U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB


(Mark One)
[x]        ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
           EXCHANGE ACT OF 1934

                  For The Fiscal Year Ended: September 30, 1999

                                       or

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

For the transition period from                to

                          Commission file number 0-730

                            PENN-PACIFIC CORPORATION
                 (Name of small business issuer in its charter)



          Delaware                                           95-3227748
State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization                             Identification No.)


             4525 W. Hacienda Ave, Ste 12H, Las Vegas, Nevada 89118
               (Address of principal executive offices)(Zip code)

                Issuer's telephone number (800) 868-7233 ext 228


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

Securities registered under Section 12(g) of the Act:

                           Common Stock Par Value $.10
                                (Title of Class)

                                        1

<PAGE>



     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 required for the past 90 days. Yes No X

     Check if there is no disclosure of delinquent  filers  pursuant to Item 405
of  Regulation  S-B is not  contained in this form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this form 10-KSB. [X]

     State issuer's revenues for its most recent fiscal year: None


     To the best  knowledge and belief of management  there has been no trading,
therefore the aggregate market value is not known.


                         (ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDING DURING THE PRECEDING FIVE YEARS)

     Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court. Yes X No

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

     State the number of shares  outstanding of each of the issuer's  classes of
common equity, as of the latest practical date: December 28, 1999 951,082


                       DOCUMENTS INCORPORATED BY REFERENCE

     If the following documents are incorporated by reference,  briefly describe
them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) Into
which the document is incorporated:  (1) any annual report to security  holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"):

None

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




                                        2

<PAGE>



                                TABLE OF CONTENTS


Item Number and Caption                                                    Page

PART I

Item 1.  Description of Business............................................. 4

Item 2.  Description of Property............................................. 4

Item 3.  Legal Proceedings................................................... 4

Item 4.  Submission of Matters to a Vote of Security Holders................. 5

PART II

Item 5.  Market for Common Equity and Related Stockholder Matters............ 5

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

Item 7.  Financial Statements................................................ 8

Item 8.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure................................................ 8

PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act................... 8

Item 10. Executive Compensation.............................................. 9

Item 11. Security Ownership of Certain Beneficial Owners and Management...... 9

Item 12. Certain Relationships and Related Transactions......................10

Item 13. Exhibits and Reports on form 8-K....................................11






                                        3

<PAGE>



                                     PART I



                         ITEM I DESCRIPTION OF BUSINESS


General

           The  Company  intends  to  acquire   interests  in  various  business
opportunities,  which in the opinion of management  will provide a profit to the
Company.


History

           The Company was incorporated  under the laws of the state of Delaware
on May 18, 1971. From 1979 to 1991 the primary  business of Penn Pacific and its
subsidiaries  was the  acquisition,  exploration,  development,  production  and
operation of oil and gas properties.  Penn Pacific has been inactive since 1991.
The Company filed a voluntary petition of reorganization under Chapter 11 of the
United  States  Bankruptcy  Code on January 27, 1994.  On January 13, 1997,  the
Company emerged from bankruptcy  pursuant to a final decree of the United States
Bankruptcy  Court for the Northern  District of Oklahoma.  The Company is in the
development stage since January 13, 1997 and has not commenced planned principal
operations.



                         ITEM 2 DESCRIPTION OF PROPERTY


           The Company at this time has no properties.  As of September 30, 1999
and 1998 all activities of the Company have been conducted by corporate officers
from either their homes or business offices. Currently, there are no outstanding
debts  owed by the  company  for the use of these  facilities  and  there are no
commitments for future use of the facilities.



                            ITEM 3 LEGAL PROCEEDINGS


           The Company is not presently involved in any legal proceedings.




                                        4

<PAGE>





                        ITEM 4 SUBMISSION OF MATTERS TO A
                            VOTE OF SECURITY HOLDERS



           No Matters were  submitted to a vote of security  holders  during the
last quarter of the fiscal year ended September 31, 1999



                                     PART II


                       ITEM 5 MARKET FOR COMMON EQUITY AND
                           RELATED STOCKHOLDER MATTERS


           The stock is traded on the Internet with the trading symbol  "PENNC".
The following high and low bid  information  was provided by NIPHIX  Investments
Inc.  The  quotations  provided  reflect  inter-dealer  prices,  without  retail
mark-up, mark-down or commission and may not represent actual transactions.

          1999                      HIGH BID            LOW BID
                                     (To the best knowledge of
                                     management, there was no
                                     trading of shares for fiscal
                                     1999 and 1998.)


           The number of shareholders of record of the Company's common stock as
of December 28, 1999 was approximately 6607.

           The  Company  has not paid any  cash  dividends  to date and does not
anticipate  paying  dividends  in the  foreseeable  future.  It is  the  present
intention of management to utilize all available  funds for the  development  of
the Company's business.

Recent Sales of Unregistered Securities.

           The Company  over the past three years has sold  3,750,000  shares of
common  stock.  The stock was not sold through an  underwriter  and was not sold
through a public offer. A summary of the transactions follows:

                                        5

<PAGE>




                                                               Common Stock
                                                           Shares        Amount
November 11, 1995 shares issued
   to an officer/director for services at
   $0.10 per share .................................    $  200,000    $   20,000
October 1, 1996 shares issued
   to officers/directors for services at
   $0.10 per share .................................     2,850,000       285,000
December 19, 1996 shares issued
   to officers/directors for promissory notes at
   $0.10 per share .................................       500,000        50,000
April 17, 1997 shares issued
   to officers/directors for cash at
   $0.01 per share .................................       200,000         2,000
Total ..............................................    $3,750,000    $  357,000

           These sales are exempt under  Regulation D Rule 506 of the Securities
Act of 1933.



                       ITEM 6 MANAGEMENT'S DISCUSSION AND
                         ANALYSIS OR PLAN OF OPERATIONS


Plan of Operations

           The planned  operations of the company  during the next twelve months
are as follows:

           The  Company   intends  to  seek  an  acquisition  of  a  larger  and
potentially  more  profitable   business.   The  Company  intends  to  focus  on
opportunities  to acquire new products or technologies in development as well as
those  currently  planned,  including  a complete  operating  business  that has
demonstrated  long-term growth  potential,  strong marketing  presence,  and the
basis for continuing profitability.  The Company has not identified any specific
target or possible acquisition.  As the Company pursues its acquisition program,
it will incur costs for ongoing general and  administrative  expenses as well as
for identifying, investigating, and negotiating a possible acquisition.

Results of Operations - The Company filed a voluntary petition of reorganization
under  Chapter 11 of the United States  Bankruptcy  Code on January 27, 1994. On
January 13, 1997, the Company emerged from bankruptcy pursuant to a final decree
of the United States Bankruptcy Court for the Northern District of Oklahoma. The
Company is in the development stage since January 13, 1997 and has not commenced
planned principal operations.

Liquidity  and  Capital   Resources  -  The  Company  requires  working  capital


                                        6

<PAGE>


principally  to fund its current  operating  expenses  for which the Company has
relied on short-term  borrowings  and the issuance of  restricted  common stock.
There are no formal commitments from banks or other lending sources for lines of
credit or similar short-term borrowings, but the Company has been able to borrow
any additional working capital that has been required.  From time to time in the
past,  required  short-term  borrowings  have  been  obtained  from a  principal
shareholder or other related entities.

           Cash flows.  Operating activities used cash of $7,000 for 1997 to pay
Chapter 11 administrative fees. Financing activities provided cash of $7,000 for
1997  from the sale of the  Company's  restricted  stock and  issuance  of notes
payable to stockholders..

           In order to complete any acquisition,  the Company may be required to
supplement  its  available  cash and other  liquid  assets  with  proceeds  from
borrowings,  the sale of additional securities,  including the private placement
of restricted stock and/or a public offering, or other sources.  There can be no
assurance  that  any such  required  additional  funding  will be  available  or
favorable to the Company.

           Because management controls 47.68 % of voting rights,  management may
actively  negotiate or otherwise consent to the purchase of any portion of their
common  stock as a  condition  to or in  connection  with a  proposed  merger or
acquisition.  Furthermore,  management  could consent or approve any  particular
stock buy-out  transaction without  shareholder  approval.  In the event that an
appropriate  merger  candidate  is  located,  the  Company  may need to pay cash
finder's  fees or may issue  securities  (debt or  equity) as a  finders's  fee.
Finder's fees or other acquisition related compensation may be paid to officers,
directors,  promoters  or their  affiliates.  Any such  finder's  fee paid to an
officer,  director,  promoter,  or affiliate  may present a conflict of interest
because of the non-arms  length  nature of such  transaction.  There are no such
negotiations in progress or contemplated.

           There are no arrangements or  understandings  between  non-management
shareholders and management under which non-management shareholders may directly
or  indirectly  participate  in or influence  the  management  of the  Company's
affairs.

           The  Company may be required to  supplement  its  available  cash and
other  liquid  assets  with  proceeds  from  borrowing,  the sale of  additional
securities,  or other sources.  There can be no assurance that any such required
additional  funding will be available or, if available,  that it can be obtained
on terms favorable to the Company.

Year 2000 Compliance

           The Company has made an effort to insure that the software components
of its information  and billing systems are Year 2000 compliant.  Management has
confirmed  that  all  of  such  systems  are  Year  2000  compliant.  Upon  such
confirmation,  management believes that, after January 1, 2000, the Company will
be able to accurately track and bill for its services and products.  At the same
time, it is likely that the operations of a number of the Company's vendors rely


                                        7

<PAGE>


on software that is not Year 2000 compliant.



                           ITEM 7 FINANCIAL STATEMENTS


           The financial  statements of the Company and  supplementary  data are
included beginning  immediately following the signature page to this report. See
Item 13 for a list of the financial statements and financial statement schedules
included.



              ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                     ON ACCOUNTING AND FINANCIAL DISCLOSURE


           There are not and have not been any disagreements between the Company
and its  accountants  on any  matter  of  accounting  principles,  practices  or
financial statements disclosure.



                                    PART III


               ITEM 9 DIRECTORS EXECUTIVE OFFICERS, PROMOTERS AND
                CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF
                                THE EXCHANGE ACT


Directors and Executive Officers.

Director's Name     Age           Office                        Term of Office



James O'Brien       61       President and CEO/Director        February 23, 1998
Rose Fischer        45       Secretary/Treasurer/Director      February 23, 1998


Business Experience

James O'Brien, CEO/President,  founded Optimum Source International Ltd., during


                                        8

<PAGE>


the past five  years  Mr.  O'Brien  developed  software,  established  trade and
countertrade exchanges for Optimum Source International, Ltd.

Rose  Fischer,   Secretary/Treasurer/Director,   with  an  associate  degree  in
accounting,  has been Director and  Operations  Facilitator  for Optimum  Source
International,  Ltd. ("OSI") for the past two years, which includes finalization
and  implementation  of all  electronic  commerce.  Prior to OSI, Ms.  Fischer's
experience was as a financial consultant with a privately held firm since 1985.

Compliance With Reporting Requirements.

           Based  upon a review of Forms 3, 4, and 5  furnished  to the  Company
during or with respect to the preceding fiscal year and written  representations
from certain reporting  persons,  the Company is not aware of any failure by any
reporting  person to make  timely  filings of those forms as required by Section
16(a) of the Securities Exchange Act of 1934.



                         ITEM 10 EXECUTIVE COMPENSATION


There has been no executive compensation.



                 ITEM 11 SECURITY OWNERSHIP OF BENEFICIAL OWNERS
                                 AND MANAGEMENT


Principal Shareholders

           The table below sets forth  information  as to each person  owning of
record or who was known by the Company to own  beneficially  more than 5% of the
951,082  shares of issued and  outstanding  Common Stock,  including  options to
acquire stock of the Company as of December 28, 1999 and  information  as to the
ownership of the Company's Stock by each of its directors and executive officers
and by the  directors  and  executive  officers as a group.  Except as otherwise
indicated,  all shares are owned  directly,  and the persons  named in the table
have  sole  voting  and  investment  power  with  respect  to  shares  shown  as
beneficially owned by them.








                                        9

<PAGE>




                                                            # of
Name and Address                          Nature of        Shares
of Beneficial Owners                      Ownership        Owned        Percent
Directors
--------------------------------------------------------------------------------
Principal Shareholders


John Allison ......................         Common          71,500         7.51
Alpha Beta LLC ....................         Common          90,945         9.56
Celex-Nevada ......................         Common          97,750        10.27
Wayne H. Creasy ...................         Common          66,063         6.94
Edwin K. Hiseroot .................         Common          45,250         4.75
George White ......................         Common          70,500         7.41
                                                           -------     -----
         Total ....................                        442,008        46.44

Directors and Executive Officers


James O'Brien .....................         Common          11,860         1.247

All Executive Officers and
Directors as a Group (3
persons) ..........................         Direct         679,514        47.68%
  .................................         Options        None           None %
  .................................            Total       679,514        47.68%



             ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


           During 1999 an officer and director  loaned the Company  $3,000.  The
note is payable on demand  plus  interest.  During  1997  various  officers  and
directors  loaned the  Company  $5,000.  The notes are  payable  on demand  plus
interest.  During 1998 the note holders agreed to accept 10,000 pre split shares
of common  stock in exchange for the debt.  The balance due as of September  30,
1998 is $-0-.

           As of September 30, 1999 and 1998 all  activities of the Company have
been  conducted  by  corporate  officers  from  either  their  homes or business


                                       10

<PAGE>


offices.  Currently,  there are no outstanding debts owed by the company for the
use of these  facilities  and there are no  commitments  for  future  use of the
facilities.


                   ITEM 13. EXHIBITS, AND REPORTS ON FORM 8-K


      (a)     The following documents are filed as part of this report.

1.     Financial Statements                                                Page

Report of Robison, Hill & Co., Independent Certified Public Accountants.....F-1
Balance Sheets
 September 30, 1999, and 1998...............................................F-2
Statements of Operations
  For the Years Ended September 30, 1999, and 1998..........................F-3
Statements of Changes in Stockholders' Equity
  For the Years Ended September 30, 1999, and 1998..........................F-4
Statements of Cash Flows
  For the Years Ended September 30, 1999, and 1998..........................F-5
Notes to Financial Statements
 September 30, 1999 and 1998................................................F-6

2.     Financial Statement Schedules

     All schedules are omitted  because they are not  applicable or the required
information is shown in the financial statements or notes thereto.

3.     Exhibits
                        The  following  exhibits  are  included  as part of this
report:
Exhibit
Number           Title of Document

3.01     Articles of Incorporation and Bylaws of the registrant(1)

3.02     Amendments to Article IV and IX of the Articles of Incorporation of the
         Registrant, as filed with the Delaware Secretary of State on October 5,
         1988(1)

4        Instruments  defining the rights of security  holders  (Certificate  of
         Designation of Preferences of Series C preferred  Stock), as filed with
         the Delaware Secretary of State on October 5, 1988(1)

Other


                                       11

<PAGE>



23.01    Consent of Accountants(1)

         (1) Incorporated by Reference

     (b) No reports on Form 8-K were filed.




                                   SIGNATURES


           Pursuant to the requirements of section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended,  the Registrant has duly caused this report to
be signed on it behalf by the undersigned, thereunto duly authorized.

                                               PENN-PACIFIC CORPORATION


Dated: December 29, 1999                       By  /S/     James O'Brien
                                               --------------------------------
                                               James O'Brien
                                               President and CEO

           Pursuant to the requirements of the Securities  Exchange Act of 1934,
as amended, this report has been signed below by the following persons on behalf
of the Registrant and in the capacities  indicated on this 29 th day of December
1999.

Signatures                                     Title

/S/     James O'Brien
James O'Brien                                  President, C.E.O., Director
                                               (Principal Executive, Financial
                                               and Accounting Officer)

/S/    Rose Fischer
Rose Fischer                                   Secretary, Treasurer and Director











                                       12

<PAGE>









                          INDEPENDENT AUDITOR'S REPORT


Board of Directors
Penn Pacific Corporation
Las Vegas, Nevada

Board Members:

           We have  audited  the  accompanying  balance  sheets of Penn  Pacific
Corporation (a development  Stage  Company),  as of September 30, 1999 and 1998,
and the related statements of operations,  changes in stockholders'  equity, and
cash  flows  for the  years  then  ended.  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 financial  statements  referred to above present
fairly,  in all  material  respects,  the  financial  position  of Penn  Pacific
Corporation (a development Stage Company),  as of December 31, 1999 and 1998 and
the  results of its  operations,  and its cash flows for the years then ended in
conformity with generally accepted accounting principles.

                                               Respectfully submitted,



                                                  /s/ Robison, Hill & Co.
                                               Certified Public Accountants

Salt Lake City, Utah
December 28, 1999

                                      F - 1

<PAGE>



                            PENN PACIFIC CORPORATION
                          (A Development Stage Company)
                                 BALANCE SHEETS



                                                           September 30,
                                                   ----------------------------
                                                       1999            1998
                                                   ------------    ------------
ASSETS .........................................   $       --      $       --


LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Accounts payable .............................   $     16,309    $     11,523
  Accrued expenses .............................         16,775          11,757
  Notes payable - stockholders .................          3,000            --
                                                   ------------    ------------

     Total Liabilities .........................         36,084          23,280
                                                   ------------    ------------

Stockholders' Equity
Preferred stock (par value $1.00),
  50,000,000 shares authorized,
  no shares issued at September 30, 1999
  and 1998 .....................................           --              --
Common stock to be issued ......................          8,154           8,154
Common stock (par value $.10),
  100,000,000 shares authorized,
  951,082 shares issued and outstanding
  September 30, 1999 and 1998 ..................         95,108          95,108
Capital in excess of par value .................     35,686,105      35,683,105
Retained deficit ...............................    (35,735,361)    (35,735,361)
Deficit accumulated during development stage ...        (90,090)        (77,286)
                                                   ------------    ------------

     Total Stockholders' Equity ................        (36,084)        (23,280)
                                                   ------------    ------------

     Total Liabilities and Stockholders' Equity    $       --      $       --
                                                   ============    ============







   The accompanying notes are an integral part of these financial statements.




                                      F - 2

<PAGE>



                            PENN PACIFIC CORPORATION
                          (A Development Stage Company)
                             STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>

                                                                                Cumulative
                                                                                  Since
                                                    For the Year Ended         Inception of
                                                        September 30,          Development
                                                 --------------------------
                                                     1999          1998           Stage
                                                 -----------    -----------    -----------
<S>                                              <C>            <C>            <C>
Revenues .....................................   $      --      $      --      $      --
                                                 -----------    -----------    -----------

Expenses
  Selling, general and administrative expenses         8,835         14,020         26,524
                                                 -----------    -----------    -----------

Operating Loss ...............................        (8,835)       (14,020)       (26,524)

Other income (expense):
   Interest expense ..........................         3,969          1,411         55,380

Reorganization items:
   Administrative fees .......................          --             --            8,186
                                                 -----------    -----------    -----------

Loss before taxes ............................       (12,804)       (15,431)       (90,090)
Income taxes .................................          --             --             --
                                                 -----------    -----------    -----------

       Net Loss ..............................   $   (12,804)       (15,431)   $   (90,090)
                                                 ===========    ===========    ===========


Per Share Amounts
Net Income (Loss) ............................   $     (0.01)   $     (0.01)
                                                 ===========    ===========

Weighted Average Shares Outstanding ..........     1,032,619      1,032,619



</TABLE>








   The accompanying nots are an integral part of these financial statements.

                                      F - 3

<PAGE>



                            PENN PACIFIC CORPORATION
                          (A Development Stage Company)
                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                                                                                                     Deficit
                                    Common Stock                                                                   Accumulated
                    Preferred       To be Issued                   Common             Excess of     Accumulated      During
                        Stock    Shares       Amount        Shares        Amount      Par value       Deficit         Stage
                        -----  ----------   ----------   ------------   ----------   ------------   ------------   ----------
<S>                     <C>    <C>          <C>          <C>            <C>          <C>            <C>            <C>
Balance
October 1, 1996 as
originally reported ..   --     3,263,128   $  326,313     15,389,053   $1,538,905   $ 33,807,923   $(35,735,361)  $     --

Retroactive adjustment
for 1 for 20 reverse
stock split
February 23, 1998 ....   --    (3,099,970)    (309,997)   (14,615,471)  (1,461,547)     1,893,182           --           --
                        -----  ----------   ----------   ------------   ----------   ------------   ------------   ----------
Restated Balance
October 1, 1996 ......   --       163,158       16,316        773,582       77,358     35,701,105    (35,735,361)        --

Issuance of stock ....   --      (142,500)     (14,250)       142,500       14,250           --             --           --

Issuance of
stock for cash .......   --          --           --           35,000        3,500        (18,000)          --           --

Stock to be issued
in exchange for debt
(bankruptcy claims) ..   --        29,019        2,901           --           --             --             --           --

Net Loss .............   --          --           --             --           --             --             --        (61,855)
                        -----  ----------   ----------   ------------   ----------   ------------   ------------   ----------
Balance
September 30, 1997 ...   --        49,677        4,967        951,082       95,108     35,683,105    (35,735,361)     (61,855)

Stock to be issued
in exchange for debt .   --        31,860        3,187           --           --            3,000           --           --

Net Loss .............   --          --           --             --           --             --             --        (15,431)
                        -----  ----------   ----------   ------------   ----------   ------------   ------------   ----------
Balance
September 30, 1999 ...   --        81,537        8,154        951,082       95,108     35,686,105    (35,735,361)     (77,286)

Net Loss .............   --          --           --             --           --             --             --        (12,804)
                        -----  ----------   ----------   ------------   ----------   ------------   ------------   ----------

Balance
September 30, 1998 ...   --        81,537   $    8,154        951,082   $   95,108   $ 35,686,105   $(35,735,361)  $  (90,090)
                        =====  ==========   ==========   ============   ==========   ============   ============   ==========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      F - 4

<PAGE>



                            PENN PACIFIC CORPORATION
                          (A Development Stage Company)
                             STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                            Cumulative
                                                                              Since
                                                    For the Year Ended      Inception of
                                                       September 30,        Development
                                                    --------------------
                                                       1999       1998        Stage
                                                    ---------   --------    ---------
<S>                                                 <C>         <C>         <C>
Cash Flows from Operating Activities:
  Cash paid to suppliers and employees ...........  $    --     $    --     $    --
                                                    ---------   ---------   ---------
      Net cash used by operating activities before
        reorganization items .....................       --          --          --
                                                    ---------   ---------   ---------
  Reorganization Items:
    Chapter 11 administrative fees ...............       --          --        (7,000)
                                                    ---------   ---------   ---------
      Net cash used in operating activities ......       --          --        (7,000)
                                                    ---------   ---------   ---------

Cash Flows from Investing Activities: ............       --          --          --
                                                    ---------   ---------   ---------

Cash Flows from Financing Activities:
  Proceeds from common stock .....................       --          --         2,000
  Issuance of notes payable-stockholders .........       --          --         5,000
                                                    ---------   ---------   ---------
      Net cash provided by financing activities ..       --          --         7,000
                                                    ---------   ---------   ---------
Net change in cash and cash equivalents ..........       --          --          --
Cash and cash equivalents at beginning of year ...       --          --          --
                                                    ---------   ---------   ---------

Cash and cash equivalents at end of year .........  $    --     $    --     $    --
                                                    =========   =========   =========

Reconciliation of Net Loss to Net Cash
 Used in Operating Activities:
Net loss .........................................  $ (12,804)  $ (15,431)  $ (90,090)
Adjustments used to reconcile net loss to Net
cash used in operating activities:
Common stock issued for expenses .................       --         6,187     114,226
Increase in accounts payable .....................      4,787      11,523      16,310
Increase accrued expenses ........................      5,017       2,721      12,592
(Increase) Decrease in
   Notes payable - stockholders ..................      3,000      (5,000)     (2,000)
Decrease in liabilities not subject to
compromise:
    Administrative fees ..........................       --          --       (52,181)
Decrease in liabilities subject to compromise:
    Priority claims ..............................       --          --        (4,277)
    Unsecured non-priority claims ................       --          --        (1,580)
                                                    ---------   ---------   ---------
Net cash used in operating activities ............  $    --     $    --     $  (7,000)
                                                    =========   =========   =========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      F - 5

<PAGE>



                            PENN PACIFIC CORPORATION
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           SEPTEMBER 30, 1999 AND 1998


NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES

           This summary of accounting  policies for Penn Pacific  Corporation is
presented to assist in  understanding  the Company'  financial  statements.  The
accounting policies conform to generally accepted accounting principles and have
been consistently applied in the preparation of the financial statements.

Organization and Basis of Presentation

           The Company was incorporated  under the laws of the state of Delaware
on May 18, 1971. From 1979 to 1991 the primary  business of Penn Pacific and its
subsidiaries  was the  acquisition,  exploration,  development,  production  and
operation of oil and gas properties.  Penn Pacific has been inactive since 1991.
The Company filed a voluntary petition of reorganization under Chapter 11 of the
United  States  Bankruptcy  Code on January 27, 1994.  On January 13, 1998,  the
Company emerged from bankruptcy  pursuant to a final decree of the United States
Bankruptcy  Court for the Northern  District of Oklahoma.  The Company is in the
development stage since January 13, 1997 and has not commenced planned principal
operations.

Nature of Business

           The  Company  intends  to  acquire   interests  in  various  business
opportunities,  which in the opinion of management  will provide a profit to the
Company.

Cash Equivalents

           For the purpose of reporting  cash flows,  the Company  considers all
highly liquid debt  instruments  purchased with maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.

Pervasiveness of Estimates

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





                                      F - 6

<PAGE>



                            PENN PACIFIC CORPORATION
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           SEPTEMBER 30, 1999 AND 1998
                                   (Continued)


NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (continued)

Net Loss per Common Share

           The effect of outstanding  common stock  equivalents are antidilutive
for 1999 and 1998 and are thus not considered.

           The  reconciliations  of the numerators and denominators of the basic
EPS computations are as follows:

<TABLE>
<CAPTION>

                                1999                                    1998
              --------------------------------------   --------------------------------------
                               Number       Loss                       Number       Loss
                                of           Per                         of          Per
                 Loss          Shares       Share         Loss         Shares       Share
              (numerator)  (denominator)               (numerator)  (denominator)
              -----------   -----------  -----------   -----------   -----------  -----------
<S>           <C>           <C>          <C>           <C>           <C>          <C>
Loss to Common
Shareholders  $   (12,804)    1,032,619  $     (0.01)  $   (15,431)    1,032,619  $     (0.01)
              ===========   ===========  ===========   ===========   ===========  ===========

</TABLE>



NOTE 2 - INCOME TAXES

           The Company  has  accumulated  tax losses  estimated  at  $15,000,000
expiring in years 2000 through  2013.  Current tax laws limit the amount of loss
available to be offset against  future taxable income when a substantial  change
in ownership  occurs.  Therefore,  the amount available to offset future taxable
income  may be  limited.  No tax  benefit  has been  reported  in the  financial
statements,  because the Company  believes  there is a 50% or greater chance the
carryforwards will expire unused. Accordingly, the potential tax benefits of the
loss carryforwards are offset by a valuation allowance of the same amount

NOTE 3 - DEVELOPMENT STAGE

           The Company has not begun principal  operations and as is common with
a development  stage  company,  the Company has had recurring  losses during its
development stage.





                                      F - 7

<PAGE>


                            PENN PACIFIC CORPORATION
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           SEPTEMBER 30, 1999 AND 1998
                                   (Continued)


NOTE 4 - COMMITMENTS

           As of September 30, 1999 and 1998 all  activities of the Company have
been  conducted  by  corporate  officers  from  either  their  homes or business
offices.  Currently,  there are no outstanding debts owed by the company for the
use of these  facilities  and there are no  commitments  for  future  use of the
facilities.

NOTE 5 - 1 FOR 20 STOCK SPLIT

           On  February  23,  1998 the Board of  Directors  approved  a 1 for 20
reverse stock split. The financial  statements have been retroactively  adjusted
to reflect  the stock  split as if it had  happened  effective  on the  earliest
period presented.


                                      F - 8