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

                              FORM 10-KSB


[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
      For the fiscal year ended June 30, 1998

[  ]  TRANSITION REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
For the transition period from _______________________ to____________________

                         Commission file number 0-28184

                             MASON OIL COMPANY, INC.
              (Exact name of small business issuer in its charter)

                 Utah                            37-109974
     --------------------------      -----------------------------------
      (State of incorporation)       (I.R.S. Employer Identification No.)

 6337 Ravenwood Drive, Sarasota, FL                 34243
------------------------------------- -----------------------------------
 (Address of principal executive                (ZIP Code)
            offices)

Issuer's telephone number:  (941) 351-3102

Securities registered pursuant to Section 12(b) of the Exchange Act:

      Title of each class     Name of each  exchange on which registered
      -------------------     ------------------------------------------
              None                             None

Securities registered pursuant to Section 12(g) of the Exchange Act:

                          $0.001 par value Common Stock
                          -----------------------------
                                (Title of class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes X No _____

Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of Regulation  S-B  contained in this form,  and no disclosure
will  be  contained,   to  the  best  of  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
10-KSB.  [X]

The  issuer's  revenues  for its most recent  fiscal year  consisted of interest
income in the amount of approximately $45,782.


<PAGE>


The aggregate market value of the voting Common Stock held by  non-affiliates of
the issuer  (treating  all executive  officers and directors of the issuer,  for
this  purpose,  as if they may be  affiliates  of the issuer) was  approximately
$322,473  as of  December  31, 1998 (based on the average bid and asked price of
such Common Stock).

Ten million eight hundred ninety thousand five hundred four (10,890,504)  shares
of the issuer's Common Stock were outstanding as of December 31, 1998.

Transitional Small Business Disclosure Format (check one):
Yes _______     No       X     


<PAGE>


                        MASON OIL COMPANY, INC.
                  For Fiscal Year Ended June 30, 1998

                           TABLE OF CONTENTS
                              Form 10-KSB

                                PART I


Item                                                                    Page
1     Description of Business.                                           1
2.    Description of Property                                            3
3.    Legal Proceedings                                                  9
4.    Submission of Matters to a Vote of Security Holders                9
                              PART II
5.    Market for Issuer's Common Equity and Related Stockholder          
       Matters                                                           9
6.    Management's Discussion and Analysis or Plan of Operation         10
7.    Financial Statements                                              11
8.    Changes in and Disagreements with Accountants on Accounting
      and Financial Disclosure                                          12
                             PART III
9.    Directors, Executive Officers, Promoters and Control
      Persons; Compliance with Section 16(a) of the Exchange Act        12
10.   Executive Compensation                                            13
11.   Security Ownership of Certain Beneficial Owners and               
       Management                                                       13
12.   Certain Relationships and Related Transactions                    14
                              PART IV
13.   Exhibits and Reports on Form 8-K                                  14
      Signatures                                                        16




<PAGE>


                                PART I

This Form  10-KSB  contains  forward-looking  statements  within the  meaning of
Section 27A of the  Securities  Act of 1933 and  Section  21E of the  Securities
Exchange Act of 1934. The Company's actual results could differ  materially from
those  set  forth  in  the  forward-looking   statements.  The  forward  looking
statements  include  statements  that reflect  management's  intentions,  plans,
beliefs,  expectations  or predictions  of future  operations,  conditions,  and
potential future capitalization of the Company. These forward-looking statements
are based on current expectations that involve numerous risks and uncertainties.
Assumptions relating to such current expectations involve judgments with respect
to, among other things,  future economic,  competitive and market conditions and
future business  decisions,  all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Company. Although the
Company believes that the assumptions underlying the forward-looking  statements
are reasonable,  any of the assumptions  could be inaccurate and therefore there
can be no assurance that the  forward-looking  statements  included in this Form
10-KSB  will prove to be  accurate.  In light of the  significant  uncertainties
inherent in the  forward-looking  statements  included herein,  the inclusion of
such information  should not be regarded as a  representation  of the Company or
any other person that the objectives and plans of the Company will be achieved.

Item 1.  Description of Business.

General.  Mason  Oil  Company,  Inc.,  a Utah  corporation  formed  in 1980 (the
"Company"), is positioning itself to participate in the acquisition, development
and  operation  of  selected  oil and gas  properties,  expected  to be  located
principally in Australia and Southeast  Asia.  From 1981 until 1996, the Company
was dormant, with no significant assets or liabilities.  Controlling interest in
the  Company  was  acquired  in  September,  1996 by Paul B.  Ingram and John L.
Naylor,  for the  purpose  of  establishing  a vehicle  for the  identification,
exploration,  development  and  operation of promising  oil and gas  properties.
Since the date of such  transaction,  the  Company  has  investigated  potential
petroleum  exploration  and  development  prospects  and  explored  how it might
participate in the development and operation of such properties.

In October of 1996,  Mr. Ingram and Mr.  Naylor sold a 100% working  interest in
two South Australian oil and gas exploration  licenses,  identified as Petroleum
Exploration  Licenses 61 and 63 ("PELs 61 and 63", and collectively the "PELs"),
to the Company,  subject to a 3% royalty interest retained by Mr. Ingram and Mr.
Naylor,  in exchange for 6,000,000  shares of the Company's  stock. The PELs are
held by Hemley  Exploration  Pty.  Ltd.,  an Australian  corporation  ("Hemley")
which, as a result of the transaction  with Mr. Ingram and Mr. Naylor,  became a
wholly owned subsidiary of the Company. At the time of the transaction, the PELs
constituted the only significant  assets of Hemley, and Hemley had not conducted
any significant operations with respect to the PELs or otherwise.


<PAGE>



The initiation of exploration  activities  under the PELs was further delayed in
1998 because of negotiations  with the aboriginal  tribes claiming  interests in
the  geographic  areas  covered by the PELs.  In recent  months,  a native group
asserted  rights to title of the land  subject to PEL 63. The  Company  believes
however,  that it has resolved such claims by entering into an Access  Agreement
with  this  native  group  (the "PEL 63  Access  Agreement").  The PEL 63 Access
Agreement sets forth the terms upon which the Company has agreed with the native
group  to all  access  to PEL 63 for  purposes  of  conducting  exploration  and
production  activities.  The  Company  is  obligated  under  the  PEL 63  Access
Agreement  to make  certain  payment in return  for rights to use the area.  The
Company performed  additional  aeromagnetic  surveys in the northeast portion of
the Officer  Basin of South  Australia  during the last fiscal  year,  being the
geographic  area  covered by the PELs,  and the data is in the  process of being
interpreted.  A report on such data is  expected in the near  future.  This data
will assist the Company in pursuing  drilling  activities which are, at present,
practically unwise due to the decline of oil prices in recent months.

Sale of Drilling Rig Interest.  The company recently sold its one-half  interest
in a  Cabot/Franks  1000  drilling  rig.  The rig was  purchased  when  drilling
equipment  in the  vicinity  of the PELs was not readily  available.  Due to the
deflated market price for oil, however, the Company decided to not transport the
rig to  Australia  for use in the PELs.  At current  market  prices for oil, the
Company  believes  that it is now more  economical to contract the drilling work
out to third parties.  Accordingly,  the Company decided to sell its interest in
the rig back to the operator, T. D. International,  at a price equal to that for
which  the  Company  purchase  the rig,  $300,000.  T.D.  International  is also
returning 806,666 shares of common stock of the Company which it acquired in the
purchase of the rig, and the Company is obtaining unencumbered title to a 50 man
portable drilling camp. At the time of this report,  the rig sales agreement has
been signed and the stock is being returned for cancellation.

Indonesian  Venture.  Over the past two years  the  Company  has been  exploring
various ventures in Indonesia as a means of acquiring proven reserves to broaden
the base of the Company's  operations.  The Company recently signed a Memorandum
of  Agreement  (MOA) with a banking  group by  invitation,  which is intended to
result in an 80%  management  interest in a joint venture with the banking group
under a Technical  Assistance  Contract  (TAC) with  Pertamina,  the  Indonesian
national  oil  company.  The MOA  covers 195 square  kilometers,  including  two
previously  discovered  and partially  developed  fields in the Bintuni Basin of
Irian Jaya (Western New Guinea).

The joint venture working interest would entitle the joint venture to 67% of the
production (with the Company to receive 80% of the joint venture  proceeds) with
33% going to the state of Indonesia.  Two independent  reports show these fields
have in excess of 500 million  barrels of original oil in place  (OOIP)  average
reserves.  These  detailed  reports  also  estimate  that the 6 million  barrels
produced  between 1955 and 1961  represents less than 2% of the total that could
be produced from these  fields.  In addition,  there are two  structures in this
Bintuni  Basin  block that have never  been  explored.  There were a total of 53
producing wells in the two fields at the time they were closed down in 1961.

The  Company  believes  that it will  need  $2.4  million  U. S. to  reopen  the
Indonesian field and prove that substantially similar pressures and depth of the
oil/water interface exist today when compared with the time they were closed. If
and when financing is secured,  the Company plans to proceed to open and test at
least  one well in each  field  and one well in each  producing  formation.  The
proving  period is expected to run  through  August of 1999,  subject to certain
rights of extension.  The production  period,  without any new  discoveries,  is
expected  to  last  for up to 6  years  and,  if the  reported  reserves  can be
effectively extracted,  to produce at least 6 million barrels of oil during that
time.


<PAGE>



In order to take advantage of this joint venture  opportunity,  the Company must
obtain some form of  financing.  There can be no assurance  that the Company can
obtain  such needed  financing.  Given its present  cash  position,  the Company
anticipates  that it can satisfy  its cash  requirements,  at current  operating
levels for a period of one year or more.  Moreover,  the political  situation in
Indonesian  around  Jakarta,  Indonesia is less than ideal at this time, but the
situation on Irian Jaya is quite different, showing no signs of unrest. However,
there can be no assurance  that the  political  situation  around the field will
remain calm.

General Risks and Uncertainties

Currently the Company is not involved in any oil and gas production  activities.
There can be no  assurance  that in the future the Company  will  locate  proven
reserves in addition to those discovered in Indonesia,  whether  associated with
the PELs or otherwise. Exploration and development activities undertaken may not
result in the  establishment  of  producing  wells.  Moreover,  even with proven
reserves  positively  identified,   the  feasibility  of  recovery  is  strongly
dependent  upon world market  prices for oil and gas.  There can be no assurance
that amounts capitalized as acquisition,  exploration and development costs will
be recoverable through future operations.

Operating Hazards and Insurance.  The oil and gas business involves a variety of
operating  risks,  including  the risks of fire,  explosions,  blow  outs,  pipe
failures,  abnormally pressured formations and environmental hazards such as oil
spills, gas leaks,  ruptures or discharges of toxic gases, the occurrence of any
of which  could  result  in  substantial  losses  due to injury or loss of life,
severe damage to or  destruction of property,  natural  resources and equipment,
pollution or other environmental  damage, clean up responsibilities,  regulatory
investigations  and penalties and suspension of operations.  Upon the initiation
of development  activities,  the Company will seek to obtain a gas and oil lease
operator policy that would insure the Company  against certain risks  associated
with  drilling,  completing  and operating any wells.  There can be no assurance
that such  insurance  would be  available  to the Company or, if it is obtained,
that it would be adequate to cover any losses or exposure to liability. Once the
Company  commences  exploration and development  activities,  even if it obtains
insurance  as customary  in the  industry,  such  insurance  coverage  would not
provide complete coverage against all operating risks. An uninsured or partially
insured claim, if successful and of sufficient magnitude,  could have a material
adverse  effect on the Company and its financial  condition.  Any  difficulty in
obtaining or maintaining  insurance coverage may impair the Company's ability to
engage in its proposed business activities.

Regulation.  The oil and gas  industry is  extensively  regulated  by  national,
regional and local  authorities in each jurisdiction in which the Company may be
involved in exploration,  development and production activities.  In particular,
oil and gas production  operations and economics are affected by price controls,
environmental   protection   statutes,   governmental   control  of   extraction
activities,  tax  statutes  and  other  laws  and  regulations  relating  to the
petroleum industry, as well as by changes in such laws, changing  administrative
regulations  and the  interpretations  and  application of such laws,  rules and
regulations.  Oil and gas industry  legislation and agency  regulation are under
constant review for amendment and expansion for a variety of political, economic
and other reasons.  Numerous governmental and regulatory authorities,  national,
regional and local,  are empowered to issue rules and regulations  impacting the
oil and gas industry,  some of which carry substantial  penalties for failure to
comply. The legal and regulatory framework for conducting petroleum exploration,
development  and production  activities in foreign  countries is also subject to
change due to changes in the parties in power. The Company's proposed activities
would be subject  to the risks  associated  with  political  instabilities.  The
regulatory  burdens and political risks associated with the oil and gas industry
increase the cost of doing business and,  consequently,  affect a  participant's
ability to achieve profitability.


<PAGE>



Competition.  The oil and  gas  industry  is  highly  competitive  in all of its
phases. The Company will encounter  competition from other oil and gas companies
in all areas of its  operations,  including  the  acquisition  of  interests  in
exploration and development properties, the marketing of oil and gas that may be
produced,  and the  availability  of drilling  rigs.  Many of these  competitors
possess  greater  financial,  technical  and other  resources  than the Company.
Competition  for  acquisition  of  rights  to  exploration  and  development  of
properties  is  affected  by the amount of funds  available  to the  Company and
information about producing properties available to the Company. Competition may
also be presented by alternative fuel sources,  including  heating oil and other
fossil fuels.  There has been increased  competition for lower risk  development
opportunities and available sources of financing.

Environmental  Regulation.   Various  national,  regional  and  local  laws  and
regulations  covering  the  discharge  of  materials  into  the  environment  or
otherwise  relating to the  protection of the public health and the  environment
may affect the Company's  operations,  expenses and costs.  The Company does not
believe that its environmental risks will be materially  different from those of
comparable  oil  and  gas  companies  operating  in  similar  geographic  areas.
Nevertheless, no assurance can be given that environmental laws will not, in the
future,  result  in the  curtailment  in  production  activities  or  materially
increase  the costs of  exploration,  development  or  production,  or otherwise
adversely effect the Company's operations and financial condition.

Bankruptcy  Proceeding.  As has been disclosed in prior filings, on December 31,
1985,  the Company filed a Chapter 11 Petition for  Voluntary  Bankruptcy in the
United States Bankruptcy Court for the District of Utah,  Central  Division.  At
the  Company's  request,  on January 14, 1988 the  bankruptcy  proceedings  were
dismissed.

Employees.  The Company has two employees,  both of which work full time for the
Company.  The employees are Paul Ingram and John Naylor, the two officers of the
Company,  who between  themselves  handle all  administrative  functions and the
investigation and evaluation of potential exploration and development projects.

Item 2.  Description of Property.

General.  The Company's  primary asset is its interests in the PELs,  which were
issued by the State of South Australia,  and an access  agreement  providing the
Company with access to the  property  covered by the PELs,  negotiated  with the
Anangu Pitjantjatjari aboriginal tribe.

The area  covered by the PELs is roughly  described  as a portion of the Eastern
Officer  Basin,  consisting of 17,188  square  kilometers  (4.2 million  acres),
situated  approximately  200 miles south of Alice Springs and  approximately 700
miles north of Adelaide. Although the location is remote from populated areas, a
modern railway and a year-round,  sealed  highway  service the site, and provide
access from the site to a refinery at Alice Springs to the north, and a refinery
and deep water port at Port  Augusta and  Adelaide to the south.  The terrain is
relatively  flat,  making access to rail and highway  uncomplicated.  Due to the
remoteness of the site, it is anticipated that  development  would cause minimal
disturbance to human population,  flora or fauna.  Climatic conditions typically
allow operations 350 days of the year.


<PAGE>



Grant and Area of PELs. The PELs were granted to Hemley on 23 May 1996, pursuant
to the terms of the Petroleum Act 1940 (South  Australia) (the "Petroleum Act").
Under  Australian  law,  minerals and  petroleum  are vested in the  Government;
rights to explore and extract  petroleum  within  mainland  South  Australia are
conferred under and regulated by the Petroleum act and  regulations  made by the
South Australian Government under that Act.

In broad  terms,  the  PELs  confer  the  right to  explore  for gas and  liquid
hydrocarbons within the license area, but not to undertake commercial production
of any reserves which are  discovered.  The initial term of each PEL is five (5)
years,  ending on 22 May  2001.  The PELs  were  issued by the South  Australian
Department of Mines and Energy (the  "Department") on behalf of the Minister for
Mines and Energy.

PEL 61  covers  an area of  approximately  6,258  square  kilometers,  and falls
entirely within the land area known as the  "Pitjantjatjara  Lands." These lands
are subject of the  Pitjantjatjara  Land Rights Act 1981 (South  Australia) (the
"Pitjantjatjara  Act").  Pursuant to this Act,  ownership of the  Pitjantjatjara
Lands had been vested in a corporation, Anangu Pitjantjatjara,  on behalf of the
local  traditional  occupiers of the land.  The vesting of these lands in Anangu
Pitjantjatjara,  and the terms of the Pitjantjatjara  Act, do not prevent Hemley
Exploration from exercising its rights under PEL 61. However, in order to comply
with  the  Pitjantjatjara  Act,  Hemley  Exploration  is  subject  to an  Access
Agreement   with  Anangu   Pitjantjatjara,   which  further   regulates   Hemley
Exploration's activities on the PEL area.

PEL 63 covers an area which is adjacent to (but  outside of) the  Pitjantjatjara
Lands area.  The total area covered by the license is 10,930 square  kilometers,
though the license is expressed  only to apply to specified  categories  of land
within this area. In essence,  these are categories of land in respect of which,
under  Australian  law, the Company  believes that a native title claim will not
(or is most unlikely to) apply.  However,  in recent months,  a native group did
assert  rights to land  subject  to this  license  agreement.  To  resolve  such
conflict,  the  Company has entered  into the PEL 63 Access  Agreement  with the
native group which regulates Hemley Exploration's activities on the PEL area.

Petroleum  Exploration  Licenses  - Rights and  Obligations.  The PELs have been
issued  for an  initial  term of five  years,  subject  to the  license  renewal
provisions  contained in the Petroleum Act. The Petroleum Act prescribes minimum
exploration  expenditure  requirements  to apply  during the initial  term of an
Exploration License.  However, in the case of each of PELs 61 and 63, a detailed
plan setting out minimum levels of exploration for each year of the initial term
of the PEL is included in the License conditions.



<PAGE>



The plan  includes  minimum  estimated  expenditure  levels  for each  year,  as
follows:

                                          PEL 61          PEL 63
                                       ------------    -----------

     Year 1 (ending 22 May 1997)       A $1,250,000    A $  645,000
     Year 2 (ending 22 May 1998)          2,000,000         340,000
     Year 3 (ending 22 May 1999)          2,450,000       1,700,000
     Year 4 (ending 22 May 2000)          3,950,000       1,770,000
     Year 5 (ending 22 May 2001)          4,975,000         300,000

     Total                             A $14,625,000   A $4,755,000

Under the terms of each License,  if Hemley fails to comply with the  prescribed
exploration  requirements in any year of the term, the responsible  Minister may
(at his  discretion)  cancel or vary the License or,  alternatively,  vary these
expenditure  requirements.  The  Company  has to date  been  unable  to meet the
exploratory requirements of the PELs, as a result of lack of capital and certain
complications  associated  with  the  status  of  one of  the  PELs . The  South
Australian  Department of Mines and Energy  ("MESA") has eased the  requirements
associated  with the  Company's  PELs and has agreed to work with the Company to
resolve such complications. Currently the Company believes that both PELs are in
good standing with MESA.

In brief,  some of the principal  rights and obligations  attaching to Hemley as
the holder of a Petroleum Exploration License are as follows:

     (a)  the  Licensee  has  the   exclusive   right  to  engage  in  petroleum
          exploration on the subject area;

     (b)  the Licensee must comply with general  conservation and rehabilitation
          obligations set out in the Petroleum Act and Regulations;

     (c)  the  Licensee  is  subject  to ongoing  reporting  obligations  to the
          Department in respect of work undertaken and expenditure incurred;

     (d)  the  Licensee  must also  consult  with and obtain the approval of the
          Department  in respect of work to be  undertaken  for the remainder of
          the term; and

     (e)  where any part of the  License  area is being used for  certain  other
          purposes,  such as for the  cultivation  of crops or as  pasture,  the
          Licensee  must first  obtain the consent of the  relevant  occupier or
          user.

A most  important  obligation  of  Hemley as the  Licensee  under the PELs is to
notify the Minister upon the discovery of petroleum  (whether liquid or gaseous)
within the relevant License area. Particulars of the quantity and quality of the
petroleum must be provided as soon as practicable. The rights of Hemley to apply
for a Production License in this event are referenced below.


<PAGE>



Extension of Term of PEL. The Petroleum  Act makes  provision for the renewal of
Petroleum Exploration Licensees for further terms of five years. Hemley would be
entitled  to apply for and obtain  such an  extension  at the end of the current
term  of  the  PELs,  subject  to  satisfying  the  Department  that  all of the
obligations  applicable to the initial term have been  satisfied.  Upon any such
renewal,  the  existing  area of the PEL would be  required to be reduced by not
less than 25% by the excision of area(s) from the existing area of the License.

PEL 61 and PEL 63 - Access  Agreements.  As referenced above, the area of PEL 61
is subject to the Pitjantjatjara  Act. Under the terms of that Act, in order for
any exploration or production  activities to be undertaken on the Pitjantjatjara
Lands  under  (inter  alia)  the  Petroleum   Act,  the   permission  of  Anangu
Pitjantjatjara  must first be obtained.  The Access Agreement for PEL 61 dated 5
March 1996, between Anangu  Pitjantjatjara (on the one hand) and Paul Ingram and
John Naylor (on the other),  sets out the terms upon which  permission  has been
granted for both  exploration and production  operations  within the area of PEL
61. The PEL 61 Access  Agreement  was entered into by Messrs.  Ingram and Naylor
prior to the grant of the PEL, but the Agreement  contemplates  the substitution
of a company owned by them. Accordingly, Hemley is now bound by the terms of the
PEL 61 Access  Agreement.  The area of PEL 63 is  subject  to the  assertion  of
various rights by a native group indigenous to the area. The Company has entered
into the PEL 63 Access  Agreement with such group in order to resolve the claims
raised  and permit  the  Company to  continue  its  exploration  and  production
activities.  The PEL 63 Access Agreement dated May 1, 1998 among Yankunytjatjara
Council, Antakirinja Land Management, Paddy Jones, Jean Woods, Tilly Waye, Sadie
Singer,  Lallie Lennon,  Johnny  Cullinan,  William Herbert Lennon Snr.,  Eileen
Crombie,  Ian Crombie,  Keith Smith and Hemley sets out the terms upon which the
Company may conduct exploration and production activities.

The Access  Agreements  generally provide for certain payments to be made, based
on:

     (a)  annual exploration expenditure on the License area; and

     (b)  the well-head value of any petroleum produced from the License area.

The Access Agreement for PEL 61 also entitles Anangu Pitjantjatjara to take up a
participatory  interest of up to 10% in any Petroleum  Production  License which
may be granted in respect to any petroleum discovery within the area of PEL 61.

Grant of Petroleum  Production  License. As the holder of PELs 61 and 63, Hemley
enjoys priority  rights in respect of any petroleum  reserves which it discovers
within the area of either  license.  Provided that it is in compliance  with its
obligations  under  the  relevant  PEL  and  the  Petroleum  Act at the  time of
discovery,  Hemley will be entitled to apply for a Petroleum  Production License
for the area within  which the  petroleum  is  discovered.  In this  event,  and
subject to the foreign  investment  and native title  considerations  referenced
below, the Minister will be obliged to grant the License, unless the reserves or
quality of petroleum are not sufficient to warrant production.  If the holder of
a Petroleum Exploration License makes an economic discovery,  and fails to apply
for a Production License within twelve (12) months, the responsible Minister may
then grant a Production License in respect of the field to any third party.


<PAGE>



A Petroleum  Production  License has a term of twenty-one (21) years, but may be
renewed for further 21 year terms.  The are of such a License may not exceed 260
square kilometers.  A Production License confers upon the licensee the exclusive
right to conduct  operations for the production of petroleum  within the License
area, including all necessary construction and other works.

If Hemley is granted any Petroleum Production  Licenses,  under the terms of the
Petroleum  Act,  these  will  also  be  subject  to a  royalty,  payable  to the
Government, at a rate of 10% of the well-head value of petroleum recovered.

Foreign  Investment  Considerations.  Australia's  foreign  investment policy is
administered  by the  Federal  Treasurer  with  the  assistance  of the  Foreign
Investment  Review Board ("FIRB").  For the purposes of the policy,  Hemley will
constitute a "foreign  interest." While the granting of the PELs to Hemley would
not have attracted the operation of the policy, it is likely that Hemley will be
required  to obtain the  approval  of the FIRB under that  policy  before  being
entitled to the grant of one or more Petroleum  Production  Licenses.  Under the
current  policy,  the level of scrutiny of the  proposal  will,  in broad terms,
depend on the projected level of investment in the  development.  If the planned
investment is less than A$50 million,  the FIRB will normally  approve the grant
without  examination.  If this  level is  exceeded,  the FIRB will  examine  the
proposal, and will approve the grant of the License unless this is considered by
the Government to be contrary to the national interest.

Native Title Considerations

1.   Native Title. In 1992, the High Court of Australia handed down its decision
     in the "Mabo case." In that decision,  the Court  rejected the  traditional
     doctrine that Australia was terra nullius (land belonging to no one) at the
     time of British  settlement.  It stated  that the  common law of  Australia
     recognizes  the  existence  of a form of native  title held by  Australia's
     indigenous inhabitants over their traditional lands where:

     (a)  a group of indigenous  people can establish  that it has  maintained a
          substantial  connection with the land, in accordance with  traditional
          laws and customs of the group,  since the time of British  settlement;
          and

     (b)  the native title rights have not been lawfully extinguished.

     The Court  found that the  content of native  title is  dependent  upon the
     traditions,  customs and laws of the particular  Aboriginal group. There is
     no single,  universal native title rather it will vary from group to group.
     Therefore,  once  a  group  has  established  that  it has  maintained  the
     requisite connection with the land since British settlement, the court must
     look to the  traditions,  customs and laws of that group to  determine  the
     precise content of native title.

     In response  to the High  Court's  decision,  the  Commonwealth  Parliament
     enacted the Native Title Act 1993 (the "NTA") in December 1993. The NTA has
     a number of objectives:

     (a)  Protection  of  native  title - to  provide  for the  recognition  and
          protection of native title.


<PAGE>



     (b)  Validation of past acts - to provide for, or allow,  the validation of
          Government acts (including the grant of interests in land) done before
          the  commencement of the NTA on 1 January 1994,  which might otherwise
          be invalid because of the existence of native title.

     (c)  Compensation - to provide for  compensation to be paid to native title
          holders  where  native  title has been  extinguished  or impaired as a
          result of validation of a past act.

     (d)  Validity of future acts - to  establish  procedures  to be followed to
          ensure  that  Government  acts  after 1 January  1994 which may affect
          native title can proceed  without  extinguishing  or impairing  native
          title, and are therefore valid. These include the "right to negotiate"
          procedure  which  applies  in  relation  to  the  grant,  renewal  and
          extension of mining and exploration titles.

     (e)  Native title claims - to establish a procedure for native title claims
          to be made and determined.

      The NTA also  established the National Native Title Tribunal  ("NNTT") for
      the purposes of carrying out specified functions under the NTA.

2.    Future  Act  Regime.  In order to ensure  that  native  title  rights  are
      protected  in  relation to future  grants of  interests  in land,  the NTA
      specifies  that such  grants can only be  validly  made over land in which
      native  title  might  exist if certain  conditions  are  satisfied.  These
      conditions  include giving native title holders the same procedural rights
      as the holders of ordinary  "freehold"  title to the land,  including  the
      right to be notified.

      In addition,  the NTA prescribes a special  procedure called the "right to
      negotiate"  procedure  (the "RTN  procedure")  which must be  followed  to
      ensure the  validity of certain  types of future acts  relating to onshore
      land. These acts include:

     (a)  the  creation  of a  right  to  mine  (which  is  defined  to  include
          exploration and prospecting for petroleum or gas); and

     (b)  an extension of the period of a right to mine, where the extension was
          not part of the original grant of the right to mine.

      Under the RTN procedure, a State Government that is planning to do the act
      (for example,  the granting of a petroleum  exploration license) must give
      notice of its intention to do so to various parties, including:

     (a)  any  registered  native  title  holders  or  claimants  (native  title
          parties) in relation to the land;

     (b)  any  representative  Aboriginal  body  that  will be  affected  by the
          proposed act; and

     (c)  the general public.


<PAGE>



     Aboriginal  groups  which wish to oppose or have input in  relation  to the
     proposed  future act have two  months  from the  issuance  of the notice in
     which to notify the NNTT.  The  Government  must then give the native title
     parties an  opportunity  to make  submissions  in relation to the  proposed
     future act, and must  negotiate in good faith with the native title parties
     and the grantee with a view to obtaining  the agreement of the native title
     parties to the doing of the act. If the parties  fail to reach an agreement
     within a  specified  period of time,  the NNTT can be  requested  to make a
     determination.

3.   Conditions Relating to Grant of Petroleum  Exploration  Licenses 61 and 63.
     Both PELs were granted after the commencement of the NTA. Accordingly,  the
     future  act  regime  and the RTN  procedure  applied  to the  grant  of the
     Licenses.  Although  it is not  apparent  from  the  terms  of the  License
     documents themselves,  it is assumed that these procedures were followed by
     the South  Australian  Department of Mines and Energy and the Licenses were
     therefore validly granted under the NTA.

     PEL 63 is a "Swiss cheese" grant,  in that the License relates only to land
     for which  native title is likely to have been  extinguished.  This land is
     described in the License document as including:

     (a)  land that is now or was  formerly  the  subject of a grant of freehold
          title or of a perpetual Government lease; and

     (b)  land which is or was formerly  subject to a pastoral  lease granted by
          the South Australian Government.

     Land over which  native  title may still  exist is  intended to be excluded
     from the scope of the License.

4.   Native Title  Claims.  As mentioned  above,  the NTA allows for  Aboriginal
     groups to register  claims for native title with the NNTT.  Once a claim is
     accepted and registered,  the claimants are then entitled to receive notice
     of any proposed dealing in the claimed land by the relevant Government.  If
     other  parties,  such as the  relevant  State or  Territory  Government  or
     underlying  landowners,  oppose the claim, the NNTT must direct the parties
     to try and reach an agreement about the existence of native title.

     On the basis of a search of the Register of Native Title Claims kept by the
     NNTT, the only claim which has been  registered with the NNTT and which may
     affect the PELs is a claim  lodged by  William  Lennon Snr on behalf of the
     Antakirinja  Muntuntjarra people (Claim No. SC 95/7). This claim would only
     affect  land within the  boundary of PEL 63. The claim was  accepted by the
     Registrar on August 29, 1996.  The Company  believes  that the substance of
     this claim has been resolved by the PEL 63 Access Agreement.

5.   Renewal of the PELs and Grant of Petroleum Production  Licenses.  Under the
     current regime,  renewal of the PELs or the grant of a Petroleum Production
     License to Hemley will  constitute a future act to which the RTN  procedure
     applies.  Therefore,  prior to renewal or grant, the governmental authority
     will  be  required  to  notify  any  registered  native  title  holders  or
     claimants,  who will then have the  opportunity  to oppose  the  renewal or
     grant.


<PAGE>



     On the  assumption  that no further native title claims are lodged over the
     areas  covered  by the PELs,  it appears  that the  renewal of PEL 61, or a
     grant of a PPL in  substitution  for it, is  unlikely  to be opposed by any
     aboriginal groups.  This is because the area covered by the PEL (or PPL) is
     part of the Pitjantjatjara  Lands, and so covered by the Pitjantjatjara Act
     and the Access Agreement.  However, the position is less certain in respect
     of PEL 63.

6.   Legislative Amendments; Recent Developments. The current Federal Government
     has proposed extensive  amendments to the NTA. These amendments include the
     exclusion  of  certain  exploration  and  mining  tenements  from  the  RTN
     procedure,  provided  certain  conditions  are  met.  It is  expected  that
     substantial  revisions  will be  made to the  amendments  before  they  are
     passed.

     The content of the  amendments  will also be  affected by the  Government's
     response to the High  Court's  decision in the recent "Wik case," which was
     handed down on 23 December 1996. In that case, the Court held that pastoral
     leases did not necessarily  extinguish  native title rights.  This decision
     may have some impact on PEL 63, as it appears to cover substantial areas of
     land  which are or have been the  subject  of  pastoral  leases.  The South
     Australian  Government may also take steps to clarify the status of mineral
     and petroleum  tenements  granted over pastoral  lease land, as a result of
     the High Court's decision.

No Active  Exploration  Activities  or Wells.  The Company has not yet commenced
active  exploration and production  activities,  has drilled no wells and has no
production wells or developed acres.

Company  Facilities.  The Company currently conducts its business operations out
of facilities located in Sarasota,  Florida provided by its officers, at no cost
to the Company. In March 1997, Hemley entered into an operating lease for office
space in Australia. The terms of the lease provide for payments of approximately
$10,500  annually and the lease expires in March of 1999. It is anticipated that
at  the  time  of  commencement  of  substantial   exploration  and  development
activities,  offices  and  facilities  will be  established  at the site of such
operations

Item 3.  Legal Proceedings.

Not applicable.

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

No matters were submitted to a vote of the Company's security holders during the
fourth quarter of the fiscal year covered by this report.


                                PART II

Item 5. Market for  Issuer's  Common  Equity and Related  Stockholder  
Matters.

The Company's  Common Stock is traded on the NASDAQ  bulletin  board,  under the
symbol  MSNO.  The Company  estimates  that at  December  31,  1998,  there were
approximately 2,365 holders of record of the Company's Common Stock.


<PAGE>



The Company  has not  declared or paid any cash  dividends  on its Common  Stock
during the last two fiscal years,  and does not  anticipate  the  declaration or
payment of dividends in the  foreseeable  future.  The Company is not subject to
any  restrictions  that  limit its  ability  to pay  dividends,  other  than the
unavailability  of funds and a statutory  restriction  found in the Utah Revised
Business  Corporation  Act,  which  prohibits  the payment of  distributions  to
sharehodlers if, after giving effect to such distribution:

     (a)  The  Company  would not be able to pay its debts as they become due in
          the usual course of business; or

     (b)  The  Company's  total  assets  would be less than the sum of its total
          liabilities.

The  following  table sets forth the range of high and low bid  information,  as
reported by the bulletin board services, for the Company's Common Stock for each
quarter since Mr. Naylor and Mr. Ingram  acquired a controlling  interest in the
Company and  transferred  the PELs to the Company,  reviving it from its dormant
status.  Over-the-counter  quotations reflect inter-dealer prices without retail
mark-up, mark-down, or commission and may not represent actual transactions.

                                                    Common Stock
                                              ------------------------
                                                  High         Low
                                              ------------  ----------

            March 31, 1997                    $   1.875     $   1.25
            June 30, 1997                     $   0.5625    $   0.4375
            December 31, 1997                 $   0.50      $   0.375
            March 31, 1998                    $   0.3125    $   0.125
            June 30, 1998                     $   0.18      $   0.07
            September 30, 1998                $   0.16      $   0.125
            December 31, 1998                 $   0.16      $   0.14

During the last  fiscal  year,  the  Company  sold no  securities  that were not
registered under the Securities Act of 1933.

Item 6.  Management's Discussion and Analysis or Plan of Operation.

The  Company  has not had  revenues  from  operations  in either of the last two
fiscal years.  The Company's plan of operation for the next twelve months is set
forth below.

Given its current cash position and resources,  the Company  anticipates that it
can satisfy its cash requirements,  at current operating levels, for a period of
one year. The Company will continue to conduct investigations and evaluations of
promising  exploration and development  opportunities,  and will conduct testing
and gather data with respect to such properties,  but will defer any substantial
exploration or production activities pending receipt of additional financing.

The  Company  plans  to seek to raise  additional  capital  to fund  development
operations in Indonesia and to otherwise fund future exploration and development
operations.  The Company  anticipates  that funding  will be raised  through the
issuance of additional equity in either the private or public markets within the
next 12  months.  There can be no  assurance  that the  Company  will be able to
obtain any such financing.


<PAGE>



The  Company  does not  anticipate  any  significant  changes  in the  number of
employees, pending receipt of additional funding and commencement of exploration
and development activities.

Year 2000

The Year 2000 ("Y2K") problem is the result of two potential  malfunctions  that
could have an impact on systems and  equipment.  The first problem arises due to
computers  being  programmed  to use two rather  than four  digits to define the
applicable  year. The second problem arises in embedded chips,  where microchips
and  microcontrollers  have been  designed  using two rather than four digits to
define the applicable year. If uncorrected, the problem could result in computer
system and program  failures or  equipment  malfunctions  that could result in a
disruption of business operations.

To date, the Company has not completed an internal  review of its minimal number
of systems to determine major areas of exposure to Y2K issues.  The Company does
not, however, operate a significant number of computer systems and does not rely
on  computers to regulate any critical  corporate  functions.  Accordingly,  the
Company  believes that even without any  corrective  measures  being taken,  the
Company will not suffer material adverse effects from the Y2K problems. However,
there can be no assurance that the Company will not experience  loss of data and
loss of capacity  to  continue  pursuing  its  operations  if Y2K issues are not
addressed and remedied.

In addition, third parties with whom the Company interacts,  need to be surveyed
to assess Y2K compliance, or if contingency plans will become necessary. If such
third party systems are not addressed, any failure of such systems could have an
adverse effect on the Company's development and exploration activities. Inasmuch
as the Company  intends to rely  heavily on third  parties  for its  exploration
activities,  if such  third  parties'  systems  fail,  it could  have a material
adverse effect on the Company.


<PAGE>


Item 7.   Financial Statements.


                             MASON OIL COMPANY, INC.
                                 AND SUBSIDIARY

                        Consolidated Financial Statements
                               As of June 30, 1998






<PAGE>




                     MASON OIL COMPANY, INC. AND SUBSIDIARY




                                Table of Contents



                                                                   Page

Independent Auditors' Report..........................................1

Consolidated Financial Statements

      Consolidated Balance Sheet......................................2

      Consolidated Statements of Operations...........................3

      Consolidated Statement of Changes in Stockholders' Equity.......4

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

Notes to Consolidated Financial Statements............................7





<PAGE>





                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
Mason Oil Company, Inc. and Subsidiary


We have  audited  the  accompanying  consolidated  balance  sheet of  Mason  Oil
Company,  Inc. and  Subsidiary  (the  "Company")  as of June 30,  1998,  and the
related consolidated statements of operations,  changes in stockholders' equity,
and cash flows for each of the years in the two year period ended June 30, 1998.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial position of Mason Oil Company,
Inc. and Subsidiary as of June 30, 1998, and the results of their operations and
their  cash  flows for each of the years in the two year  period  ended June 30,
1998, in conformity with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial   statements,   the  Company's  future   exploration  and  development
commitments and recurring net losses raise  substantial  doubt about its ability
to continue as a going concern.  Management's  plans regarding those matters are
also  described in Note 2. As further  described in Note 5, the Company has been
unable to meet the exploratory  operation  requirements for its petroleum leases
(PEL's).  If  the  Company  is  unable  to  satisfactorily   obtain  a  modified
exploration  commitment and drilling  program  schedule,  the Company could lose
these PEL's.  These PEL's reflect the  Company's  only cost center and potential
revenue  source at this  time.  The  financial  statements  do not  include  any
adjustments that might result from the outcome of this uncertainty.




                                          /s/Ehrhardt Keefe Steiner & Hottman PC
                                             Ehrhardt Keefe Steiner & Hottman PC
December 3, 1998
Denver, Colorado


<PAGE>


                     MASON OIL COMPANY, INC. AND SUBSIDIARY

                           Consolidated Balance Sheet
                                  June 30, 1998


                                   Assets
Current Assets
 Cash and cash equivalents .............................     $   473,652
                                                             -----------
      Total current assets .............................         473,652
                                                             -----------

Property and equipment, at cost
 Unproved oil and gas properties, full
  cost method Notes 3 and 5) ...........................         274,994
     Vehicles ..........................................          37,185
     Other .............................................           7,684
                                                             -----------
                                                                 319,863
      Less accumulated depreciation ....................         (11,980)
                                                             -----------
                                                                 307,883
                                                             -----------
Other assets
 Investment in joint venture (Note 6) ..................         528,894
 Deposits ..............................................          19,682
                                                             -----------
                                                                 548,576
                                                             -----------

Total assets ...........................................     $ 1,330,111
                                                             ===========
                    Liabilities and Stockholders' Equity
Current liabilities
 Accounts payable ......................................     $    32,673
 Notes payable - related parties (Note 4) ..............         197,599
 Current portion of notes payable (Note 4) .............          13,588
                                                             -----------
      Total current liabilities ........................         243,860
                                                             -----------

Long-term notes payable (Note 4) .......................           1,695
Deferred salary - stockholder ..........................          72,000
                                                             -----------
      Total liabilities ................................         317,555
                                                             -----------

Commitments and contingencies (Notes 2, 5 and 6)

Stockholders' equity
 Common stock, $.001 par value, 200,000,000
  shares authorized; 11,697,171 issued and
  outstanding ..........................................          11,697
 Additional paid in capital ............................       2,485,994
 Accumulated deficit ...................................      (1,498,738)
 Foreign currency translation adjustment ...............          13,603
                                                             -----------
                                                               1,012,556
                                                             -----------

Total liabilities and stockholders' equity .............     $ 1,330,111
                                                             ===========
            See notes to consolidated financial statements.

                                 - 2 -

<PAGE>


                MASON OIL COMPANY, INC. AND SUBSIDIARY

                 Consolidated Statements of Operations


                                                   For the Years Ended
                                                          June 30,
                                               ------------------------------
                                                   1998               1997
                                               ------------      ------------

General and administrative expenses ......     $    799,293      $    312,940
Impairment loss on investment in joint
 venture (Note 6) ........................          406,649              --
                                               ------------      ------------
           Loss from operations ..........        1,205,942           312,940

Other (expense) income
 Interest income .........................           45,782            25,507
 Interest expense ........................          (28,024)          (13,939)
                                               ------------      ------------
                                                     17,758            11,568

Net (loss) ...............................     $ (1,188,184)     $   (301,372)
                                               ============      ============

Basic loss per common share ..............             (.10)             (.04)
                                               ============      ============

Weighted average common shares outstanding       11,398,815         8,028,767
                                               ============      ============




            See notes to consolidated financial statements.

                                 - 3 -


<PAGE>



                MASON OIL COMPANY, INC. AND SUBSIDIARY

       Consolidated Statement of Changes in Stockholders' Equity
<TABLE>
<CAPTION>


                                                                                                        Foreign
                                                  Common Stock           Additional                     Currency
                                            -------------------------      Paid-in     Accumulated    Translation
                                                Shares       Amount        Capital       Deficit       Adjustment           Total
                                              ---------   -----------   -----------    -----------    ------------     -------------


<S>                                               <C>             <C>           <C>             <C>            <C>             <C> 
Balance at June 30, 1996 ..............           100     $       100   $       900    $    (1,116)   $      (231)     $      (347)

Recapitalization and issuance of stock
 for assets in connection with reverse
 acquisition (Note 1) .................     9,225,354           9,125          (900)        (8,066)          --                159

Issuance of stock for consulting
 services (Note 6) ....................       190,000             190        34,776           --             --             34,966

Issuance of stock, net of related
 costs of $216,500 (Note 6) ...........     1,475,050           1,475     1,847,025           --             --          1,848,500

Net loss ..............................          --              --            --         (301,372)          --           (301,372)

Foreign currency translation adjustment          --              --            --             --          (1,347)          (1,347)
                                          -----------     -----------   -----------    -----------    -----------      -----------

Balance at June 30, 1997 ..............    10,890,504          10,890     1,881,801       (310,554)       (1,578)       1,580,559

Stock issued for investment in joint
 venture (Note 6) .....................       806,667             807       604,193           --             --            605,000

Net loss ..............................          --              --            --       (1,188,184)          --         (1,188,184)

Foreign currency translation adjustment          --              --            --             --           15,181           15,181
                                          -----------     -----------   -----------    -----------    -----------      -----------

Balance at June 30, 1998 ..............    11,697,171     $    11,697   $ 2,485,994    $(1,498,738)   $    13,603      $ 1,012,556
                                          ===========     ===========   ===========    ===========    ===========      ===========

</TABLE>





            See notes to consolidated financial statements.

                                 - 4 -

<PAGE>







                MASON OIL COMPANY, INC. AND SUBSIDIARY

                 Consolidated Statements of Cash Flows


                                                    For the Years Ended
                                                           June 30,
                                                 ----------------------------
                                                     1998             1997
                                                 -----------      -----------

Cash used in operating activities
   Net loss ................................     $(1,188,184)     $  (301,372)
                                                 -----------      -----------
   Changes to reconcile net loss to net cash
    used in operating activities
     Stock issued for services .............            --             34,966
     Impairment loss on disposal of joint
      venture interest .....................         406,649             --
     Depreciation and amortization .........          10,000            2,067
      Changes in assets and liabilities
       Prepaid expenses and other ..........           1,478           (1,857)
       Deposits ............................          (5,190)            (943)
       Organizational costs ................           1,049               77
       Accounts payable and accrued expenses          62,598           36,916
                                                 -----------      -----------
                                                     476,584           71,226
           Net cash used in operating
            activities .....................        (711,600)        (230,146)
                                                 -----------      -----------

Cash used in investing activities
 Purchase of interest in joint venture
  interest .................................        (300,000)            --
 Oil and gas exploration expenditures ......        (107,816)         (16,433)
 Purchase of vehicles and equipment ........          (7,012)         (11,754)
                                                 -----------      -----------
          Net cash used in investing
           activities ......................        (414,828)         (28,187)
                                                 -----------      -----------

Cash provided from financing activities
 Notes payable .............................          50,872             --
 Payments on notes payable .................         (14,076)         (15,629)
 Issuance of common stock, net .............            --          1,848,500
 Cash acquired in reverse acquisition ......            --              2,159
                                                 -----------      -----------
          Net cash provided by financing
           activities ......................          36,796        1,835,030
                                                 -----------      -----------

Effect of exchange rates on cash ...........         (24,343)          (1,347)
                                                 -----------      -----------

Net (decrease) increase in cash and cash
 equivalents ...............................      (1,113,975)       1,575,350

Cash and cash equivalents - beginning of
 period ....................................       1,587,627           12,277
                                                 -----------      -----------

Cash and cash equivalents - end of period ..     $   473,652      $ 1,587,627
                                                 ===========      ===========

Continued on the following page.


            See notes to consolidated financial statements.

                                 - 5 -

<PAGE>


                MASON OIL COMPANY, INC. AND SUBSIDIARY

                 Consolidated Statements of Cash Flows


Continued from the previous page.


Supplemental disclosure of non-cash financing and investing activities:

      During the year ended June 30, 1998,  the Company issued 806,667 shares of
      stock  valued at  $605,000  and paid  $300,000  cash to  purchase  a joint
      venture interest in a drilling rig.

      DURING FISCAL YEAR 1998 AND 1997, THE COMPANY FINANCED $9,554 AND $24,601,
      RESPECTIVELY, TO PURCHASE VEHICLES.

      DURING THE YEAR ENDED JUNE 30,  1997,  THE COMPANY  ENTERED  INTO A MERGER
      AGREEMENT  WHICH  HAS BEEN  ACCOUNTED  FOR AS A REVERSE  ACQUISITION.  THE
      FOLLOWING  ASSETS WERE ACQUIRED AND  LIABILITIES  WERE ASSUMED IN EXCHANGE
      FOR ALL COMMON STOCK OF THE SURVIVING COMPANY:

      Cash                                          $  2,159
      Notes payable                                   (2,000)
                                                    --------

      Net assets acquired                           $    159
                                                    ========

      Net common stock received                     $  9,125
      Reduction of additional paid-in-capital           (900)
      Net effect on retained earnings                 (8,066)
                                                    --------

      Net effect on equity                          $    159
                                                    ========






            See notes to consolidated financial statements.

                                 - 6 -



<PAGE>


                MASON OIL COMPANY, INC. AND SUBSIDIARY

              Notes to Consolidated Financial Statements


Note 1 - Organization and Summary of Significant Accounting Policies

Nature of Business and Organization

Mason Oil Company,  Inc. and Subsidiary  (the Company) was  incorporated in Utah
and conducts principally oil and gas acquisition,  exploration,  and development
activities  in South  Australia  through a wholly owned  Australian  subsidiary,
Hemley Exploration Pty. Ltd.

In October 1996, Mason Oil Company,  Inc. (Mason Oil) acquired all of the issued
and outstanding  common shares of IAN Holdings Limited and Subsidiaries (IAN) in
exchange  for  6,000,000  shares of common  stock of Mason  Oil.  For  financial
reporting purposes,  the business combination was accounted for as an additional
capitalization of the Company (a reverse  acquisition with IAN as the acquirer).
IAN is considered  the surviving  entity.  The historical  financial  statements
prior to the merger are those of IAN. Mason Oil's only assets  consisted of cash
and a liability  with a net book value of $159.  Mason Oil and IAN  subsequently
merged with Mason Oil (the  Company) as the legal  survivor and  continues to be
governed under such Articles of Incorporation  and bylaws in effect  immediately
prior to consummation of the merger.

Principles of Consolidation

The consolidated  financial  statements  include the accounts of Mason Oil, Inc.
and its wholly  owned  subsidiary.  All  significant  intercompany  accounts and
transactions have been eliminated in consolidation.

Risks and Uncertainties

Currently the Company has not identified any proven reserves, and therefore,  is
not involved in any oil & gas production  activities.  There can be no assurance
that in the future the Company will locate proved  reserves  associated with its
leasehold interests. In the event proved reserves are identified the feasibility
of recovery is strongly  dependent  upon world market  prices for oil & gas, and
accordingly  there can be no guarantee that amounts  capitalized as acquisition,
exploration,   and  development   costs  will  be  recoverable   through  future
operations.

The Company's  principal  operations are conducted in South  Australia where the
Australian dollar is the functional  currency.  Future operations of the Company
could be adversely affected by unfavorable foreign currency fluctuations.




                                 - 7 -


<PAGE>


                MASON OIL COMPANY, INC. AND SUBSIDIARY

              Notes to Consolidated Financial Statements


Note 1 - Organization and Summary of Significant Accounting Policies (continued)

Foreign Currency Translation

All assets and liabilities of the Company's  subsidiary are translated into U.S.
dollars using the prevailing exchange rates as of the balance sheet date. Income
and expenses are translated  using the weighted  average  exchange rates for the
period.  Stockholders'  investments  are translated at the  historical  exchange
rates  prevailing  at the time of such  investments.  Any gains or  losses  from
foreign   currency   translation  are  included  as  a  separate   component  of
stockholders'  equity.  The  prevailing  exchange  rate at  June  30,  1998  was
approximately 1 U.S. dollar to 1.62 Australian dollars.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original  maturities of
three months or less to be cash equivalents.  The Company had balances in excess
of FDIC limits of approximately $290,000 at June 30, 1998.

Deposits

Deposits  at June  30,  1998  consist  of  security  bonds on  deposit  with the
Australian  Department of Mines and Energy (MESA) as required by the  associated
license agreements and a deposit for an office in Jakarta, Indonesia.

Property and Equipment

Property  and  equipment  are stated at cost.  Depreciation  is  computed on the
straight-line  method over the estimated  useful lives of the assets which range
from five to seven years.

Oil and Gas Properties

The  Company  follows  the  full  cost  method  of  accounting  for  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.  Amounts  capitalized  by the  Company  as  exploration  costs
currently  consist of  geological  and  geophysical  (G&G)  costs in addition to
leasehold maintenance costs.




                                 - 8 -


<PAGE>


                MASON OIL COMPANY, INC. AND SUBSIDIARY

              Notes to Consolidated Financial Statements


Note 1 - Organization and Summary of Significant Accounting Policies (continued)

Oil and Gas Properties (continued)

Investments  in unproved  properties  are not  amortized  until proved  reserves
associated with the projects can be determined or until  impairment  occurs.  If
the results of an assessment  indicate  that the  properties  are impaired,  the
amount of the  impairment  is included  in  capitalized  costs to be  amortized.
Management  of the  Company  assesses  costs  excluded  from the full  cost pool
periodically for impairment.

Income Taxes

The Company is subject to U.S.  Federal  income  taxes and is subject to foreign
taxes in Australia for earnings of its Australian subsidiaries.  No income taxes
are currently due. The Company  recognizes  deferred tax assets and  liabilities
for  future tax  consequences  attributable  to  differences  between  financial
statement carry amounts of existing assets and liabilities and their  respective
tax bases.  Deferred tax assets and  liabilities  are measured using enacted tax
rules expected to apply to taxable income in the years in which those  temporary
differences  are  expected to be  recovered  and settled at June 30,  1998.  The
Company has foreign net operating loss carryforwards of approximately  $614,000,
which can be used to offset  future  Australian  income taxes  payable.  The net
operating  loss  carryforwards  have  been  fully  reserved  for by a  valuation
allowance.

Fair Value of Financial Instruments

The  carrying   amounts  for  cash,   accounts   payable  and  accrued  expenses
approximated  their fair values as of June 30, 1998 due to the relatively  short
maturities of these instruments.

The carrying amounts of Notes Payable  outstanding  also approximate  their fair
values  as of  June  30,  1998  because  interest  rates  on  these  instruments
approximate the interest rate on debt with similar terms to the Company.

The Company  cannot  reasonably  estimate  the fair value of  deferred  salary -
stockholder  due to  uncertainties  surrounding  the repayment which is based on
achieving certain revenue levels or capital being raised.

Use of Estimates

The  preparation  of  consolidated   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 consolidated
financial  statements and the reported  amounts of revenues and expenses  during
the reporting period. Actual results could differ from those estimates.

                                 - 9 -


<PAGE>


                MASON OIL COMPANY, INC. AND SUBSIDIARY

              Notes to Consolidated Financial Statements


Note 1 - Organization and Summary of Significant Accounting Policies (continued)

Basic Loss Per Common Share

During the year ended June 30,  1998,  the  Company  adopted the  provisions  of
Statement of Financial  Accounting  Standard No. 128, "Earnings Per Share" (SFAS
128). FAS 128 established  new definitions for calculating and disclosing  basic
and diluted earnings per share.  Basic loss per share is based upon the weighted
average number of shares outstanding.  All dilutive potential common shares have
an  antidilutive  effect on diluted net loss per share and  therefore  have been
excluded in determining net loss per share. The Company's basic and diluted loss
per share are  equivalent  and  accordingly  only  basic loss per share has been
presented.

Recently Issued Accounting Pronouncements

In June 1997, the FASB issued  Statement of Financial  Accounting  Standards No.
130, "Reporting  Comprehensive  Income" (SFAS 130), which establishes  standards
for  reporting  and  display  of  comprehensive   income,   its  components  and
accumulated balances.  Comprehensive income is defined to include all changes in
equity except those resulting from  investments by owners and  distributions  to
owners.  Among  other  disclosures,  SFAS 130  requires  that all items that are
required to be recognized  under current  accounting  standards as components of
comprehensive  income,  be reported in a financial  statement  that is displayed
with the same prominence as other financial statements.


Note 2 - Going Concern

The Company's  commitments for future  exploration  and  development  activities
required under its Petroleum  Exploration  Leases coupled with the recurring net
losses  from  inception  to June 30,  1998  raise  substantial  doubt  about the
entity's ability to continue as a going concern. Management's plans to fund such
commitments  include raising  additional capital through a private placement and
the public markets.  Management  believes that the Company will be able to raise
adequate capital to fund such future exploration and development operations.


Note 3 - Unproved Oil and Gas Properties

The Company  maintains two  petroleum  exploration  leases  (PEL's) with 5 years
terms  expiring May 22, 2001.  The Company may renew the leases for additional 5
year terms subject to the terms contained in the PEL's (Note 5).

                                - 10 -


<PAGE>


                MASON OIL COMPANY, INC. AND SUBSIDIARY

              Notes to Consolidated Financial Statements


Note 3 - Unproved Oil and Gas Properties (continued)

The Company is currently  participating in oil and gas exploration activities on
approximately 4,200,000 acres in the state of South Australia, which is known as
the  Eastern  Officer  Basin  situated  approximately  200 miles  south of Alice
Springs and 700 miles north of Adelaide.  Such acreage  comprises  the Company's
only cost center. The Company  anticipates  commencement of drilling  activities
during fiscal year 1999.

Costs excluded from amortization consist of the following at June 30, 1998:



                              Acquisition    Exploration
   Period Incurred               Costs          Costs          Total
--------------------------     ---------      ---------      ---------

Inception to June 30, 1998     $  23,874      $ 251,120      $ 274,994
                               =========      =========      =========

Period ended June 30, 1996     $  27,339      $ 147,539      $ 174,878
Year ended June 30, 1997            --           18,015         18,015
Year ended June 30, 1998            --          115,057        115,057
Effect of exchange rates          (3,465)       (29,491)       (32,956)
                               ---------      ---------      ---------

                               $  23,874      $ 251,120      $ 274,994
                               =========      =========      =========


Note 4 - Notes Payable

Notes payable consists of the following at June 30, 1998:

Note payable  (unsecured) -  stockholder,  interest at 8%, due
 on demand ...................................................     $173,718

Note payable  (unsecured) -  stockholder,  interest at 8%, due
 on demand ...................................................       23,881
                                                                   --------

Total related party notes payable ............................     $197,599
                                                                   ========
Note payable - finance  corporation,  interest at 8.5%, due in
 monthly  installments  of $431 including interest through
 October 1999.  The note is collateralized by a vehicle ......     $  6,535

Note  payable - finance  corporation,  interest at 11%, due in
 monthly  installments  of $557 including interest through
 March 1999.  The note is collateralized by a vehicle ........        4,786


                                - 11 -


<PAGE>


                MASON OIL COMPANY, INC. AND SUBSIDIARY

              Notes to Consolidated Financial Statements


Note 4 - Notes Payable (continued)

Note payable - finance  corporation,  interest at 10.35%,  due
 in monthly  installments of $379 through May 1999.  The note
 is collateralized by a vehicle ..............................        3,962
                                                                   --------
                                                                     15,283
      Less current portion ...................................      (13,588)
                                                                   --------
                                                                   $  1,695
                                                                   ========

Future installments due on notes payable are as follows:

            Year Ending June 30,
            --------------------

                    1999           $13,588
                    2000             1,695
                                   -------

                                   $15,283
                                   =======


Note 5 - Commitments and Contingencies

Petroleum Exploration Licenses (PEL's)

The Company has two  Petroleum  Exploration  Licenses  (PEL's) with the state of
South  Australia  which  contain  certain  commitments  related  to  exploratory
operations  to be incurred  over the five year term of each lease.  The licenses
contain   estimates  of  the  costs  to  complete  such  exploratory   operation
requirements,  stated in  Australian  dollars (A $) which are also  presented in
United States dollars (U.S. $) using the June 30, 1998 exchange rate as follows:

                                     A $             U.S. $
                                ------------     -------------


Year one, ending May 22, 1997      $1,895,000      $1,170,000
Year two, ending May 22, 1998       2,340,000       1,444,000
Year three, ending May 22, 1999     4,150,000       2,562,000
Year four, ending May 22, 2000      5,720,000       3,531,000
Year five, ending May 22, 2001      5,275,000       3,256,000
                                   ----------      ----------

Total estimated exploratory
 costs                            $19,380,000     $11,963,000
                                  ===========     ===========


                                - 12 -


<PAGE>


                MASON OIL COMPANY, INC. AND SUBSIDIARY

              Notes to Consolidated Financial Statements


Note 5 - Commitments and Contingencies (continued)

Petroleum Exploration Leases (PEL's) (continued)

As of June 30,  1998,  the  Company  has  been  unable  to meet the  exploratory
operation requirements of the PEL's. MESA has eased the requirements  associated
with the  Company's  PEL's and has  agreed to work with the  Company  to reach a
revised   exploration   commitment   schedule  including  drilling   activities.
Currently,  the Company's  management and legal counsel believes that both PEL's
are in good standing with MESA and anticipates receiving favorable approval of a
revised exploration and drilling activity commitment schedule in 1999.


In addition to the PEL's, the Company entered into Access Agreements with Anangu
Pitjanjatjara (AP) on March 5, 1996 and with the Yankunytjatjara Council (YC) on
May 1, 1998.  Pursuant  to such  agreements,  the Company has agreed that annual
rental  payments  be made to AP and YC for each of the  parcels  covered  by the
PEL's. While both Access Agreements  stipulate a minimum payment of $12,300, the
rental  payments  for AP and YC are  calculated  based upon the amount of Annual
Exploration Expenditures (AEE's) incurred as follows:

      2.5% AND 2.55%,  RESPECTIVELY OF AEE'S LESS THAN OR EQUAL TO $308,600 1.5%
      OF AEE'S IN EXCESS OF $308,600

The conversion  rate used for these  financial  statement  disclosures are as of
June 30, 1998 and reflect an exchange  rate of  approximately  1 U.S.  dollar to
1.62 Australian dollar.

Under  the terms of the  Access  Agreements,  any  application  for a  Petroleum
Production  License (PPL) by the Company would entitle the respective parties to
obtain a participatory  interest in any exploration and production joint venture
agreement (JVA). If either party so elects, the maximum  participating  interest
is 10% in no event can the participatory interest be less than 1%.

The access  agreements  provide  for the  reimbursement  of  surveying  services
provided by AP and YC and for certain overriding royalty payments to be made for
all  petroleum  recovered  under  any  PEL's  or any PPL  granted  by the  South
Australian Department of Mines and Energy. In addition, certain stockholders' of
the Company have been personally granted a 3% overriding royalty interest in any
PPL's granted to the Company's subsidiary Hemley Exploration Pty. Ltd.

Operating Leases

In March 1997,  the Company's  Australian  subsidiary  entered into an operating
lease for office space.  The terms of the lease provide for minimum  payments of
approximately  $8,600  annually  and the lease  expires in March  1999,  with an
option to renew for three  additional  years.  The future minimum lease payments
under the  office  lease for the fiscal  year  ended June 1999 is  approximately
$6,500.

                                - 13 -


<PAGE>


                MASON OIL COMPANY, INC. AND SUBSIDIARY

              Notes to Consolidated Financial Statements


Note 5 - Commitments and Contingencies (continued)

Operating Leases (continued)

Rental  expense under the office lease was  approximately  $9,446 and $2,860 for
the years ended June 30, 1998 and 1997.

In June 1998,  the  Company's  Australian  subsidiary  entered into an operating
lease for  residential  housing.  The terms of the lease  provide  for  payments
totaling approximately $8,700 for a one year term.

Rental expense for housing leases was  approximately  $20,600 for the year ended
June 30, 1998.

Stock Options

The Company had the following  stock option activity for the year ended June 30,
1998:

                                           Exercise
                               Number        Price        Expiration
                             ----------    ---------    ---------------

Balance at June 30, 1997             -     $     -
Stock options issued          3,500,000         1.00    November 14, 2002
Stock  options   cancelled   (1,500,000)        1.00
                             ----------    ---------

Balance at June 30, 1998     2,000,000     $    1.00    November 14, 2002
                             =========     =========

(1)   Options  were  issued to  outside  consultants  and  directors  for future
      services to be  performed.  Such  services  were never  performed  and the
      related options were cancelled.

Contingent Claim

The Company has received  notification from an unrelated Australian  exploration
company  (AEC) for damages  which it claims it will seek if it forfeits its only
significant  asset  (a  certain  PEL) as a  result  of  early  1998  acquisition
negotiations  between AEC and the Company.  Management  of the Company and legal
counsel  believe this contingent  claim will not result in any material  adverse
effect on the financial condition of the Company.

Consulting Agreement - Related Party

The Company has entered into a consulting  agreement with a company owned by one
of the Company's  directors.  The agreement calls for engineering services to be
provided  to  the  Company's  subsidiary  at a  rate  of  approximately  $75,000
annually.  The Company  paid  approximately  $65,000  and $35,000 in  consulting
expense  to this  related  entity for the years  ended  June 30,  1998 and 1997,
respectively.
                                - 14 -


<PAGE>


                MASON OIL COMPANY, INC. AND SUBSIDIARY

              Notes to Consolidated Financial Statements


Note 6 - Investment in Joint Venture

In  September  1997,  the Company  entered  into an  agreement to purchase a 50%
interest  in a joint  venture to own and  operate a drilling  rig.  Based on the
terms of the  agreement,  the  purchase  price of $905,000 was funded by issuing
806,667 shares of common stock valued at $605,000 and $300,000 cash.

As a result of declining world oil prices mobilization and use of the rig became
unfeasible,  and the Company  entered  into an agreement in October 1998 to sell
their  interest in the drilling  rig joint  venture back to the other 50% owner.
The  subsequent  sale of the  Company's  investment  in the  drilling  rig joint
venture  caused the Company to record an impairment of $406,649,  reflecting the
net realizable value of the investment. Based on the terms of the agreement, the
net realizable  value of $522,459 from the sale is to be received in the form of
a $300,000 note receivable,  the transfer of title to the Company for a portable
rig camp  valued at  $121,626,  and the  return of 806,667  shares of  Company's
common stock  originally  used to purchase the joint venture  interest valued at
$100,833.


                                - 15 -



<PAGE>



Item 8.  Changes In and Disagreements With Accountants on Accounting 
and Financial Disclosure.

As previously reported in a current report on Form 8-K dated September 22, 1997,
effective as of September 22, 1997, the firm of Mantyla, McReynolds & Associates
("Mantyla") was dismissed as the Company's principal independent accountant, and
the  accounting  firm of Ehrhardt  Keefe Steiner & Hottman PC was engaged by the
Company to serve as the principal  accountants to audit the Company's  financial
statements.

The reports of Mantyla on the Company's financial  statements for the two fiscal
years ended  December  31, 1995 and December 31, 1994 did not contain an adverse
opinion or  disclaimer  of opinion  and were not  qualified  or  modified  as to
uncertainty,  audit,  scope,  or accounting  principles.  The decision to change
accountants  was approved by the  Company's  Board of  Directors.  There were no
disagreements with Mantyla, whether or not resolved, on any matter of accounting
principles or practices,  financial statement  disclosure,  or auditing scope or
procedure,  which, if not resolved to Mantyla's satisfaction,  would have caused
Mantyla  to  make  reference  to  the  subject  matter  of the  disagreement  in
connection with its report.

                               PART III

Item 9.  Directors, Executive Officers, Promoters and Control 
Persons; Compliance with Section 16(a) of the Exchange Act.

The Company's directors and executive officers are as follows:

Paul B. Ingram, Age 67
President and Principal Executive Officer Mr. Ingram has served as the President
and a director of the Company since September 13, 1996. Mr. Ingram was active as
an independent oil and gas producer until 1995.

John L. Naylor, Age 58
Secretary-Treasurer  and Principal  Accounting and Financial  Officer Mr. Naylor
has served as the Secretary and Treasurer of the Company, and as a member of its
Board of Directors,  since September 13, 1996. Mr. Naylor has been active in the
oil and gas business for the past 30 years both from a technical  and a business
standpoint in Australia, Southeast Asia and the U.S.

John K. Price,  Age 56
Mr. Price has served as a director of the Company since December 1996. Mr. Price
is a college  professor at North West  Louisiana  University.  Mr. Price holds a
Ph.D. degree in Political Science.

Geoffrey J. Pickles,  Age 60 
Mr.  Pickles has served as a director of the Company since June 1, 1997. He is a
stock broker in the energy  field in Sydney,  NSW,  Australia,  with the firm of
Dicksons  Limited.  Mr.  Pickles  has  had  many  years  of  experience  in  the
exploration and development of natural resources.

All directors  serve until the next annual  meeting of  shareholders,  and until
their successors are duly elected and qualified.  None of the current  directors
of the Company serves as a director of any other reporting company.


<PAGE>



The Company has no employees other than its executive officers.

Section  16(a) of the  Securities  Exchange Act of 1934  requires the  Company's
officers  and  directors,  and  persons  who own  more  than  ten  percent  of a
registered  class of the Company's  equity  securities,  to file certain reports
regarding  ownership of and transactions in the Company's equity securities with
the Securities and Exchange Commission. Such officers, directors and ten-percent
shareholders  are also  required by SEC rules to furnish the Company with copies
of all Section 16(a) forms that they file.

Based  solely  upon its review of copies of such forms or "no  filings  required
letters"  received by it, the Company believes that during the fiscal year ended
June 30, 1997, all reports were filed on a timely basis.

Item 10.  Executive Compensation.

Set forth below is a Summary Compensation Table, showing the various elements of
compensation  earned  during  the last  completed  fiscal  year and  during  the
previous  two years.  No  executive  officer  was  compensated  in the amount of
$100,000 or more during any of the last three years.

<TABLE>
<CAPTION>


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

<S>                    <C>       <C>           <C>          <C>             <C>             <C>           <C>            <C>
CEO                    1998      $48,000*      0            0               0               0             0              0
Paul B. Ingram         1997      $24,000*      0            0               0               0             0              0
</TABLE>


*     Compensation  is earned and accrued at this rate,  commencing from January
      1, 1997,  but payments have been deferred until the Company has sufficient
      cash flow.

Item 11. Security Ownership of Certain Beneficial Owners and Management.

The table  below sets forth as of the  Record  Date (i) the name and  address of
each person known by management to own beneficially  more than five percent (5%)
of the Company's  outstanding  Common Stock,  the number of shares  beneficially
owned by each such  shareholder  and the percentage of outstanding  shares owned
and (ii) the  number  and  percentage  of  outstanding  shares of  Common  Stock
beneficially  owned  by each of the  Company's  directors  and  each of the five
highest  paid  executive  officers  of  the  Company,   individually  (excluding
executive  officers whose annual  compensation is less than $100,000) and by all
directors and  executive  officers of the Company as a group.  Unless  otherwise
noted,  the  persons  named  below have sole  voting and  investment  power with
respect to such shares.


<PAGE>


                                                         Percent
                                          Number of    Beneficially
        Beneficial Owners                  Shares         Owned
-------------------------------------    -----------    ----------

Paul B. Ingram (Director and Officer)
6337 Ravenwood Drive
Sarasota, FL 34243 ..................     3,700,000        33.97%

John L. Naylor (Director and Officer)
6337 Ravenwood Drive
Sarasota, FL 34243 ..................     3,700,000        33.97%

Geoffrey J. Pickles (Director)
Kardinea Road
Cliffton Gardens
2088 NSW, Australia .................             0         0%

John K. Price (Director)
104 Wynnwood
Ruston, Louisiana 71270 .............             0         0%

All Executive Officers and
Directors as a group (4
persons)-Total ......................     7,400,000        67.94%

Item 12.  Certain Relationships and Related Transactions.

Except as otherwise set forth below, to the knowledge of management,  during the
past two years,  the Company  was not  involved  in any  transaction  and is not
currently involved in any proposed  transaction,  in which the Company or any of
its  subsidiaries  was or is to be a  party,  in  which  any  of its  directors,
officers,  nominees for  election as  directors,  security  holders or immediate
family member of any of the parties  mentioned above,  have a direct or indirect
material interest,  other than transactions  involving  employment or consulting
relationships  or other  transactions  where the amount  involved did not exceed
$60,000 per year.  The Company has entered  into a  consulting  arrangement  for
engineering  services  with an entity  owned by John  Naylor,  a director of the
Company.  The Company paid  approximately  $65,000  during the fiscal year ended
June  30,  1998  under  such  consulting   arrangement.   Additionally,   Hemley
Exploration Pty. Ltd., a wholly owned  subsidiary of the Company,  paid for John
L. Naylor's rent and living expenses for  approximately  one month when he moved
from the Philippines to Australia during the last fiscal year.


<PAGE>



Item 13.  Exhibits and Reports on Form 8-K.

      (a)  Exhibits

          *Exhibit 3.1 Articles of  Incorporation  of the Registrant.  (Filed as
           Exhibit 3.1 to the Registrant's Form 10-SB-A1, Reg. No. 0-28184 filed
           May 31, 1996).
<TABLE>
<CAPTION>

                 <S>          <C>                                                         
                *Exhibit 3.2  Articles of  Amendment  to  Articles of  Incorporation.
                              (Filed  as  Exhibit  3.2  to  the   Registrant's   Form
                              10-SB-A1, Reg. No. 0-28184 filed May 31, 1996).

                *Exhibit 3.3  Bylaws  of the  Registrant.  (Filed as  Exhibit  3.3 to
                              the Registrant's Form 10-SB-A1,  Reg. No. 0-28184 filed
                              May 31, 1996).


                *Exhibit 3.4  Amended  Bylaws of the  Registrant.  (Filed as  Exhibit
                              3.4  to  the  Registrant's  Form  10-SB-A1,   Reg.  No.
                              0-28184 filed May 31, 1996).

                *Exhibit 10   Stock Purchase Agreement,  dated September 10, 1996, by
                              and between Craig Carpenter,  Mason Oil Company,  Inc.,
                              Paul B.  Ingram and John L.  Naylor.  (Filed as Exhibit
                              2.1 to the Registrant's  Form 10-QSB Reg. No. 000-28184
                              filed November 15, 1996).

                *Exhibit 10.1 Stock  Purchase and Sale  Agreement,  dated October 14,
                              1996,  between  Registrant,  Paul B. Ingram and John L.
                              Naylor.  (Filed  as  Exhibit  2.2 to  the  Registrant's
                              Form 10-QSB Reg. No. 000-28184      filed      November
                              15, 1996).

                *Exhibit 10.2 Access  Agreement  between  Anangu  Pitjantjatjara  and
                              John Leonard  Naylor and Paul Bryan  Ingram.  (Filed as
                              Exhibit 2.5 to the Registrant's  Form 10-QSB,  Reg. No.
                              000-28184 filed February 21, 1997).

                *Exhibit 10.3 Petroleum  Exploration  License  (PEL)  No.  61 and PEL
                              Agreement.  (Filed as Exhibit  2.3 to the  Registrant's
                              Form 10-QSB  Reg.  No.  000-28184  filed  February  21,
                              1997).

                *Exhibit 10.4 Petroleum   Exploration   License   No.   63  and   PEL
                              Agreement.  (Filed as Exhibit  2.4 to the  Registrant's
                              Form 10-QSB  Reg.  No.  000-28184  filed  February  21,
                              1997).

                *Exhibit 10.5 Joint  Venture  Agreement  between  Hemley  Exploration
                              PTY.  LTD.,  an  Australian  corporation  and PT. PUTRA
                              BAKTI MAHKOTA, an Indonesian  corporation.  (Filed
                              as Exhibit  10.5 to the  Registrant's  Form 10-KSB
                              for the fiscal year ended June 30, 1997).

                *Exhibit 10.6 Subscription  Agreement and Investment  Representation,
                              dated  February  28,  1997.  (Filed as Exhibit  10.1 to
                              the  Registrant's  Form 10-QSB Reg. No. 000-28184 filed
                              May 20, 1997).


<PAGE>




                *Exhibit 10.7 Consulting  Fee  Agreement  dated  February  28,  1997.
                              (Filed  as a  plan  to  the  Registrant's  Registration
                              Statement  in Form S-8 Reg. No.  333-24467  filed April
                              3, 1997).

                *Exhibit 10.8 Amendment No. 1 to Consulting  Fee Agreement  dated May
                              8, 1997,  amending the Consulting  Fee Agreement  dated
                              February  28,  1997,  and  previously  filed  with  the
                              Securities  and  Exchange  Commission  on  a  Form  S-8
                              Registration  Statement  dated March 25,  1997.  (Filed
                              as Exhibit  10.2 to the  Registrant's  Form 10-QSB Reg.
                              No. 000-28184 filed May 20, 1997).

                Exhibit 10.9  Access  Agreement dated May 1, 1998 among Yan
                              Kun   ytjatjara    Council,    Antakirinja    Land
                              Management,  Paddy Jones, Jean Woods,  Tilly Waye,
                              Sadie  Singer,  Lallie  Dennon,  Johnny  Cullinan,
                              William Herbert Lennon Snr.,  Eileen Crombie,  Ian
                              Crombie, Keith Smith and Henley

                Exhibit 10.10 Drilling Rig Sales Agreement
                        

                Exhibit 10.11 Memorandum   of   Agreement    between   PT.   Patrindo
                              Persadamadjn  and Hemley  Exploration  Pty. Ltd., dated
                              August 24, 1998.

                *Exhibit 16   Letter on Change in  Certifying  Accountant.  (Filed as
                              Exhibit  16  to  the  Registrant's  Form  8K  Reg.  No.
                              0-28184 filed September 29, 1997).

                Exhibit 21    Subsidiaries of the Registrant.

                Exhibit 24    Power of Attorney (included on page 17 herewith).

                Exhibit 27    Financial Data Schedule.
</TABLE>

*Exhibits incorporated herein by reference.


<PAGE>


                              SIGNATURES

In  accordance  with Section 13 or 15(d) of the  Securities  and Exchange Act of
1934,  the  Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

January _____, 1999


                               MASON OIL COMPANY, INC.



                               By: /s/Paul B. Ingram                           
                                     Paul B. Ingram, President (Principal
                                     Executive Officer) and Director


                           POWER OF ATTORNEY

KNOW ALL PERSONS by these  presents  that each person  whose  signature  to this
Annual Report appears below hereby  constitutes  and appoints Paul B. Ingram and
John L.  Naylor,  and each of them as his true and lawful  attorney-in-fact  and
agent, with full power of substitution,  to sign on his behalf  individually and
in the  capacity  stated  below and to perform any acts  necessary to be done in
order  to file all  amendments  and  post-effective  amendments  to this  Annual
Report,  and  any  and  all  instruments  or  documents  filed  as part of or in
connection  with this Annual  Report or the  amendments  thereto and each of the
undersigned  does hereby ratify and confirm all that said  attorney-in-fact  and
agent, or his substitutes, shall do or cause to be done by virtue hereof.

In accordance  with the  requirements  of Section 13, or 15(d) of the Securities
and  Exchange  Act of 1934,  the  Registrant  has duly  caused this report to be
signed below by the  following  persons on behalf of the  Registrant  and in the
capacities and on the dates indicated.


      January ___, 1999        /s/Paul B. Ingram                          
                               Paul B. Ingram, President (Principal
                               Executive Officer) and Director

      January ___, 1999        /s/John L. Naylor
                               John L. Naylor, Secretary-Treasurer
                               (Principal Accounting and Financial
                               Officer) and Director


      January ___, 1999        /s/John Price
                               John Price, Director


      January ___, 1999        /s/Geoffrey J. Pickles
                               Geoffrey J. Pickles, Director