SECURITIES & EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 1O-QSB

(X)  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934

     For the quarterly period ended September 30, 1996

                                       or

(-)  Transition  Report  Pursuant  to  Section  13 or  15(d)  of the  Securities
     Exchange Act of 1934

         For the transition period from ____________ to ____________

                           Commission File No.0-25658

                            KNIGHT NATURAL GAS, INC.
             (Exact name of Registrant as specified in its charter)

       Colorado                                               84-1357927
(State or other jurisdiction                                (I.R.S. Employer
of incorporation or organization)                          Identification No.)

         Tower I, Suite 340,
         12835 E. Arapahoe Road
         Englewood, Colorado                                         80112
         (Address of principal executive offices)                    (Zip Code)



                                 (303) 706-1606
               (Registrant's telephone number including area code)


Indicate by check mark whether the Registrant (1) had filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or 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___

The number of shares  outstanding  of  Registrant's  common  stock,  par value $
 .00001 per share, as of September 30, 1996 was 15,552,500 shares.



<PAGE>


                         PART 1 - FINANCIAL INFORMATION

ITEM I. Financial Statements


Knight Natural Gas, Inc.
(A Development Stage Company)
Balance Sheet
<TABLE>
                                                Unaudited    Audited
                                                September    December
                                                 30, 1996    31, 1995
                                                 --------    --------
ASSETS

<S>                                              <C>         <C>
Cash                                             $     389    $     647
Deferred Property Acquisition Costs                119,808            0
                                                 ---------    ---------

Total Current Assets                               120,197          647
                                                 ---------    ---------
TOTAL ASSETS                                     $ 120,197    $     647
                                                 =========    =========
LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES

Current Liabilities

Current Maturities Of Long-Term Debt             $  39,091            0
Advances From Shareholders'                         10,544            0
Other Accrued Expenses                                 209            0
                                                 ---------    ---------
Total Current Liabilities                           49,844            0
                                                 ---------    ---------
Long-Term Debt                                      60,685            0
                                                 ---------    ---------
TOTAL LIABILITIES                                  110,529            0
                                                 ---------    ---------
SHAREHOLDERS' EQUITY

Preferred Stock, $.10 Par Value, Non Voting
Authorized 1,000,000 Shares;
Issued And Outstanding -0- Shares                        0            0

Common Stock, $.00001 Par Value
Authorized 100,000,000 Shares;
Issued And Outstanding 15,552,500 and 2,052,500        156           21

Capital Paid In Excess Of
Par Value Of Common Stock                          447,573      422,649           

Retained Deficit Prior To January 1, 1993         (417,421)    (417,421)

Deficit Accumulated During
The Development Stage                              (20,640)      (4,602)
                                                 ---------    ---------
TOTAL SHAREHOLDERS' EQUITY                           9,668          647
                                                 ---------    ---------
TOTAL LIABILITIES AND  SHAREHOLDERS' EQUITY      $ 120,197    $     647
                                                 =========    =========
</TABLE>

   The Accompanying Notes Are An Integral Part Of These Financial Statements.

                                       F-1

<PAGE>


Knight Natural Gas, Inc.
(A Development Stage Company)
Unaudited Statement Of Operations
<TABLE>
                                                Three Month   Three Month
                                                September     September
                                                 30, 1996     30, 1995
                                                 --------     --------
<S>                                            <C>           <C>       
Revenue                                        $        0    $        0
                                               ----------    ----------
Expenses:

Licenses And Fees                                       0             0
Office                                              1,628            23
Professional                                        4,000             0
Salaries                                            4,742             0
Taxes - Payroll                                       363             0
                                               ----------    ----------
Total                                              10,733            23
                                               ----------    ----------
Net (Loss)                                        (10,733)          (23)
                                               ==========    ==========
Net (Loss) Per  Common Share                           (0)           (0)
                                               ==========    ==========
Weighted Average Common Shares Outstanding     $3,347,021    $2,052,500
                                               ==========    ==========  
</TABLE>
   The Accompanying Notes Are An Integral Part Of These Financial Statements.

                                       F-2


<PAGE>


Knight Natural Gas, Inc.
(A Development Stage Company)
Unaudited Statement Of Operations
<TABLE>
                                                                      January
                                                                      1, 1993
                                                                     (Inception)
                                      Nine Month      Nine Month      Through
                                      September       September       September
                                      30, 1996        30, 1995        30, 1996
                                      --------        --------        --------
<S>                                    <C>             <C>            <C>       
Revenue                               $        0      $        0     $        0
                                      ----------      ----------     ----------
Expenses:

Licenses And Fees                            210               0            210
Office                                     1,696              68          2,088
Professional                               9,027           3,700         13,237
Salaries                                   4,742               0          4,742
Taxes - Payroll                              363               0            363
                                      ----------      ----------     ----------
Total                                     16,038           3,768         20,640
                                      ----------      ----------     ----------
Net (Loss) Before Other (Expenses)       (16,038)         (3,768)       (20,640)

Other Expense - Interest                       0               0              0
                                      ----------      ----------     ----------
Net (Loss)                            $  (16,038)     $   (3,768)    $  (20,640)
                                      ==========      ==========     ========== 
Net (Loss) Per Common Share                   (0)             (0)            (0)
                                      ==========      ==========     ========== 
Weighted Average Common Shares         3,347,021       2,052,500      3,347,021
  Outstanding                         ==========      ==========     ========== 
</TABLE>
   The Accompanying Notes Are An Integral Part Of These Financial Statements.

                                       F-3

<PAGE>


Knight Natural Gas, Inc.
(A Development Stage Company)
Unaudited Statement Of Cash Flows
<TABLE>
                                                                      January
                                                                      1, 1993
                                                                     (Inception)
                                      Nine Months     Nine Months     Through
                                      September       September       September
                                       30, 1996       30, 1995        30, 1996
                                       --------       --------        --------
<S>                                  <C>            <C>              <C>
Net (Loss) Accumulated  
 During The Development  Stage          (16,038)        (3,768)         (20,640)
Stock Issued Not For Cash                     0              0               15
Increase In Accrued Expenses                209              0              209
                                     ----------     ----------       ----------
Cash Flows From Operations              (15,829)        (3,768)         (20,416)
                                     ----------     ----------       ----------
Cash Flows From Financing Activities:

Advances From Shareholders'              10,544              0           10,544
Contribution Of Capital                   5,027          3,700            8,727
                                     ----------     ----------       ----------
Cash Flows From Financing                15,571          3,700           19,271
                                     ----------     ----------       ----------
Cash Flows From Investing Activities:

                                              0              0                0
                                     ----------     ----------       ----------
Cash Flows From Investing                     0              0                0
                                     ----------     ----------       ----------
Net Increase In Cash                       (258)           (68)          (1,145)
Cash At Beginning Of Period                 647            924            1,534
                                     ----------     ----------       ----------
Cash At End Of Period                $      389     $      856       $      389
                                     ==========     ==========       ==========




Summary Of Non-Cash Investing And Financing Activities:

1,500,000 Shares Issued For Service @ $.00001
 Per Share                                                           $       15
                                                                     ==========
Deferred Property Acquisition Costs  $  119,808                      $  119,808
 Less Debt Assumed                      (99,776)                        (99,776)
                                     ----------                      ----------
Acquisition Of Mining Rights         $   20,032                      $   20,032
                                     ==========                      ==========
</TABLE>
   The Accompanying Notes Are An Integral Part Of These Financial Statements.

                                       F-4


<PAGE>


Knight Natural Gas, Inc.
(A Development Stage Company)
Statement Of Shareholders' Equity
<TABLE>
                                                                                                                 Deficit
                                                                        Capital                                Accumulated
                                                   Number Of            Paid In  Number Of                      During The
                                                    Common   Common    Excess Of Preferred Preferred  Retained  Development
                                          Notes     Shares    Stock    Par Value   Shares    Stock     Deficit     Stage      Total
                                          -----     ------    -----    ---------   ------    -----     -------     -----      -----
<S>                                       <C>      <C>      <C>          <C>      <C>      <C>       <C>        <C>        <C>     
Balance At January 1, 1993 ...............         552,500        6      418,949        0        0   $(417,421)        0   $  1,534


Net (Loss) December 31, 1993 .............                                                                          (336)      (336)
                                                  -------- --------     -------- -------- --------              --------   --------
Balance At December 31, 1993 .............         552,500        6      418,949        0        0    (417,421)     (336)  $  1,198

Issuance Of Common Stock: ................1,2
 November 1, 1994 - Services @
 $.00001 per Share .......................       1,500,000       15            0                                           $     15

Net (Loss) December 31, 1994 .............                                                                         (289)       (289)
                                                 ------------------------------------------------------------- --------    --------
Balance At December 31, 1994 .............       2,052,500       21     $418,949        0        0   $(417,421)$   (625)   $    924

Capital Contribution .....................                                 3,700                                              3,700

Net (Loss) @ December 31, 1995 ...........                                                                       (3,977)     (3,977)
                                                 ------------------------------------------------------------- --------    --------

Balance At December 31, 1995 .............       2,052,500       21     $422,649        0        0   $(417,421)$ (4,602)   $    647
                                                 =========     ====     ========     ====     ====   ========= ========    ========
Capital Contribution .....................                                 5,027                                              5,027

Stock Issued In Exchange For Assets Valued
 @ $.0015 ................................      13,500,000      135       19,897                                             20,032

Unaudited Net (Loss) @ September 30, 1996.                                                                      (16,038)    (16,038)
                                                 ------------------------------------------------------------- --------    --------
Balance At September 30, 1996 ............      15,552,500   $  156     $447,573     $  0     $  0   $(417,421)$(20,640)   $  9,668
                                                 =========     ====     ========     ====     ====   ========= ========    ========
</TABLE>
   The Accompanying Notes Are An Integral Part Of These Financial Statements.

                                       F-5
<PAGE>


KNIGHT NATURAL GAS, INC.
Footnotes
September 30, 1996

NOTE 1

In the  opinion  of  management,  all  adjustments,  consisting  only of  normal
recurring  adjustments  necessary  for a fair  statemetn  of (a) the  results of
operations for the nine month period ended  September 30, 1996 and 1995, and for
the  periods  from  inception  at January 1, 1993 to  September  30,  1996,  (b)
financial  position at September 30, 1996 and December 31, 1995 adn (c) the cash
flows for the nine months ended  September  30, 1996 and 1995 and for the period
from  inception,  January 1, 1993  (inception)  to September  30, 1996 have been
made.

NOTE 3

The  results  for the  nine  month  period  ended  September  30,  1996  are not
necessarily  indicative of the results for the entire fiscal year ended December
31, 1996.

                                      F-6

<PAGE>


ITEM 2. Managements  Discussion and Analysis of Financial  Condition and Results
        of Operations

          Results of Operations

     The Company has generated no  substantial  revenues from its operations and
has been a development stage company since inception.  Since the Company has not
generated revenues and has never been in a profitable position, it operates with
minimal  overhead.  In August,  1996,  the Company  effected an  acquisition  of
certain  defined assets and liabilities of Sedcore  Exploration  Company Limited
("Sedcore")  in exchange for  5,000,000  common  shares of the  Company,  and an
additional  acquisition,  for certain  additional  defined  assets of Sedcore in
exchange for 8,500,000 common shares of the Company. The transactions have given
the Company  effective  control of defined  assets of  Sedcore,  and the current
control shareholders of Sedcore now control both companies. The Company plans to
change its name to "KALAN GOLD CORPORATION" or some derivation thereof.

     The Company decided to engage in the  transactions  with Sedcore to develop
an asset  base and  increase  the value of the  Company's  shares as a result of
acquiring a defined business venture.

     During this fiscal year, the Company plans to prove up the gold reserves on
these  properties  , which  have the  potential  to produce  gold in  commercial
quantities. During the period of this report, the Company has not engaged in any
efforts  intended to prove up the gold reserves on the properties but intends to
do so before the end of the fiscal year.

     During  the  period of this  report,  the  Company  has not  engaged in any
preliminary  efforts  intended to identify any additional  possible further gold
reserves  and has neither  conducted  negotiations  nor entered into a letter of
intent concerning any business opportunity.

          Liquidity and Capital Resources

     As of the end of the reporting period,  the Company had no material cash or
cash equivalents. There was no significant change in working capital during this
fiscal year.

     Management feels that the Company has inadequate  working capital to pursue
the proving up of its gold reserves,  absent an infusion of outside capital. For
the  foreseeable  future,  the  Company  intends  to  pursue  additional  equity
investments,  bank borrowings,  joint ventures, or combinations thereof, none of
which are  definitive  at this time,  as a means to develop  sufficient  working
capital.  Otherwise, the Company will have negligible capital requirements prior
to the  consummation  of any plan for  working  capital  and can  operate in the
interim. The Company does not intend to pay dividends in the foreseeable future.


<PAGE>


                           PART II- OTHER INFORMATION


ITEM 1.           Legal Proceedings

     No legal  proceedings of a material  nature to which the Company is a party
were pending  during the  reporting  period,  and the Company  knows of no legal
proceedings  of a material  nature  pending or threatened  or judgments  entered
against any director or officer of the Company in his capacity as such.

ITEM 2.           Changes in Securities. None.

ITEM 3.           Defaults upon Senior Securities.  None.

ITEM 4.           Submission of Matters to a Vote of Security Holders.  None

ITEM 5.           Other Information. None.

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

No exhibits as set forth in  Regulation  S-K are  considered  necessary  in this
lO-QSB filing.


<PAGE>


                                   SIGNATURES

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

                                        Knight Natural Gas, Inc.



Dated:                                  By: /s/ James H. Baum
                                            -----------------
                                           James H. Baum
                                           President and Chief Executive Officer


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


                                        CHIEF FINANCIAL AND ACCOUNTING OFFICER



Dated:                                      By:  /s/ Robert J. Goldman
                                                 ---------------------
                                                 Robert J. Goldman
                                                 Treasurer



                                            SECRETARY

Dated:                                      By:    /s/ Robert J. Goldman
                                                   ---------------------
                                                   Robert J. Goldman
                                                   Secretary