U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-KSB

[X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended December 31, 2001, or

[ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange
act of 1934 for the transition period from to

                          Commission File No. 333-37842

                               MOUNTAIN OIL, INC.
           (Name of Small Business Issuer as specified in its charter)

                  Utah                                 87-0639343
    (State or Other Jurisdiction of                   (IRS Employer
     Incorporation or Organization)                Identification No.)

             3954 East 200 North East Highway 40, Ballard, UT 84066
              (Address of Principal Executive Offices and Zip Code)

Issuer's Telephone Number:  (435) 722-2992

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

Securities registered under Section 12(g) of the Act:  None

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

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B in this form, and no disclosure will be contained, to the best of
registrant's   knowledge,   in  definitive   proxy  or  information   statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [ X ]

The Registrant's revenues for its most recent fiscal year:  $1,053,000

The aggregate market value of voting stock held by non-affiliates:  $1,963,076

As of December 31, 2001,  the  Registrant had  outstanding  3,102,749  shares of
common stock, no par value.

Documents incorporated by reference:  None.


<PAGE>


                                TABLE OF CONTENTS

ITEM NUMBER AND CAPTION                                                   Page

Part I

1.    Description of Business                                             3

2.    Description of Property                                             6

3.    Legal Proceedings                                                   8

4.    Submission of Matters to a Vote of Security Holders                 8

Part II

5.    Market for Common Equity and Related Stockholder Matters            8

6.    Management's Discussion and Analysis and Plan of Operation          8

7.    Financial Statements                                                10

8.    Changes in and Disagreements with Accountants                       10
      on Accounting and Financial Disclosure

Part III

9.    Directors, Executive Officers, Promoters and Control Persons        11

10.   Executive Compensation                                              12

11.   Security Ownership of Certain Beneficial Owners and Management      13

12.   Certain Relationships and Related Transactions                      14

13.   Exhibits and Reports on Form 8-K                                    15

Signatures                                                                16


                                       2
<PAGE>


                                     PART I

                         ITEM 1. DESCRIPTION OF BUSINESS

General

     Mountain  Oil,  Inc., a Utah  corporation  formed on July 30,  1999,  is an
independent oil and gas  exploration  and development  company that holds 11,989
acres of leased mineral rights located within a thirty-mile  radius of Duchesne,
Utah.  On our acreage we have nine wells  producing  oil and gas at December 31,
2001,  with pumps in place.  We are  gathering oil from one  additional  well by
swabbing,  which brings oil to the surface without a pump. Nine of our wells are
capable of producing with pumps in place,  but are not in production now because
of the low price of oil. We believe we can  successfully  rework the well we are
swabbing and four additional  wells for  production,  but do not intend to do so
until the price of oil improves and we can locate additional capital to fund the
project.

     On January 19, 2001, we commenced a registered public offering of 1,000,000
shares of common  stock at a gross sales price of  $2,250,000.  On February  28,
2001, we closed our public  offering after selling  715,068 shares  resulting in
gross  proceeds of $1,609,000.  Net proceeds of the offering were  approximately
$1,524,053.  We used approximately  $374,722 of the net proceeds to purchase oil
well  equipment,  $547,071 to rework  wells,  and  $252,233 to purchase  service
equipment.

     Our plan for the coming  year is to  preserve  our leases  through  limited
production of our wells,  seek  additional  financing to fund our operations and
pursue the  rework  project on our  existing  wells,  and seek farm out or joint
drilling arrangements to drill new wells on our undeveloped acreage.

Operations

     We conduct our own operator  services for our oil and gas wells.  Operating
services includes  maintaining  producing wells and related equipment,  swabbing
certain wells  without  pumps to bring oil to the surface,  and pulling pipe and
performing  other tasks related to reworking our wells. We reduced the number of
field  employees  from 13 earlier this year to two because of low oil prices and
the  resulting  reduction of revenue.  Our two full-time  employees  perform the
services  required  to  maintain  production  from nine of our wells.  We own an
office and storage facility in Ballard,  Utah where we store equipment and tools
and from which we operate to service our wells.

     We cannot predict when we will bring back into production our 10 wells that
can  produce  with  pumps  in  place or when we will  pursue  reworking  of five
additional wells, since we do not believe this activity is economical at current
oil prices.  While we are looking for  opportunities  to develop our undeveloped
lease acreage by drilling new wells or through farm out arrangements,  we cannot
predict  whether  we will be able to  locate  and  take  advantage  of any  such
opportunities with oil prices at current levels.

     Our operations are subject to all of the risks incident to exploration  for
and production of oil and gas,  including  blow-out of the well due to excessive
pressure, cratering of the well due to ground subsidance,  pollution, and fires,
each of which could result in damage to or  destruction  of oil and gas wells or
production  facilities  or injury to persons and property.  We currently  have a
$1,000,000  insurance  policy for public  liability and $5,000,000 for claims or
losses. If our insurance does not fully cover certain of these risks, the impact
could have a material adverse effect on our financial position.

     Future  drilling  activities are subject to many risks,  including the risk
that no commercially productive reservoirs will be encountered.  There can be no

                                       3
<PAGE>


assurance that any new wells drilled in which we participate will recover all or
any portion of the related  investment.  The cost of drilling,  completing,  and
operating wells is often uncertain and cost overruns can occur.  Future drilling
programs  might be  curtailed,  delayed,  or  canceled  as a result of  numerous
factors,  many of which are beyond our control.  These factors include financial
resources  of Mountain Oil or its  partners,  commodity  prices,  land and title
issues,   mechanical   problems,   weather   conditions,   and  compliance  with
governmental requirements.  Unsuccessful drilling and development activities may
have a material adverse effect on Mountain Oil and its results of operations.

Market

     Our oil and gas  production  is marketed to third parties  consistent  with
industry practices. Typically, oil is sold at field posted prices, plus or minus
adjustments for quality and transportation. We currently sell our oil to Chevron
Corporation  under a  month-to-month  contract  that can be terminated by either
party with 30 days prior notice. Natural gas is usually sold under a contract at
a negotiated price based upon factors normally considered in the industry,  such
as gas quality,  distance  from the well to the  pipeline,  estimated  reserves,
liquid  hydrocarbon  content of  natural  gas,  and  prevailing  supply/  demand
conditions.  Coastal field Services  operates a gas gathering system in the area
where our  producing  wells are located and  purchases  our gas at spot  prices.
Coastal Field Services delivers to us propane or butane to run our batteries and
pumps,  the  cost of which  is  offset  against  the  amount  owed to us for gas
gathered from our wells. After the offset we did not realize any net revenue for
gas sales in 2001. At December 31, 2001,  we were selling our oil  production at
$17.50 per barrel and gas  production  at $1.94 per mcf of gas,  as  compared to
sales at prices  averaging  $27.50  per barrel of oil and $8.00 per mcf of gas a
year ago.

     The  availability of a ready market for our oil and gas depends on numerous
factors beyond our control,  including the demand for and supply of oil and gas,
the  proximity  of our natural gas reserves to  pipelines,  the capacity of such
pipelines,  fluctuations  in  production  and  seasonal  demand,  the effects of
inclement weather and governmental regulation.  New gas wells may be shut-in for
lack of a  market  until a gas  pipeline  or  gathering  system  with  available
capacity is extended into the area. New oil wells may have production  curtailed
until production  facilities and equipment are acquired or developed.  As is the
case now,  production  may be curtailed  because it is not  commercially  viable
under  current  prices.  Our  business  will always be subject to these types of
risks.

Regulation

     The production and sale of gas and oil are subject to a variety of federal,
state and local government  regulations,  including  regulations  concerning the
prevention  of waste,  the  discharge of  materials  into the  environment,  the
conservation of natural gas and oil, pollution, permits for drilling operations,
drilling  bonds,  reports  concerning  operations,  the  spacing  of wells,  the
unitization  and pooling of  properties,  and various other  matters,  including
taxes.  Many  jurisdictions  have at various  times imposed  limitations  on the
production of gas and oil by restricting  the rate of flow for gas and oil wells
below their actual  capacity to produce.  In  addition,  many states have raised
state  taxes on energy  sources  and  additional  increase  may occur,  although
increases in state energy taxes would have no predictable  effect on natural gas
and oil prices.  We believe we are in  substantial  compliance  with  applicable
environmental and other government laws and regulations.  However,  there can be
no assurance that  significant  costs for compliance will not be incurred in the
future.

     All  aspects  of the oil and gas  industry  are  extensively  regulated  by
federal, state and local governments. Regulations govern such things as drilling
permits,  production  rates,  environmental  protection  and pollution  control,
royalty rates, and taxation rates. These regulations may substantially  increase

                                       4
<PAGE>


the  cost of  doing  business  and  sometimes  prevent  or  delay  the  start or
continuation of any given  exploration or development  project.  Regulations are
subject  to future  changes  by  legislative  and  administrative  action and by
judicial decisions, which may adversely affect the petroleum industry.

     We believe  our  operations  comply  with all  applicable  legislation  and
regulations in all material  respects and that the existence of such regulations
has had no more  restrictive  effect on our  method  of  operations  than  other
similar  companies  in the  industry.  Although we do not  believe our  business
operations  presently  impair  environmental  quality,  compliance with federal,
state and local  regulations  that have been enacted or adopted  regulating  the
discharge of materials  into the  environment  could have an adverse effect upon
our capital expenditures, earnings and competitive position.

     In  the  areas  which  we  conduct  our  operations,  there  are  statutory
provisions  regulating  the  production of oil and natural gas.  These rules may
restrict  the oil and gas  production  rate to  below  the rate  our  wells  can
produce.  We are also subject to numerous  laws and  regulations  governing  the
discharge  of  materials  into  the   environment   or  otherwise   relating  to
environmental  protection.  We may be required to obtain permits before drilling
and operating our wells. Also, we may be subject to liability for pollution that
results from our  operations.  It is impossible to predict if and to what extent
these regulations may impact our operations.

     State  regulatory   authorities  have  established  rules  and  regulations
requiring  permits  for  drilling  operations,  drilling  bonds  and/or  reports
concerning  operations.  The state regulatory authorities may also have statutes
and  regulations  concerning  the  spacing of wells,  environmental  matters and
conservation.

     At present,  our compliance  efforts consist of filing monthly  production,
inventory  and sales  reports with the state of Utah and the Mineral  Management
Services. We are also required to file notices when there are any changes in the
wells such as relocating tanks and pipes,  cleanouts and other activity.  We may
incur  additional  costs for clean up in the event of an oil spill.  We estimate
that we currently spend  approximately  $30,000 per year to maintain  compliance
with  regulatory  requirements.   We  intend  to  comply  with  all  regulations
pertaining to our  operations.  However,  future  legislation and regulation may
have adverse impact on our business.

Competition

     In developing  and producing oil and gas, we compete with a number of other
companies, including large oil and gas companies and other independent operators
with greater financial,  operational,  and management resources than ours. There
can be no assurance we can compete  effectively with these larger entities.  The
oil and gas  industry is highly  competitive  in all phases.  We will  encounter
strong  competition  from other  independent  oil  companies in all areas of our
business including marketing,  production,  and obtaining external financing for
new development.

Employees

     We presently have one full-time  officer and one full time office staff. In
addition,  we employ  consultants from  time-to-time to assist in evaluating oil
and gas properties.  We employ two additional full time production employees who
are on call 24 hours a day.

     Our  success  will  be  largely  dependent  upon  the  efforts  and  active
participation  of Craig  Phillips  our  president  and Joe  Ollivier  our  chief
financial  officer.  The  loss of the  services  of any of  these  officers  may
adversely  affect our business  development.  We have key man insurance in place
for Craig  Phillips,  but do not anticipate  purchasing key man insurance on any
other employee until such time as revenues from operations allow.

                                       5
<PAGE>


     Our  directors  and  officers,  are,  or may  become  in  their  individual
capacity, officers, directors, controlling shareholders and/or partners of other
entities  engaged  in a variety  of  businesses.  Thus,  there  exist  potential
conflicts of interest including,  among other things, time, effort and corporate
opportunity,  involved in participation with such other business  entities.  The
amount of time,  which our officers and  directors  will devote to our business,
may be limited.  It is not anticipated that any of such other business interests
will be ones that are, or will be, in competition with us.

                         ITEM 2. DESCRIPTION OF PROPERTY

Principal Offices

     Our offices are located at 3954 East Highway 40,  Ballard,  Uintah  County,
Utah.  Our  building  consists of a total of 2,400 square feet with 1,200 square
feet on each of two floors.  All  administrative  and  managerial  functions are
performed at our office location. We have purchased our building and adjacent 10
acres for $29,325 and are current in our mortgage payments.

Our Oil and Gas Properties

     Mountain Oil operates nine developed wells,  owns nine developed wells that
are not now in production,  and owns mineral  interests in five additional wells
located on 11,989 acres of leased mineral rights in Duchesne and Uintah counties
of Utah.  The wells are  completed in oil and gas  formations  between 4,000 and
17,000 feet deep. At one time all wells were producing.  However, due to lack of
maintenance over the years,  most of the wells had ceased production at the time
we  acquired  them in 1999.  Since July 1999,  we have  focused  our  efforts on
settling outstanding liabilities, raising capital, and reworking existing wells.

     Total net proved  reserves are 396 Mbbls of oil and 413 Mmcf of natural gas
with a net present  value of $503,159 as of December 31,  2001.  The net present
value of our proved  reserves  is the  present  value of the future  revenues we
estimate will be generated from  production of proved  reserves net of estimated
lease operating  expenses,  production taxes, and future development costs using
costs and prices as of the date of  estimation  without  future  escalation  and
without  giving effect to  non-property  related  expenses and  discounted at an
annual  discount rate of 10 percent.  An oil price of  $16.50/bbl  for black wax
crude and $21.15/bbl for yellow wax crude, and a gas price of $1.94/mcf was used
in the economic analysis of the reserves. Oil and gas prices were not escalated.
Proved  developed  reserves  were assigned at December 31, 2001, to nine pumping
wells  totaling  115 Mbbls of oil and 0 Mmcf of natural  gas with a net  present
value of $359,597,  before income tax effects.  Proved undeveloped reserves were
assigned to two  undrilled  locations  totaling 281 Mbbls of oil and 413 Mmcf of
natural gas with a net present value of $143,562, before income tax effects.

     We intend to  develop  our proved  undeveloped  reserves  through  farm out
arrangements  with  larger oil  companies  and joint  drilling  agreements.  Our
undrilled  locations  have been  evaluated  by several  independent  oil and gas
companies that have expressed interest in participating in the development,  but
we  have  yet  to  negotiate  the  terms  of any  farm  out  or  joint  drilling
arrangement, and we cannot predict when we will be able to do so.

     We do not own the land on which  the wells  are  located,  but we lease the
minerals rights subject to royalty interests. The land and royalty interests are
owned by the Bureau of Land Management, the state of Utah, the Ute Indian Tribe,
or by private individuals.  The average annual rental on the lease agreements is
$1.25 per acre per year.  Some of the leases do not require  any annual  payment
and are held by production, which means we hold the mineral rights lease as long
as there is production or we are developing the lease for production.

                                       6
<PAGE>


Oil and Gas Reserve Information

     The  following  reserve  report  is based  upon oil and gas  sales  prices,
production  history,  working  interests,  net revenue  interests,  drilling and
completion costs, and operating costs provided by Mountain Oil to an independent
petroleum engineer.  The evaluation is based upon utilization of the oil and gas
prices believed to be in effect on December 31, 2001. A field examination of the
producing wells was not conducted.

     Estimates  of reserves  and of future net  revenue  may vary  substantially
depending,  in part,  on the  assumptions  made and may be subject to adjustment
either up or down in the  future.  The actual  amounts of  production,  revenue,
taxes,   development   expenditures,   operating  expenses,  and  quantities  of
recoverable oil and gas reserves to be encountered may vary  substantially  from
the engineer's estimates.  Oil and gas reserve estimates are necessarily inexact
and involve matters of subjective and engineering  judgment.  If these estimates
of  quantities,  prices  and costs  prove  inaccurate,  we are  unsuccessful  in
increasing our producing oil and gas wells,  and/or  declines in and instability
of oil  and  gas  prices  occur,  then  write  downs  in the  capitalized  costs
associated  with our oil and gas assets may be  required.  While we believe that
the estimated  proved oil and gas reserves and estimated future net revenues are
reasonable, there is no assurance that certain revisions will not be made in the
future.

     Our productive  wells are situated on 2,080 total gross acres and 1,261 net
developed acres of oil and gas leases in Duchesne and Uintah Counties, Utah. The
wells are  between  7,000 and 14,000 feet deep and are  completed  to either the
Green  River or Wasatch  substrata  formations.  The  following  table  presents
information as of December 31, 2001, on our productive wells:

--------------------------------------------------------------------------------
                                Productive Wells
--------------------------------------------------------------------------------
            Oil                        Gas                       Total
--------------------------------------------------------------------------------
    Gross          Net         Gross          Net         Gross         Net
--------------------------------------------------------------------------------
      22            22          -0-           -0-           22           22
--------------------------------------------------------------------------------

     Mountain Oil has two 320-acre proved undeveloped  drilling locations in the
Wasatch and Green River  formations in the Altamont and Bluebell  fields.  These
drilling  locations  represent 640 gross and 451 net acres of undeveloped  lease
acreage.  In  addition,  Mountain  Oil holds  9,536 gross and 8,007 net acres of
undeveloped properties in the Altamont,  Bluebell, Brundage Canyon, Myton Bench,
Duchesne,  West Willow Creek North, and Bridgeland  fields,  which have not been
assigned proved  undeveloped  reserves in the December 31, 2001, reserve report.
Mountain  Oil  intends to focus its  efforts  on  reworking  existing  wells for
production  and will use the net  proceeds of this  offering  for that  purpose.
Excess  cash flow from  increased  production  from these  wells will be used to
advance our development program for undeveloped reserves.  During this period we
also intend to implement  joint drilling  agreements to develop the reserves and
pursue debt and equity financing for specific drilling projects.

     The following table sets forth certain information  regarding our developed
and undeveloped leasehold acreage as of December 31, 2001:

--------------------------------------------------------------------------------
         Developed                 Undeveloped                   Total
--------------------------------------------------------------------------------
    Gross          Net         Gross          Net         Gross         Net
--------------------------------------------------------------------------------
    2,080         1,261        10,176        8,458        12,256       9,719
--------------------------------------------------------------------------------


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                            ITEM 3. LEGAL PROCEEDINGS

     Mountain Oil is not a party to any material pending legal proceedings,  and
to the best of its knowledge,  no such  proceedings  by or against  Mountain Oil
have been threatened.

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

     No matter was submitted to a shareholder vote for the fourth the quarter of
the 2001 calendar year.

                                     PART II

        ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     In the second  calendar  quarter of 2001,  Mountain  Oil's common stock was
included  in the NASD's  Bulletin  Board  system  under the symbol  "MOLI".  The
following  table sets forth for the respective  periods  indicated the prices of
the common stock in the  over-the-counter  market, as reported and summarized by
the OTC  Bulletin  Board.  Such prices are based on  inter-dealer  bid and asked
prices,  without  markup,  markdown,  commissions,  or  adjustments  and may not
represent actual transactions.

Calendar Quarter Ended             High Bid ($)               Low Bid ($)

June 30, 2001                         $4.25                       $1.75
September 30, 2001                    $2.25                       $0.55
December 31, 2001                     $1.01                       $0.55

     All shares of common stock  outstanding  may be sold  without  restriction,
except 2,207,345 shares,  which are restricted  securities within the meaning of
Rule 144 and cannot be sold without  registration  under the  Securities  Act of
1933 or in a transaction exempt from registration.

     Since its  inception,  no dividends have been paid on Mountain Oil's common
stock. We intend to retain any earnings for use in its business  activities,  so
it is not expected  that any  dividends on the common stock will be declared and
paid in the foreseeable  future. At December 31, 2001, there were  approximately
330 holders of record of our common stock.

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

Results of Operations for the Fiscal Years Ended December 31, 2001 and 2000

     During the year  ended  December  31,  2001,  Mountain  Oil had a loss from
operations of $1,606,000 on revenues of  $1,053,000,  as compared to a loss from
operations of $279,000 on revenues of $637,000 for calendar year 2000.  Revenues
in 2001 included $133,000 of service revenue derived from well services provided
by  Mountain  Oil to  unrelated  third  parties,  which we do not  expect  to be
significant in 2002. The  substantial  increase in our loss from operations from
2000 to 2001 is  attributable to substantial  increases in our operating  costs,
general and administrative  expenses,  impairment of property and equipment, and
depreciation, depletion and amortization expenses.

     Operating  costs in 2001  were  $784,000,  compared  to  $279,000  in 2000.
Approximately  $340,000 of this increase is  attributable  to increased  lifting
costs  associated with extracting oil and gas from wells we reworked and brought
into production during 2001. Operating costs also includes an increase in repair

                                       8
<PAGE>


and  maintenance  expense from  $16,000 in 2000 to $130,000 in 2001,  which is a
result of having  more wells  producing  in 2001.  Due to  declining  oil prices
during the later part of 2001,  we reduced the number of wells in  production to
nine at December 31, 2001.  We expect this  reduction  will lower our  operating
costs for the coming year.

     Since  we  had  expanded   our   operations   in  2001,   our  general  and
administrative expenses increased because payroll expenses increased by $36,000,
the cost of  maintaining  and  operating  our  vehicles  increased  by  $24,000,
insurance expense increased by $33,000,  taxes and licenses increased by $36,000
(which  included  a  $20,000  surcharge  imposed  by a lessor of our oil and gas
properties  for late report  filings in 2000,  which is not expected to recur in
subsequent  periods),  and an increase in bad debt allowance by $17,000.  Due to
declining oil prices we have  substantially  curtailed our  operations  from the
level of  operation  at the middle of 2001.  We have  reduced  our  general  and
administrative  expenses  at the  beginning  of 2002 and will  continue to purse
efforts to cut costs.

     At December 31, 2001,  we updated our reserve  study,  which  resulted in a
substantial impairment expense to our property and equipment. As a result of the
significant decline in oil prices from approximately $31 at the beginning of the
year to $16 at the end of the year,  certain of our productive wells were deemed
to be uneconomical at December 31, 2001.  Consequently,  the reserves associated
with these wells were not included in proved reserves at December 31, 2001. As a
result, we recognized an impairment expense of $761,000 in 2001, which we do not
expect to recur in future periods unless there is another decline in oil prices.

     Our expense for depreciation,  depletion,  and amortization  increased from
$255,000 in 2000, to $597,000 in 2001.  This is a result of having more property
and equipment to depreciate in 2001, increased production from our wells in 2001
that increased the amount of depletion,  and an  acceleration of the time period
over which we are required to depreciate  and deplete our property and equipment
because of the  reduction  in the reserve  values of our oil and gas  properties
resulting from lower oil prices in 2001.

     Other expense and income items in 2001 did not have a significant impact on
our results of  operations.  Interest  expense in 2001 was  $31,000  compared to
$145,000 in 2000, which is a result of having  significantly  lower  outstanding
debt during calendar year 2001. Our interest  expense was offset by other income
and interest  income  totaling  $58,000,  so that the net income realized by the
company from other items was $27,000.

     As a  result  of the  foregoing  factors,  the  company  had a net  loss of
$1,579,000 in 2001, compared to a net loss of $402,000 in 2000, which results in
a loss per common share of $0.52 in 2001 compared to $0.22 in 2000.

Liquidity and Capital Resources

     At  December  31,  2001,  Mountain  Oil had a working  capital  deficit  of
$86,000, compared to a working capital deficit of $414,000 at December 31, 2000.
The  substantial  improvement in our working  capital deficit is a result of the
funds  derived from our public  offering in the first quarter of 2001. We closed
the public  offering  on  February  28,  2001,  after  selling  715,068  shares,
resulting in net proceeds of  $1,524,053.  From the net proceeds of the offering
we used  $374,722  to purchase  oil well  equipment,  $547,071 to rework  wells,
$252,233 to purchase service equipment, $282,000 to repay outstanding loans from
directors  of Mountain  Oil,  $18,527 for payment of  interest,  and $49,000 for
general and administrative expenses.

     During the year we used cash of $975,000  for the  purchase of property and
equipment,  which  included  $615,000 of  capitalized  costs for  reworking  our

                                       9
<PAGE>


existing wells and installing well equipment,  and $360,000 of vehicles and well
service equipment. Notwithstanding the substantial expenditures for property and
equipment,  the value of our property and equipment at the end of 2001 decreased
by  $372,000  from  the end of  2000.  This  reduction  is  attributable  to the
impairment  of  $761,000  we  were  required  to  recognize  on our  oil and gas
properties  because  of  lower  oil  prices  and  the  substantial  increase  in
depreciation and depletion attributed to our properties. Since these impairments
and expenses are non-cash  items, we recognized an increase in cash from $14,000
at the beginning of 2001 to $173,000 at the end of 2001,  which is  attributable
to the net cash provided by our financing activities of $1,202,000.

     Mountain Oil is currently suffering from the substantial drop in oil prices
since the middle of 2001.  As a result of the decline of oil prices,  we are not
only  operating  nine of our oil wells at reduced rates to maintain our existing
leases. Our remaining  productive wells are not economical at current oil prices
and we do not intend to pursue  further rework  projects on our remaining  wells
while  oil  prices  are  at  their  current  level.   We  have  taken  steps  to
substantially reduce our operating expenses by laying off employees and reducing
or eliminating  other items. We cannot predict at this time whether we can reach
a break-even point of operation, or whether we will continue to operate at a net
loss. The foregoing factors, as well as our recurring history of losses,  raises
substantial  doubt of our  ability to  continue  as a going  concern.  If we are
unable to implement cost-saving  measures,  which will enable us to support with
revenues  our  operating  structure,  we may be  forced  to seek  debt or equity
financing from outside sources. There is no assurance that we will be successful
in our efforts to sustain our operations  internally,  or locate  financing from
outside sources on terms that are acceptable to Mountain Oil.

Recent Sales of Unregistered Securities

     In April of 2000, we issued  convertible  debentures to 41  individuals  in
exchange for $825,000.  The  debentures  were issued to accredited  investors in
reliance on Section 4(2) of the Securities Act in  transactions by an issuer not
involving a public offering.  Each of the investors received written information
Mountain  Oil  on its  existing  and  proposed  business  activities,  financial
condition and terms of the investment. No commissions were paid to any person in
connection  with the  transaction.  In March  2001,  the  holders of $802,000 in
principal amount of the debentures  elected to convert the debentures to 534,667
shares of our common stock.

     In March 2001, we issued options to purchase  25,000 shares of common stock
of Mountain Oil to Harry L. Peterson, a newly appointed director, in reliance on
the exemption set forth in Section 4(2) of the Securities  Act for  transactions
by an issuer not involving a public  offering.  The option is  exercisable  at a
price of $2.25 per share and expires in March 2011.

                          ITEM 7. FINANCIAL STATEMENTS

     The  financial  statements of Mountain Oil appear at the end of this report
beginning with the Index to Financial Statements on page 17.

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

     None.


                                       10
<PAGE>


                                    PART III

      ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

Directors and Officers

The following table sets forth the names, ages, and positions of our directors
and executive officers.

Name                   Age    Position                           Since

Craig K. Phillips       49    President and Director             July 1999

Joseph F. Ollivier      59    Vice President - Chief Financial   July 1999
                              Officer/Investor Relations
                              Officer and Director

Lynn Stratford (1)      58    Vice President - Finance and       February 2000
                                    Director

Daniel S. Sam           40    Secretary, Treasurer, General      July 1999
                              Counsel and Director

Harry L. Peterson       58    Director                           March 2001

(1)   Mr. Stratford resigned as a director on January 7, 2002.

Biographies

     The following are brief biographies of the officers and directors:

     Craig K. Phillips,  President and Director. Craig K. Phillips has nearly 30
years of  experience  in the oil industry.  Mr.  Phillips  began his career on a
drilling crew and  progressed  into managing  drilling  projects and oil and gas
production  services.  From  January  1995 to October  1997,  Mr.  Phillips  was
superintendent  for Uintah Oil & Gas,  and from  October 1997 through July 1999,
Mr. Phillips was self-employed as a consultant in the oil and gas industry.  Mr.
Phillips'  primary  responsibility  is the  firm's  day-to-day  operations.  Mr.
Phillips is one of the co-founders of Mountain Oil.

     Joseph F. Ollivier,  Vice President,  Chief Financial Officer and Director.
Since 1995, Mr.  Ollivier has been a managing  member of First Capital  Funding,
LLC, a private mortgage company, where he supervises loan activity. Mr. Ollivier
is  responsible  for  overseeing  our  budgeting and  financial  direction.  Mr.
Ollivier is also a director of Datigen.com,  Inc., a public company,  engaged in
the business of trip hazard removal.

     Lynn  Stratford,   Vice  President  and  Director.   Lynn  Stratford  is  a
Northwestern  MBA  graduate.  Mr.  Stratford  worked for two years  with  Arthur
Andersen & Co. after  graduate  school.  Since 1978 Mr.  Stratford  has been the
financial  specialist in his own venture capitalist firm, starting new companies
as well as  buying  and  selling  companies.  Mr.  Stratford  has  expertise  in
management, accounting, computers, and financial analysis.

     Daniel S. Sam, Secretary,  Treasurer, General Counsel and Director. Mr. Sam
is a licensed  attorney  and has been  engaged in the practice of law in Vernal,
Utah, focusing on natural resources law for the past nine years.

                                       11
<PAGE>


     Harry L. Peterson,  Director.  Harry L. ("Pete")  Peterson has served since
1987 as the president of Business Insurance Group, Inc., a private company based
in  Salt  Lake  City,  Utah,  that  provides   employee  benefit  brokerage  and
administrative services to businesses.

                         ITEM 10. EXECUTIVE COMPENSATION

Annual Compensation

     The table on the following  page sets forth certain  information  regarding
the annual and long-term compensation for services in all capacities to Mountain
Oil for the prior fiscal years ended December 31, 2001, 2000, and 1999, of those
persons  who  were  either  (i) the  chief  executive  officer  during  the last
completed  fiscal  year or (ii) one of the other  four most  highly  compensated
executive  officers as of the end of the last completed fiscal year whose annual
salary  and  bonuses  exceeded  $100,000  (collectively,  the  "Named  Executive
Officers").

                                            Annual           Long Term
                                         Compensation       Compensation
                                                        Securities Underlying
Name and Principal Position     Year      Salary ($)      Options/SARs (#)

Craig K. Phillips, President    2001       36,000                -0-
                                2000       36,000             25,000
                                1999          -0-                -0-


Stock Options

     No options were granted to the Named Executive Officers in 2001.

     The  following  table  sets  forth  certain  information  with  respect  to
unexercised options held by the Named Executive Officers. No outstanding options
held by the Named Executive Officers were exercised in 2001.

                              Number of Securities      Value of Unexercised
                             Underlying Unexercised     In-the-Money Options
                                     Options          At Fiscal Year End ($)(1)
                              at Fiscal YearEnd (#)
                                 Exercisable/              Exercisable/
Name and Principal Position     Unexercisable             Unexercisable

Craig K. Phillips                  25,000/ -0-                -0-/ -0-
  President

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

(1) This value is  determined  on the basis of the  difference  between the fair
market value of the securities  underlying the options and the exercise price at
December  31,  2001.  The fair market  value of Mountain  Oil's  common stock at
December 31, 2001, is determined by the last sale price on that date,  which was
$1.01 per share.


                                       12
<PAGE>


Description of Long Term Stock Incentive Plan

     The purpose of the Long Term Stock Incentive Plan is to provide  directors,
officers,  employees,  and consultants with additional  incentives by increasing
their  ownership  interests  in Mountain  Oil.  Directors,  officers,  and other
employees of Mountain Oil and its  subsidiaries  are eligible to  participate in
the plan. In addition,  awards may be granted to consultants  providing valuable
services  to Mountain  Oil.  As of December  31,  2001,  Mountain  Oil  employed
approximately  four  individuals  who are eligible to participate in the plan. A
committee of the board or the entire board grants awards under the plan.  Awards
may  include  incentive  stock  options,   non-qualified  stock  options,  stock
appreciation  rights,  stock units,  restricted  stock,  restricted stock units,
performance shares, or performance units.

     The  committee or the Board of Directors  has  discretion  to determine the
terms of a plan award,  including  the type of award,  number of shares or units
covered by the award, option price, term, vesting schedule, and post-termination
exercise period or payment.  Notwithstanding this discretion:  (i) the number of
shares  subject to an award  granted to any  individual in any calendar year may
not exceed 100,000  shares;  (ii) the option price per share of common stock may
not be less than 100 percent of the fair market  value of such share at the time
of grant or less than 110% of the fair market value of such shares if the option
is an incentive  stock option  granted to a stockholder  owning more than 10% of
the  combined  voting  power of all classes of the stock of Mountain Oil (a "10%
stockholder");  and (iii) the term of any incentive  stock option may not exceed
10 years,  or five years if the option is  granted to a 10%  stockholder.  As of
December  31, 2001,  awards in the form of stock  options to purchase a total of
100,000 shares were outstanding  under the plan. This includes options issued to
Craig K. Phillips, our president, to purchase 25,000 shares at an exercise price
of $1.10 per share that  expire in  January  2010,  options  issued to Joseph F.
Ollivier and Daniel S. Sam to purchase  25,000 shares each at an exercise  price
of $1.00 per share that expire in January 2010,  and options  issued to Harry L.
Peterson to purchase  25,000 shares at an exercise price of $2.25 per share that
expire in March 2011.

     A maximum of 500,000  shares of common stock may be subject to  outstanding
awards,  determined  immediately  after the  grant of any award  under the plan.
Shares of common  stock,  which are  attributable  to awards that have  expired,
terminated,  or been  canceled  or  forfeited  during  any  calendar  year,  are
available for issuance or use in connection with future awards.

     The plan was effective January 15, 2000, and is not limited in duration. No
incentive  stock  option may be granted  more than 10 years after the  effective
date.  The plan may be amended by the Board of Directors  without the consent of
the stockholders, except that stockholder approval is required for any amendment
that  materially  increases the aggregate  number of shares of stock that may be
issued under the plan or materially  modifies the requirements as to eligibility
for participation in the plan.

                ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                              OWNERS AND MANAGEMENT

     The  following  table sets forth as of December  31,  2001,  the number and
percentage  of the  outstanding  shares of common stock which,  according to the
information supplied to Mountain Oil, were beneficially owned by (i) each person
who is  currently a director,  (ii) each  executive  officer,  (iii) all current
directors  and  executive  officers  as a group and (iv) each person who, to our
knowledge,  is the beneficial  owner of more than 5% of the  outstanding  common
stock. Except as otherwise  indicated,  the persons named in the table have sole
voting and  dispositive  power with  respect to all shares  beneficially  owned,
subject to community property laws where applicable.

                                       13
<PAGE>



Name and Address                           Common Shares     Percent of Class(1)

Craig K. Phillips (2)(3)                      396,010           12.7
P.O. Box 1622
Roosevelt, UT 84066

Joseph F. Ollivier (2)(3)                     307,800            9.8
3191 N. Canyon Rd.
Provo, UT 84604

Daniel S. Sam (2)(3)                          371,182           11.9
319 W. 100 South
Vernal, UT 84078

Harry L. Peterson (2)(5)                      184,117            5.9
2063 N. Main
Centerville, UT 84014

All officers and Directors as
a Group (4 persons)                          1,259,109          39.3


(1) These figures represent the percentage of ownership of the named individuals
assuming each of them alone has exercised his options,  and percentage ownership
of all officers and  directors as a group  assuming all purchase  rights held by
such individuals are exercised.

(2)   These persons are all executive officers or directors of Mountain Oil.

(3) The number of shares listed for Craig K. Phillips  includes  shares issuable
under an option to purchase  25,000 shares of common stock at an exercise  price
of $1.10 per share. The number of shares listed for Joseph F. Ollivier  includes
shares  issuable under an option to purchase 25,000 shares of common stock at an
exercise price of $1.00 per share. The number of shares listed for Daniel S. Sam
includes  shares  issuable  under an option to purchase  25,000 shares of common
stock at an exercise price of $1.00 per share.

(4) The shares  attributed to Lynn  Stratford  are held in the following  names:
61,667 shares in the name LRS  Unitrust,  Lynn R.  Stratford as Trustee;  80,000
shares in the name LRS Unitrust #3, Lynn R. Stratford as Trustee;  33,333 shares
in the name GHB Charitable Trust #1, Lynn R. Stratford,  Trustee;  33,333 shares
in the name GHB  Charitable  Trust #2, Lynn R.  Stratford,  Trustee;  and 90,000
shares in the name of Lynn R. Stratford.

(5) The shares  attributed to Harry L. Peterson  include  111,117 shares held in
the name of PKP Investments,  a limited  liability company of which Mr. Peterson
is the president, 25,000 shares issuable under an option at an exercise price of
$2.25 per share, and 48,000 shares in the name of Harry L. Peterson.

             ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In September  2000,  we borrowed  $85,000 from Joseph  Ollivier and $25,000
from Daniel Sam,  both  officers and directors of Mountain Oil. In October 2000,
we borrowed  an  additional  $5,000  from  Daniel  Sam.  On November 1 2000,  we
borrowed an additional  $150,000 from Joseph  Ollivier.  Each of these loans was

                                       14
<PAGE>


represented by a promissory  note bearing  interest at the rate of 12% per year.
All  interest  and  principal  was due in February  2001,  except the first note
issued to Joseph  Ollivier for $85,000,  which  provided for interest to be paid
monthly.  We secured the note to Mr.  Ollivier  in the amount of $85,000  with a
work over rig and  pumping  equipment  that we own. On November  28,  2000,  Mr.
Ollivier  agreed  to  make  and  additional  $100,000  available  to us  under a
promissory  note,  which  was  identical  to the  other  notes we  issued to Mr.
Ollivier,  against which we drew a total of $72,729.  We repaid all of the notes
to these officers and directors in March 2001.

                    ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

Exhibits

Exhibit No. Title of Document                                     Location

    3.1     Articles of Incorporation                                 *

    3.2     Amended Articles of Incorporation                         *

    3.3     By-Laws                                                   *

   10.1     Form of Oil and Gas Lease with U.S. Bureau of Land        *
              Management **

   10.2     Form of Oil and Gas Lease with U.S. Bureau of Land        *
              Management **

   10.3     Form of Oil and Gas Lease with U.S. Bureau of             *
            Indian
              Affairs **

   10.4     Form of Oil and Gas Lease with Private Person **          *

   10.5     Schedule of Leases with BLM, BIA, and Private             *
            Persons *

   10.6     Options Issued to Management - Phillips                   *

   10.7     Options Issued to Management - Ollivier                   *

   10.8     Options Issued to Management - Sam                        *

   10.9     Options Issued to Management - Peterson               Page E-1

   10.10    Stock Option Plan                                         *

* These  exhibits are  incorporated  herein by this  reference to Mountain Oil's
Registration  Statement  on Form SB-2 filed  with the  Securities  and  Exchange
Commission  on May 25, 2000,  as amended by Amendment No. 1 filed on October 19,
2000,  Amendment No. 2 filed on December 27, 2000,  and Amendment No. 3 filed on
January 16, 2001.

Form 8-K Filings

     No reports on Form 8-K were filed during the fourth  quarter ended December
31, 2001.
                                       15

<PAGE>

                                   SIGNATURES

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

                                          MOUNTAIN OIL, INC.

Date: March 7, 2002                       By: /s/ Craig K. Phillips, President

Date: March 7, 2002                       By: /s/ Joseph F. Ollivier,
                                                  Chief Financial Officer

     In accordance with the Exchange Act, this  registration  statement has been
signed  by  the  following  persons  on  behalf  of  the  registrant  and in the
capacities and on the dates indicated.


Date: March 7, 2002                      /s/ Craig K. Phillips, Director


Date: March 7, 2002                      /s/ Joseph F. Ollivier, Director


Date: March 7, 2002                      /s/ Daniel S. Sam, Director


Date: March 7, 2002                      /s/ Harry L. Peterson, Director



                                       16
<PAGE>



                               MOUNTAIN OIL, INC.
                          Index to Financial Statements

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





                                                                            Page


Independent Auditor's report                                                  18


Balance sheet                                                                 19

Statement of operations                                                       20


Statement of stockholders' equity                                             21


Statement of cash flows                                                       22


Notes to financial statements                                                 23


Schedules of supplementary information on
  oil and gas operations                                                      36


                                       17
<PAGE>



                                                    INDEPENDENT AUDITOR'S REPORT



To the Board of Directors and
Stockholders of Mountain Oil, Inc.


We have  audited the  accompanying  balance  sheet of Mountain  Oil,  Inc. as of
December  31,  2001  and  2000,  and  the  related   statements  of  operations,
stockholders'  equity,  and cash flows for the years then ended. These financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position of Mountain  Oil,  Inc. as of
December  31,   2001and  2000,   and  the  related   statements  of  operations,
stockholders' equity, and cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in note 2 to the
financial  statements,  the Company  has a working  capital  deficiency  and has
incurred substantial losses from operations.  In addition, the Company's oil and
gas reserves have declined significantly as noted in the unaudited supplementary
schedules  included after the notes to financial  statements.  These  conditions
raise  substantial doubt about the ability of the Company to continue as a going
concern.  Management's  plans in regard to these  matters are also  described in
note 2. The  financial  statements  do not  include any  adjustments  that might
result from the outcome of this uncertainty.


                                                      TANNER + CO.


Salt Lake City, Utah
January 25, 2001

                                       18
<PAGE>



                                                              MOUNTAIN OIL, INC.
                                                                   Balance Sheet

                                                                    December 31,
--------------------------------------------------------------------------------
          Assets                                     2001        2000
          ------                                 -------------------------
 Current assets:
    Cash                                         $    173,000      14,000
    Accounts receivable                                67,000     113,000
    Inventory                                          50,000      58,000
    Other current assets                                4,000      79,000
                                                 -------------------------

             Total current assets                     294,000     264,000

 Property and equipment, net                        1,211,000   1,583,000
 Deposits                                                   -      11,000
                                                 -------------------------

                                                 $  1,505,000   1,858,000
                                                 =========================
 -------------------------------------------------------------------------------
          Liabilities and Stockholders' Equity
          ------------------------------------
 Current liabilities:
    Cash overdraft                               $     66,000  $        -
    Accounts payable                                  163,000     321,000
    Accrued expenses                                  118,000      13,000
    Related party notes payable                             -     338,000
    Current portion of long-term debt                  33,000       6,000
                                                 -------------------------

             Total current liabilities                380,000     678,000

 Long-term debt                                        39,000     864,000

 Commitments                                                -           -

 Stockholders' equity:
    Preferred stock, no par value, authorized
     10,000,000 shares; no shares issued or
     outstanding                                            -           -
    Common stock, no par value, authorized
     50,000,000 shares; 3,102,749 and 1,853,000
     shares issued and outstanding, respectively    3,084,000     735,000
    Accumulated deficit                            (1,998,000)   (419,000)
                                                 -------------------------

             Total stockholders' equity             1,086,000     316,000
                                                 -------------------------

                                                 $  1,505,000   1,858,000
                                                 =========================

See accompanying notes to financial statements.

                                       19
<PAGE>


                                                              MOUNTAIN OIL, INC.
                                                         Statement of Operations

                                          Years Ended December 31, 2001 and 2000
--------------------------------------------------------------------------------

                                                       2001        2000
                                                 -------------------------

 Oil and gas sales, net                               920,000     637,000
 Other revenues                                       133,000           -
                                                 -------------------------

                                                    1,053,000     637,000
                                                 -------------------------

 Costs and expenses:
    Operating costs                                   784,000     279,000
    Production and other taxes                         69,000      96,000
    General and administrative expenses               448,000     286,000
    Impairment of property and equipment              761,000           -
    Depreciation, depletion and amortization
     expense                                          597,000     255,000
                                                 -------------------------
                                                    2,659,000     916,000
                                                 -------------------------
         Loss from operations                      (1,606,000)  (279,000)

Interest expense                                      (31,000)  (145,000)
 Other Income                                          46,000           -
 Interest income                                       12,000      22,000
                                                 -------------------------
         Loss before provision for income taxes    (1,579,000)  (402,000)

 Provision for income taxes                                 -           -
                                                 -------------------------
         Net loss                                  (1,579,000)  (402,000)
                                                 =========================
Loss per common share - basic and diluted               (.52)       (.22)
                                                 =========================
 Weighted average number of common shares -
   basic and diluted                                3,015,000   1,834,000
                                                 =========================

See accompanying notes to financial statements.

                                       20
<PAGE>


                                                              MOUNTAIN OIL, INC.
                                               Statement of Stockholders' Equity

                                          Years Ended December 31, 2001 and 2000
--------------------------------------------------------------------------------
<TABLE>
<S>                         <C>    <C>     <C>      <C>           <C>       <C>
                             Preferred        Common Stock      Accumulated
                             Stock
                            --------------------------------
                             Shares Amount Shares     Amount      Deficit     Total
                            ----------------------------------------------------------

Balance at January
 1, 2000                         -  $  -  1,803,000 $  603,000    $(17,000) $  586,000

Exercise of stock options        -     -     50,000     50,000           -      50,000

Beneficial conversion feature    -     -          -     82,000           -      82,000
on convertible debentures

Net loss                         -     -          -          -    (402,000)   (402,000)
                            -----------------------------------------------------------
Balance at December 31, 2000     -     -  1,853,000    735,000    (419,000)    316,000

Common stock issued for cash     -     -    715,082  1,547,000           -   1,547,000

Common stock issued for debt     -     -    534,667    802,000           -     802,000

Net loss                         -     -          -          -  (1,579,000) (1,579,000)
                            -----------------------------------------------------------

Balance at December 31, 2001     -  $  -  3,102,749 $3,084,000 $(1,998,000) $1,086,000
                            ===========================================================
</TABLE>


See accompanying notes to financial statements.


                                       21
<PAGE>
                                                              MOUNTAIN OIL, INC.
                                                         Statement of Cash Flows

                                                        Years Ended December 31,
--------------------------------------------------------------------------------
                                                           2001         2000
                                                        ------------------------

Cash flows from operating activities:
 Net loss                                                $(1,579,000)  (402,000)
 Adjustments to reconcile net loss to net cash
  used in operating activities:
   Depreciation, depletion and amortization                  597,000    255,000
   Impairment of property and equipment                      761,000         -
   Allowance for doubtful accounts                            17,000         -
   Interest expense from beneficial conversion feature            -       82000
   (Increase) decrease in:
     Accounts receivable                                      29,000    (35,000)
     Inventory                                                 8,000    (58,000)
     Other current assets                                     75,000    (78,000)
     Deposits                                                 11,000         -
   Increase (decrease) in:
     Cash over-draft                                          66,000
     Accounts payable                                       (158,000)   138,000
     Accrued expenses                                        105,000      9,000
                                                        ------------------------
             Net cash used in
             operating activities                            (68,000)   (89,000)
                                                        ------------------------
 Cash flows used in investing activities -
  purchase of property and equipment                        (975,000)(1,421,000)
                                                        ------------------------
 Cash flow from financing activities:
  Proceeds from issuance of common stock                   1,547,000     50,000
  Payments on related party notes payable                   (338,000)  (200,000)
  Payments on long-term debt                                  (7,000)   (11,000)
  Proceeds from long-term debt                                    -     825,000
  Collection of subscription receivable                           -      10,000
  Proceeds from related party notes payable                       -     338,000
                                                        ------------------------
             Net cash provided by
             financing activities                          1,202,000  1,012,000
                                                        ------------------------
             Net increase (decrease) in cash                 159,000   (498,000)

 Cash, beginning of year                                      14,000    512,000
                                                        ------------------------

 Cash, end of year                                       $   173,000 $   14,000
                                                        ========================

See accompanying notes to financial statements.

                                       22
<PAGE>

                                                              MOUNTAIN OIL, INC.
                                                   Notes to Financial Statements

                                                      December 31, 2001 and 2000
--------------------------------------------------------------------------------
1. Organization     Organization and Business
   and              Mountain  Oil,  Inc.  (the  Company) is  incorporated
   Summary of       under the laws of the state of Utah and is  primarily
   Significant      engaged in the business of producing  and selling oil
   Accounting       and gas through  re-developing  existing  wells.  All
   Policies         of the  companies  operations  are  conducted  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
                    Financial instruments which potentially subject the Company
                    to concentration of credit risk consist primarily of trade
                    receivables. In the normal course of business, the Company
                    provides credit terms to its customers. Accordingly, the
                    Company performs ongoing credit evaluations of its customers
                    and maintains allowances for possible losses which, when
                    realized, have been within the range of management's
                    expectations.

                    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.


                                       23
<PAGE>

                                                              MOUNTAIN OIL, INC.
                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

1. Organization     Oil and Gas Producing Activities
   and              The Company  utilizes the  successful  efforts method
   Summary of       of   accounting   for  its  oil  and  gas   producing
   Significant      activities.  Under this method,  all costs associated
   Accounting       with productive  exploratory  wells and productive or
   Policies         nonproductive   development   wells  are  capitalized
   Continued        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. Capitalized
                    costs of producing oil and gas properties, after considering
                    estimated dismantlement and abandonment costs and estimated
                    salvage values, are depreciated and depleted by the
                    unit-of-production method. Support equipment and other
                    property and equipment are depreciated over their estimated
                    useful lives.

                    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.

                    Inventories
                    Inventories consist mainly of crude oil and are recorded at
                    the lower of cost or market, cost being determined on a
                    first-in, first-out (FIFO) method.

                                       24
<PAGE>
                                                              MOUNTAIN OIL, INC.
                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

1. Organization     Property and Equipment
   and              Property  and  equipment  are  stated  at  cost  less
   Summary of       accumulated  depreciation.  Depreciation  is provided
   Significant      using the  straight-line  method  over the  estimated
   Accounting       useful   lives  of  the  assets.   Expenditures   for
   Policies         maintenance  and repairs are expensed  when  incurred
   Continued        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.

                    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. Oil and gas sales are reported net of royalty fees,
                    which fees were $194,000 and $157,000 for the years ended
                    December 31, 2001 and 2000, respectively. Revenues from
                    services provided to other well operators are recognized
                    when the services have been performed.

                    The Company does not have any gas balancing arrangements.

                    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 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.


                                       25
<PAGE>

                                                              MOUNTAIN OIL, INC.
                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

1. Organization     Earnings Per Share
   and              The  computation  of basic  earnings per common share
   Summary of       is based on the  weighted  average  number  of shares
   Significant      outstanding during the period.
   Accounting
   Policies         The computation of diluted  earnings per common share
   Continued        is based on the  weighted  average  number  of shares
                    outstanding during the period 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
                    period. Options to purchase 75,000 shares of common stock at
                    prices ranging from $1.00 to $1.10 per share were
                    outstanding at December 31, 2001 and 2000 but were not
                    included in the diluted loss per share calculation because
                    the effect would have been antidilutive.

                    Reclassifications
                    Certain accounts in the 2000 financial statements have been
                    reclassified to conform with the current year presentation.


2. Going            The  accompanying   financial  statements  have  been
   Concern          prepared  assuming  that the Company will continue as
                    a going concern. As of December 31, 2001, the Company had a
                    working capital deficiency, an accumulated deficit, and has
                    incurred substantial operating losses. In addition, the
                    Company's oil and gas reserves have declined significantly
                    as noted in the unaudited supplementary schedules included
                    after the notes to financial statements. These conditions
                    raise substantial doubt about the ability of the Company to
                    continue as a going concern. The consolidated financial
                    statements do not include any adjustments that might result
                    from the outcome of these uncertainties. Management intends
                    to reduce operating costs through the reduction of personnel
                    and direct production efforts to the more profitable wells.
                    If the Company is unable to obtain profitable operation it
                    will require additional debt or equity financing. There can
                    be no assurance that the Company will be successful in its
                    efforts to secure debt or equity financing should the need
                    arise.


                                       26
<PAGE>
                                                              MOUNTAIN OIL, INC.
                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

3. Accounts         Accounts receivable is comprised of the following at
   Receivable       December 31:

                                                            2001         2000
                                                        ------------------------

                    Trade accounts receivable           $    61,000  $  113,000
                    Related party receivable                 23,000           -
                    Allowance for doubtful accounts         (17,000)          -
                                                        ------------------------
                                                        $    67,000  $  113,000
                                                        ========================

4. Property and     Property and equipment consists of the following:
   Equipment
                                                              December 31,
                                                        ------------------------
                                                            2001         2000
                                                        ------------------------
                    Oil and gas properties
                      (successful efforts method)       $   174,000  $  174,000
                    Oil and gas equipment
                      (successful efforts method)         1,496,000   1,480,000
                    Vehicles and equipment                  334,000     155,000
                    Building and land                        59,000      31,000
                    Office furniture and fixtures            12,000      10,000
                                                        ------------------------
                                                          2,075,000   1,850,000

                    Less accumulated depreciation,
                      and depletion                        (864,000)   (267,000)
                                                        ------------------------
                                                        $ 1,211,000  $1,583,000
                                                        ========================

                                       27
<PAGE>

                                                              MOUNTAIN OIL, INC.
                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

5. Long-Term       Long-term  debt  consists of the following at December 31:
   Debt
                                                            2001          2000
                                                        ------------------------
                   Mortgage payable, due in monthly
                   installments of $300,including
                   interest at 8%, secured by real
                   property, andmaturing in August
                   2010.                                $    24,000  $   26,000

                   Note payable to a finance company,
                   due in monthly installments of $500,
                   including interest at 10.3%, secured
                   by equipment and maturing in
                   November 2004.                            15,000      19,000

                   Note payable to a bank bearing
                   interest at 9.45%, secured by
                   vehicles and due in monthly
                   installments of $340, maturing in
                   October 2004                              10,000          -

                   Convertible debentures (see note 4)       23,000     825,000
                                                        ------------------------
                                                             72,000     870,000

                                                            (33,000)     (6,000)
                                                        ------------------------
                                                        $    39,000  $  864,000
                                                        ========================
                   Future maturities of long-term debt are as follows:

                   Year Ending December 31:                            Amounts
                   ------------------------                            ---------
                      2002                                             $ 33,000
                      2003                                               11,000
                      2004                                               11,000
                      2005                                                3,000
                      2006                                                3,000
                      Thereafter                                         11,000
                                                                       ---------
                                                                       $ 72,000
                                                                       =========

                                       28
<PAGE>

                                                              MOUNTAIN OIL, INC.
                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

6. Convertible     On April 30, 2000, the Company  completed the issuance
   Debentures      of $825,000  convertible  debentures.  The  debentures
                   are convertible into common stock at $1.50 per share and are
                   due on March 31, 2002. Interest at 7% is due monthly. The
                   debentures are convertible at any time until the due date.
                   The Company recognized $82,000 as a beneficial conversion
                   feature related to the conversion price of $1.50 per share
                   for the year ended December 31, 2000. The beneficial
                   conversion feature combined with the face interest rate of 7%
                   results in an annual effective interest rate of 12%. During
                   the year ended December 31, 2001 $802,000 of the convertible
                   debentures were converted to the Company's common stock.


7. Impairment      As of December 31, 2001,  based on an updated reserve
   On Assets       study,  the  Company  determined  that its oil and gas
                   properties were impaired. The principal reason for such
                   impairment has the significant decline in oil and gas prices
                   during 2001. Due to the decline in prices, certain wells were
                   considered to be uneconomical for development as of December
                   31, 2001. Therefore the reserves associated with such wells
                   were not included as proved reserves at December 31, 2001.
                   The impairment, calculated on a well by well basis, was based
                   on the amount of recorded costs in excess of the net future
                   discounted cash flows from such wells. The total amount of
                   impairment recorded as of December 31, 2001 was $761,000.

8. Income          The  provision  for  income  taxes  differs  from the
   Taxes           amount computed at federal  statutory rates as follows
                   at December 31:

                                                            2001         2000
                                                        ------------------------

                   Income tax benefit at statutory rate $   584,000  $  150,000
                   Beneficial conversion feature                 -      (28,000)
                   Depletion carry forward                   15,000      15,000
                   Other                                      1,000          -
                   Change in valuation allowance           (600,000)   (137,000)
                                                        ------------------------
                                                        $        -   $       -
                                                        ========================


                                       29
<PAGE>

                                                              MOUNTAIN OIL, INC.
                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

8. Income         Deferred tax assets  (liabilities)  are comprised of the
   Taxes          following at December 31:
   Continued
                                                            2001         2000
                                                        ------------------------

                  Net operating loss carry forward      $   464,000  $  146,000
                  Depreciation and depletion                (44,000)    (21,000)
                  Impairment on fixed assets                284,000          -
                  Allowance for bad debt                      6,000          -
                  Depletion carry forward                    30,000      15,000
                  Valuation allowance                      (740,000)   (140,000)
                                                        ------------------------
                                                        $        -   $       -
                                                        ------------------------
                  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.

                  As of December 31, 2001, the Company had a net operating loss
                  carry forward of approximately $1,247,000. This carry forward
                  begins to expire in 2019. 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. The ultimate realization of this carry forward is
                  due, in part, on the tax law in effect at the time and future
                  events which cannot be determined.


9. Sales to       The  Company's  had sales to  entities  which  represent
   Major          more  than  10% as  follows  which  represented  for the
   Customer       years ended December 31, 2001 and 2000:

                                                            2001         2000
                                                        ------------------------

                  Company A                             $   847,000  $       -
                  Company B                             $   244,000  $  637,000
                  Company C                             $   124,000  $       -

10.   Related     Related  party  notes  payables  at  December  31,  2000
      Party       consisted  of  notes  payable  to  officers/shareholders
      Notes       totaling  $338,000.   The  notes  required  interest  at
      Payable     rates  ranging  from  11% to 12%  and  were  secured  by
                  property and equipment. During the year ended December 31,
                  2001 these notes were paid by the Company in full.


                                       30
<PAGE>

                                                              MOUNTAIN OIL, INC.
                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------
11.  Supplemental  Operations  reflect  actual  amounts paid for interest
     Disclosures   and income taxes as follows:
    of Cash Flow
    Information
                                                            2001         2000
                                                        ------------------------
                   Interest                             $    31,000  $    63,000
                                                        ------------------------
                   Income taxes                         $        -   $        -
                                                        ------------------------

                   During the year ended December 31, 2001:

                   o     The Company issued 535,000 shares of common stock in
                         exchange for $802,000 of convertible debt.

                   o     The Company acquired vehicles of $11,000 , in exchange
                         for a long-term debt.


12.  Preferred     The Company's  preferred stock may be issued from time
     Stock         to time in one or more series,  with such  distinctive
                   serial  designations  as may be stated or expressed in
                   the resolution or resolutions  providing for the issue
                   of such stock  adopted  from time to time by the Board
                   of  Directors.   In  such  resolution  or  resolutions
                   providing   for  the   issuance   of  shares  of  each
                   particular  series,  the  Board of  Directors  is also
                   expressly authorized to fix:

                   o     The right to vote

                   o     The consideration for which the shares of such series
                         are to be issued, the number of shares constituting
                         such series and whether shares of such series shall be
                         subject to redemption and the terms

                   o     The rate of dividends, the times at which dividends
                         shall be payable, and preferences and whether such
                         dividends shall be cumulative or non-cumulative


                                       31
<PAGE>

                                                              MOUNTAIN OIL, INC.
                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

12.  Preferred     o     The rights  which the  holders of shares of such
     Stock               series shall have in the event of any  voluntary
     Continued           or     involuntary     liquidation,      merger,
                         consolidation,  distribution  or sale of assets,
                         dissolution  or winding up of the affairs of the
                         corporation

                    The rights which the holder of shares of such series shall
                    have to convert such shares into or exchange such shares for
                    shares of any other class or any other series of stock of
                    the corporation


13.  Stock         A summary of the stock option and warrant  activity is
     Options and   as follows:
     Warrants
                                                                     Weighted
                                                        Number        Average
                                                       of Shares  Exercise Price
                                                       -------------------------
                     Outstanding at January 1, 2000         -             -
                     Granted                            125,000          1.05
                     Exercised                          (50,000)           -
                                                       -------------------------
                     Outsdanting at December 31, 2000    75,000   $      1.03
                      Granted                            25,000          2.25
                      Exercised                              -             -
                                                       -------------------------
                     Outstanding at December 31, 2001   100,000   $      1.34
                                                       =========================


                                       32
<PAGE>


                                                              MOUNTAIN OIL, INC.
                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

13. Stock          When  accounting for the issuance of stock options and
    Options and    warrants   financial   accounting   standards   allows
    Warrants       entities  the  choice  between   adopting  fair  value
    Continued      method or an  intrinsic  value  method  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 the Company's options and warrants been
                   determined based on the fair value method, the results of
                   operations would have been reduced to the pro forma amounts
                   indicated below:

                                                             2001         2000
                                                        ------------------------
                   Net loss applicable to common
                     shares - as reported               $(1,579,000) $ (402,000)
                   Net loss applicable to common
                     shares - pro forma                 $(1,630,000) $ (516,000)
                   Loss per common share - as reported  $      (.52) $     (.22)
                   Loss per common share - pro forma    $      (.54) $     (.28)
                                                        ========================

                   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:

                                                            2001         2002
                                                        ------------------------
                   Expected dividend yield              $        -   $       -
                   Expected stock price volatility           84.69%          -
                   Risk-free interest rate                    4.75%        5.75%
                   Expected option life                    5 years     10 years




                                       33
<PAGE>


                                                              MOUNTAIN OIL, INC.
                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

13.   Stock        The  weighted  average  fair value of options  granted during
      Options and  the year ended December 31, 2000 is $.91.
      Warrants
      Continued    The following table summarizes information about stock
                   options and warrants outstanding at December 31, 2001:

                                       Outstanding             Exercisable
                          ------------------------------------------------------
                                       Weighted
                                       Average     Weighted             Weighted
                Range of              Remaining    Average              Average
                Exercise  Number      Contractual  Exercise   Number    Exercise
                Prices    Outstanding Life (Years)  Price   Exercisable  Price
                ----------------------------------------------------------------
                $1.00-1.10   75,000         8.04   $   1.03    75,000   $   1.03
                      2.25   25,000         9.18       2.25    25,000       2.25
                ----------------------------------------------------------------
                $1.00-2.25  100,000         8.33   $   1.34   100,000   $   1.34
                ================================================================

14.   Fair         The Company's  financial  instruments consist of cash,
      Value of     receivables,   payables,   and  notes   payable.   The
      Financial    carrying  amount  of cash,  receivables  and  payables
      Instruments  approximates  fair  value  because  of the  short-term
                   nature of these items. The aggregate carrying amount of the
                   notes payable approximates fair value as the individual
                   borrowings bear interest at market interest rates.


15.  Environ-      Various federal,  state and local laws and regulations
     mental        covering  discharge of materials into the environment,
     Regulation    or  otherwise   relating  to  the  protection  of  the
                   environment,  may affect the Company's  operations and
                   the  costs of its oil and  natural  gas  exploitation,
                   development  and  production  operations.  The Company
                   does not  anticipate  that it will be  required in the
                   near future to expend amounts  material in relation to
                   the  financial  statements  taken as a whole by reason
                   of environmental  laws and regulations.  Because these
                   laws and  regulations  are  constantly  being changed,
                   the  Company is unable to predict the  conditions  and
                   other  factors,   over  which  it  does  not  exercise
                   control,   that   may   give   rise   to   environment
                   liabilities affecting the Company.



                                       34
<PAGE>


                                                              MOUNTAIN OIL, INC.
                                                   Notes to Financial Statements
                                                                       Continued
--------------------------------------------------------------------------------

16.   Recent       In August 2001,  the  Financial  Accounting  Standards
      Accounting   Board  issued   Statement   of  Financial   Accounting
      Pronounce-   Standards No. 144  "Accounting  for the  Impairment of
      ments        Long-Lived    Assets".    This   Statement   addresses
                   financial accounting and reporting for the impairment of
                   long-lived assets and for long-lived assets to be disposed
                   of. This Statement supercedes FASB Statement 121 and APB
                   Opinion No. 30. However, this Statement retains certain
                   fundamental provisions of Statement 121, namely; recognition
                   and measurement of the impairment of long-lived assets to be
                   held and used, and measurement of long-lived assets to be
                   disposed of by sale. The Statement also retains the
                   requirement of Opinion 30 to report discontinued operations
                   separately from continuing operations. This Statement also
                   Amends ARB No. 51 to eliminate the exception of consolidation
                   for a temporarily controlled subsidiary. The provisions of
                   this statement are effective for financial statements issued
                   for fiscal years beginning after December 15, 2001. The
                   Company is currently assessing the impact of this statement.

                   In June 2001, the Financial Accounting Standards Board issued
                   Statement of Financial Accounting Standards No. 143,
                   "Accounting for Asset Retirement Obligations". This Statement
                   addresses financial accounting and reporting for obligations
                   associated with the retirement of tangible long-lived assets
                   and the associated asset retirement costs. This Statement is
                   effective for financial statement issued for fiscal years
                   beginning after June 15, 2002. the Disposal of Long-Lived
                   Assets. This Statement addresses financial accounting and
                   reporting for the disposal of long-lived assets. Management
                   does not expect the adoption of SFAS No. 143 to have a
                   significant impact on the financial position or results of
                   operations of the Company. The Company is currently assessing
                   the impact of these statements.



                                       35
<PAGE>



                                                              MOUNTAIN OIL, INC.
                 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  Statement  of
Financial  Accounting  Standards No. 69 "Disclosures about Oil and Gas Producing
Activities."

               Capitalized Costs Relating to Oil and Gas Producing Activities

                                                        December 31,
                                                  ------------------------
                                                     2001        2000
                                                  ------------------------

Proved oil and gas properties and related
 equipment                                       $ 1,323,000 $  1,433,000
Unproved oil and gas properties                      347,000      221,000
                                                  ------------------------
            Subtotal                                1,670,000   1,654,000

Accumulated depreciation, depletion and
 amortization and valuation allowances               (786,000)   (239,000)
                                                  ------------------------

                                                  $  884,000 $  1,415,000
                                                  ------------------------


                   Costs Incurred in Oil and Gas Acquisition,
                     Exploration and Development Activities

                                                   Year Ended December 31,
                                                  ------------------------
                                                     2001        2000
                                                  ------------------------

Acquisition of properties:
   Proved                                         $         - $         -
   Unproved                                       $         - $         -
Exploration costs                                 $         - $         -
Development costs                                 $   587,000 $ 1,167,000



                                       36
<PAGE>


                                                              MOUNTAIN OIL, INC.
                 Schedule of Supplementary Information on Oil and Gas Operations
                                                                       Continued
--------------------------------------------------------------------------------

                 Results of Operations for Producing Activities

                                                      Years Ended
                                                      December 31,
                                                --------------------------
                                                --------------------------
                                                    2001         2000
                                                --------------------------

Oil and gas sales, net                          $   920,000  $   637,000
Production costs                                   (853,000)    (375,000)
Exploration costs                                          -            -
Impairment on properties and equipment             (761,000)            -
Depreciation, depletion and amortization
 provisions                                        (597,000)    (193,000)
                                                --------------------------

Net (loss) income before income taxes            (1,291,000)      69,000

Income tax provision                                       -     (13,000)
                                                --------------------------

Results of operations from producing
 activities
  (excluding corporate overhead and interest
    costs)                                      $(1,291,000) $    56,000
                                                ==========================




                                       37
<PAGE>


                                                              MOUNTAIN OIL, INC.
                 Schedule of Supplementary Information on Oil and Gas Operations
                                                                       Continued
--------------------------------------------------------------------------------


                    Reserve Quantity Information (Unaudited)

The estimated  quantities of proved oil and gas reserves  disclosed in the table
below are based upon  estimates by Ralph L. Nelms,  a petroleum  engineer.  Such
estimates are inherently imprecise and may be subject to substantial revisions.

Revisions may occur because  current  prices of oil and gas and current costs of
operating  are  subject  to  fluctuations,  past  performance  of wells does not
necessarily  guarantee future  performance and rates used to estimate decline of
reserves could vary from that which is projected.

All quantities shown in the table are proved reserves and are located within the
United States.

                                        Years Ended December 31,
                                ------------------------------------------
                                        2001                 2000
                                ------------------------------------------
                                   Oil        Gas       Oil       Gas
                                  (bbls)     (mcf)    (bbls)     (mcf)
                                ------------------------------------------

Proved developed and
undeveloped
  reserves:
   Beginning of period             942,000   863,000   893,000    837,000
   Revision in previous           (496,000) (416,000)   79,000     26,000
estimates
   Discoveries and extension             -         -         -          -
   Purchase in place                     -         -         -          -
   Production                      (50,000)  (34,000)  (30,000)         -
   Sales in place                        -         -         -          -
                                ------------------------------------------

   End of period                   396,000   413,000   942,000    863,000
                                ==========================================

Proved developed reserves:
   Beginning of period              62,000         -    37,000          -
   End of period                   115,000         -    62,000          -




                                       38
<PAGE>


                                                              MOUNTAIN OIL, INC.
                 Schedule of Supplementary Information on Oil and Gas Operations
                                                                       Continued
--------------------------------------------------------------------------------


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

                                                          Years Ended
                                                          December 31,
                                                  --------------------------
                                                        2001        2000
                                                  --------------------------

  Future cash inflows                             $  9,021,000 $ 30,458,000
  Future production costs                           (4,152,000) (10,202,000)
  Development costs                                 (2,823,000)  (8,798,000)
  Future income tax expenses                          (763,000)  (4,274,000)
                                                  --------------------------

                                                     1,283,000    7,184,000

  10% annual discount for estimated timing of
  cash flows                                          (966,000)  (4,526,000)
                                                  --------------------------

  Standardized measure of discounted future net
  cash flows                                      $    317,000 $  2,658,000
                                                  --------------------------


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 period 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,  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.



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<PAGE>



                                                              MOUNTAIN OIL, INC.
                 Schedule of Supplementary Information on Oil and Gas Operations
                                                                       Continued
--------------------------------------------------------------------------------

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

                                                           Year Ended
                                                          December 31,
                                                   -------------------------
                                                       2001        2000
                                                   -------------------------

  Balance, beginning of period                   $  2,658,000 $   778,000
  Sales of oil and gas produced net of                (67,000)   (262,000)
  production costs
  Net changes in prices and production costs       (1,974,000)  2,168,000
  Extensions and discoveries, less related costs            -           -
  Purchase and sales of minerals in place                   -           -
  Revisions of estimated development costs          2,967,000           -
  Revisions of previous quantity estimate          (5,171,000)    480,000
  Accretion of discount                               266,000     331,000
  Net changes in income taxes                       1,638,000    (837,000)
                                                 -------------------------

  Balance, end of year                           $    317,000 $ 2,658,000
                                                 =========================



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