SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
               1934 FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2000.

                         Commission File Number 0-30472

                               PIONEER OIL AND GAS
           (Name of small business issuer as specified in its charter)

               Utah                                      87-0365907
  (State or other jurisdiction of                      (I.R.S. Employer
  incorporation or organization)                     Identification Number)

                     1206 West South Jordan Parkway, Unit B
                          South Jordan, Utah 84095-4551
                    (Address of principal executive offices)

                                 (801) 566-3000
                (Issuer's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  Common Stock
(Par Value $.001 Per Share)

     Indicate  by check  mark  whether  the  issuer  (1) has 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____

     Indicate  by check mark  whether  the issuer  has 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
__

     The issuer's revenues for its most recent fiscal year were $1,206,309.

     The aggregate  market value on September 30th,  2000, of common shares held
by non-affiliates was approximately $836,097 based on the average of the closing
bid and asked prices of the  registrant's  common shares on such date, as quoted
by the National Quotation Bureau.

         As of September  30th,  2000,  the issuer had  8,135,018  shares of its
$0.001 par value common stock issued and outstanding.

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

<PAGE>


SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995

         Except for the historical  information  contained  herein,  the matters
discussed in this 10KSB are  forward-looking  statements which involve risks and
uncertainties,  including but not limited to economic,  competitive,  political,
regulatory  and   governmental   factors   affecting  the  company's   revenues,
operations,  markets and prices,  properties and other factors  discussed in the
Company's various filings with the Securities and Exchange Commission.

                                     PART I

ITEM 1 - BUSINESS

HISTORY AND OVERVIEW

         Pioneer Oil and Gas (the  "Company")  was organized on October 16, 1980
under the laws of the State of Utah. The Company's  principal  place of business
is  located at 1206 West  South  Jordan  Parkway,  Unit B,  South  Jordan,  Utah
84095-4551.  The Company's  telephone number is (801) 566-3000 and the Company's
fax number is (801)  446-5500.  The Company has  primarily  been  engaged in the
acquisition and exploration of oil and gas properties in Utah, Wyoming, Colorado
and Nevada.

         The Company filed a Chapter 11 bankruptcy petition on February 19, 1997
and filed an Amended Plan of  Reorganization  (the "Plan") on June 11, 1998. The
United States  Bankruptcy Court for the District of Utah,  Central Division (the
"Court")  entered an order  approving the Plan on August 5, 1998. The Order that
granted the final decree was entered into on November 6, 1998. Twenty days after
the Order was mailed on November 26, 1998, the Company emerged from bankruptcy.

         Prior  to the  Plan's  implementation,  the  Company  in  June  of 1998
effected a 10 for 1 reverse stock split of the Company's  common shares to allow
the  Company  to  raise  capital  from  the  sale  of  new  shares  to  existing
shareholders.  The Plan  implemented  by the Company  and  approved by the Court
combined  the sale of some of the  Company's  assets  along with the sale of its
common shares to existing  shareholders.  The capital  raised by the Company was
used  to pay  unsecured  creditors  100%  of the  first  $500  of any  unsecured
creditor's  claim  plus  approximately  5.0% of the  claim  above  $500.00.  The
Company's  principal secured creditor Zions Bank (the "Bank") agreed to the Plan
based on the Bank being  repaid the full  amount owed by the Company to the Bank
by December 1999. In September of 1999 the Company completed the sale of several
of its oil and gas assets and retired all the debt owed the Bank.

<PAGE>

RECENT DEVELOPMENTS:

         Since  September  1999,  the  Company has been  focusing  on  obtaining
prospects for the  exploration  of oil and gas and  continuing the operations of
its current producing oil and gas properties.  During the last fiscal year ended
September 30th, 2000, the Company was successful in selling one of its prospects
in Johnson County,  Wyoming.  The prospect sold was a coal bed methane  prospect
containing  9,487.96 acres of federal and state oil and gas leases.  The Company
retained on the sale a 9.375%  interest in the 9,487.96 acres in Johnson County,
Wyoming.

         The Company is also  attempting  to sell an oil and gas prospect in the
Northwest  Sheldon  Dome Field in Fremont  County,  Wyoming,  a coal bed methane
prospect in Carbon  County,  Wyoming and an oil prospect in Nye County,  Nevada.
During the latest  fiscal year the Company has returned  one well to  production
and expended over $100,000 in the reworking of another well.

         The Company is currently  investigating other areas for the acquisition
of oil and gas  leases for  further  development  by the  Company.  The  Company
operates in a highly  competitive  industry wherein many companies are competing
for the same finite resources as the Company.

THE BUSINESS

         The Company has focused its efforts over the years in acquiring oil and
gas properties from other companies selling producing wells and in acquiring new
oil and gas leases for the  purpose of  exploring  for oil and gas.  Leases have
also been acquired over the years for the purpose of reselling  them at a profit
to other oil and gas companies.

         Most of the Company's  present  production  from oil and gas properties
was acquired from large oil companies  selling  properties they considered to be
marginal  producers.  The Company has found that it can operate these properties
at a profit.  Presently,  the Company  operates 9 producing oil and gas wells in
Utah and Wyoming.

         The Company also owns an interest in several  non-operated  oil and gas
wells and  overriding  royalty  interests in oil and gas wells  located in Utah,
Colorado,  and Wyoming. An overriding royalty interest, is an interest in a well
that  receives a percentage  of the  production  from a well without  paying any
operation expenses.

         The Company over the last 3 years has focused  most of its  exploration
efforts in drilling  exploratory wells in Wyoming and Nevada.  Prior to drilling
an exploratory  well a geological  review of the prospective area is made by the
Company's  staff to  determine  the  potential  for oil and  gas.  If an area is
determined  to have  promise  the  Company  will  attempt to acquire oil and gas
leases over the prospective area. The Company will then acquire geophysical data
(generally  seismic and gravity  data) to further  evaluate the area.  After the
evaluation of the geophysical  data, if the area appears to contain  significant

<PAGE>

accumulations of oil and gas in the Company's  opinion for the area, the Company
will  market a drilling  program to outside  investors  covering  the  Company's
leases.  Significant  accumulations  cannot be quantified  because it depends on
many factors such as how much it costs to drill and complete  wells in a certain
area, how close the wells are to pipelines, what the price of oil or gas is, how
accessible  the area is,  whether  the  project  is a  developmental  or wildcat
project,  what the cost of oil and gas leases are in an area, the type of return
investors are seeking at that time in the different  exploration areas, and many
other geological, geophysical and other considerations.

         When the Company markets a drilling  program its sells a portion of its
oil and gas  leases  over the  prospect  area along  with  obtaining  a drilling
commitment  from  the  parties  purchasing  the  leases  to  drill a well on the
prospect area. A drilling program will generally allow the Company to recoup its
investment  in the area with the Company also  retaining an ongoing  interest in
new wells to be drilled in the area.

         The Company markets its drilling  programs to other industry  partners.
Drilling  programs  have been  marketed  by placing  ads in  industry  journals,
attending trade shows and by traveling to the office of prospective partners. In
the past,  the Company has sold  drilling  programs to major oil  companies  and
large independents and occasionally to individuals.

         Leases acquired for resale have been acquired in areas determined to be
prospective  by the Company's  staff.  An area is  determined to be  prospective
based on a geological review of the area, drilling in the area and review of the
Company's geophysical data if available.  Usually resale leases are acquired for
the  purpose  of  selling  at a profit  along  with  the  Company  retaining  an
overriding royalty interest in the leases sold.

COMPETITION

         The oil and gas business is highly  competitive.  The Company  competes
against numerous other companies, both major and independents, many with greater
financial  resources and larger staffs than those  available to the Company.  In
the area that the Company  competes there are over 100  competitors  with no one
competitor dominating the area. The Company believes it can successfully compete
against other companies by focusing its efforts in Utah,  Colorado,  Wyoming and
Nevada and by pursuing oil and gas prospects  that it develops  internally  with
its own staff.  The  Company has also been able to  successfully  compete in the
past for  leases in areas that it has  accumulated  geological  and  geophysical
data.

MARKETABILITY

         The  products  sold by the  Company,  natural  gas and crude  oil,  are
commodities  desired by many  companies and the Company is frequently  contacted
regarding the sale of its  products.  The Company sells all of its oil on 30 day
contracts to companies  willing to pay the highest price.  Although,  at anytime
the Company may be selling 10% or more of its crude oil to one purchaser, such a
purchaser  is not  material  to the  Company  since if that  purchaser  fails to
purchase the  Company's  oil for any reason the Company can readily sell the oil
to another party at a price close to what was paid by the former purchaser.

         Presently, the marketability of the Company's crude oil has not posed a
problem for the Company. Crude oil can be easily sold wherever it is produced in
the states that the Company  operates  subject to the  transportation  cost. The

<PAGE>

crude oil produced by the Company is transported either by trucking or pipeline.
On  the  other  hand,   natural  gas  can  be  more   difficult  to  sell  since
transportation  requires a pipeline.  In the areas that the Company is presently
pursuing  new  drilling  activity for natural  gas,  other  companies  have been
delayed up to a year because of the  unavailability of a pipeline.  No assurance
can be given that  natural gas wells  drilled by the  Company  will be placed on
line within a year after the well is drilled and completed.

BUSINESS RISKS

         Oil and gas  exploration  and drilling  involves a high degree of risk.
Oil and gas prices  are  subject  to  fluctuations  and,  as a  consequence,  no
assurance can be given that oil and gas prices will decrease, increase or remain
stable.  There is no assurance  that wells drilled on behalf of the Company will
obtain  production or that even if production is obtained,  such production will
allow the recovery of all or any part of the investment made by the Company in a
well.

         There are other  risks  inherent in the oil and gas  industry  that are
encountered  in drilling,  completing,  and producing  oil and gas wells.  These
risks include unusual or unexpected  formations,  pressures or other conditions,
blowouts  and  environmental  pollution.  The  Company  may incur  losses due to
environmental  hazards  against which it cannot insure or which it elects not to
insure  against  because of high premium costs or other  reasons.  Consequently,
substantial  uninsured  liabilities  to third parties may arise,  the payment of
which could result in significant losses to the Company.

         The Company carries  comprehensive  general  liability in the amount of
$5,000,000 with a financially  sound and reputable  insurance company and covers
such  risks  that are  usually  carried  by  companies  engaged in the same or a
similar business and similarly situated.  However,  the Company usually does not
insure against  environmental hazards such as blow out of wells or environmental
hazards in a prior chain of title.  The cost of such  insurance in many cases is
prohibitive. These types of risks are extraordinary events and are not generally
covered under a normal liability insurance policy for an oil and gas company.

         Governmental  regulation is a  significant  business risk of an oil and
gas company  because the industry  becomes more regulated with time. The Company
is subject to federal, state and local laws, regulations and ordinances relating
to the  production and sale of oil and gas. Some of the laws that the Company is
subject to  include  the Clean Air Act,  the Clean  Water  Act,  and  Endangered
Species Act. For example,  coal bed methane wells are being highly regulated for
disposing  produced  fresh water on the surface.  The EPA is requiring  that the
fresh water meet more  stringent  standards  than before,  which  ultimately may
require the water be injected  underground.  Reinjecting the water will increase
the  cost  of  production   and  in  some  cases  make  the  drilling  of  wells
uneconomical.

         Environmental  regulations and taxes imposed by state  governments in a
jurisdiction  wherein  producing  oil and gas  properties  are located  impose a
significant burden on the cost of production.  Severance and ad valorem taxes in
Wyoming can amount to approximately 14% of the Company's gross production and if
the property is located on a  Reservation  the total tax burden by  governmental
entities  can  amount  to as much as 22% of the gross  production.  Governmental
regulation may also delay drilling in areas that have endangered species. Delays
in  drilling  in the past have not imposed a  significant  cost to the  Company,
however,  no  assurance  can be given that in future the delays will not be more
expensive.

<PAGE>

         In the oil and gas industry  there is always a  possibility  that there
will be a shortage of drilling  rigs,  casing pipe or other  material  not being
available, when needed for drilling, completing or operating wells. To date, the
Company has not  encountered  any  significant  difficulties in the areas it has
operated or intends to operate in the future, however, no assurance can be given
that this condition will remain unchanged.

OBLIGATIONS AND CONTINGENCIES

         The  Company is liable for future  restoration  and  abandonment  costs
associated  with its oil and gas  properties.  These costs  include  future site
restoration  and  plugging  costs of wells.  The cost of future  abandonment  of
producing wells has not been  determined.  Management  believes that these costs
will not have a material  adverse effect upon its financial  position or results
of operations.

OTHER

         The Company has a total of four full-time employees as of September 30,
2000.

         All of the company's  revenues during the last fiscal year were derived
from domestic sources.

ITEM 2 - DESCRIPTION OF PROPERTY

         The Company owns an interest in 9 currently producing oil and gas wells
located in Utah and Wyoming.

         The Company  attempts to maintain  all of its  operating  wells in good
working  condition.  Wells  operated by the Company  are  generally  overseen by
contract  pumpers  familiar  with the oil and gas  business in the area that the
well is located.

         The operated wells are secured by the Company's  line of credit.  Other
than the line of  credit  by Zions  Bank the  operated  oil and gas wells of the
Company have no other liens or encumbrances.

         The Company owns a small  interest in  approximately  120 other oil and
gas wells that it does not  operate.  The  Company  owns its  interest  in these
properties  either  as a  working  interest  owner or as an  overriding  royalty
interest owner. These interests vary from the Company owning an interest of less
than  a half  of a  percent  to as  high  as  eight  and a  third  percent.  The
non-operating  properties  are located  primarily in Colorado  and Wyoming.  The
non-operating  properties  account for less than 25% of the Company's  total oil
and gas revenues. The Company also owns various non-producing oil and gas leases
that it is either attempting to sell to industry partners or develop itself.

EXPLORATION AND PRODUCTION

          Since  emerging  from  Chapter  11  bankruptcy,  the  Company  has not
participated as a working interest owner in the drilling of any wells.  However,

<PAGE>

wells  have  been  drilled  in which  the  Company  owns an  overriding  royalty
interest.  During the fiscal years ending  September 30, 2000, and September 30,
1999 the Company has not participated in the drilling of any wells.

         In the next year the Company plans on  participating in the drilling of
at  least  one well if it is able to  successfully  market  one of its  drilling
programs. It is currently marketing several projects to outside investors.

PROVED RESERVES

           The following table sets forth the estimated proved developed oil and
gas  reserves,  net to  Company's  interest,  of oil  and gas  properties  as of
September  30,  2000.  The  reserve  information  is  based  on the  independent
appraisal  prepared by Fall Line Energy Inc.  of  Littleton,  Colorado,  and was
calculated in accordance  with the rules and  regulations  of the Securities and
Exchange  Commission.  The oil  price  used was based on  posted  pricing  as of
September 30, 2000. An historical  price  differential  was  calculated for each
property  between the most recent  wellhead price received and the monthly strip
of  historical  WTI  postings as obtained  from the US Bank Energy  Group.  This
differential  was then  applied  to the  quoted  September  30th WTI  posting of
$27.50,  to obtain  the price  used.  The gas  price  was  handled  in a similar
fashion.  The differential was calculated  between the actual price received and
the average of four regional gas pipeline  postings.  The  differential was then
applied to the Index Price for September  30th of  $4.13/MMBTU.  For  comparison
purposes,  this price corresponds to a Henry Hub Spot Price of $4.64/MMBTU as of
September  30,  2000.  All  product  pricing  were held flat for the life of the
project.

                 Present Value of Estimated Future Net Revenues
<TABLE>
<CAPTION>


Estimated Proved Reserves
                                                                  Discounted at
                                                   Oil       Gas        10% (1)
                                                  (MBbl)    (MMCF)       (M$)
Proved Developed
     <S>                                         <C>        <C>         <C>

       Operated
     Canyon State 2-36 .........................   9.30     28.98      $152.941

     Climax 7-2 .................................101.93      0.00       816.247

      Pilot A-1 .................................. 0.00    132.26       348.093

     Sheldon Tribal Lease (includes

        31-1, 21-1, 42-1 wells) ................. 15.09      0.00       143.928

     South Pine Ridge 7-6 ........................ 0.50     55.14       113.380

     Willow Creek 29-13 ......................... 15.11     33.40       210.420

      Non-Operated

     Mamm Creek .................................  0.00     49.98       135.788

     Climax Minnelusa Unit ....................... 6.16      0.00        36.105

     Hunter Mesa Unit ............................ 1.14    230.09       447.555

     Haight-Pittman .............................  0.00      3.84        10.819

     Murdock 41-10 ..............................  2.56      0.00        14.481

Totals ........................................  151.80    533.72    $2,429.757

</TABLE>

<PAGE>

==========    =====================

(1)  The  oil  reserves  assigned  to  the  properties  in the  evaluation  were
determined by analyzing current test data,  extrapolating  historical production
data, and comparing  field data with the production  history of similar wells in
the  area.  The  current  volatility  of  oil  prices  provides  an  element  of
uncertainty to any  estimates.  If prices should vary  significantly  from those
projected in the appraisal, the resulting values would change substantially. The
reserve  estimates  contained  in the  engineering  report are based on accepted
engineering and evaluation principles. The present value of estimated future net
revenues,  discounted  at 10%, does not  necessarily  represent an estimate of a
fair market value for the evaluated properties.

         The reserve  estimates  contained herein are the same that are required
to be filed with any governmental agency.

           There are numerous uncertainties inherent in estimating quantities of
proved  oil  reserves.  The  estimates  in the  appraisal  are based on  various
assumptions  relating  to rates of  future  production,  timing  and  amount  of
development  expenditures,  oil prices,  and the results of planned  development
work. Actual future  production rates and volumes,  revenues,  taxes,  operating
expenses,  development expenditures,  and quantities of recoverable oil reserves
may vary  substantially  from those assumed in the  estimates.  Any  significant
change in these  assumptions,  including  changes  that  result  from  variances
between  projected and actual  results,  could  materially and adversely  affect
future reserve estimates.  In addition, such reserves may be subject to downward
or upward revision based upon production history, results of future development,
prevailing oil prices, and other factors.

     The actual  amount of the  Company's  proved  reserves are dependent on the
prevailing  price for oil,  which is beyond the Company's  control or influence.
World oil prices declined significantly during 1997 and 1998 from previous years
and have  increased  significantly  during  the 1999 and  2000.  There can be no
assurance  that oil prices will  decline or increase in the future.  Oil and gas
prices have been and are likely to  continue to be volatile  and subject to wide
fluctuations  in  response to any of the  following  factors:  relatively  minor
changes  in the  supply  of and  demand  for oil and  gas;  market  uncertainty;
political  conditions  in  international  oil producing  regions;  the extent of
domestic  production  and  importation  of oil;  the level of  consumer  demand;
weather  conditions;  the  competitive  position of oil as a source of energy as
compared with natural gas, coal, nuclear energy,  hydroelectric power, and other
energy sources; the refining capacity of prospective oil purchasers;  the effect
of federal and state  regulation on the production,  transportation  and sale of
oil; and other factors,  all of which are beyond the control or influence of the
Company.

WELLS AND ACREAGE

         In the oil and gas industry  and as used herein,  the word "gross" well
or acre is a well or acre in which a working  interest  is owned;  the number of
gross wells is the total number of wells in which a working interest is owned. A
"net"  well or acre is  deemed  to exist  when the sum of  fractional  ownership
working interests in gross wells or acres equals one. The number of net wells or
acres is the sum of the  fractional  working  interests  owned in gross wells or
acres.

<PAGE>


         As of September 30, 2000, the Company owned 5.87 net  productive  wells
and 13 gross productive wells.

      Set forth below is information  respecting  the developed and  undeveloped
acreage  owned by the  Company  in Utah,  Colorado,  Nevada  and  Wyoming  as of
September 30, 2000.

             Developed Acreage                       Undeveloped Acreage
             -----------------                       ----------------------
             Gross       Net                         Gross          Net
             ------     -------                      --------      --------
             2,600      1,600                        26,849        11,387

         Annual  rentals on all  undeveloped  leases for the fiscal  year ending
September 30, 2001 are expected to be approximately $17,080.

PRODUCTION AND SALE OF OIL AND GAS

      The  following  table  summarizes  certain  information  relating  to  the
Company's  net oil and gas produced  and from the  Company's  properties,  after
royalties, during the periods indicated.

                                            Year Ended September 30,
                                           ------------------------
                                              1999          2000
                                            -------        ------
Average net daily production of oil (Bbl)       53            48
Average net daily production of gas (MCF)      234           324
Average sales price of oil ($ per Bbl)      $14.86        $25.04
Average sales price of gas ($ per MCF)       $1.62         $2.10
Average lifting cost per bbl oil equiv.     $ 9.11         $9.69

DELIVERY COMMITMENTS

         The  Company  sells its oil to the  company  willing to pay the highest
price for its crude oil.  In the area that the  Company  sells its oil there are
several different  companies offering to purchase the Company's oil. The Company
sells all of its  crude  oil on a 30 day  contracts  that can be  terminated  at
anytime  upon 30 day notice by either  party.  The Company has also entered into
contracts to sell its natural gas on monthly spot prices.  The  contracts do not
require the Company to produce or sell any quantity of gas. The  contracts  only
provide that the price will be paid up to a certain  amount of gas produced from
the wells, which is more than the wells are currently producing.  Therefore, the
Company has no  commitments  that obligate the Company to produce any set amount
of oil or gas.

<PAGE>

         The  Company  does not own the office  space in which its  business  is
located.  The  Company  has  moved  to a new  office  condominium  owned  by the
Company's Board of Directors.  The Company pays less for rent than it did at its
former location.  To provide more operating  capital for the Company the Company
has chosen to lease the office space from the  Company's  Board of Directors who
have purchased the office condominium themselves. The new office space is leased
on terms  reasonable  for the same kind of  office  space in the area that it is
located.  The office space is 1,950 square feet with an  unfinished  basement of
approximately  975 square feet. The Company's  address is 1206 West South Jordan
Parkway,  Unit B, South Jordan, Utah 85095-4551.  The Company's telephone number
remains (801) 566-3000 but the fax number has been changed to (801) 446-5500.

ITEM 3 - LEGAL PROCEEDINGS

                The Company may become or is subject to investigations,  claims,
or lawsuits ensuing out of the conduct of its business,  including those related
to environmental safety and health,  commercial transactions etc. The Company is
currently not aware of any such items,  which it believes  could have a material
adverse affect on its financial position.


ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters  were  submitted  to a vote of security  holders  during the
fourth quarter of the fiscal year ending September 30, 2000.


                                     PART II

ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET PRICE AND DIVIDENDS OF COMPANY

                The  Company  is  listed on the  over-the-counter  market on the
NASDAQ OTC Bulletin  Board.  The range of high and low bid  information  for the
shares  of the  Company's  stock  for the last two  complete  fiscal  years,  as
reported by the OTC  Bulletin  Board  National  Quotation  Bureau,  is set forth
below. Such quotations  represent prices between dealers,  do not include retail
markup, markdown or commission, and does not represent actual transactions.

Year Ended September 30, 2000                        High              Low

First Quarter                                        $.25             $.1875
Second Quarter                                        .20              .1563
Third Quarter                                         .23              .22.5
Fourth Quarter                                        .15              .20

Year Ended September 30, 1999                        High              Low

First Quarter                                       $0.15            $0.10
Second Quarter                                       0.2813           0.125
Third Quarter                                        0.2188           0.125
Fourth Quarter                                       0.375            0.125

<PAGE>

                As of September 30, 2000 the Company had issued and  outstanding
8,135,018 common shares held by approximately 1,165 holders of record.

                There have been no cash dividends  declared by the Company since
its inception. Further, there are no restrictions that would limit the Company's
ability to pay  dividends on its common  equity or that would be likely to do so
in the future.

                The Company has no plans to register any of its securities under
the Securities Act for sale by security holders.  There is no public offering of
equity and there is no proposed public offering of equity.

RECENT SALES OF UNREGISTERED SECURITIES

         In June of 1998,  the  Company  effected  a reverse  stock  split of 10
common  shares of the Company for one share.  After the reverse  stock split the
Company had issued and  outstanding  4,289,431  common  shares.  Presently,  the
Company has 8,135,018 common shares issued and outstanding. The 3,845,587 common
shares issued after the reverse stock split have been for purposes of paying the
Company's  obligation  under the Company's  Employee Stock  Ownership  Plan, for
providing  working  capital  and paying the  creditors  and  expenses  under the
Company's plan of reorganization in bankruptcy.

         The Company has an Employee Stock  Ownership Plan, in which the Company
can invest 10% of the compensation for full-time employees for salary or bonuses
in  common  stock  of the  Company.  All  full-time  employees  of  the  Company
participate  in the  Employee  Stock  Ownership  Plan  on  the  same  terms  and
conditions as management.  Shares in the Company's Employee Stock Ownership Plan
("ESOP") before November 1999 were issued from the Company to the Plan every six
months to cover the  Company's  obligation  to the ESOP.  From  January  1997 to
September 1998, the Company issued to the ESOP 248,244 common shares  calculated
on a post reverse stock split basis.

         In November  of 1998,  the ESOP in  conjunction  with the offer made to
shareholders of the Company  purchased  1,500,000 common shares of the Company's
common  stock at a price of $.20 per  share in the form of a stock  subscription
receivable. The stock subscription receivable owed by the ESOP to the Company is
reduced  every six months by the amount of the  obligation  owed by the  Company
towards  the ESOP for that  period.  The  stock  subscription  receivable  bears
interest at a rate of six percent per annum.

         For the Company to emerge from its  Chapter 11  bankruptcy  it required
enough  capital to pay its creditors  under the  reorganization  plan and needed
sufficient  capital to operate.  From July 1998 to February of 1999, the Company
issued  2,246,426  common  shares to  shareholders  of the  Company  for a total
consideration   of  $415,308.   From  the   $415,308   raised  by  the  Company,
approximately  $300,000 was used for paying  bankruptcy  expenses and for paying
the creditors of the Company.  The remaining $115,308 of the $415,308 raised was
used for operating capital of the Company.

<PAGE>


         Sales  of the  Company's  securities  to  the  shareholders  under  the
Bankruptcy  Plan and to the ESOP plan were  exempt from  registration  under the
Securities Act of 1933 pursuant to Section 4(2) of the Act.

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

RESULTS OF OPRERATIONS -2000 Compared to 1999

         Total revenue for fiscal year 2000 was  $1,206,309 as compared to total
revenue  for fiscal  year 1999 of  $670,864.  The  increase  in revenue  was due
primarily  to higher  product  price for fiscal 2000 as compared to fiscal 1999.
Total oil and gas sales  (including  royalty  revenue)  climbed from $655,446 to
$1,076,107.  Average  gas  prices  increased  from $1.62 MCF (1999) to $2.10 MCF
(2000) and average  daily gas  production  increased 38 percent as the Pilot gas
property was restored to production and additional  production was realized from
the Hunter Mesa Unit royalty as more wells were brought on line.  Oil production
declined nine percent due to natural production  declines.  However this drop in
oil  production  was more than offset by product price  increases as average oil
prices per barrel soared from $14.86 to $25.04.

         Project and lease sales income increased from $3,270 to $129,002 as the
Company sold one of its coalbed methane projects.

         Costs of  operations  increased  from  $462,711 to $574,863.  This item
includes all well operating expenses and any amounts paid to employees and other
interest   owners  for  their  interest  in  producing   properties.   Increased
disbursements to interest owners due to higher product prices accounted for most
of the increase.

         General and  administrative  costs  increased from $304,734 to $325,221
due primarily to salary increases for employees.

         In  fiscal  1999  the  Company  sold  all of its low BTU  Colorado  gas
properties and several small non-operated oil properties in Wyoming. The sale of
these  properties  resulted in a gain of approximately  $1,800,000.  The Company
also  abandoned  most of its Nevada  properties  and wrote off some other  small
non-producing  properties.  The net  result  of all  these  actions  was gain of
$1,323,080  on "assets sold or  abandoned"  for 1999. In fiscal 2000 the Company
wrote off some of its non-producing oil properties in Wyoming for a loss on sale
of assets abandoned of $6,447.

         During fiscal year ending  September 30, 1999, the Company  retired all
of its bank debt with proceeds from the sale of properties  mentioned above. The
Company  also  received  $164,068  from  the  issuance  of  common  stock to its
shareholders  during the fiscal year ending September 30, 1999.  Common stock of
the  Company was issued to the  shareholders  for the  $415,308  received by the
Company from July 1998 to February 1999.

         The Company's  total  stockholders'  equity  increased from $924,530 to
$946,044.  This  increase  during  fiscal 2000 in  shareholder's  equity was the
result  of  positive  net  income  of $9050  and a  decrease  in the ESOP  stock
subscription  receivable of $12,464.  The current ratio  decreased from 3.55 (FY
1999) to 3.22 (FY 2000).  Net income  dropped from $785,384 to $9,050.  However,
net income for 1999 was entirely due to gain on sale of assets sold or abandoned
of  $1,323,080.  Excluding  this gain  total  income  increased  from a negative
$537,696 to a positive $9,050.

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         Historically the Company has funded operations  primarily from earnings
and bank borrowing.  As of September 30, 2000 the Company had working capital of
$326,689 and an unused line of credit with Zions Bank for $750,000. This line of
credit  is  collateralized  by  all  of  the  companies  operated  oil  and  gas
properties.  The line of credit bears interest at prime rate plus 1.0%. The line
of credit with Zions Bank matured on December 1, 1999, and was renewed for a two
year  period  ending  December  31,  2001.  As of  September  30, 1999 and as of
September 30, 2000, no amount was owed on the line of credit.

         During  fiscal 2000 cash provided in operating  activities  was $61,395
while cash used in investing  activities  was $158,633.  For September 30, 2000,
there was no cash flow from  financing  activities.  There was a net decrease in
cash of $97,238,  as cash  decreased  from $343,919 to $246,681.  The changes in
cash from operating  activities,  investing  activities and financing activities
from 1999 to 2000,  were all  primarily a result of the Company  returning  to a
normal mode of  operation  after  having sold a  substantial  portion of its non
producing  oil and gas  assets to retire  its bank  debt as  addressed  above in
Results of Operations.

OIL AND GAS PROPERTIES

         The  Company as of the date of this  filing is the owner of several oil
and gas properties  located  throughout the Rocky Mountain  Region.  The Company
operates  four  properties  in Utah,  three in Wyoming and one in Colorado.  The
standardized  measure of  discounted  future net cash flows of all the Company's
properties as of September 30, 2000 is $1,611,000.

INCOME TAXES

         The Company's  present net operating  loss  carryforward  of $2,292,000
arises from operations for the year ended September 30th, 1997. Carryforwards of
net operating losses for years prior to the year ended September 30th, 1997 were
completely  used for tax  purposes  to  offset  net  income  for the year  ended
September 30th,  1999. The present loss  carryforward of the Company will expire
in the year 2012.

         The Company does not anticipate that it will have taxable income during
the carryforward period because of the applicable net operating loss.

DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

         This report on Form 10-KSB includes "forward-looking statements" within
the  meaning of  Section  27A of the  Securities  Act of 1933,  as amended  (the
"Securities  Act"),  and Section 21E of the Securities  Exchange Act of 1934, as
amended (the "Exchange Act"). All statements other than statements of historical
facts included in this report, including,  without limitation,  statements under
"Description  of  Business",   "Description   of  Property'  and   "Management's
Discussion and Analysis or Plan of Operation"  regarding the Company's financial
position,  reserve quantities and net present values,  business strategy,  plans
and  objectives of management of the Company for future  operations  and capital
expenditures, are forward-looking statements and the assumptions upon which such
forward- looking statements are based are believed to be reasonable. The Company
can give no assurance that such  expectations  and assumptions  will prove to be
correct.  Reserve  estimates of oil and gas properties  are generally  different

<PAGE>

from the  quantities  of oil and natural gas that are  ultimately  recovered  or
found. This is particularly true for estimates applied to exploratory prospects.
Additionally,  any statements contained in this report regarding forward-looking
statements  are subject to various known and unknown  risks,  uncertainties  and
contingencies,  many of which are beyond the control of the Company. Such things
may cause actual  results,  performance,  achievements or expectations to differ
materially  from  the   anticipated   results,   performance,   achievements  or
expectations.  Factors that may affect such forward-looking  statements include,
but are not limited to: the Company's ability to generate  additional capital to
complete any planned drilling and exploration activities;  risks inherent in oil
and gas acquisitions,  exploration,  drilling, development and production; price
volatility of oil and gas;  competition;  shortages of  equipment,  services and
supplies;  government regulation;  environmental matters; financial condition of
the other companies participating in the exploration, development and production
of oil and gas programs;  and other matters  beyond the Company's  control.  All
written  and oral  forward-looking  statements  attributable  to the  Company or
persons acting on its behalf subsequent to the date of this report are expressly
qualified in their entirety by this disclosure.

ITEM 7 - FINANACIAL STATEMENTS

                               PIONEER OIL AND GAS

                              Financial Statements

                           September 30, 2000 and 1999


<PAGE>



                               PIONEER OIL AND GAS

                          Index to Financial Statements








Report of Jones, Wright, Simkins & Associates LLP                         F-2

Report of Tanner + Co.                                                    F-3

Statement of income                                                       F-4

Balance sheet                                                             F-5

Statement of stockholders' equity (deficit)                               F-6

Statement of cash flows                                                   F-7

Notes to financial statements                                             F-8

Supplementary schedules on oil and gas operations                         F-18

                                F-1
<PAGE>

                          INDEPENDENT AUDITOR'S REPORT





To the Board of Directors and
Stockholders of Pioneer Oil and Gas


     We have audited the accompanying balance sheet of Pioneer Oil and Gas as of
September 30, 2000, and the related statements of income,  stockholders' equity,
and cash  flows for the year 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 audit. We conducted our audit
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
audit provides 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 Pioneer  Oil and Gas as of  September 30,  2000,  and the
results  of its  operations  and its cash  flows  for the  years  then  ended in
conformity with generally accepted accounting principles.



                     JONES, WRIGHT, SIMKINS & ASSOCIATES LLP



Logan, Utah
December 1, 2000
                                F-2
<PAGE>

                          INDEPENDENT AUDITOR'S REPORT





To the Board of Directors and
Stockholders of Pioneer Oil and Gas


     We have audited the accompanying balance sheet of Pioneer Oil and Gas as of
September  30, 1999 and the related  statement of income,  stockholders'  equity
(deficit),  and cash flows for the year 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  audit.  We
conducted our audit 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 audit  provides 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 Pioneer Oil and Gas as of September
30, 1999 and the results of its  operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.


                                  TANNER + CO.




Salt Lake City, Utah
November 15, 1999
                                F-3
<PAGE>


                               PIONEER OIL AND GAS

                               Statement of Income
<TABLE>
<CAPTION>


                                                                            Years Ended September 30,




                                                                             2000              1999
                                                                       ------------------------------------
<S>                                                                         <C>               <C>
Revenue:
     Oil and gas sales                                                        $927,876          $585,121
     Royalty revenue                                                           148,231            70,325
     Operational reimbursements                                                  1,200            12,148
     Project and lease sales income                                            129,002             3,270
                                                                       ------------------------------------

                                                                             1,206,309           670,864
                                                                       ------------------------------------

Costs and expenses:
     Cost of operations                                                        574,863           462,711
     General and administrative expenses                                       325,221           304,734
     Exploration costs                                                         188,177           152,934
     Lease rentals                                                               5,761             4,710
     Depreciation, depletion and amortization                                  120,836           151,472
                                                                       ------------------------------------

                                                                             1,214,858         1,076,561
                                                                       ------------------------------------

                  Loss from operations                                         (8,549)         (405,697)
                                                                       ------------------------------------

Other income (expense):
     (Loss) gain on assets sold or abandoned                                    (6,447)        1,323,080
     Interest income                                                            22,617            19,008
     Interest expense                                                           (6,739)         (129,372)
     Other                                                                       8,168           (21,635)
                                                                       ------------------------------------

                                                                                17,599         1,191,081
                                                                       ------------------------------------

                  Income before provision
                  for income taxes                                               9,050           785,384

Provision  for income taxes                                                          -                 -
                                                                       ------------------------------------

                  Net income                                                    $9,050          $785,384
                                                                       ------------------------------------

                  Net income per common share-
                  basic and diluted                                                $ -             $ .10
                                                                       ------------------------------------

                  Weighted average common shares-
                  basic and diluted                                         8,135,000          7,723,000
                                                                       ------------------------------------
</TABLE>

See accompanying notes to financial statements.
                                F-4
<PAGE>

<TABLE>
<CAPTION>

                                  Balance Sheet

                                                                                 September 30,




              Assets                                                         2000              1999
                                                                       ------------------------------------
<S>                                                                         <C>               <C>
Current assets:
     Cash                                                                     $246,681          $343,919
     Accounts receivable                                                       130,398           105,798
     Resale leases, at lower of cost or market                                  96,925            17,333
                                                                       ------------------------------------

                  Total current assets                                         474,004           467,050

Property and equipment - net                                                   617,355           586,005
Other assets                                                                     2,000             3,000
                                                                       ------------------------------------

                                                                            $1,093,359        $1,056,055
                                                                       ------------------------------------

-----------------------------------------------------------------------------------------------------------

              Liabilities and Stockholders' Equity

Current liabilities:
     Accounts payable                                                         $125,762          $109,099
     Accrued expenses                                                           21,553            22,426
                                                                       ------------------------------------

                  Total current liabilities                                    147,315           131,525
                                                                       ------------------------------------

Commitments and contingencies                                                        -                 -

Stockholders' equity:
     Common stock, par value $.001 per share,                authorized
       50,000,000 shares authorized; 8,135,018 shares issued
       and outstanding                                                           8,134             8,134
     Additional paid-in capital                                              2,521,069         2,521,069
     Stock subscription receivable                                            (280,996)         (293,460)
     Accumulated deficit                                                    (1,302,163)       (1,311,213)
                                                                       ------------------------------------

                  Total stockholders' equity                                   946,044           924,530
                                                                       ------------------------------------

                                                                            $1,093,359        $1,056,055
                                                                       ------------------------------------
</TABLE>
See accompanying notes to financial statements.
                                F-5
<PAGE>


                   Statement of Stockholders' Equity (Deficit)

                     Years Ended September 30, 2000 and 1999


<TABLE>
<CAPTION>


                                                Additional       Stock
                              Common Stock        Paid-in    Subscription    Accumulated
                          ----------------------
                            Shares     Amount     Capital     Receivable       Deficit         Total
                          ---------------------------------------------------------------------------------

<S>                         <C>        <C>       <C>           <C>          <C>              <C>

Balance at
October 1, 1998             5,644,792  $  5,644  $ 2,059,491    $       -   $  (2,096,597)    $   (31,462)

Issuance of common stock
for:
     Cash                     990,226       990      163,078            -              -           164,068
     Receivable             1,500,000     1,500      298,500      (300,000)            -                 -

Payments on stock
subscription receivable             -         -            -        6,540              -             6,540

Net income                          -         -            -              -      785,384           785,384
                          ---------------------------------------------------------------------------------

Balance at
September 30, 1999          8,135,018     8,134    2,521,069      (293,460)    (1,311,213)         924,530

Payments on stock
subscription receivable             -         -            -       12,464              -            12,464

Net income                          -         -            -            -          9,050             9,050
                          ---------------------------------------------------------------------------------

Balance at
September 30, 2000          8,135,018   $ 8,134   $2,521,069     $(280,996)   $(1,302,163)        $946,044
                          ---------------------------------------------------------------------------------

</TABLE>
See accompanying notes to financial statements.
                                F-6
<PAGE>



                             Statement of Cash Flows
<TABLE>
<CAPTION>

                                                                            Years Ended September 30,


                                                                             2000              1999
                                                                       ------------------------------------
<S>                                                                           <C>             <C>
Cash flows from operating activities:
     Net income                                                                 $9,050          $785,384
     Adjustments to reconcile net income to net cash
       provided by (used in) operating activities:
         Loss (gain) on assets sold or abandoned                                 6,447        (1,323,080)
         Depreciation, depletion and amortization                              120,836           151,472
         Employee benefit plan expense                                          27,948                 -
         Interest income                                                       (15,484)               -
         (Increase) decrease in:
              Accounts receivable                                              (24,600)          (20,705)
              Resale leases                                                    (79,592)           34,713
              Other assets                                                       1,000                 -
         Increase (decrease) in:
              Accounts payable                                                  16,663           (61,502)
              Accrued expenses                                                    (873)         (280,998)
              Outstanding checks in excess of bank balance                           -           (78,854)
                                                                       ------------------------------------

                  Net cash provided by (used in)
                  operating activities                                          61,395           (793,570)
                                                                       ------------------------------------

Cash flows from investing activities:
     Acquisition of property and equipment                                    (158,633)           (34,575)
     Proceeds from sale of property                                                  -          2,002,000
                                                                       ------------------------------------

                  Net cash (used in) provided by
                  investing activities                                        (158,633)          1,967,425
                                                                       ----------------------------------

Cash flow from financing activities:
     Proceeds from note payable                                                      -              75,727
     Payments on note payable                                                        -          (1,331,419)
     Proceeds from issuance of common stock                                          -             164,068
     Collection of stock subscription receivable                                     -               6,540
                                                                       ------------------------------------

                  Net cash used in
                  financing activities                                               -          (1,085,084)
                                                                       ------------------------------------

                  Net (decrease)  increase in cash                             (97,238)             88,771

Cash, beginning of year                                                        343,919             255,148
                                                                       ------------------------------------

Cash, end of year                                                             $246,681            $343,919
                                                                       ------------------------------------
</TABLE>
See accompanying notes to financial statements.
                                F-7
<PAGE>



                              PIONEER OIL AND GAS
                          Notes to Financial Statements

                           September 30, 2000 and 1999


                               PIONEER OIL AND GAS


1. Organization and Summary of Significant Accounting Policies

The Company is incorporated under the laws of the state of Utah and is primarily
engaged in the business of acquiring,  developing, producing and selling oil and
gas properties to companies located in the continental United States.

Cash and Cash Equivalents
For purposes of the  statement of cash flows,  the Company  considers all highly
liquid  investments  with  a  maturity  of  three  months  or  less  to be  cash
equivalents.

Concentration of Credit Risk
The Company  maintains its cash in bank deposit  accounts which,  at times,  may
exceed federally  insured limits.  The Company has not experienced any losses in
such account.  The Company believes it is not exposed to any significant  credit
risk on cash and cash equivalents.

Resale Leases
The Company  capitalizes  the costs of acquiring oil and gas leaseholds held for
resale,  including lease bonuses and any advance rentals required at the time of
assignment of the lease to the Company.  Advance  rentals paid after  assignment
are charged to expense as carrying  costs in the period  incurred.  Costs of oil
and gas leases  held for  resale  are valued at lower of cost or net  realizable
value and  included in current  assets since they are expected to be sold within
one year,  although the holding period of individual  leases may be in excess of
one  year.  The cost of oil and gas  leases  sold is  determined  on a  specific
identification basis.

                                F-8
<PAGE>

                               PIONEER OIL AND GAS
                          Notes to Financial Statements
                                    continued

   1.   Organization and Summary of Significant Accounting Policies Continued

Oil and Gas Producing  Activities
The Company utilizes the successful efforts method of accounting for its oil and
gas  producing  activities.   Under  this  method,  all  costs  associated  with
productive  exploratory wells and productive or nonproductive  development wells
are capitalized while the costs of nonproductive exploratory wells are expensed.
If an exploratory well finds oil and gas reserves, but a determination that such
reserves  can be  classified  as  proved is not made  after  one year  following
completion  of  drilling,  the costs of  drilling  are  charged  to  operations.
Indirect exploratory expenditures,  including geophysical costs and annual lease
rentals,  are expensed as incurred.  Unproved  oil and gas  properties  that are
individually  significant are periodically assessed for impairment of value, and
a loss is  recognized  at the time of  impairment  by  providing  an  impairment
allowance.  Other  unproved  properties  are  amortized  based on the  Company's
experience of successful drilling and average holding period.  Capitalized costs
of producing oil and gas properties,  after considering estimated  dismantlement
and abandonment costs and estimated salvage values, are depreciated and depleted
by the  units-of-production  method.  Support  equipment and other  property and
equipment are depreciated over their estimated useful lives.

On the sale or retirement of a complete unit of a proved property,  the cost and
related  accumulated  depreciation,  depletion,  and amortization are eliminated
from the property accounts, and the resultant gain or loss is recognized. On the
retirement or sale of a partial unit of proved property,  the cost is charged to
accumulated  depreciation,  depletion, and amortization with a resulting gain or
loss recognized in income.
On the sale of an  entire  interest  in an  unproved  property  for cash or cash
equivalent,  gain or loss on the sale is recognized,  taking into  consideration
the  amount  of any  recorded  impairment  if the  property  had  been  assessed
individually.  If a partial interest in an unproved property is sold, the amount
received is treated as a reduction of the cost of the interest retained.

                                F-9
<PAGE>


                               PIONEER OIL AND GAS
                          Notes to Financial Statements
                                    continued
1.   Organization and Summary of Significant Accounting Policies Continued

Property and Equipment
Property  and  equipment  are  stated  at cost  less  accumulated  depreciation.
Depreciation  is provided  using the  straight-line  method  over the  estimated
useful  lives of the  assets.  Expenditures  for  maintenance  and  repairs  are
expensed when incurred and  betterments are  capitalized.  When assets are sold,
retired  or  otherwise   disposed  of,  the  applicable  costs  and  accumulated
depreciation,  depletion and amortization are removed from the accounts, and the
resulting gain or loss is reflected in operations.

Income Taxes
Deferred income taxes arise from temporary differences resulting from income and
expense items  reported for financial  accounting  and tax purposes in different
periods.  Deferred taxes are  classified as current or noncurrent,  depending on
the classification of the assets and liabilities to which they relate.  Deferred
taxes  arising from  temporary  differences  that are not related to an asset or
liability are  classified  as current or noncurrent  depending on the periods in
which the temporary  differences are expected to reverse.  Temporary differences
result primarily from a net operating loss carryforward and intangible  drilling
costs and depletion.

Earnings Per Share
The  computation  of basic  earnings  per common  share is based on the weighted
average number of shares outstanding during each year.

The  computation  of diluted  earnings per common share is based on the weighted
average  number of shares  outstanding  during  the year plus the  common  stock
equivalents  which would arise from the  exercise of stock  options and warrants
outstanding  using the treasury  stock  method and the average  market price per
share during the year.  Common stock equivalents are not included in the diluted
earnings per share calculation when their effect is antidilutive.

Revenue Recognition
Revenue is recognized from oil sales at such time as the oil is delivered to the
buyer.  Revenue is  recognized  from gas sales when the gas passes  through  the
pipeline  at the  well  head.  Revenue  from  overriding  royalty  interests  is
recognized when earned.

The Company does not have any gas balancing arrangements.

                                F-10
<PAGE>


                              PIONEER OIL AND GAS
                          Notes to Financial Statements
                                    continued
1.   Organization and Summary of Significant Accounting Policies Continued

Use of Estimates in the  Preparation of Financial  Statements
The preparation of financial  statements in conformity  with generally  accepted
accounting  principles  requires  management to make  estimates and  assumptions
primarily related to oil and gas property  reserves and prices,  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.

Reclassifications
Certain  amounts in the 1999  financial  statements  have been  reclassified  to
conform with the current year presentation.


2.   Property and Equipment

Property and equipment consists of the following:



                                              September 30,
                                    -----------------------------------
                                             2000             1999
                                    -----------------------------------

Oil and gas
properties
 (successful efforts method)             $1,733,448       $1,590,708
Office furniture and equipment              127,873          118,427
                                    -----------------------------------

                                          1,861,321        1,709,135

Less accumulated
 depreciation, depletion and
 amortization                            (1,243,966)      (1,123,130)
                                    -----------------------------------

                                           $617,355         $586,005
                                    -----------------------------------

3.   Bank Line of Credit
The  Company  has a bank  revolving  line-of-credit  in the  amount of  $750,000
bearing  interest  at the  bank's  prime  rate plus 1 percent  (1.5  percent  at
September 30, 1999) and is secured by producing  properties.  The line-of-credit
matures on December 31, 2001 and had no  outstanding  balance at  September  30,
2000 and 1999.

                                F-11
<PAGE>


4.       Stock Subscription Receivable
The stock subscription  receivable consists of a six percent receivable due from
the Company's  ESOP. The receivable is reduced every six months by the amount of
the obligation owed by the Company to the ESOP, under the terms of the ESOP (see
note 10).

5.   Income Taxes
The  provision  for income  taxes  differs  from the amount  computed at federal
statutory rates as follows:
<TABLE>
<CAPTION>

                                                                                       Years Ended
                                                                                      September 30,
                                                                               ----------------------------
                                                                                   2000           1999
                                                                               -------------- -------------
<S>                                                                                <C>            <C>

                                Income tax at statutory rate                          $(1,000)    $(267,000)
                                Change in valuation allowance                           1,000       267,000
                                                                               -------------- -------------

                                                                                         $ -           $ -
                                                                               -------------- -------------
</TABLE>

         Deferred tax assets (liabilities) are comprised of the following:

<TABLE>
<CAPTION>
                                                                                     September 30,
                                                                              -----------------------------
                                                                                  2000           1999
                                                                              ------------- ---------------
<S>     <C>                                                                        <C>           <C>

                                Intangible drilling costs and depletion            $(145,000)     $(107,000)
                                Net operating loss carry forward                     779,000        744,000
                                AMT credit carry forward                               5,000          3,000
                                                                              ------------- ---------------

                                                                                     639,000        640,000

                                Valuation allowance                                 (639,000)      (640,000)
                                                                              ------------- ---------------

                                                                                        $ -            $ -
                                                                              ------------- ---------------
</TABLE>


A valuation  allowance has been recorded for the full amount of the deferred tax
asset because it is more likely than not that the deferred tax asset will not be
realized.

                                F-12
<PAGE>

                               PIONEER OIL AND GAS
                          Notes to Financial Statements
                                    continued
5.   Income Taxes Continued

As of September 30, 2000,  the Company had net operating  loss  carryforward  of
approximately  $2,292,000.  This  carryforward  expires in 2012. If  substantial
changes  in the  Company's  ownership  should  occur,  there  would be an annual
limitation of the amount of NOL carry forward which could be utilized. Also, the
ultimate  realization  of this  carryforward  is due, in part, on the tax law in
effect at the time and future events which cannot be determined.

During the year ended September 30, 1999, the Company's  valuation allowance was
reduced for the expiration of both the investment tax credit  carryforward and a
portion of the net operating loss carryforward.

6.   Sales to Major Customers
The Company had sales to major  customers  during the years ended  September 30,
2000 and 1999, which exceeded ten percent of total sales as follows:

                                                Years Ended
                                               September 30,
                                         --------------------------------
                                                   2000            1999
                                         --------------------------------
 Company A                                       $450,000        $191,844
 Company B                                            $ -         $86,025

7.   Related Party Transactions
The Company  acts as the operator  for several oil and gas  properties  in which
employees,  officers and other related and  unrelated  parties have a working or
royalty interest.  At September 30,  2000 and 1999 there was $35,244 and $7,390,
respectively, included in accounts payable due to related parties as a result of
these  activities.  The Company also is the general  manager in certain  limited
partnerships  and the operator for certain joint ventures formed for the purpose
of oil and gas exploration and development.

During the year ended  September 30, 2000,  the Company began leasing its office
space from certain  officers of the Company.  The lease requires  monthly rental
payments of $2,500 plus all expenses  pertaining to the office space and expires
in September  2005.  Future  minimum lease  payments for the next five years are
$30,000 each year.  Rent  expense for the year ended  September  30,  2000,  was
approximately $30,000.

The Company has a stock subscription receivable from the ESOP (see note 4).

                                F-13
<PAGE>

                              PIONEER OIL AND GAS
                          Notes to Financial Statements
                                    continued

8.   Supplemental Disclosures of Cash Flow Information
Operations reflect actual amounts paid for interest and income taxes as follows:




                                 Years Ended
                                September 30,
                        -----------------------------------
                              2000             1999
                        -----------------------------------

 Interest                   $7,000         $129,000
                        -----------------------------------

 Income taxes               $5,000             $100
                        -----------------------------------

During the year ended September 30, 2000, the company  recorded  interest income
(on  the  stock   subscription   receivable)  of  $15,484,   reduced  the  stock
subscription  receivable  by $12,464  and  recorded  an  employee  benefit  plan
contribution of $27,948.
During the year ended September 30, 1999, the Company issued 1,500,000 shares of
common stock in exchange for a stock  subscription  receivable  in the amount of
$300,000.

9.   Fair Value of Financial Instruments
The Company's financial instruments consist of cash, receivables,  payables, and
a  note  payable.  The  carrying  amount  of  cash,   receivables  and  payables
approximates  fair value because of the  short-term  nature of these items.  The
carrying  amount of the note payable  approximates  fair value as the note bears
interest at floating market interest rates.

10.  Stock Options and Warrants
Employee Stock Ownership Plan
The Company has adopted a  noncontributory  employee stock ownership plan (ESOP)
covering all full-time employees who have met certain service  requirements.  It
provides for discretionary  contributions by the Company as determined  annually
by the Board of Directors, up to the maximum amount permitted under the Internal
Revenue Code. The plan has received IRS approval under Section 401(A) and 501(A)
of the Internal  Revenue Code.  Pension  expense  charged to operations  for the
years ended  September 30, 2000 and 1999 was $27,948 and $24,540,  respectively.
All  outstanding  shares  held by the ESOP are  included in the  calculation  of
earnings per share.

                                F-14
<PAGE>


                              PIONEER OIL AND GAS
                    Notes to Financial Statements continued

10.      Stock Options and Warrants Continued
The Company has granted  stock  options  and  warrants to certain  officers  and
employees of the Company to purchase shares of the Company's  common stock.  The
exercise  price of the options and warrants is equal to or in excess of the fair
market  value of the stock on the date of grant.  A schedule  of the options and
warrants at September 30, 2000 and 1999 is as follows:
<TABLE>
<CAPTION>

                                                      -----------------------------------------------------
                                                                  Number of                  Exercise
                                                                                            Price Per
                                                                                              Share
                                                      -----------------------------------------------------
                                                           Options         Warrants
                                                      -----------------------------------------------------
                             <S>                              <C>              <C>              <C>

                             Outstanding at                                                     .55 - 1.20
                             October 1, 1998                   60,000          300,000  $
                             Granted                          420,000          300,000                 .30
                             Canceled                          (60,000)       (300,000)         .55 - 1.20
                                                      -----------------------------------------------------

                             Outstanding at                                               $            .30
                             September 30,1999                  420,000        300,000                   .
                             Expired                                  -       (300,000)                .30
                                                      -----------------------------------------------------

                             Outstanding at                                            -  $            .30
                             September 30, 2000                 420,000                 .              .30
                                                      -----------------------------------------------------
</TABLE>

Stock Based Compensation  Statement of Financial  Accounting  Standards No. 123,
"Accounting for Stock-Based  Compensation"  (SFAS 123) gives entities the choice
between  adopting a fair value method or continuing  to use the intrinsic  value
method under  Accounting  Principles  Board (APB)  Opinion No. 25 with  footnote
disclosures  of the pro forma effects if the fair value method had been adopted.
The Company has opted for the latter approach.  Had compensation expense for the
company's stock options and warrants been determined  based on the fair value at
the grant date for awards in 1999,  consistent  with the  provisions of SFAS No.
123, the Company's results of operations would have been as follows:
                                                             Year Ended
                                                            September 30,
                                                              1999
                                                  -----------------------------
Net income - as reported                                $              785,384
Net income - pro forma                                  $              685,195
Earnings per share - as reported                        $                  .10
Earnings per share - pro forma                          $                  .09
                                                  -----------------------------

                                F-15
<PAGE>

                              PIONEER OIL AND GAS
                     Notes to Financial Statements continued
10.  Stock  Options and Warrants Continued
The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following assumptions:



                                                   September 30,
                                                        1999
                                              ---------------------------

Expected dividend yield                         $                   -
Expected stock price volatility                                   116%
Risk-free interest rate                                          6.06%
Expected life of options                                  2 to 3 years
                                              ---------------------------

The weighted  average fair value of options and warrants granted during 1999 was
$.14.
During the year ended  September,  30, 2000, no options or warrants were granted
and, therefore, there would be no pro forma effect on the 2000 operations.
The following table summarizes  information  about stock options  outstanding at
September 30, 2000:
<TABLE>
<CAPTION>

                                       Outstanding                                 Exercisable
-----------------------------------------------------------------------------------------------------------
     Exercise           Number          Weighted          Weighted          Number       Weighted Average
                                         Average
                                        Remaining
                                       Contractual        Average
                                          Life            Exercise                           Exercise
      Price          Outstanding         (Years)           Price          Exercisable         Price
-----------------------------------------------------------------------------------------------------------
<S> <C>                    <C>             <C>            <C>     <C>          <C>           <C>

     $       .30           420,000         1.7            $       .30          420,000       $      .30
-----------------------------------------------------------------------------------------------------------
</TABLE>

                                F-16
<PAGE>



                               PIONEER OIL AND GAS
                          Notes to Financial Statements
                                    continued




11. Commitments and Contingencies

Limited Partnerships
The Company has an  immaterial  interest  in two  limited  partnership  drilling
programs and acts as the general partner. As the general partner, the Company is
contingently  liable  for  any  obligations  of  the  partnerships  and  may  be
contingently  liable  for  claims  generally  incidental  to the  conduct of its
business as general  partner.  As of September 30, 2000, the Company was unaware
of any such obligations or claims arising from these partnerships.

Employment Agreements
The Company has entered  into  severance  pay  agreements  with  officers of the
Company who also serve as board members.  Under the terms of the  agreements,  a
board member who is terminated  shall receive  severance pay equal to the amount
such  board  member  received  in salary  and  bonus for the two years  prior to
termination.

Litigation
The  Company  may  become or is subject to  investigations,  claims or  lawsuits
ensuing  out  of the  conduct  of  its  business,  including  those  related  to
environmental  safety and health,  commercial  transactions  etc. The Company is
currently  not aware of any such items which it  believes  could have a material
adverse affect on its financial position.


12. Recent Accounting Pronouncements

In June 2000, the FASB issued SFAS No. 138,  "Accounting for Certain  Derivative
Instruments and Certain Hedging Activities, an amendment of SFAS No. 133" and in
June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative  Instruments
and Hedging  Activities - Deferral of the Effective  date of FASB  Statement No.
133." SFAS 138 and 133  establishes  accounting  and  reporting  standards  for
derivative  instruments and requires recognition of all derivatives as assets or
liabilities  in the  statement of financial  position and  measurement  of those
instruments at fair value.  SFAS 133 is now effective for fiscal years beginning
after June 15, 2000. The Company  believes that the adoption of SFAS 138 and 133
will not have any material effect on the financial statements of the Company.

In June 2000,  the FASB issued SFAS No. 139,  "Rescission  of FASB Statement No.
53" and amendments to FASB  Statements No. 63, 89 and 121. The Company  believes
that the adoption of SFAS 139 will not have any material effect on the financial
statements of the Company.

                                F-17
<PAGE>



                               PIONEER OIL AND GAS
                      Schedule of Supplementary Information
                            On Oil and Gas Operations





The  information  on the  Company's  oil and gas  operations  as  shown  in this
schedule  is  based  on the  successful  efforts  method  of  accounting  and is
presented in conformity  with the  disclosure  requirements  of the Statement of
Financial  Accounting  Standards No. 69 "Disclosures about Oil and Gas Producing
Activities."
                 Capitalized Costs Relating to Oil and Gas Producing Activities
<TABLE>
<CAPTION>

                                                                                  September 30,
                                                                       ------------------------------------
                                                                             2000              1999
                                                                       ------------------------------------
<S>                                                                         <C>               <C>

     Proved oil and gas properties and related equipment                    $1,733,448        $1,584,261
     Unproved oil and gas properties                                                 -             6,447
                                                                       ------------------------------------

                       Subtotal                                              1,733,448         1,590,708

     Accumulated depreciation, depletion and amortization
       and valuation allowances                                              (1,127,046)       (1,012,865)
                                                                       ------------------------------------

                                                                              $606,402          $577,843
                                                                       ------------------------------------

                                Costs Incurred in Oil and Gas Acquisition,
                                  Exploration  and Development Activities
</TABLE>

                                                    Years Ended
                                                   September 30,
                                           ------------------------------------
                                                2000              1999
                                           ------------------------------------
 Acquisition of properties:
          Proved                           $      -           $     -
                                                  -                 -
          Unproved
 Exploration costs                            188,177           152,934
 Development costs                                  -            20,250

                                F-18
<PAGE>

<TABLE>
<CAPTION>
                              PIONEER OIL AND GAS
                      Schedule of Supplementary Information
                            On Oil and Gas Operations

                 Results of Operations for Producing Activities

                                                                                   Years Ended
                                                                                  September 30,
                                                                       ------------------------------------
                                                                             2000              1999
                                                                       ------------------------------------
<S>                                                                          <C>                 <C>

     Oil and gas - sales                                                     $1,076,107          $655,446
     Production costs net of reimbursements                                    (580,110)         (450,563)
     Exploration costs                                                         (188,177)         (152,934)
     Depreciation, depletion and amortization
       and valuation provisions                                                (114,181)         (144,411)
                                                                       ------------------------------------

     Net income (loss) before income taxes                                      193,639           (92,462)

     Income tax (provision) benefit                                             (66,000)           20,000
                                                                       ------------------------------------

     Results of operations from producing activities
       (excluding corporate overhead and interest costs)                       $127,639          $(72,462)
                                                                       ------------------------------------

</TABLE>
                                F-19
<PAGE>
                              PIONEER OIL AND GAS
                      Schedule of Supplementary Information
                            On Oil and Gas Operations


                    Reserve Quantity Information (Unaudited)

The estimated  quantities of proved oil and gas reserves  disclosed in the table
below are based upon an appraisal  of the proved  developed  properties  by Fall
Line Energy, Inc. Such estimates are inherently  imprecise and may be subject to
substantial revisions.
All quantities shown in the table are proved developed  reserves and are located
within the United States.
<TABLE>
<CAPTION>

                                                                  Year Ended September 30,
                                                  ----------------------------------------------------------
                                                              2000                        1999
                                                  ----------------------------------------------------------
                                                       Oil           Gas            Oil           Gas
                                                      (bbls)        (mcf)         (bbls)         (mcf)
                                                  ----------------------------------------------------------
<S>                                                   <C>            <C>            <C>        <C>

     Proved developed and undeveloped reserves:
          Beginning of year                           176,802        368,136        185,006     5,899,880
          Revision in previous estimates               (3,949)       125,461         11,061        14,540
          Discoveries and extension                         -        132,269              -             -
          Purchase in place                                 -              -              -             -
          Production                                  (21,045)       (92,142)       (19,265)      (85,430)
          Sales in place                                    -              -                -  (5,460,854)
                                                  ----------------------------------------------------------

          End of year                                 151,808        533,724        176,802       368,136
                                                  ----------------------------------------------------------

     Proved developed reserves:
          Beginning of year                           176,802        368,136        185,006       609,768
          End of year                                 151,808        533,724        176,802       368,136

</TABLE>
                                F-20
<PAGE>


                              PIONEER OIL AND GAS
                      Schedule of Supplementary Information
                            On Oil and Gas Operations

          Standardized Measure of Discounted Future Net Cash Flows and
       Changes Therein Relating to Proved Oil and Gas Reserves (Unaudited)
<TABLE>
<CAPTION>

                                                                                   Years Ended
                                                                                  September 30,
                                                                            2000                1999
                                                                     ----------------------------------------
<S>                                                                         <C>                 <C>
Future cash inflows                                                         $6,505,000          $4,644,000
Future production and development costs                                      (2,437,000)         (1,794,000)
Future income tax expenses                                                   (1,383,000)           (969,000)
                                                                     ----------------------------------------
                                                                             2,685,000           1,881,000
10% annual discount for estimated timing of cash flows                       (1,074,000)           (828,000)
                                                                     ----------------------------------------

Standardized measure of discounted future net cash flows                    $1,611,000          $1,053,000
                                                                     ----------------------------------------
</TABLE>

                                F-21
<PAGE>
                              PIONEER OIL AND GAS
                      Schedule of Supplementary Information
                            On Oil and Gas Operations



Standardized  Measure of  Discounted  Future Net Cash Flows and Changes  Therein
Relating to Proved Oil and Gas Reserves (Unaudited)-Continued

The preceding  table sets forth the estimated  future net cash flows and related
present value discounted at a 10% annual rate from the Company's proved reserves
of oil,  condensate  and gas.  The  estimated  future net revenue is computed by
applying the year end prices of oil and gas  (including  price  changes that are
fixed and  determinable)  and current  costs of  development  and  production to
estimated  future   production   assuming   continuation  of  existing  economic
conditions.  The values  expressed are estimates only,  without actual long-term
production to base the production  flows, and may not reflect  realizable values
or fair market values of the oil and gas ultimately extracted and recovered. The
ultimate  year of  realization  is also  subject to  accessibility  of petroleum
reserves and the ability of the Company to market the products.

                     Changes in the Standardized Measure of
                    Discounted Future Cash Flows (Unaudited)

<TABLE>
<CAPTION>

                                                                                   Years Ended
                                                                                  September 30,
                                                                      ---------------------------------------
                                                                             2000                1999
                                                                      -------------------- ------------------
<S>                                                                           <C>                <C>
Balance, beginning of year                                                    $1,053,000         $3,711,000
Sales of oil and gas produced net of
   production costs                                                             (252,000)          (670,000)
Net changes in prices and production costs                                       300,000           (671,000)
Extensions and discoveries, less related
   costs                                                                         209,000                  -
Purchase and sales of minerals in place                                                -         (4,100,000)
Revisions of estimated development costs                                               -                  -
Revisions of previous quantity estimate                                          444,000          1,662,000
Accretion of discount                                                            105,000            371,000
Net changes in income taxes                                                     (248,000)           750,000
                                                                      -------------------- ------------------

Balance, end of year                                                          $1,611,000         $1,053,000
                                                                      -------------------- ------------------

</TABLE>
                                F-22
<PAGE>


ITEM 8 - CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS ON ACCOUNTING AND
FINANACIAL DISCLOSURE

         On November 13, 2000,  the Company  terminated  its  relationship  with
Tanner + Co. ("Tanner"),  the principal  accountant  previously engaged to audit
the Company's  financial  statements.  Effective  November 13, 2000, the Company
retained  Jones,  Wright,  Simkins and  Associates  ("Jones")  as the  principal
accountants to replace  Tanner.  The Company's  board of directors  approved the
change of accountants from Tanner to Jones.

            The audit  reports of Tanner on the Company's  financial  statements
for the fiscal  year  ending  September  30,  1999 did not  contain  any adverse
opinion or  disclaimer  of opinion,  nor were they  qualified  or modified as to
uncertainty, audit scope, or accounting principles.

     In connection with the audits of the fiscal year ending  September 30, 2000
and the  subsequent  interim  period  through  November  13,  2000,  the date of
termination,  the  Company  had no  disagreements  with  Tanner on any matter of
accounting principles or practices,  financial statement disclosure, or auditing
scope or procedures.  Had there been any disagreements that were not resolved to
their  satisfaction,  such  disagreements  would  have  caused  Tanner  to  make
reference  in  connection  with  their  opinion  to the  subject  matter  of the
disagreement.  In addition, during that time there were no reportable events (as
defined in Item 304(a)(1)(iv) of Regulation S-B).

            During the fiscal  year  ending  September  30, 2000 and the interim
period  through  November 13, 2000, the date of  termination,  and prior to such
appointment, the Company did not consult with Jones regarding the application of
generally  accepted  accounting  principles  to a specific  transaction,  either
proposed or  completed,  or the type of audit  opinion that might be rendered on
the  Company's  financial  statements.  Since  there  were no  disagreements  or
reportable  events (as defined in Item 304(a)(2) of Regulation S-B), the Company
did not consult Jones in respect to these matters during that time.

     The Company  provided Tanner with a copy of its Form 8-K prior to filing it

<PAGE>

with the SEC.  The  Company  requested  that Tanner  furnish the Company  with a
letter to the SEC stating  whether  Tanner agreed with the above  statements.  A
copy of that  letter  dated  November  14,  2000 is  filed as  Exhibit  1 to the
Company's Form 8-K filed with the SEC on November 16, 2000.

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

DIRECTORS AND EXECUTIVE OFFICERS

The directors,  executive officers and significant  employees of the company are
as follows:

                                                  POSITION
          NAME                  AGE               WITH COMPANY
          ----                  ---               ------------

     Don J. Colton               54          President/Treasurer & Director
     Gregg B. Colton             47          Vice President/Secretary & Director
     John O. Anderson            58          Office Manager/Director
     Michael L. Pinnell          56          Exploration Manager

Note:  Don J. Colton and Gregg B. Colton are  brothers  and John O.  Anderson is
their uncle.

                  Don J. Colton serves as the Company's President, Treasurer and
Chairman of its Board of  Directors.  Since the  Company's  inception in October
1980 Mr. Colton has served as the  Company's  President and has been involved in
all aspects of the business including  exploration,  acquisition and development
of  producing  properties.  From 1979 to 1981,  Mr.  Colton was Chief  Financial
Officer and a member of the Board of Directors of Drilling  Research  Laboratory
in Salt Lake City,  Utah.  The Drilling  Research  Laboratory is a subsidiary of
Terra  Tech,  Inc.  and  prior to his  involvement  with the  Drilling  Research
Laboratory,  Mr.  Colton was Manager of Special  Projects  for Terra  Tech.  Mr.
Colton  received a BS in Physics from  Brigham  Young  University  in 1970 and a
Master of Business Administration from the University of Utah in 1974.

     Gregg B. Colton serves as the Company's Vice President,  Secretary, General
Counsel and a member of the Board of  Directors.  Mr.  Colton has been  employed
with the Company  since it actually  commenced  business in 1981.  Mr. Colton is
involved in handling  the  contracts,  sales of oil and gas  products  and legal
problems  of the  Company  along  with the day to day  decision  making  for the
Company with the Company's  President.  From 1981 to 1984, Mr. Colton was also a
partner in the law firm of Cannon, Hansen & Wilkinson. Mr. Colton is a member of
the  Utah  State  Bar  and a real  estate  broker.  He is also a  member  of the
Corporate  Counsel section for the Utah State Bar. Mr. Colton earned his BA from
the  University  of Utah in 1976 and a Juris  Doctor  and a Master  of  Business
Administration from Brigham Young University in 1981.
                  John O. Anderson serves as the Company's  Office Manager along
with being a member of the Board of Directors.  Mr.  Anderson as Office  Manager
handles  the day to day  accounting  for the  Company  along with  handling  the
procurement of office supplies.

<PAGE>

     The Company has employed Mr.  Anderson  since 1981 and prior to joining the
Company he worked in land  investments.  Mr. Anderson received his BS in Zoology
in 1968 from the University of California.

     Michael L. Pinnell serves as the Company's Exploration Manager and has been
employed by the Company  from 1989 to the present.  Mr.  Pinnell is in charge of
performing and supervising the geological and geophysical interpretation for the
Company's  drilling  prospects.  Mr.  Pinnell worked as a consultant for various
companies from 1985 to 1989 and performed  geological and geophysical  services.
From 1981 to 1985 Mr.  Pinnell  was the  Exploration  Manager  for  Fortune  Oil
Company.  Mr. Pinnell received a BS in Geology in 1970 and an MS in Geology from
Brigham Young University.


COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

         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
the  Company's  Common  Stock,  to file  reports  of  ownership  and  changes in
ownership  with  the  Securities  and  Exchange  Commission  ("SEC").  Officers,
directors  and  greater  than  ten  percent  stockholders  are  required  by SEC
regulations  to furnish the Company with copies of all Section  16(a) forms they
file.

The  following  disclosure  is based solely upon a review of the Forms 3 and any
amendments thereto furnished to the Company during the Company's fiscal year
ended  September 30, 2000, and Forms 5 and amendments  thereto  furnished to the
Company  with respect to such fiscal year,  or written  representations  that no
Forms 5 were  required  to be filed by such  persons.  Based on this  review the
following  persons who were a director or  beneficial  owner of more than 10% of
the  Company's  outstanding  Common  Stock  during  such  fiscal year filed late
reports on Forms 3.

All of the Directors of the Company,  Gregg B. Colton, Don J. Colton and John O.
Anderson each filed one late report on Form 3 after the Company  became  subject
to the Exchange Act of 1934.

ITEM 10 - EXECUTIVE COMPENSATION

                  The following Summary  Compensation  Table sets forth all cash
compensation  paid,  distributed or accrued for services,  including  salary and
bonus amounts rendered in all capacities for the Company's CEO during the fiscal
years ended, September 30, 2000, 1999, and 1998. All other tables required to be
reported have been omitted as there has been no compensation  awarded to, earned
by or paid to any of the  executives  of the  Company  that  is  required  to be
reported other than what is stated below:

                           SUMMARY COMPENSATION TABLE

Name and                                    Amount of            Fiscal
Principal Position                          Compensation         Year Ended

Don J. Colton, CEO                          $90,504(1)           2000
Don J. Colton, CEO                          $72,403(1)           1999
Don J. Colton, CEO                          $72,403(1)           1998

         (1) The amount of  compensation  included  in the table  above for each
         fiscal  year  does not  include  amounts  paid by the  Company  for the
         Company's  Employee  Stock  Ownership  Plan.  Under the Employee  Stock
         Ownership Plan 10% of the employees  compensation for salary or bonuses
         is paid on behalf of the  employee for Company  stock in the  Company's
         Employee Stock Ownership  Plan. All full-time  employees of the Company
         participate in the Employee Stock  Ownership Plan on the same terms and
         conditions as  management.  For the fiscal years shown above 10% of the
         compensation amount above was paid towards the Employee Stock Ownership
         Plan in the form of Company stock.

<PAGE>

                  Below is the  options  granted  in the last two years that are
required to be disclosed under this filing:

                     OPTION GRANTS IN LAST TWO FISCAL YEARS

                                         % of Total
                        Number of        Options
                        Securities       Granted to
                        Underlying       Employees in      Exercise         Exp.
 Name                   Options Granted  Fiscal Year       Price ($/Sh)     Date


 Don J. Colton, CEO     120,000          28.57%             $.30/Share      (1)

         (1) The expiration date for 60,000 of the 120,000 options granted above
         are due to expire on December  31, 2001,  and the other 60,000  options
         are due to expire on December 31, 2002.

ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The  following  table  sets forth  certain  information  regarding  the
beneficial  ownership of the Company's Common Stock by each person or group that
is known by the Company to be the beneficial  owner of more than five percent of
its outstanding Common Stock, each director of the Company, each person named in
the Summary  Compensation Table, and all directors and executive officers of the
Company as a group as  September  30,  2000.  Unless  otherwise  indicated,  the
Company believes that the persons named in the table below, based on information
furnished by such owners,  have sole voting and investment power with respect to
the Common Stock beneficially owned by them, where applicable.

Title of          Name and Address of        Amount and Nature          Percent
 Class            Beneficial Owner           of Beneficial Owner        of Class

Common   Don J. Colton                       753,019(1)                   8.8%
                  2172 E Gambel Oak Drive
                  Sandy, Utah 84092

Common   Gregg B. Colton                     780,928(1)                   9.1%
                  10026 Ridge Gate Circle
                  Sandy, Utah 84092

Common   John O. Anderson                    376,532(1)                   4.4%
                  7462 S Parkridge Circle
                  Salt Lake City, Utah 84121


Common   Pioneer Employee Stock              1,623,042(2)                18.97%
                  Ownership Plan
                  1225 Fort Union Blvd., #100
                  Midvale, Utah 84047

All Directors and Officers as a Group
(3 Persons)                                  1,910,479                   22.3%

<PAGE>


         (1) Includes currently  exercisable options to purchase common stock in
         the Company as long as the person is serving as a director and employee
         of the Company.  Each of the persons  listed under this  footnote  have
         options to purchase 120,000 shares of the Company's Common Stock.

         (2) Persons  listed  above have their  vested  shares under the Pioneer
         Employee Stock  Ownership Plan included under their name. Don J. Colton
         and Gregg B. Colton as Trustees of the Pioneer Employee Stock Ownership
         Plan  have  the  right  to  vote  all  the  shares  of the  Plan at any
         shareholder meeting of the Company.

         The Company currently has no arrangements, which may result in a change
of control.

ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The Board of  Directors  approved  more than 10 years ago a  resolution  to
allow  employees  of the  Company to purchase  25% of any oil and gas  producing
property  acquired by the Company at the same time as the Company  acquires  the
property.  The resolution required that the employees pay for 25% of the cost of
the  oil  and  gas  properties  at the  same  time  the  Company  purchased  the
properties.  In the event,  the  Company is unable to fund the total cost of any
producing  properties  the  employees of the Company may purchase the amount the
Company is unable to fund even if it exceeds  25%. The  employees  also have the
right to acquire  25% of any  non-producing  oil and gas leases  acquired by the
Company on similar terms as those for producing properties.

                  The  Company  also  leases  office  space that is owned by the
Board  of  Directors.  The  office  space  is  leased  to the  Company  on terms
reasonable for the same kind of office space in the area that it is located. The
new  office  space  has  1,950  square  feet  with  an  unfinished  basement  of
approximately 975 square feet.

                  The Board of  Directors  has also  authorized  the  Company to
repurchase  up to  2,000,000 of its common  shares as treasury  stock during the
next 12 months. The exact timing,  price and terms for the purchase of the stock
shall be at the discretion of the officers of the Company.

<PAGE>

                                     PART IV

         ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K

PART F/S                   FINANCIAL STATEMENTS

     The  financial  statements  of the  Company  as  required  by  Item  310 of
Regulation S-B are included in Part II, Item 7 of this report.

PART III.                  INDEX TO EXHIBITS

                The following Exhibits are filed herewith:

Exhibit No.                                 Description

3(i)                                        Articles of Incorporation (1)
                                            (with amendments)

3(ii)                                       Bylaws (1)

10                                          Line of Credit Agreement (1)

23                                          Fall Line Energy letter from
                                            Petroleum Engineer

99                                          Minutes Approving Employee
                                            Participation in Acquisitions (1)


               (1)  Incorporated by reference from the Company's 2000 Form 10SB.

REPORTS ON FORM 8-K

                One  Form  8-K was  filed  during  the  fourth  quarter  2000 as
referenced above under Item 8 regarding the change of the Company's  accountants
for the audit for the year ending September 30, 2000.

                                   SIGNATURES

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

                                     By:     /S/
                                         ----------------
                                         Don J. Colton
                                         Director/President

<PAGE>

                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.

       /S/          Director/President
--------------------
   Don J. Colton

       /S/          Director/Vice President/Secretary
--------------------
   Gregg B. Colton

      /S/           Director
--------------------
   John O. Anderson