SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB


       Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934 for the Quarterly Period Ended June 30, 2001


                         Commission File Number 0-14096


                              Foreland Corporation
                              --------------------
        (Exact name of small business issuer as specified in its charter)

             Nevada                                          87-0422812
             ------                                          ----------
(State or other jurisdiction of                           (I.R.S. Employer
 Incorporation or organization)                           Identification No.)

      2561 South 1560 West
       Woods Cross, Utah                                        84087
       -----------------                                        -----
(Address of principal executive offices)                     (Zip Code)

                                 (801) 298-9886
                                 --------------
                           (Issuer's telephone number)

                                       n/a
                ------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)


Check mark  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act of 1934  during the past 12 months (or
for 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 [ ] No [X]

State the number of shares outstanding of each of the issuer's classes of common
equity,  as of the latest  practicable  date. As of August 14, 2001,  issuer had
9,742,323 shares of issued and outstanding common stock, par value $0.001.

Transitional Small Business Disclosure Format: Yes [ ] No [X]

<PAGE>

                          PART I--FINANCIAL INFORMATION
<TABLE>
<CAPTION>

                          ITEM 1. FINANCIAL STATEMENTS

                              FORELAND CORPORATION
                                 Balance Sheets


                                     ASSETS

                                                                                 June 30,          December 31,
                                                                                   2001                2000
                                                                            ------------------  ------------------
                                                                                (Unaudited)
<S>                                                                         <C>                 <C>
CURRENT ASSETS
   Cash                                                                     $            4,198  $           98,298
   Inventory - pipe                                                                     53,004              53,004
                                                                            ------------------  ------------------
     Total Current Assets                                                               57,202             151,302
                                                                            ------------------  ------------------

LONG-TERM ASSETS
   Office equipment, net                                                                15,559              18,078
   Unproved oil and gas properties                                                     188,177             188,177
   Deposits                                                                             75,000              75,000
                                                                            ------------------  ------------------
     Total Long-Term Assets                                                            278,736             281,255
                                                                            ------------------  ------------------
     Total Assets                                                           $          335,938  $          432,557
                                                                            ==================  ==================

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

                                       2
<PAGE>
<CAPTION>
                              FORELAND CORPORATION
                           Balance Sheets (Continued)


                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

                                                                                 June 30,          December 31,
                                                                                   2001                2000
                                                                            ------------------  ------------------
                                                                                (Unaudited)
<S>                                                                         <C>                 <C>
CURRENT LIABILITIES
   Amount due to seller of acquired business (Note 5)                       $          628,500  $          600,000
   Accounts payable                                                                    550,133             557,149
   Accrued liabilities                                                                       -              79,300
   Officers' salaries - related parties                                                 36,692             583,939
   Current portion of note payable                                                      10,000                   -
                                                                            ------------------  ------------------
     Total Current Liabilities                                                       1,225,325           1,820,388
                                                                            ------------------  ------------------

COMMITMENTS AND CONTINGENCIES (Note 6)

STOCKHOLDER'S EQUITY (DEFICIT)
   Convertible preferred stock, $0.001 par value, 5,000,000
     shares authorized; 407,243 shares issued and outstanding
     in 2000 (liquidation preference of $3,229,000)                                        407                 407
   Common stock, $0.01 par value, 50,000,000 shares
     authorized; 9,742,323 shares issued and outstanding                                 9,742               9,742
   Additional paid-in capital                                                       39,322,689          39,126,440
   Less stock subscriptions receivable                                                       -            (350,488)           )
   Accumulated deficit                                                             (40,222,225)        (40,173,932)
                                                                            ------------------  ------------------
     Total Stockholders' Equity (Deficit)                                             (889,387)         (1,387,831)
                                                                            ------------------  ------------------
     TOTAL LIABILITIES AND STOCKHOLDERS'
      EQUITY (DEFICIT)                                                      $          335,938  $          432,557
                                                                            ==================  ==================
</TABLE>
              The accompanying notes are an integral part of these
                             financial statements.

                                       3
<PAGE>
<TABLE>
<CAPTION>
                              FORELAND CORPORATION
                            Statements of Operations
                                   (Unaudited)

                                                                    For the Three Months Ended         For the Six Months Ended
                                                                             June 30,                          June 30,
                                                               ---------------------------------  ---------------------------------
                                                                          2001              2000              2001             2000
                                                               ---------------   ---------------  ----------------  ---------------

<S>                                                            <C>               <C>              <C>               <C>
REVENUE                                                        $         6,840   $       103,718  $        117,280  $       103,718
                                                               ---------------   ---------------  ----------------  ---------------
EXPENSES
   Oil exploration                                                      30,524            27,824            63,156           27,824
   General and administrative                                           26,415            97,326            73,194           97,326
   Depreciation and amortization                                         1,260               504             2,520              504
                                                               ---------------   ---------------  ----------------  ---------------
     Total Expenses from Operations                                     58,199           125,654           138,870          125,654
                                                               ---------------   ---------------  ----------------  ---------------

INCOME (LOSS) BEFORE OTHER EXPENSE                                     (51,359)          (21,936)          (21,590)         (21,936)
                                                               ---------------   ---------------  ----------------  ---------------

OTHER INCOME (EXPENSE)
   Interest income                                                         555             1,149             1,171            1,149
   Interest expense                                                    (14,250)          (63,520)          (28,500)         (63,520)
                                                               ---------------   ---------------  ----------------  ---------------
     Total Other Income (Expense)                                      (13,695)          (62,371)          (27,329)         (62,371)
                                                               ---------------   ---------------  ----------------  ---------------

INCOME (LOSS) BEFORE INCOME TAX,
 EXTRAORDINARY ITEM AND DISCONTINUED OPERATIONS                        (65,054)          (84,307)          (48,919)         (84,307)

Income taxes                                                                 -                 -                 -                -
                                                               ---------------   ---------------  ----------------  ---------------

INCOME (LOSS) BEFORE EXTRAORDINARY
 ITEM AND DISCONTINUED OPERATIONS                                      (65,054)          (84,307)          (48,919)         (84,307)

   Gain on foreclosure of assets and liabilities                             -                 -                 -        4,469,006

LOSS FROM DISCONTINUED OPERATIONS - NET
 OF ZERO TAX EFFECT                                                          -                 -                 -       (1,125,862)
                                                               ---------------   ---------------  ----------------  ---------------

NET INCOME (LOSS)                                                      (65,054)          (84,307)          (48,919)       3,258,837

   Preferred stock dividend                                            (68,250)          (68,250)          (68,250)         (68,250)
                                                               ---------------   ---------------  ----------------  ---------------

NET INCOME (LOSS) APPLICABLE TO COMMON
 STOCKHOLDERS                                                  $      (133,304)  $      (152,557) $       (117,169) $     3,190,587
                                                               ===============   ===============  ================  ===============
WEIGHTED AVERAGE COMMON SHARES
  OUTSTANDING                                                        9,742,323         9,733,206         9,742,323        9,733,206
                                                               ===============   ===============  ================  ===============
</TABLE>
              The accompanying notes are an integral part of these
                             financial statements.

                                       4
<PAGE>
<TABLE>
<CAPTION>
                              FORELAND CORPORATION
                            Statements of Cash Flows

                                                                                       For the Six Months
                                                                                         Ended June 30,
                                                                            --------------------------------------
                                                                                   2001                2000
                                                                            ------------------  ------------------
<S>                                                                         <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income (loss)                                                        $          (65,054) $        3,258,837
   Depreciation and amortization                                                         1,260                 504
   Gain on foreclosure                                                                       -          (4,469,006)
   Discontinued operations                                                                   -           1,125,862
   Changes in operating assets and liabilities                                         (40,306)             82,803
                                                                            ------------------  ------------------
     Net Cash (Used in) Provided by Operations                                        (104,100)             (1,000)
                                                                            ------------------  ------------------

CASH FLOWS FROM INVESTING ACTIVITIES                                                         -                   -
                                                                            ------------------  ------------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from note payable                                                           10,000                   -
                                                                            ------------------  ------------------

     Net Cash Provided by Financing Activities                                          10,000                   -
                                                                            ------------------  ------------------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                       (94,100)             (1,000)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                          98,298               1,000
                                                                            ------------------  ------------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                    $            4,198  $                -
                                                                            ==================  ==================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
   Cash paid for interest                                                   $                -  $                -
   Cash paid for income taxes                                               $                -  $                -

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
 AND FINANCING ACTIVITIES
   Options for debt                                                         $                -  $                -
</TABLE>

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

                                       5
<PAGE>

                              FORELAND CORPORATION
                        Notes to the Financial Statements
                             June 30, 2001 and 2000


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

              a.  Nature of Operations

              Foreland Corporation (Foreland) was incorporated in Nevada in 1985
              to  engage  in  oil  exploration,   development,  and  production.
              Activities to date have focused primarily in north-central Nevada.
              As discussed in Note 3, the Company  acquired  certain  refineries
              and  transportation  equipment  from Petro Source  Corporation  in
              August 1998.  The refineries  produce  diesel fuel,  residual fuel
              oil, asphalts, and other petroleum products.

              The  Company  entered a  voluntary  surrender  agreement  with its
              largest  creditor  in  November  1999.  At  March  31,  2000,  the
              foreclosure  agreement was  completed  and the related  assets and
              liabilities were transferred. All operations from January 1, 2000,
              through March 31, 2000, were recorded as discontinued  operations.
              The Company  reported a gain from the  foreclosure  of $4,469,006.
              After  the  foreclosure,  the  Company  is  only  engaged  in  oil
              exploration.

              b.  Cash Equivalents

              The Company considers all highly liquid debt instruments purchased
              with an  original  maturity  of  three  months  or less to be cash
              equivalents.

              c.  Other Property and Equipment

              Depreciation is calculated using the straight-line method over the
              following estimated useful lives:

                                                                  Years
                                                               ------------
                      Refineries and building                      3-15
                      Transportation and other equipment            3-7
                      Office furniture and equipment               3-10

              The cost of normal maintenance and repairs is charged to operating
              expenses as incurred. Material expenditures that increase the life
              of an asset are  capitalized  and  depreciated  over the estimated
              remaining  useful life of the asset.  The cost of properties sold,
              or otherwise disposed of, and the related accumulated depreciation
              or  amortization  are removed from the accounts,  and any gains or
              losses are reflected in current operations.  Depreciation  expense
              related to other  property  and  equipment  amounted to $2,520 and
              $504  for  the  six  months   ended   June  30,   2001  and  2000,
              respectively.

                                       6
<PAGE>

                              FORELAND CORPORATION
                        Notes to the Financial Statements
                             June 30, 2001 and 2000


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              d.  Impairment of Long-Lived Assets

              The  Company  assesses  impairment  whenever  events or changes in
              circumstances  indicate  that the carrying  amount of a long-lived
              asset may not be recoverable. When an assessment for impairment of
              proved  oil  and gas  properties  is  performed,  the  Company  is
              required to compare the net  carrying  value of proved oil and gas
              properties  on a  field-by-field  basis (the lowest level at which
              cash flows can be determined on a consistent basis) to the related
              estimates  of   undiscounted   future  net  cash  flows  for  such
              properties.  If the net carrying value exceeds the net cash flows,
              then  impairment is recognized to reduce the carrying value to the
              estimated fair value.

              Unproved  oil and gas  properties  are  periodically  assessed for
              impairment  of  value,  and a loss is  recognized  at the  time of
              impairment by providing an impairment allowance.

              e.  Inventories

              Inventories  are  carried  at the  lower  of cost or  market.  For
              refined petroleum products, cost is generally determined using the
              first-in,  first-out  method.  For  other  inventories,   cost  is
              determined   using   the   average   cost   method   or   specific
              identification where possible.

              f.  Revenue Recognition

              The Company  recognizes  sales of refined  petroleum  products and
              crude oil upon delivery to the purchaser.  Transportation revenues
              are recognized as the services are performed.

              g.  Net Earnings (Loss) Per Common Share

              The computation of basic earnings (loss) per share of common stock
              is based on the  weighted  average  number of  shares  outstanding
              during the period of the financial statements.
<TABLE>
<CAPTION>
                                                                                    For the Six Months Ended
                                                                                            June 30,
                                                                            --------------------------------------
                                                                                   2001                 2000
                                                                            ------------------  ------------------
              <S>                                                           <C>                 <C>
              Basic earnings (loss) per share:
                Income (loss) from operations                               $            (0.01) $            (0.01)
                Income from extraordinary items                                              -                0.46
                (Loss) from discontinued operations                                          -               (0.12)
                                                                            ------------------  ------------------
                Net income (loss)                                           $            (0.01) $             0.33
                                                                            ==================  ==================

              Diluted earnings (loss) per share:
                Income (loss) from operations                               $            (0.01) $                -
                Income from extraordinary items                                              -                0.38
                (Loss) from discontinued operations                                          -               (0.10)
                                                                            ------------------  ------------------
                Net income (loss)                                           $            (0.01) $             0.28
                                                                            ==================  ==================
</TABLE>
                                       7
<PAGE>

                              FORELAND CORPORATION
                        Notes to the Financial Statements
                             June 30, 2001 and 2000


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              g.  Net Earnings (Loss) Per Common Share (Continued)

              Shares  issuable  upon exercise of stock options were not included
              in  computing  the diluted  per-share  data for the periods  ended
              March 31 and June 30, 2001,  because to do so would have  resulted
              in  reducing  the loss per share data as  compared  to the amounts
              reported for the basic per-share data.

              h.  Stock Based Compensation

              The  Company  accounts  for  stock-based  compensation  issued  to
              employees   using  the  intrinsic   value  method   prescribed  in
              Accounting  Principles Board Opinion No. 25,  Accounting for Stock
              Issued to  Employees,  and related  interpretations.  Accordingly,
              compensation  cost for  stock  options  granted  to  employees  is
              measured as the excess,  if any, of the quoted market price of the
              Company's  common stock at the measurement  date  (generally,  the
              date of grant) over the amount an employee must pay to acquire the
              stock.

              The  Company   accounts   for  options,   warrants,   and  similar
              instruments  that  are  granted  to  nonemployees  for  goods  and
              services at fair value on the grant date,  as required by SFAS No.
              123,  Accounting  for  Stock-Based  Compensation.  Fair  value  is
              generally  determined  under an  option  pricing  model  using the
              criteria set forth in SFAS No. 123. The Company did not adopt SFAS
              No. 123 to account for stock-based  compensation for employees but
              is subject to the pro forma disclosure requirements.

              i.  Accounting Estimates

              The use 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.

NOTE 2 -      GOING CONCERN

              The Company's  financial  statements are prepared using  generally
              accepted  accounting  principles  applicable  to a going  concern,
              which  contemplates  the  realization of assets and liquidation of
              liabilities in the normal course of business. However, the Company
              does not have significant cash or other material assets,  nor does
              it have an established source of revenues  sufficient to cover its
              operating costs and to allow it to continue as a going concern. It
              is the intent of management to strongly pursue its oil exploration
              through funding by outside investors.

                                       8
<PAGE>

                              FORELAND CORPORATION
                        Notes to the Financial Statements
                             June 30, 2001 and 2000


NOTE 3 -      PURCHASE OF REFINING AND TRANSPORTATION ASSETS

              On August 12, 1998,  the Company  completed  the purchase  from an
              unrelated  firm  of a  crude  oil  processing  refinery  in  Eagle
              Springs,  Nevada,  a hydrocarbon  processing  facility in Tonopah,
              Nevada,  and trucks and related equipment used to gather crude oil
              and distribute products. The purchase price was $8,688,000,  which
              consisted  of  $520,000 in common  stock  issued by the Company in
              December 1997,  $5,000,000 in cash, the issuance of 863,602 shares
              of common stock with a fair value of approximately $3,023,000, and
              other  costs  related  to  the   acquisition   of  $145,000.   The
              acquisition  was  accounted  for  using  the  purchase  method  of
              accounting for business combinations.

              The purchase agreement required the Company to register the shares
              issued for the acquired  assets.  If the proceeds from liquidation
              of 763,602 shares were less than $2,676,000  (plus interest at 10%
              per annum), the agreement required the Company to issue additional
              shares or pay cash for the deficiency.  Based on the trading price
              of the Company's common stock at December 31, 1999, the fair value
              of the  shares  was  approximately  $150,000  and a sale of  these
              shares  into the  market  would  likely  depress  the stock  price
              further,  reducing the fair value of the shares.  During the year,
              the seller initiated litigation asserting a claim of $2.9 million,
              plus punitive  damages,  attorneys' fees and other costs,  against
              the Company.  As discussed in Note 5, the litigation  initiated by
              the seller has been settled.

NOTE 4 -      INVENTORIES
<TABLE>
<CAPTION>
              Inventories consist of the following at June 30, 2001:
              <S>                                                                               <C>
                Oil field equipment and other                                                   $           53,004
                                                                                                ------------------

                      Total                                                                     $           53,004
                                                                                                ==================

NOTE 5 -      DEBT
<CAPTION>
              Debt at June 30, 2001, consists of the following:
              <S>                                                                               <C>
              Note payable to Petro Source Corporation, interest at prime plus 2%,
                due September 1, 2001.                                                          $          628,500
                                                                                                ------------------

              Total                                                                             $          628,500
                                                                                                ==================
</TABLE>
              The  promissory  note  is  secured  by  4,000,000  shares  of  the
              Company's  common  stock.  In  addition,  Petro Source has a first
              priority lien on 80% of the Company's  share of any  production on
              properties in Nevada.

                                       9
<PAGE>

                              FORELAND CORPORATION
                        Notes to the Financial Statements
                             June 30, 2001 and 2000

NOTE 5 -      DEBT (Continued)

              After the execution of the voluntary  surrender  agreement,  Petro
              Source,  the company from whom the original purchase of the assets
              was made,  initiated an action against the Company claiming it had
              a security  interest in the assets that were surrendered to Energy
              Income Fund.  The lawsuit,  which sought  compensatory  damages of
              $2,869,087 and other damages, was filed on February 18, 2000.

              In April 2001,  this  lawsuit was settled  under an  agreement  in
              which the Company agreed to immediately  pay $600,000  through its
              insurance  provider and issue a  promissory  note in the amount of
              $600,000.  The note will  accrue  interest at a rate of prime plus
              two  percentage  points,  and is payable in full with  interest on
              September  1, 2001.  The note is  secured by 80% of the  Company's
              share of production of hydrocarbons for all the working  interests
              that the Company has or may have in the state of Nevada.

NOTE 6 -      COMMITMENTS AND CONTINGENCIES

              Environmental - The Company is subject to extensive federal, state
              and local  environmental  laws and regulations.  These laws, which
              are constantly changing,  regulate the discharge of materials into
              the  environment and may require the Company to remove or mitigate
              the environmental  effects of the disposal or release of petroleum
              or   chemical   substances   at   various   sites.   Environmental
              expenditures are expensed or capitalized depending on their future
              economic   benefit.   Expenditures  that  relate  to  an  existing
              condition  caused  by past  operations  and  that  have no  future
              economic benefits are expensed.  Liabilities for expenditures of a
              noncapital  nature  are  recorded  when  environmental  assessment
              and/or  remediation  is probable,  and the costs can be reasonably
              estimated.  The seller of the  refineries  agreed to indemnify the
              Company for certain environmental obligations.

              Contingencies  - The  Company may from time to time be involved in
              various  claims,  lawsuits,  disputes with third parties,  actions
              involving  allegations  of  discrimination,  or breach of contract
              incidental to the  operations of its business.  The Company is not
              currently  involved  in any  such  incidental  litigation  that it
              believes  could have  materially  adverse  effect on its financial
              conditions or results of operations. Three creditors have obtained
              judgments  against the Company  totaling  approximately  $458,000.
              These amounts are included in accounts payable.

                                       10
<PAGE>

        ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Introduction

         Foreland is engaged  principally in oil  exploration in the Great Basin
and Range of Nevada,  an area that  management  believes has  potential  for the
discovery of major oil  reserves.  In  continuing  to advance this  exploration,
Foreland's  strategy is to generate  exploration  prospects with the most recent
generally  available  scientific  techniques,   expand  and  improve  Foreland's
strategic land position,  and establish  arrangements with other oil exploration
firms  active in  Nevada  to obtain  additional  scientific  data,  leases,  and
funding.  Currently,  Foreland's  assets  consist of  exploration  prospects  in
northeastern  Nevada,  an  approximately  30,000  acre lease  position,  and the
associated  geological and geophysical database accumulated by Foreland over the
preceding approximately 16 years.

         During  2000,  Foreland  entered  into an  exploration  agreement  with
Farakel Company of Houston, Texas, covering four of Foreland's Nevada prospects,
requiring  that one prospect be drilled and the other three option  prospects be
drilled or have  significant  geophysical  work commenced on their acreage.  The
first well was drilled in the first quarter of 2001 and was unsuccessful.

         In the  first  quarter  of 2000,  Foreland  Corporation  completed  the
surrender of its producing properties,  refining and marketing  operations,  its
transportation  company and a principal  exploration  prospect  with its related
database.  The  surrender  was in  accordance  with  the  terms  of a  Voluntary
Surrender Agreement between Foreland and its principal  creditor,  Energy Income
Fund,  L.P.,  ("E.I.F.").  As  a  result  of  the  surrender,   indebtedness  of
approximately $12.6 million was cancelled.

         Foreland,  one of its  former  directors,  and  E.I.F.  were named in a
lawsuit  filed by Petro Source  Corporation  claiming  damages in excess of $3.5
million in connection with the purchase of refinery inventory and receivables to
be paid for in Foreland common stock.  Foreland settled the lawsuit on behalf of
itself and its  director in the first  quarter of 2001 for $1.2  million in cash
and a note.

         This report should be read in conjunction with Foreland's annual report
on Form  10-KSB for the year ended  December  31,  2000.  Foreland's  results of
operations for any interim period are not necessarily  indicative of its results
of operations for a longer period or for any time in the future.

         Foreland  has  reviewed  all  recently  issued,  but not  yet  adopted,
accounting standards in order to determine their effects, if any, on our results
of operations or financial  position,  and based on that review, we believe that
none of these pronouncements will have a significant effect on current or future
earnings or operations.

Forward-Looking Information

         This report contains certain forward-looking statements and information
relating to  Foreland  that are based on the  beliefs of  management  as well as
assumptions made by and information currently available to management. When used
in the  document,  the  words  "anticipate,"  "believe,"  "estimate,"  "expect,"
"intend," and similar expressions, as they relate to Foreland or its management,
are intended to identify forward-looking statements. Such statements reflect the
current  view of Foreland  respecting  future  events and are subject to certain
risks,  uncertainties,  and assumptions,  including the risks and  uncertainties
noted. Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect,  actual results may vary materially from
those  described  herein  as  anticipated,  believed,  estimated,  expected,  or
intended.

                                       11
<PAGE>

Current Precarious Financial Condition

         Foreland  is  suffering  from  extreme  shortages  of working  capital,
defaults on major indebtedness and due or past due current liabilities,  and the
need for substantial amounts of additional investment,  strategic alliances or a
sale,  merger or  reorganization  involving  all or portions of its business and
operations.

o        Foreland Has Substantial Working Capital and Stockholders' Deficits. As
         of June 30, 2001, Foreland had current liabilities of $1,225,325,  with
         current  assets of only  $57,202,  for a  working  capital  deficit  of
         $1,168,123. Current liabilities include an aggregate of $458,000 due on
         judgments  obtained by  creditors  and  $628,500 due on a note to Petro
         Source on September 1, 2001, as part of the  settlement of its lawsuit.
         As of June 30,  2001,  Foreland  had an  accumulated  deficit  of $40.2
         million.

o        Many  of  Foreland's   Obligations  Are  Substantially   Past  Due.  Of
         Foreland's  $1,225,325  in  current  liabilities  as of June 30,  2001,
         $596,825 of which was  substantially  past due. The $628,500 balance is
         due  September  1,  2001,  under a note to the  seller  of an  acquired
         business in settlement of a lawsuit in the first quarter of 2001. Three
         creditors with claims  aggregating  $458,000 at December 31, 2000, have
         obtained judgments against Foreland.

o        Foreland  Has No  Revenue  or  Cash.  Foreland  has no  cash  or  other
         financial resources and no revenue from operations or other activities,
         but  must  rely on  raising  additional  capital  to meet  its  ongoing
         obligations for general and  administrative  expenses,  lease payments,
         payments to creditors, and other costs.

o        Foreland Has Very Limited Assets on which To Base a Financial Recovery.
         As a result of the voluntary  surrender of the collateral  securing its
         indebtedness,   Foreland's  remaining  assets  consist  of  only  other
         exploration   prospects   on   approximately   30,000  gross  acres  of
         nonproducing  leases  and the  associated  geological  and  geophysical
         database  accumulated by Foreland over the preceding  approximately  16
         years. In addition,  Foreland earned a 16.6% interest in  approximately
         5,000 acres  known as the Hay Ranch  prospect as the result of drilling
         the Pine Valley  Federal  42-16  wildcat  well in the first  quarter of
         2001.

o        Foreland Has No Liquidity or Cash with which To Reactivate. As a result
         of the voluntary surrender of the collateral securing its indebtedness,
         Foreland  has  no  present  ability  to  generate  revenues.  With  the
         exception of leases  covered  under the  Company's  Nevada  Exploration
         Agreement  with  Farakel  Company,  Foreland has  insufficient  cash to
         maintain its exploration leaseholds, pay its personnel,  satisfy claims
         of creditors, or undertake oil and gas exploration.

o        Foreland's Audit Report for the Year Ended December 31, 2000,  Contains
         a Going Concern Explanatory Paragraph. Foreland's independent auditor's
         report on the December 31, 2000 financial statements,  as for preceding
         fiscal years, contains an explanatory paragraph that indicates there is
         substantial  doubt as to  Foreland's  ability  to  continue  as a going
         concern.

o        Possible  Inability To Continue.  As a result of all of the  foregoing,
         Foreland  urgently  needs  additional  capital,   but  because  of  its
         precarious  condition and limited assets,  may be unable to attract any
         capital or sufficient capital to continue.

Operations Overview

         Foreland began drilling the Hay Ranch Prospect in Pine Valley,  Nevada,
in January  2001,  as operator,  with the  participation  of Farakel  Company of
Houston,  Texas,  and Mirage  Energy L.L.C.  of Minnesota.  The 3-D defined well
tested two targets and  encountered  shows of oil in two drill-stem  tests.  The
well was  drilled  to a depth of 7,700 feet and was  plugged  and  abandoned  on
February 24, 2001.

                                       12
<PAGE>

         Farakel Company has the right under its Nevada Exploration Agreement to
undertake  additional  geophysical  work  or  drill  three  additional  Foreland
prospects  by  electing  to do so by  August  1,  2001.  Foreland  is  currently
discussing  the  prospects  with other  industry  partners that may wish to join
Farakel in defining and drilling the prospects.  The Company is also  evaluating
the acquisition of additional  acreage in Nevada to enhance and expand its lease
positions. These acquisitions as well as funds for the payment of existing lease
rentals would be funded through a combination of debt and an earned  interest in
the acreage.

         During  January  2001,  N. Thomas  Steele,  president and a director of
Foreland  resigned.  Alex  Nazarenko,  a principal with 2N Company was appointed
director, and Bruce Decker,  formerly  vice-president of Foreland, was appointed
president.  2N Company acquired Foreland common and preferred stock and warrants
formerly owned by E.I.F.

         As  an  inducement  for  Petro  Source  Corporation  to  enter  into  a
settlement agreement with Foreland,  officers and directors agreed to cancel all
existing options and warrants.  Petro Source subsequently agreed to the issuance
of options for accrued  salaries  payable,  with the provision that such options
not be exercised until the Petro Source note is paid.

Results of Operations

         Note that in view of the voluntary surrender of Foreland's  production,
refinery, transportation,  marketing and certain exploration assets in March and
April 2000, the following discussion should not be considered  indicative of its
future results of operation.

         During the  quarter  and six months  ended  June 30,  2001,  Foreland's
revenue consisted of payments under the Nevada Exploration Agreement. Foreland's
expenses during the period were associated with drilling and an exploratory test
well on the Hay Ranch Prospect in Nevada under the Nevada Exploration  Agreement
and general and administrative costs,  resulting in loss before other expense of
$51,359 and $21,590, respectively.  Other expense of $13,695 and $27,329 for the
quarter  and six  months  ended June 30,  2001,  respectively,  was  principally
associated  with  interest  accrued on the  promissory  note due Petro Source on
September 1, 2001,  resulting in net loss of $65,054 and $48,919 for the quarter
and six months ended June 30, 2001, respectively.

         During both the quarter and six months  ended June 30,  2000,  Foreland
received  revenue of $103,718  from  transition  payments  from EIF and incurred
operating expenses of $125,654 related to continuing  operations,  for a loss of
$21,936 for both  periods.  In addition,  in the six months ended June 30, 2000,
Foreland  recognized net income of $3,343,000,  resulting from a $4,469,000 gain
on the  foreclosure  of assets  and  liabilities,  less  loss from  discontinued
operations  associated  with  the  voluntary  surrender  of  the  Company's  oil
production,  refining,  and  transportation  assets to EIF, its secured  lender,
under a Voluntary Surrender Agreement.

Liquidity and Capital Resources

         Six Months Ended June 30, 2001

         Foreland's  operating  activities  used net cash of $104,100 in the six
months  ending  June 30,  2001,  to fund  $65,054  in net loss  and  $40,306  in
operating liabilities.  Investing activities had no impact on cash flows for the
six months ended June 30, 2001.  For financing  activities,  proceeds of $10,000
were received  from  issuance of  a  note payable  during  the six  months ended
June 30, 2001.

                                       13
<PAGE>

         Current and Future Requirements

         As of June 30, 2001,  Foreland had current  liabilities  of $1,225,325,
$596,825 of which was currently or  substantially  past due, with current assets
of  only  $57,202,  for  a  working  capital  deficit  of  $1,168,123.   Current
liabilities  include an  aggregate  of  $458,000  due on  judgments  obtained by
creditors  and $628,500  due on a note to Petro Source on September 1, 2001,  as
part of the  settlement  of its lawsuit.  Foreland  will seek to  negotiate  the
continued  forbearance,  compromise,  partial  forgiveness,  extension  or other
resolution  of all or a portion  of the  above  claims.  Nevertheless,  Foreland
expects  that a  significant  amount  of cash  will be  required  to  reach  any
accommodation  with these  creditors.  Foreland  cannot  assure  that it will be
successful in its efforts to reach a satisfactory  resolution of these claims or
raise the cash required to pay any amounts that may be agreed to.

         In some instances,  Foreland may seek to satisfy  creditors'  claims by
issuing securities, which would dilute the interests of existing stockholders.

         In addition to the capital  required to meet its past due  obligations,
Foreland  needs funds for its  remaining  continuing  operations  following  the
voluntary  surrender  of assets in March  and  April  2000.  As a result of this
surrender  and  the  resulting   cost-cutting   measures   associated  with  the
elimination of Foreland's  revenues,  Foreland's  continuing  operations require
cash  principally  for lease payments on retained  Nevada  leases,  salaries for
continuing  employees,  professional  fees for assistance in meeting  regulatory
requirements  and  dealing  with  creditors  and others,  and other  general and
administrative  expenses.  The  aggregate  amount  of these  items  varies,  but
generally  approximates  from $50,000 to $75,000 per quarter.  Foreland requires
additional  funds to meet costs for these items,  but cannot assure that it will
obtain such amount from any source.

         Foreland  participated in exploration of the Hay Ranch prospect,  which
it conveyed to E.I.F.  in the  voluntary  surrender  of assets,  by  obtaining a
farmout from E.I.F.  and then finding  drilling  partners to fund an exploratory
well.  Foreland  formed a  drilling  venture  with a  Houston  oil  investor  to
undertake a multiple well  drilling  project on the Hay Ranch  prospect  under a
farmout  from  E.I.F.,  including  drilling  options on three other  exploration
prospects on  Foreland's  retained  acreage.  The venture  provided  payments to
Foreland  of  $36,000  per month for five  months  to cover  overhead  and lease
rentals and an 8.3% carried  interest in the Hay Ranch  prospect.  An additional
investor  purchased a 25% interest in the prospect  under terms that provided an
additional 8.3% carried  interest in exchange for the right to retire a $600,000
note held by Petro Source  Corporation and thereby obtain four million shares of
Foreland  common  stock  securing  such note.  The well,  drilled in January and
February 2001, was plugged and abandoned.

         Foreland's  Houston  participants in the Nevada  Exploration  Agreement
have the right to commit to drill or undertake  additional  geophysical  work by
August  2001 on the three  option  prospects.  If the  participants  decline  to
continue,  Foreland may seek  additional  drilling  partners  for its  remaining
prospects  and  funds  for  the  development  of new  prospects.  Under  such an
arrangement,  Foreland  would  attempt to negotiate for its share of costs to be
paid by the other  participants,  retaining a minority  interest in the venture.
Alternatively,  Foreland  may seek to raise funds  through the sale of equity or
debt  securities to provide its share of drilling funds and for other  corporate
purposes. Foreland does not expect that it will be able to obtain any additional
financing  from any  source  unless  and  until  it is able to reach  agreements
acceptable to investors with its various creditors so that substantially all new
money  invested  will be  available  for Nevada  exploration  and not exposed to
claims of current  creditors.  Foreland  cannot predict the amount of money that
may be required to obtain the  forbearance  or  compromise  of the claims of its
existing creditors with claims aggregating approximately $1,225,325. There is no
assurance that Foreland will be successful in accomplishing these tasks.

                                       14
<PAGE>

         Because  of its  financial  condition  and the nature and amount of its
creditors' claims,  Foreland may be susceptible to an involuntary petition under
the Bankruptcy Act seeking Foreland's  liquidation.  In addition, if Foreland is
unable to reach  satisfactory  accommodations  with its creditors or immediately
obtain urgently  required  capital,  it may be forced to seek  protection  under
Chapter 11 of the  Bankruptcy  Act while it seeks to  reorganize  its assets and
liabilities.

Inflation

         Foreland's  activities  have not  been,  and in the  near  term are not
expected to be, materially affected by inflation or changing prices in general.

                                       15
<PAGE>

                           PART II--OTHER INFORMATION


                            ITEM 1. LEGAL PROCEEDINGS

         In connection with the purchase of the refineries during 1998, Foreland
agreed  to  acquire   inventory  and  accounts   receivable  from  Petro  Source
Corporation for approximately $2.7 million through the registration and issuance
of shares of Foreland common stock.  The shares were to be sold monthly into the
market by Petro Source  Corporation  until the $2.7  million  plus  interest was
recouped.  Foreland issued approximately 865,000 shares of common stock, but did
not register the shares. The trading price for Foreland's common stock plummeted
during  1998 and  1999,  rendering  the  sale of more  shares  into  the  market
unfeasible.  In March 2000, Petro Source  Corporation  filed a complaint against
Foreland and other defendants  seeking $2.9 million actual damages plus punitive
damages,  costs,  attorneys' fees, and interest. This action has been removed to
United  States  District  Court  for the  District  of Utah,  Central  Division.
Foreland has admitted  that it incurred  the $2.7  million  obligation  to Petro
Source but denied the remaining  substantive  allegations of the  complaint.  On
January 15, 2001,  Foreland  reached an agreement with Petro Source  Corporation
and Chubb Executive Risk, its insurance carrier, to settle the litigation on its
behalf and behalf of its director for $1.2 million,  with $600,000 to be paid to
Petro Source by Chubb and the  issuance of a note for $600,000 by Foreland.  The
note, which carries interest at 2% over prime, is secured by four million shares
of Foreland common stock and 80% of any production  Foreland  develops in Nevada
and is due September 1, 2001.  If the note is retired,  Petro Source will return
the four  million  shares  issued as  collateral  as well as 863,000  additional
shares of Foreland currently held by Petro Source.

         Three trade creditors have judgments  against Foreland for services and
materials  provided  in  connection  with its Nevada  exploration  and  drilling
activities as follows:  Halliburton Energy Services, Inc. by the District Court,
Jefferson County, Colorado, in the amount of $53,000; Grant Geophysical Corp. by
the United States  District  Court for the Southern  District of Texas,  Houston
Division, in the amount of $375,000;  and Spidle Sales and Service, Inc., by the
Eighth Judicial District Court,  Uintah County,  Utah, in the amount of $17,000.
The judgments accrue post judgment interest.

         A  former  employee  of  Foreland   Refining   Corporation,   a  former
subsidiary,  filed suit  against it and Foreland  Corporation  for breach of his
employment   agreement   with  such   subsidiary,   claiming  the  company  owes
approximately  one year's pay.  William Adair v. Foreland  Corporation,  et al.,
case no.  CV0012192,  in the Seventh Judicial District Court of Nevada for White
Pine County. The suit is deemed frivolous because the employee was terminated by
the  subsidiary  after all of the stock of such  subsidiary  was  surrendered to
E.I.F.

         Other than the matters set forth above,  Foreland is not a party to any
material  proceeding,  and  none  has  been  threatened  by or,  to the  best of
Foreland's knowledge, against Foreland.


                ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

         None.


                     ITEM 3. DEFAULTS UPON SENIOR SECURITIES

         Cumulative  dividends on 200,000 preferred  shares,  payable at 12% per
year, if, as, and when declared by the board of directors, have not been paid.


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

         None.

                                       16
<PAGE>

                            ITEM 5. OTHER INFORMATION

         None


                    ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits:  None.

         (b) Reports on Form 8-K.  During the quarter  ended June 30, 2001,  the
Company did not file any reports on Form 8-K.

                                       17
<PAGE>

                                    SIGNATURE

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                      FORELAND CORPORATION


Date:  August 15, 2001                By  /s/ Bruce C. Decker
                                          --------------------------------------
                                           Bruce C. Decker, President (Principal
                                           Executive and Financial Officer)


                                       18