11,550)
  Investment in Joint Venture                            -0-        -0-  ( 109,000)
                                                   ---------- ---------- ----------
      Net Cash Provided by (Used In)
      Investing Activities                               -0-    450,000  ( 132,360)

Cash Flows from Financing Activities
------------------------------------
  Proceeds from Notes Payable                            -0-        -0-     73,500 
  Principal Payments on Notes Payable                    -0-  ( 138,500) (   7,500)
  Principal Payments on Long-Term Debt                   -0-  ( 129,490) (  36,751)
  Dividends Paid                                         -0-        -0-  (   2,085)
                                                   ---------- ---------- ----------
      Net Cash Provided by (Used In)
      Financing Activities                         (  67,169)(  267,990)    27,164 
                                                   ---------- ---------- ----------
      Increase (Decrease) in Cash 
      & Cash Equivalents                           (  67,169)    91,521  (  54,000)

      Cash & Cash Equivalents,
      Beginning of Year                              104,123     12,602     66,602 
                                                   ---------- ---------- ----------
      Cash & Cash Equivalents, End of Year         $  36,954  $ 104,123  $  12,602 
                                                   ========== ========== ==========
Disclosures from Operating Activities
-------------------------------------
  Interest                                         $     -0-  $  21,232  $  24,368 
  Taxes                                                  -0-        -0-        -0- 

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

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

NOTE #1 - Summary of Significant Accounting Policies
----------------------------------------------------
     Significant accounting policies of the Company are as follows:

a.   Principles of Consolidation (Applicable to fiscal year 1995 only).

     The consolidated financial statements include the accounts of Appalachian
Oil & Gas Company, Inc. (AOGI) and its subsidiary, TKGC #1 Limited Partnership.
All significant intercompany accounts and transactions have been eliminated in
consolidation.

b.   Business Activity and Major Customers

     AOGI sold the controlling interest in its oil and gas producing properties
in February of 1996.  AOGI  has no activities in extracting oil or gas or in
marketing the production of oil and gas.  It is AOGI's intention to sell its
remaining 40% interest in the oil and gas properties and the related assets and
to seek other business opportunities.

c.    Cash and Cash Equivalents

     Cash includes amounts on hand and in financial institutions. Cash
equivalents include all highly liquid investments with an original maturity of
three months or less when purchased.

d.    Allowance for Losses

     AOGI uses the specific write-off method to provide for doubtful accounts
since experience and management's estimation indicates an adequate allowance
for such accounts is immaterial.

e.    Oil and Gas Properties

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

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


                                       22

<PAGE>
                      Appalachian Oil & Gas Company, Inc.
             Notes to Consolidated Financial Statements -Continued-

NOTE #1- Summary of Significant Accounting Policies -Continued-
---------------------------------------------------------------

e.   Oil and Gas Properties -Continued-

     The costs associated with dismantlement and site restoration are
considered immaterial based on past history of AOGI.

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

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

f.    Income Taxes

     Deferred income taxes are provided for significant temporary differences
in recognition of revenues and expenses for financial reporting and income tax
reporting purposes.

     For Federal income tax purposes, the Company deducts certain exploration
and developmental costs, which are capitalized and amortized for financial
reporting purposes. The Company uses statutory depletion for income tax
reporting.

     Investment tax credits are accounted for as a reduction of income tax
expense in the year taxes payable are reduced.

g.    Minority Interest

     Effective April 15, 1994, AOGI acquired 53.35 percentage interest in the
TKGC #1 Partnership for $28,000 in cash and a partial assignment of an oil and
gas farm out agreement. The acquisition was accounted for as a purchase.

     AOGI's 53.35 percentage interest requires that TKGC #1's operations be
included in the consolidated financial statements. The remaining interest
(46.65%) is shown as "minority interest" in the June 30, 1994 consolidated
balance sheet. TKGC #1 did not have any operations as of June 30, 1994. April
1, 1995, the TKGC #1 Partnership was dissolved with each partner receiving
their percentage ownership in two oil and gas wells.


                                       23

<PAGE>
                      Appalachian Oil & Gas Company, Inc.
             Notes to Consolidated Financial Statements -Continued-

NOTE #1 - Summary of Significant Accounting Policies -Continued-
----------------------------------------------------------------

h.    Estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

i.    Environmental Costs

     Environmental expenditures that relate to current operations are expensed
or capitalized as appropriate. Liabilities are recorded when environmental
assessments are probable and the amounts can be reasonably estimated.

NOTE #2 -  Property and Equipment
---------------------------------

     A summary of property and equipment is as follows:
<TABLE>
<CAPTION>                                                        1997        1996           --------------------
<S>                                                        <C>         <C>             
     Proved oil and gas properties                          $ 140,184   $ 140,184 
     Less accumulated depreciation,
       depletion and amortization                              94,158      88,610 
                                                            ----------  ----------             46,026    51,574 
                                                            ----------  ----------
     Land                                                      12,410      12,410 
     Gas gathering system                                     196,334     196,334 
     Machinery and equipment                                  112,788     112,788 
     Office furniture and equipment                             5,042       5,042 
                                                            ----------  ----------
          Other property and equipment                        326,574     326,574 

     Less accumulated depreciation                            236,534     225,117 
                                                            ----------  ----------
                                                               90,040     101,457 
                                                            ----------  ----------
     Net property and equipment                             $ 136,066   $ 153,031 
                                                            ==========  ==========
</TABLE>

AOGI incurred depreciation expense of; $ 16,965 $52,086, and $67,373, for the
years ended June 30, 1997, 1996, and 1995, respectively.

                                       24<PAGE>
                      Appalachian Oil & Gas Company, Inc.
             Notes to Consolidated Financial Statements -Continued-

NOTE #3 - Income Taxes
----------------------
     At June 30, 1995, the Company had net operating loss and investment tax
credit carryforwards for income tax purposes of approximately $1,394,000 and
$30,000, respectively, which expire on or before June 30, 2007. For financial
reporting purposes, a valuation allowance of $484,160 has been recognized to
offset the deferred tax assets related to these items

     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 are reflected in deferred income taxes. Significant
components of the Company's deferred tax assets and liabilities as of June 30,
1997 and 1996 are as follows:
<TABLE>
<CAPTION>
                                                              1997         1996 
                                                         ----------   ----------
<S>                                                    <C>          <C>         
     Deferred tax assets:
       Net operating loss                                $ 490,745    $ 462,624 
       Investment tax credit                                10,200       10,200 
                                                         ----------   ----------
     Total deferred tax assets                             500,945      472,824 
     Valuation allowance for
       deferred tax assets                               ( 500,945)   ( 472,824)
                                                         ----------   ----------
          Deferred tax liabilities                             -0-          -0- 
                                                         ----------   ----------
          Net deferred tax asset                         $     -0-    $     -0- 
                                                         ==========   ==========
</TABLE>

NOTE #4 - Statement of Cash Flows Disclosures
---------------------------------------------

     AOGI paid $21,232 and $24,368, in interest during the years ended June 30,
1996, and 1995, respectively.

NOTE #5 - Earnings (Loss) Per Share
-----------------------------------

     Earnings (loss) per share are based on the weighted average number of
shares outstanding of 3,235,795, for the years ended June 30, 1997, 1996, and
1995, respectively.

NOTE #6 - Sale of Operating Assets & Well Interest
--------------------------------------------------

     Effective March 27, 1996, AOGI sold 60% of their operating assets and 60%
of their well interests for $450,000. The company that purchased the assets
began operating and managing the majority of AOGI's wells as of February 1,
1996.
                                       25
<PAGE>
                                   SIGNATURES


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

Dated: April 21, 1999                      Appalachian Oil & Gas Company, Inc.
                                           a Utah Corporation 

                                      By: /S/ Raymond A. Connelly
                                          ------------------------
                                          Raymond A. Connelly, President

DATE                NAME AND TITLE         SIGNATURE

April 21, 1999      Raymond A. Connelly   /S/ Raymond A. Connelly
                    President             -----------------------


                                       26