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                   U. S. SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549


                                  FORM 10-QSB


     [X]          QUARTERLY  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)  OF
                    THE SECURITIES AND EXCHANGE ACT OF 1934

     For  the  quarterly  period  ended  April  30,  1997
                                         ----------------

     [  ]          TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR 15 (D) OF
                   THE SECURITIES EXCHANGE ACT OF 1934

     For  the  transition  period  from  ____________  to  _____________

     Commission  File  No.  0-24394

                            PENN OCTANE CORPORATION
              (Exact name of registrant as specified in charter)


             DELAWARE                                52-1790357
  (State  or other jurisdiction of     (I.R.S. Employer Identification No.)
  incorporation  or  organization)

900  VETERANS  BLVD.,  SUITE  240,  REDWOOD  CITY,  CA              94063
    (Address  of  principal  executive  offices)                  (Zip Code)

                                (415) 368-1501
             (Registrant's telephone number, including area code)





     Indicate  by  check mark whether the Registrant (1) has filed all reports
required  to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934  during  the  preceding  12  months  (or for such shorter period that the
Registrant  was  required  to  file such reports), and (2) has been subject to
such  filing  requirements  for  the  past  90  days.    YES      X  NO
                                                            -------    -------

     As  of  June  6,  1997, 8,159,286 shares of the Registrant's common stock
were  outstanding.


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<PAGE>
                            PENN OCTANE CORPORATION


                                     INDEX

PART I.   FINANCIAL INFORMATION:

     Item 1. Consolidated Financial Statements

             Consolidated Balance Sheet as of April 30, 1997                 3

             Consolidated Statements of Operations for the three
             and nine months ended April 30, 1997 and 1996                   4

             Consolidated Statements of Cash Flows for the three
             and nine months ended April 30, 1997 and 1996                   5

             Notes to Consolidated Financial Statements                   6-13

     Item 2. Management's Discussion and Analysis or Plan
             of Operation                                                14-18


PART II.  OTHER INFORMATION:

     Item 1.   Legal Proceedings                                            19

     Item 2.   Changes in Securities                                     19-20

     Item 3.   Defaults Upon Senior Securities                              20

     Item 4.   Submission of Matters to a Vote of Security Holders       20-21

     Item 5.   Other Information                                            22

     Item 6.   Exhibits and Reports on Form 8-K                          22-23


<PAGE>
<TABLE>
<CAPTION>
                                              PENN OCTANE CORPORATION
PART  I  -  ITEM  1

                                            CONSOLIDATED BALANCE SHEET
                                                    (Unaudited)

         ASSETS                                                                  April 30, 1997
                                                                               ------------------
<S>                                                                            <C>
Cash                                                                           $         422,943 
Trade accounts receivable                                                                332,952 
Inventories                                                                              594,352 
Prepaid expenses                                                                         362,371 
                                                                               ------------------

         Total current assets                                                          1,712,618 

Property, plant and equipment (net of accumulated depreciation of $1,141,902)          3,158,560 
Lease rights (net of accumulated amortization of $403,914)                               750,125 
Other noncurrent assets                                                                   50,757 
                                                                               ------------------

         Total assets                                                          $       5,672,060 
                                                                               ==================


         LIABILITIES & STOCKHOLDERS' EQUITY

Current maturities of long-term debt                                                   1,028,934 
Construction accounts payable                                                            184,498 
Trade accounts payable                                                                   306,952 
Deferred Revenue                                                                         461,704 
Borrowings from IBC-Brownsville                                                          672,552 
Accrued liabilities                                                                      643,949 
                                                                               ------------------

         Total current liabilities                                                     3,298,589 

Long-term debt                                                                            60,043 

Stockholders' equity
 Preferred stock-$.01 par value, 5,000,000 shares authorized;
  270,000 convertible shares issued and outstanding at
  April 30, 1997                                                                           2,700 
 Common stock-$.01 par value, 25,000,000 shares authorized;
  8,159,286 shares issued and outstanding at April 30, 1997                               81,593 
 Additional paid-in capital                                                            9,584,282 
 Note receivable from President for exercise of warrants                        (      2,728,000)
 Accumulated deficit                                                            (      4,627,147)
                                                                               ------------------

         Total stockholders' equity                                                    2,313,428 
                                                                               ------------------

           Total liabilities and stockholders' equity                          $       5,672,060 
                                                                               ==================

</TABLE>



See  Notes  to  Financial  Statements

<PAGE>
<TABLE>
<CAPTION>

                                                      PENN OCTANE CORPORATION

                                               CONSOLIDATED STATEMENTS OF OPERATIONS
                                                            (Unaudited)


                                                      Three  Months  Ended              Nine  Months  Ended
                                                      --------------------              -------------------
                                                  April 30,        April 30,        April 30,          April 30,
                                                    1997             1996             1997              1996
                                               --------------  --------------  -----------------  -----------------
<S>                                            <C>             <C>             <C>                <C>

Revenues                                       $   8,021,235   $   7,831,986   $     24,080,892   $     20,105,493 

Cost of goods sold                                 7,634,879       7,456,119         23,116,092         19,049,025 
                                               --------------  --------------  -----------------  -----------------

  Gross profit                                       386,356         375,867            964,800          1,056,468 

Selling, general and administrative expenses         425,911         607,478          1,319,111          1,336,402 
                                               --------------  --------------  -----------------  -----------------

  Operating (loss)                              (     39,555)   (    231,611)   (       354,311)   (       279,934)

Other income (expense)
  Interest (expense), net                       (     48,840)   (     66,159)   (       172,346)   (       184,021)
  Royalty expense                               (     10,963)   (     10,963)
  Gain on sale of option                                              10,886                                10,886 
  Award from litigation                                              400,000                               400,000 
                                               --------------  --------------  -----------------  -----------------

    Net income (loss) before taxes              (     99,358)        113,116    (       537,620)   (        53,069)

Provision for income taxes                                 0               0                  0                  0 
                                               --------------  --------------  -----------------  -----------------

  Net income (loss)                            $(     99,358)  $     113,116   $(       537,620)  $(        53,069)
                                               ==============  ==============  =================  =================

  Earnings (loss)
   per common share                            $        (.02)  $         .02   $           (.10)  $           (.01)
                                               ==============  ==============  =================  =================


  Weighted average common
    shares outstanding                             5,936,108       5,141,333          5,443,346          5,110,547 
                                               ==============  ==============  =================  =================
</TABLE>




See  Notes  to  Financial  Statements



<PAGE>
<TABLE>
<CAPTION>

                                                   PENN OCTANE CORPORATION

                                            CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                         (Unaudited)

                                                      Three  Months  Ended              Nine  Months  Ended
                                                      --------------------              -------------------
                                                   April 30,        April 30,        April 30,        April 30,
                                                     1997             1996             1997            1996
                                                ---------------  --------------  ---------------  ----------------
<S>                                             <C>              <C>             <C>              <C>
INCREASE (DECREASE) IN CASH
Cash flows from operating activities:
Net income (loss)                               $(      99,358)  $     113,116   $(     537,620)  $(       53,069)
Adjustments to reconcile net loss to net cash
  provided by (used in) operating activities:
  Depreciation and amortization                        140,095         194,838          424,058           536,658 

Changes in current assets and liabilities
  Restricted cash                                        4,685               0                0                 0 
  Trade accounts receivable                            129,071    (    123,577)   (     303,489)   (      219,768)
  Interest receivable                                        0             109           26,233               382 
  Note receivable                                (      37,500)   (    400,000)   (      37,500)   (      300,000)
  NPEG note                                                  0         589,114                0           779,957 
  Inventories                                          151,625    (     94,448)   (     149,301)   (      189,109)
  Prepaids and other current assets              (     273,545)   (    110,905)   (     284,561)   (       58,338)
  Construction and accounts payable              (      80,351)   (    276,314)   (     300,929)   (      332,684)
  Advances from and to related party (net)                   0    (     15,011)               0    (       62,371)
  Accrued liabilities                            (      72,501)         46,745    (       7,747)   (        2,561)
  Deferred revenue                                     139,704               0          451,703                 0 
  Other assets and liabilities, net                          0               0            2,163                 0 
                                                ---------------  --------------  ---------------  ----------------
  Net cash provided by (used in)
  operating activities                                   1,925    (     76,333)   (     716,990)           99,097 

Cash flows from investing activities
  Capital expenditures                           (      87,242)   (    373,263)   (     100,914)   (      444,096)
  Other                                                      0               0                0             7,259 
                                                ---------------  --------------  ---------------  ----------------
  Net cash used in
  investing activities                           (      87,242)   (    373,263)   (     100,914)   (      436,837)

Cash flows from financing activities:
  Short-term borrowing                           (     100,000)              0                0    (      160,000)
  Long-term debt borrowing                                   0         996,804          325,000           992,962 
  Issuance of common stock                             931,260               0          931,260                 0 
  Reduction in long-term debt                    (     372,469)              0    (     379,938)                0 
  Decrease in bank overdraft                                 0    (    136,075)               0    (      133,133)
                                                ---------------  --------------  ---------------  ----------------
  Net cash provided by
  financing activities                                 458,791         860,729          876,322           699,829 
                                                ---------------  --------------  ---------------  ----------------

    Net increase in cash                               373,474         411,133           58,418           362,089 

Cash at beginning of period                             49,469           7,742          364,525            56,786 
                                                ---------------  --------------  ---------------  ----------------

Cash at end of period                           $      422,943   $     418,875   $      422,943   $       418,875 
                                                ===============  ==============  ===============  ================
</TABLE>


See  Notes  to  Financial  Statements


<PAGE>
                            PENN OCTANE CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


1.          BASIS  OF  PRESENTATION

The  consolidated  balance  sheet  as  of  April  30,  1997,  the consolidated
statements  of  operations,  and consolidated statements of cash flows for the
three and nine months ended April 30, 1997 and 1996 have been prepared by Penn
Octane  Corporation (the "Company") without audit, and include the accounts of
the  Company's  wholly-owned  subsidiary, Wilson Acquisition Corporation.   In
the  opinion  of management, the consolidated financial statements include all
adjustments (which include only normal recurring adjustments) and eliminations
necessary  to  present  fairly the consolidated financial position as of April
30,  1997  and  the  consolidated results of operations and cash flows for the
three  and  nine  months  ended  April  30,  1997  and  1996.

Certain  information  and  footnote disclosures normally included in financial
statements  prepared  in  accordance  with  generally  accepted  accounting
principles  have been omitted.  These consolidated financial statements should
be  read  in  conjunction  with  the  financial  statements  and notes thereto
included  in  the  Company's Form 10-KSB for the year ended July 31, 1996, and
Form  10-QSB  for  the  quarters  ended October 31, 1996 and January 31, 1997.

Certain  reclassifications have been made to prior year balances to conform to
the  current  presentation.    All  reclassifications  have  been  applied
consistently  to  the  periods  presented.


2.          EARNINGS  (LOSS)  PER  COMMON  SHARE

Earnings    (loss) per share of common stock is computed based on the weighted
average  number  of  shares  outstanding  after  giving effect to common stock
equivalents.   Fully diluted earnings (loss) per share of common stock assumes
the  conversion of preferred stock and is only presented in periods where such
computation results in dilution greater than 3% of primary earnings (loss) per
share  of  common  stock.

The  Financial  Accounting  Standards  Board  issued  Statement  of  Financial
Accounting Standards 128 (FASB 128) "Earnings Per Share", which supercedes APB
Opinion  15  (APB  15),  "Earnings Per Share".  The statement is effective for
financial  statements  issued  for  periods  ending  after  December  1, 1997,
including  interim  periods.   Early adoption is prohibited.  The Company does
not  expect a material change in earnings per share data in any of the periods
presented  in  the  accompanying Consolidated Statements of Operations, except
for  the  quarter ended April 30, 1996, as a result of adopting FASB 128.  For
the  quarter  ended April 30, 1996, "fully diluted EPS", as defined in APB 15,
was  $.02 per share and "diluted EPS", as defined in FASB 128, would have been
$.01  per  share.





3.          COMMITMENTS  AND  CONTINGENCIES

During  1994,  the Company entered into discussions with International Bank of
Commerce-Brownsville,  a Texas state banking association (IBC), for a proposed
letter  of  credit,  term  loan,
and  working  capital  financing.    In anticipation of receiving funding, the
Company  executed  various documents including a Security Agreement dated July
1,  1994,  assigning  and granting to IBC a security interest in substantially
all  of  the  Company's  business  and  assets,  including  its pipeline lease
agreement, its leased land at the Port of Brownsville, its terminal facilities
and  related equipment, inventories and all contracts and accounts receivable.

Beginning  July 1, 1994, IBC advanced to the Company directly or made payments
directly  to  certain of the Company's creditors a total of $1,507,552 against
the collateral.  On August 5, 1994, IBC notified the Company that it would not
honor  certain  of  the  Company's  checks  but  would  continue  to honor its
irrevocable  letters  of  credit  issued  on  behalf  of  the  Company.

On  August 24, 1994 the Company filed an Original Petition and Application for
Injunctive  Relief  against  IBC  seeking:  (1) either enforcement of a credit
facility  between the Company and IBC or a release of the Company's collateral
consisting  of  significantly  all  of  the Company's business and assets; (2)
declaratory  relief  with respect to the credit facility; and (3) an award for
damages  and  attorneys'  fees.

In response to the Company's request for injunctive relief, IBC filed a motion
on  August  29,  1994  to  compel arbitration and to stay the proceedings.  On
September 12, 1994, a State District Court in Cameron County, Texas, signed an
order  compelling  the  Company and IBC to resolve all of the Company's claims
against  IBC  in final arbitration.  The arbitration was conducted through the
American  Arbitration Association, Commercial Arbitration No. B 70 148 0133 94
A.

On  November  3, 1994, IBC filed a Responsive Pleading in Arbitration alleging
that  there  was  no loan agreement between the Company and IBC.  In addition,
IBC  requested  that  the  arbitrators  declare that IBC was not liable to the
Company  as  alleged, and that IBC was entitled to an award of $25,000,000 for
Business  Disparagement/Defamation  and  $100,000,000 in Punitive Damages plus
reasonable  attorney's  fees.

On  November  7,  1994,  the  Company  and  IBC agreed to a partial release of
certain  collateral  (accounts  receivable)  after the Company made cumulative
payments  through  that  date  to IBC totaling $800,000.  The remaining unpaid
balance to IBC at that date totaled $672,552, excluding interest ($30,448) and
fees  ($39,853).

On  May  5, 1995, IBC filed a First Amended Responsive Pleading in Arbitration
again  alleging  there  was  no loan agreement between the Company and IBC and
requesting  damages  in  excess  of  $750,000  plus  $3,500,000  for  Business
Disparagement/Defamation  plus  an amount of Punitive Damages to be determined
by  the  trier  of  fact.

The  arbitration  hearing,  held  before a panel of three neutral arbitrators,
commenced  on  July 19, 1995, and concluded on August 2, 1995.  On October 10,
1995,  the  Company  received notification of the Award of Arbitrators (Award)
which  called  for  IBC  to  pay  to the Company the sum of (a) $3,246,754 for
Breach  of  Contract  and  (b)  attorneys' fees of $568,000.  In addition, the
Award stated that IBC was entitled to an offset of (a) the sum of $804,016 and
(b)  attorneys' fees of $200,000 on IBC's counterclaim against the Company for
Breach  of Contract.  Both parties' awards accrue post-award interest at 9.75%
compounded  annually.
On  February  28,  1996, after hearing and denying IBC-Brownsville's motion to
vacate  the  arbitration  award,  the following judgment (the "Judgement") was
ordered:

International  Energy  Development  Corporation  n/k/a Penn Octane Corporation
shall  have  a  judgment against International Bank of Commerce-Brownsville in
the  sum of $2,810,737, plus post-award interest at a rate of 9.75% compounded
annually  to begin running 10 days after the date this award was signed by the
requisite  number  of  arbitrators  (September  21, 1995) to the entry of this
Judgment  and  thereafter  at  the  statutory  rate  (10%).
Upon  the  entry  of this Judgment, International Bank of Commerce-Brownsville
shall  release  all  collateral  transferred  to  it  by  International Energy
Development  Corporation  n/k/a  Penn  Octane  Corporation.

The  Court  further  orders  that International Energy Development Corporation
n/k/a  Penn  Octane Corporation shall have and recover from International Bank
of  Commerce-Brownsville  attorneys'  fees in the sum of $100,000 for services
rendered  in  pursuing  the  entry  of  Judgment  in  this case, together with
interest  at the statutory rate from date of entry of this Judgment until paid
and conditionally $7,500 for any appeal to the Court of Appeals and $5,000 for
any  appeal to the Texas Supreme Court and $2,500 in the event Writ is granted
by  the  Supreme  Court.

On June 3, 1996, IBC-Brownsville filed an appeal, but the Company continues to
believe  that the Judgment is final, binding, and collectible and will resolve
the  litigation with IBC-Brownsville.  The financial statements do not include
any adjustments reflecting the gain contingency (the Award), net of attorneys'
fees,  or  the  offset  (principal  and  interest).    Short-term borrowing of
$672,552  reflects  the  principal  amount  of  the offset.  The Award will be
accounted  for  when  it is actually realized and the offset will be accounted
for  at  such  time  as  IBC-Brownsville  has  exhausted  all  appeals.

On  April 18, 1996, the Company reached agreement to accept $400,000 to settle
a  lawsuit  it filed in October 1995 against a bank related to IBC-Brownsville
(related  Bank).    As  part of the settlement agreement, the parties executed
mutual  releases from future claims related to the IBC-Brownsville litigation.
Additionally,  the  defendant  provided  an indemnity agreement to the Company
against  future  claims  from  IBC-Brownsville.  The amount is recorded in the
statement  of  operations  for  the  year  ended  July  31,  1996.

On  June  26,  1996,  IBC-Brownsville filed suit against the Company, Case No.
96-06-3502  in  the  357th  Judicial District Court of Cameron County alleging
that  the  Company, in filing the Judgment against IBC-Brownsville in order to
clear  title  to  its  assets,  slandered  the  name  of  IBC-Brownsville.
IBC-Brownsville  contends  that  the Company's Judgment against them prevented
them  from  selling  certain  property.    IBC-Brownsville  has claimed actual
damages  of  $600,000  and  requested  punitive  damages  of  $2,400,000.   On
September  23,  1996,  the  court, which entered the Judgment on behalf of the
Company,  indicated in a preliminary ruling that the Company was privileged in
filing  the  judgment  to clear title to its assets.  The Company believes the
case  to be frivolous and is a breach of the settlement agreement entered into
with  the related Bank.  Further, the Company believes this cause of action is
covered  by  an  indemnity  agreement  from  that  related  Bank.

In  connection  with the IBC-Brownsville suit, IBC-Brownsville filed an appeal
with the Texas Court Of Appeals on January 21, 1997.  The Company responded on
February  14,  1997.

4.          PURCHASE  COMMITMENT

On September 26, 1996, the Company entered into a Term Sale Agreement with its
main propane supplier (the "Term Sale Agreement").  The Term Sale Agreement is
for  a  one-year  period  beginning on October 1, 1996.  The terms of the Term
Sale  Agreement,  such  as pricing and volumes, are substantially identical to
the  terms  of  the  Company's  sales  agreement  with  its  major  customer.


5.          LETTERS  OF  CREDIT  AND  OTHER  FINANCINGS

In  January  of 1996, the Company obtained a standby letter of credit in favor
of  a  propane  supplier.    The  standby letter of credit was for $40,000 and
expired  December  1, 1996.  In August of 1996, the Company obtained a $40,000
standby  letter  of credit for another supplier.  The letter of credit expired
on  September  30,  1996.

In  connection  with the Term Sale Agreement, in September of 1996 the Company
obtained  a  $625,000  letter of credit in favor of its main propane supplier.
As part of the terms and conditions of this letter of credit, which was due to
expire  September  30, 1997, the Company executed a $625,000 demand promissory
note to the issuing bank.  The note was initially collateralized by a $500,000
deposit,  accrued  interest  at  the prime rate (8.25% as of October 31, 1996)
plus  3%,  and  was  guaranteed  by  the  Company's  president.

On November 5, 1996, the Company's main propane supplier presented for payment
$495,315,  which  was  paid  through  the initial $500,000 collateral deposit.
After  such payment, the balance available under the letter of credit remained
$625,000,  and  $4,685  represented  the  remaining  balance of the collateral
deposit.    In  March 1997, the letter of credit, collateral and guaranty were
released.

In December 1995, the Company obtained a revolving line of credit for $140,000
which  was  renewed  in December 1996 through September 30, 1997.  Interest is
calculated  on  this  credit  line at the prime rate (8.25% - 8.50% during the
nine  months  ended April 30, 1997) plus 3%.  At April 30, 1997, there were no
balances  outstanding  under  the  revolving  line  of  credit.

During March 1997, the Company obtained a letter of credit (the "WAC Letter of
Credit") in the amount of $251,000 in connection with the obligation of WAC to
complete  certain  work under contract to be performed by WAC, a newly formed,
wholly-owned  subsidiary  of the Company engaged in the compressed natural gas
("CNG")  business.  The  WAC  Letter  of Credit is guaranteed by the Company's
President.    See  Note  8  for  description  of  WAC's  business.

During  March  1997,  the  Company received advances from its President in the
amount  of  $85,000.    This  amount  was  repaid  during  April  1997.


6.          OPERATING  LEASE  COMMITMENTS

In  May  1997, the Company reached an agreement to amend (the "Amendment") its
lease  agreement  (the  "Seadrift  Lease")  with Seadrift Pipeline Corporation
("Seadrift"), a subsidiary of Union Carbide Corporation, pursuant to which the
Company  leases  126  miles  of  6 inch pipeline running from Exxon USA's King
Ranch Gas Plant in Kleberg County, Texas (the "Pipeline") to the fence line of
certain  property  owned  by  the  Brownsville  Navigation District of Cameron
County,  Texas.    On  the  effective  date  of the Amendment, the term of the
Seadrift  Lease  will be extended until March 31, 2013, and may provide, among
other things, for additional storage access, and inter-connection with another
pipeline  controlled  by Seadrift thereby providing greater access to and from
the  Pipeline.    Pursuant  to  the  Amendment, the Company's fixed annual fee
associated  with use of the Pipeline will increase by $350,000.  Under certain
conditions  described  below,  $250,000 and $125,000 of the annual fee will be
waived  for  the first two years, respectively, from the effective date of the
Amendment.    The Amendment will become effective on the earlier of April 1998
or  the  date  that  Seadrift  notifies  the  Company of the completion by the
Company,  at  its  own  option,  of  certain  Pipeline enhancements, which, if
undertaken,  are  anticipated  to cost no more than $5,000,000.  The Amendment
may  also  require  the  Company  to make available to Seadrift, under certain
conditions,  access  to  the  Pipeline based on specified amounts at specified
rates.

     In  May  1997,  the  Company  amended  its  lease  with  the  Brownsville
Navigation  District  to  include  rental  of additional space adjacent to the
existing  terminal  location.    The lease amount will be increased to $74,784
annually, effective May 15, 1997.  The additional space will allow the Company
to develop additional storage, add railroad access to its storage facility and
facilitate  port  activities.

In  May  1997, the Company renewed the lease for its executive offices located
in Redwood City, California, through June 1998.  The monthly rental is $3,508.


7.          LONG-TERM  DEBT

During  October  1996, the Company issued 6.5 units in a private placement for
proceeds  totaling  $325,000  (the  "Units").    Each  Unit  consists of (i) a
promissory  note in the amount of $50,000 (collectively, the "Notes") and (ii)
50,000  common  stock  purchase  warrants  (the  "Warrants") to purchase Fifty
thousand  (50,000)  shares of common stock of the Company at an exercise price
of  $3.00  per  share.

The  Notes  accrue  interest  at  the  rate of 10% annually and are payable on
November  7,  1997 (the "Payment Date").  In the event the Company receives in
excess of two hundred fifty thousand ($250,000) dollars in connection with any
offering  of  its  securities  prior  to  the  Payment Date, the Company shall
utilize  up  to  one-half of the proceeds from such sale to satisfy the Notes.
In  the event such payment does not fully satisfy the Notes, the Company shall
pay  the  balance  due  on  the  Payment  Date.

During  April  1997,  250,000  of  the  Warrants issued in connection with the
placement  of  the  Units,  were exercised at prices below the original stated
exercise  price  ($1.75-$2.00),  in  exchange for the cancellation of $250,000
principal  amount  of  the  Notes,  plus  accrued interest thereon, and a cash
payment  received  by  the  Company  of  $188,438.

In  connection  with  the  receipt of proceeds from the exercise of additional
warrants  of  the  Company  during  April 1997, the Company prepaid $50,000 of
long-term  debt  obligations.

During  May  1997,  the  Company  issued a promissory note to Bay Area Bank in
connection with additional borrowings of  $33,000.  The promissory note is due
May  29,  1998.
8.          COMPRESSED  NATURAL  GAS

     WILSON  ACQUISITION  CORPORATION

In connection with the Company's plans to enter the CNG refueling business, on
March 7, 1997, WAC, a newly formed wholly-owned subsidiary of the Company, and
Wilson  Technologies  Incorporated  ("Wilson"),  a  leading  supplier  of  CNG
refueling  stations  which  is  engaged in the business of selling, designing,
manufacturing,  installing  and  servicing  CNG refueling stations and related
products  for  use  in  the CNG industry throughout the world, entered into an
Interim  Operating  Agreement  (the  "Arrangement").    Under the terms of the
Arrangement,  effective  as of February 17, 1997, WAC was granted the right to
use  the  Wilson  name,  technology  and  employees,  subject  to  certain
restrictions,  as  well  as  rights  to perform contracts which Wilson had not
begun  to  perform,  in  exchange for monthly payments of $84,000, and royalty
payments  not  to exceed $3,000,000 cumulatively, less certain adjustments, if
any. of 5% on net revenues.  WAC is entitled to all revenues earned by WAC and
by  certain  businesses  of  Wilson  commencing  as  of February 17, 1997.  In
addition, Zimmerman Holdings Inc. ("ZHI"), the parent of Wilson, has agreed to
reimburse  the  Company  for  50% of the net operating cash deficit of WAC, if
any.    WAC  is  also entitled to use the Wilson premises as well as available
inventory  of  Wilson in carrying out the business at a price of cost plus 10%
or  any  other amount mutually agreed upon by WAC and Wilson.  The Arrangement
was to have terminated on the earlier to occur of 90 days from the date of the
Arrangement  or  the  closing  of  the  Acquisition  described  below.  If the
Acquisition  was  not  completed  within  90  days,  the  Arrangement could be
extended  by  WAC  for  up  to  three  years.

Simultaneously  with the Arrangement, the Company, WAC, Wilson and ZHI entered
into  a  purchase  agreement  (the  "Acquisition"),  whereby  WAC will acquire
certain  assets,  including  trademarks  and  licenses,  and  certain  ongoing
businesses of Wilson, including Wilson's Canadian and Mexican subsidiaries, in
exchange  for  the  assumption of certain liabilities, a $3 million contingent
royalty  note  of  WAC, a note based upon certain operating expenses issued by
WAC  and  a  $220,000  convertible  debenture  issued  by  the  Company.  The
Acquisition is subject to several conditions, including obtaining satisfactory
restructuring of all of Wilson's creditor obligations including the consent of
such  creditors  to  the  proposed  Acquisition.

Effective as of March 21, 1997, the Arrangement was amended (the "Amendment"),
so  that  WAC  agreed  to  acquire $394,000 of Wilson's inventory and/or other
assets  to  be  paid  for  through the application of $294,000 previously paid
under  the Arrangement, plus other adjustments, with the difference to be paid
to  Wilson  through  a  five  year  promissory  note  payable  in equal annual
installments.    Furthermore,  the cumulative royalty to be paid to Wilson was
reduced  from  $3 million to $2 million, less certain adjustments.  Also under
the  Amendment,  effective June 1, 1997, the Company ceased making the monthly
payment  and  assumed  direct  responsibility  for  expenses  relating  to the
operation  of Wilson's facilities, including the lease of the premises and the
hiring  of  certain employees formerly employed by Wilson.  These expenses are
not  anticipated  to exceed $84,000 per month.  Pursuant to the Amendment, and
except  as  provided  for  therein,  the  Arrangement  and  Acquisition  were
terminated  effective  as  March  21, 1997.  Upon such termination, WAC is not
restricted  in continuing its CNG business.  The parties to the Amendment have
agreed  to  exchange  mutual  releases with respect to the Arrangement and the
Acquisition.




DINA  DEALERSHIP

In  November  1996,  the  Company  acquired  the right to a Dina dealership in
Mexico  (the  "Dealership"),  which  was  conditionally granted to Mr. Roberto
Keoseyan ("Keoseyan") by Grupo Dina, S.A. de C.V. ("Dina"), one of the largest
bus  and  truck  manufacturers in Mexico.  The Dealership will be granted upon
construction  of a dealership facility in accordance with Dina standards, at a
cost which is estimated to be $1,000,000.  In connection with the acquisition,
the Company makes certain monthly payments to Keoseyan and has agreed to issue
Keoseyan  100,000  warrants  to purchase 100,000 shares of the common stock of
the  Company  at  $3.00  per  share,  once  the Dealership has been officially
granted to the Company.  The Company may, at its sole discretion, at any time,
decline to construct the Dealership, give up the rights to the Dealership, and
cease  making  monthly  payments  and  with  no  obligation to issue warrants.


9.          WARRANTS

During  February 1997, the Company and certain prior officers (the "Officers")
of the Company agreed to an exchange offer whereby the Officers, on a weighted
average  basis,  received  164,286  shares  of  the  Company's common stock in
exchange for 702,856 outstanding warrants to purchase 702,856 shares of common
stock  of  the  Company  which  were  cancelled.

During  April  1997,  Thomas  G.  Janik  Associates,  Inc. ("Janik") agreed to
exercise  25,000  warrants  to  purchase  25,000 shares of common stock of the
Company  at  an  exercise  price  below the stated exercise price of $2.50 per
share,  and  the  Company  agreed  to  accept  in  lieu of cash payment on the
exercise  of  the  warrants,  full cancellation of $42,000 principal amount of
indebtedness  due  Janik,  plus  interest  thereon.

During  April  1997,  the  Company's President exercised 2,200,000 warrants to
purchase  2,200,000 shares of common stock of the Company at an exercise price
of  $1.25  per  share.    The  consideration  for the exercise of the warrants
included  $22,000  in  cash  and  a  $2,728,000  promissory note issued to the
Company,  which  accrues  interest  at  the  rate  of  8.25%  per  annum.  The
promissory  note is secured by 1,000,000 shares of common stock of the Company
owned  by  the  President  and  has  been  recorded  in  stockholders' equity.

During  April  1997, an additional 315,000 warrants to purchase 315,000 shares
of  common  stock of the Company at exercise prices of $1.25 -$2.50 per share,
were  exercised  by  a  director  of  the  Company  and  other  third parties.

During  March  1997,  the  Company's  Board  of Directors agreed to reduce the
exercise  price of 100,000 warrants to purchase 100,000 shares of common stock
of  the Company held or controlled by a director of the Company from $5.00 per
share  to  $2.50  per  share.

During  March  1997,  the Company approved the issuance of 200,000 warrants to
purchase  200,000  shares  of  common  stock  of the Company to a director and
officer  of  the  Company,  at an exercise price of $3.625 per share of common
stock,  exercisable  on  or  prior  to  March  24,  2000.




10.          ELECTION  TO  BOARD  OF  DIRECTORS

On  March  25,  1997,  the  Company's  Board  of  Directors elected Mr. Ian T.
Bothwell,  Vice President, Treasurer and Chief Financial Officer, to the Board
of  Directors  of  the Company.  In May 1997, during the Company's 1997 Annual
Meeting  of Stockholders, all seven of the Company's directors were reelected.


11.          CONTRACTOR  LOANS  PAYABLE

In  connection with the remaining obligation owed to Lauren Constructors, Inc.
("Lauren")  of  approximately  $212,000,  due to mature during April 1997, the
Company  and  Lauren  reached  an  agreement  whereby  the Company paid Lauren
$100,000  in  April  1997,  with the remaining balance to be paid down in four
equal  monthly  installments  commencing  May  15,  1997.


12.          CHARTER  AMENDMENT

On  May  29,  1997, at the 1997 Annual Meeting of Stockholders of the Company,
the  stockholders  authorized  the  amendment  of  the  Company's  Restated
Certificate of Incorporation to authorize 5,000,000 shares, $.01 par value per
share,  of  a new class of senior preferred stock for possible future issuance
in  connection  with  acquisitions  and  general corporate purposes, including
public or private offerings of shares for cash and stock dividends.  The Board
of  Directors  has  made  no determination with respect to the issuance of any
shares  of  the new preferred stock and has no present commitment, arrangement
or  plan  which  would  require  the issuance of such additional shares of new
preferred stock in connection with any equity offering, merger, acquisition or
otherwise.


13.          BY-LAWS

On  May  29,  1997, at the 1997 Annual Meeting of Stockholders of the Company,
the  stockholders  approved  an  amendment  and  restatement  of the Company's
by-laws to, among other things, allow the Board of Directors of the Company to
amend  the  by-laws  and  to  take certain other actions and to effect certain
other  matters  without  the  further  approval  of  the  stockholders.


PART  I  -  ITEM  2

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  OPERATION

RESULT  OF  OPERATIONS

The  results  of WAC, which commenced operations in March 1997, did not have a
material  impact  on  the results of the Company for the three and nine months
ended  April 30, 1997, and therefore are not included in the discussion below.

Revenue  for  the three months ended April 30, 1997 was $8,021,235 as compared
to  $7,831,986  for  the three months ended April 30, 1996, an increase of 2%.
The  increase  for  the  three  months  ended  April  30, 1997, was due to the
Company's  new  sales  arrangement  with  its  major customer, which commenced
during  October  1996,  and resulted in higher volumes of product sold to such
customer  during  the  three  months ended April 30, 1997, partially offset by
lower  volumes  of  product  sold  locally.    Volumes  of  product  sold were
approximately  19.1  million gallons sold for the three months ended April 30,
1997  compared  with  approximately  18.1  million  gallons sold for the three
months ended April 30, 1996.  In addition, the prices charged for product sold
were  generally lower during the three months ended April 30, 1997 as compared
to the three months ended April 30, 1996.  For the nine months ended April 30,
1997  as compared to the nine months ended April 30, 1996,  revenues increased
to  $24,080,892  from  $20,105,493,  an  increase  of  20%.  This increase was
primarily  due  to generally higher prices charged for product sold during the
nine  months  ended  April 30, 1997 as compared to the nine months ended April
30,  1996,  partially  offset  by  lower  volumes  sold.

Cost of goods sold for the three months ended April 30, 1997 was $7,634,879 as
compared  to $7,456,119 in the same quarter during the prior year, an increase
of  2%.    As  described earlier, this increase is primarily due to additional
volumes  sold as well as higher costs for product sold during the three months
ended  April 30, 1997.  Cost of goods sold for the nine months ended April 30,
1997  was  $23,116,092  as  compared  to $19,049,025 for the nine months ended
April  30,  1996,  an increase of 21%.  As described earlier, this increase is
primarily  due  to  higher costs for product sold during the nine months ended
April  30,  1997,  partially  offset  by  lower  volumes  sold.

Gross  profit  for  the  three  months  ended  April  30, 1997 was $386,356 as
compared  to $375,867 for the three months ended April 30, 1996.  The increase
was  due primarily to the higher volume of liquid propane gas ("LPG") gas sold
during  the  three  months  ended April 30, 1997, as a result of the new sales
arrangement  with  its  major  customer described above.  Gross profit for the
nine  months  ended  April 30, 1997 was $964,800 as compared to $1,056,468 for
the  nine  months ended April 30, 1996.  The decrease was due primarily to the
continuation of certain fixed costs which were not affected by the significant
reduction  in volumes sold during August 1996 and September 1996 until the new
sales  arrangement  with  its  major  customer  commenced during October 1996.

Selling, general and administrative (SG&A) expenses for the three months ended
April  30,  1997 were $425,911 as compared to $607,478 for the same quarter in
the  prior  year,  a  decrease  of  30%.    This decrease was due primarily to
decreases  in legal and professional costs associated with lawsuits brought by
and  against  the  Company.  SG&A expenses for the nine months ended April 30,
1997 were $1,319,111 as compared to $1,336,402 for the nine months ended April
30,  1996,  a decrease of 1%.  This decrease was due to decreases in legal and
professional  costs  associated  with  lawsuits  brought  by  and  against the
Company,  partially  offset  by  increases  in  administrative  costs.

Interest  expense was $48,840 and $66,159 for the three months ended April 30,
1997,  and  April  30,  1996, respectively.  The decrease was due primarily to
lower  average  loan  balances  during  the three months ended April 30, 1997,
including  payments  of  contractor  loan  obligations.   Interest expense was
$172,346  and $184,021 for the nine months ended April 30, 1997, and April 30,
1996,  respectively.    The  decrease  was due primarily to lower average loan
balances  during  the  nine months ended April 30, 1997, including payments of
contractor  loan  obligations.

During  the  three  and  nine months ended April 30, 1996, the Company reached
agreement  to accept $400,000 in settlement of a lawsuit it filed as plaintiff
in  October  1995.

Due  to the net losses for the nine months ended April 30, 1997, no income tax
expense  was  provided.

The  Financial  Accounting  Standards  Board  issued  Statement  of  Financial
Accounting Standards 128 (FASB 128) "Earnings Per Share", which supercedes APB
Opinion  15  (APB  15),  "Earnings Per Share".  The statement is effective for
financial  statements  issued  for  periods  ending  after  December  1, 1997,
including  interim  periods.   Early adoption is prohibited.  The Company does
not  expect a material change in earnings per share data in any of the periods
presented  in  the  accompanying Consolidated Statements of Operations, except
for  the  quarter ended April 30, 1996, as a result of adopting FASB 128.  For
the  quarter  ended April 30, 1996, "fully diluted EPS", as defined in APB 15,
was  $.02 per share and "diluted EPS", as defined in FASB 128, would have been
$.01  per  share.


LIQUIDITY  AND  CAPITAL  RESOURCES

At  July  31, 1996, the Company's arrangement with its major customer expired.
After  two  months of negotiation, a new agreement (the "Sales Agreement") was
reached.   The term of the Sales Agreement is for a one-year period commencing
October  1,  1996.    Under  the terms of the Sales Agreement, the Company has
committed  to  supply  and  the  customer  has committed to purchase a minimum
volume  of  LPG  each  month  with  seasonal variability.  The total committed
annual  volume  exceeds  the volume sold to the customer during the year ended
July  31,  1996.

Under  the  Sales  Agreement,  the Company is again responsible for the direct
purchase  of LPG.  As a result, the Company has negotiated an agreement with a
major supplier, with terms and conditions substantially identical to the terms
and  conditions  of the Company's Sales Agreement.  The agreements provide the
Company  with  a  fixed  margin  over  the  cost  of  LPG.

Since  the  Company agreed to finance the purchase of LPG, the customer agreed
to  prepay  for  approximately 75% of the gallons committed to be purchased in
October  1996,  and  to make payments within ten days of invoicing thereafter.
Under  the  terms  of  the  Sales  Agreement,  invoicing  is  to occur weekly.
Beginning November 1996, the Company made arrangements with its major customer
under  which  the  customer  will  guarantee  credit  with  the Company's main
supplier.    As  a  result  of this arrangement, invoicing occurs on a monthly
basis.    The  arrangement  is  on  a  month  to  month basis.  The Company is
currently  exploring  other  arrangements  or other options in connection with
being  able  to  provide  a  letter  of  credit directly to the Company's main
supplier.
In  May 1997, the Company reached an agreement to amend the lease arrangements
for use of the Pipeline.  See Note 6 to the Consolidated Financial Statements.
Under the new lease arrangement, once effective, the Company will have greater
access  to gas processors and petrochemical companies and the effective length
of  the  Pipeline  will  increase  to  approximately  360  miles.  The Company
believes  that  this  new  arrangement  will  enable the Company to enter into
longer-term  contracts  under  more  favorable  terms.

Because  the  Company  had complied with all terms of the settlement agreement
entered  into on June 21, 1995 with the two contractors, Lauren and Janik, who
were  owed  money from the construction of the Company's terminal, and because
the  Company  had  reduced  the amount owed the contractors from $1,308,000 to
$437,834 as of July 1996, on October 10, 1996, the Company reached a tentative
agreement  with Lauren and Janik to extend the repayment schedule to April 14,
1997,  under  substantially  similar terms and conditions.  During April 1997,
Janik  agreed  to exercise 25,000 warrants to purchase 25,000 shares of common
stock  of  the Company at an exercise price below the stated exercise price of
$2.50  per  share, and the Company agreed to accept in lieu of cash payment on
the  exercise  of  the  warrants,  full  cancellation of the remaining $42,000
principal  amount  of  indebtedness  due  Janik,  plus  interest  thereon.  In
connection  with  the  remaining  obligation  owed  to Lauren of approximately
$212,000,  due  to mature during April 1997, the Company and Lauren reached an
agreement  whereby  the  Company  paid Lauren $100,000 in April 1997, with the
remaining  balance  to  be  paid  down  in  four  equal  monthly  installments
commencing May 15, 1997.  The Company anticipates being able to make repayment
in  full  on its obligations to Lauren from cash flow generated by operations.

While the Company has not made commitments for additional capital expenditures
during  the  next  twelve  months,  it  continues  to evaluate the cost of and
opportunities  created  by  (i)  installing  a  cooling unit and upgrading and
extending a pipeline to the loading dock on the Brownsville Navigation Channel
in  order  to commence unloading from and loading onto ocean-going LPG vessels
and  (ii)  the  construction  and operation of an additional LPG terminal with
storage  facilities  within  Mexico  and/or  closer  to  U.S.-  Mexico  border
crossings  and an extension of the pipeline to this terminal, which is subject
to  regulatory  approval.    If determined to be advantageous to the Company's
operations, the projects would enable the Company to receive LPG for its major
customer  for  storage and redelivery, export LPG to Caribbean and other Latin
American  markets and allow for additional sales volumes of LPG into Mexico at
substantially higher margins.  The total cost of these projects is expected to
be  no  more  than  $5,000,000.

In connection with the Company's plans to enter the CNG refueling business, on
March 7, 1997, WAC, a newly formed wholly-owned subsidiary of the Company, and
Wilson  Technologies  Incorporated  ("Wilson"),  a  leading  supplier  of  CNG
refueling  stations  which  is  engaged in the business of selling, designing,
manufacturing,  installing  and  servicing  CNG refueling stations and related
products  for  use  in  the CNG industry throughout the world, entered into an
Interim  Operating  Agreement  (the  "Arrangement").    Under the terms of the
Arrangement,  effective  as of February 17, 1997, WAC was granted the right to
use  the  Wilson  name,  technology  and  employees,  subject  to  certain
restrictions,  as  well  as  rights  to perform contracts which Wilson had not
begun  to  perform,  in  exchange for monthly payments of $84,000, and royalty
payments  not  to exceed $3,000,000 cumulatively, less certain adjustments, if
any. of 5% on net revenues.  WAC is entitled to all revenues earned by WAC and
by  certain  businesses  of  Wilson  commencing  as  of February 17, 1997.  In
addition, Zimmerman Holdings Inc. ("ZHI"), the parent of Wilson, has agreed to
reimburse  the  Company  for  50% of the net operating cash deficit of WAC, if
any.    WAC  is  also entitled to use the Wilson premises as well as available
inventory  of  Wilson in carrying out the business at a price of cost plus 10%
or  any  other amount mutually agreed upon by WAC and Wilson.  The Arrangement
was to have terminated on the earlier to occur of 90 days from the date of the
Arrangement  or  the  closing  of  the  Acquisition  described  below.  If the
Acquisition  was  not  completed  within  90  days,  the  Arrangement could be
extended  by  WAC  for  up  to  three  years.

Simultaneously  with the Arrangement, the Company, WAC, Wilson and ZHI entered
into  a  purchase  agreement  (the  "Acquisition"),  whereby  WAC will acquire
certain  assets,  including  trademarks  and  licenses,  and  certain  ongoing
businesses of Wilson, including Wilson's Canadian and Mexican subsidiaries, in
exchange  for  the  assumption of certain liabilities, a $3 million contingent
royalty  note  of  WAC, a note based upon certain operating expenses issued by
WAC  and  a  $220,000  convertible  debenture  issued  by  the  Company.  The
Acquisition is subject to several conditions, including obtaining satisfactory
restructuring of all of Wilson's creditor obligations including the consent of
such  creditors  to  the  proposed  Acquisition.

Effective as of March 21, 1997, the Arrangement was amended (the "Amendment"),
so  that  WAC  agreed  to  acquire $394,000 of Wilson's inventory and/or other
assets  to  be  paid  for  through the application of $294,000 previously paid
under  the Arrangement, plus other adjustments, with the difference to be paid
to  Wilson  through  a  five  year  promissory  note  payable  in equal annual
installments.    Furthermore,  the cumulative royalty to be paid to Wilson was
reduced  from  $3 million to $2 million, less certain adjustments.  Also under
the  Amendment,  effective June 1, 1997, the Company ceased making the monthly
payment  and  assumed  direct  responsibility  for  expenses  relating  to the
operation  of Wilson's facilities, including the lease of the premises and the
hiring  of  certain employees formerly employed by Wilson.  These expenses are
not  anticipated  to exceed $84,000 per month.  Pursuant to the Amendment, and
except  as  provided  for  therein,  the  Arrangement  and  Acquisition  were
terminated  effective  as  March  21, 1997.  Upon such termination, WAC is not
restricted  in continuing its CNG business.  The parties to the Amendment have
agreed  to  exchange  mutual  releases with respect to the Arrangement and the
Acquisition.

WAC  has  recently  been  awarded  contracts  for  the supply of CNG refueling
station  equipment  totaling  more  than  $2,000,000.    Under  the  terms and
conditions  of  these  contracts,  WAC anticipates that there will be adequate
cash  flow  to  fund  the  equipment  as  prescribed under the contracts.  WAC
intends  to  pursue  additional  service  and  maintenance  business and other
station  development  opportunities  in  the U.S., Mexico and other countries.

During  October  1996,  the  Company  completed  a  private placement of units
including  warrants and promissory notes due November 1997.  See Note 7 to the
Consolidated  Financial  Statements.    Total proceeds raised from the private
placement were $325,000 of which the Company used the net proceeds for working
capital requirements.  During April 1997, 250,000 warrants to purchase 250,000
shares  of  the  common  stock  of  the  Company issued in connection with the
private  placement were exercised at prices below the original stated exercise
price  ($1.75-$2.00)  in exchange for cancellation of $250,000 of indebtedness
from  the  private placement, plus accrued interest thereon and a cash payment
received  by  the  Company  of  $188,438.

During  April  1997,  the  Company's President exercised 2,200,000 warrants to
purchase  2,200,000 shares of common stock of the Company at an exercise price
of  $1.25  per  share.    The  consideration  for the exercise of the warrants
included  $22,000  in  cash  and  a  $2,728,000  promissory note issued to the
Company,  which  accrues  interest  at  the  rate  of  8.25%  per  annum.  The
promissory  note is secured by 1,000,000 shares of common stock of the Company
owned  by  the  President  and  has  been  recorded  in  stockholders' equity.
During  April  1997, an additional 315,000 warrants to purchase 315,000 shares
of  common  stock  of  the  Company were exercised by certain directors of the
Company  and other third parties at exercise prices ranging from $1.25 - $2.50
per  share.

Effective  October  24,  1996,  Thomas  P.  Muse,  Chairman,  Mark D. Casaday,
President,  and  Thomas  A.  Serleth,  Executive  Vice  President,  Secretary,
Treasurer,  and  Chief  Financial  Officer resigned as members of the Board of
Directors  and  Officers  of  the Company.  Mr. Casaday continued as President
until  the  expiration  of  his  employment  contract  on  October  31,  1996.

Effective  October 29, 1996, Jerome B. Richter was elected to the positions of
Chairman of the Board of Directors, President and Chief Executive Officer, Ian
T.  Bothwell  was  elected  Vice President, Treasurer, Assistant Secretary and
Chief  Financial  Officer, and Jorge R. Bracamontes was elected Executive Vice
President  and  Secretary.   During March 1997, Ian T. Bothwell was elected to
the  Board  of  Directors.

Management of the Company believes that the Company will ultimately realize on
the  Judgement.    Receipt  of  the  proceeds  from  the  Judgment  against
IBC-Brownsville would enable the Company to substantially eliminate all of its
outstanding  obligations  including  all  debt obligations and legal fees plus
provide additional working capital.  At April 30, 1997, the Judgment including
accrued interest and legal fees approximated $3,376,213, less contingent legal
fees.    See  Note  3  to  the  Consolidated  Financial  Statements.

Through  a combination of the agreements with its major customer to purchase a
minimum  monthly  volume  of  LPG  and  its  primary  LPG  supplier to provide
increased  volumes  of LPG, and a full year of sales to U.S. Rio Grande Valley
propane  distributors, the Company believes it will have cash flow adequate to
meet  its  obligations  for  the  next  twelve month period.  In addition, the
Company  intends  to  expand  sales  to  its major customer, including related
products and/or additional services, and intends to generate new business with
other  customers which benefit from the Company's pipeline, terminal and other
strategic  advantages.


PART  II          OTHER  INFORMATION


ITEM  1.          LEGAL  PROCEEDINGS.

See  Note  3  to  the  Consolidated  Financial  Statements.


ITEM  2.          CHANGES  IN  SECURITIES.

On  May  29,  1997, at the 1997 Annual Meeting of Stockholders of the Company,
the  stockholders  authorized  the  amendment  of  the  Company's  Restated
Certificate of Incorporation to authorize 5,000,000 shares, $.01 par value per
share,  of  a new class of senior preferred stock for possible future issuance
in  connection  with  acquisitions  and  general corporate purposes, including
public or private offerings of shares for cash and stock dividends.  The Board
of  Directors  has  made  no determination with respect to the issuance of any
shares  of  the new preferred stock and has no present commitment, arrangement
or  plan  which  would  require  the issuance of such additional shares of new
preferred stock in connection with any equity offering, merger, acquisition or
otherwise.

On  March 25, 1997, the Company granted 200,000 warrants to purchase shares of
common  stock  of  the  Company  with  an  exercise  price of $3.625 per share
exercisable  on or prior to March 24, 2000, to Jorge R. Bracamontes, Executive
Vice  President,  Secretary  and  a  director  of  the  Company.

On  March  26,  1997, M.I. Garcia Cuesta exercised 15,000 warrants to purchase
15,000 shares of common stock of the Company at an exercise price of $2.50 per
share  through  payment  of $150 in cash and issuance of a promissory note due
March 26, 2000 to the Company in the principal amount of $37,350 which accrues
interest at the rate of 8.25% per annum and is secured by the pledge of 15,000
shares  of  common  stock  of  the  Company.

On  April 11, 1997, Jerome B. Richter exercised 2,200,000 warrants to purchase
2,200,000  shares of common stock of the Company at an exercise price of $1.25
per share through payment of $22,000 in cash and issuance of a promissory note
due April 11, 2000 to the Company in the principal amount of $2,728,000 at the
of  8.25%  per  annum  and secured by the pledge of 1,000,000 shares of common
stock  of  the  Company.

On  March  25,  1997,  the  Company  approved  the exercise by Thomas G. Janik
Associates,  Inc.  ("Janick")  of 25,000 warrants to purchase 25,000 shares of
common  stock  of  the  Company at an exercise price below the stated exercise
price  of  $2.50  per  share  and  accepted,  in lieu of cash payment for such
exercise,  the  cancellation  of  $42,000 principal amount of indebtedness due
Janik,  plus  interest  thereon.

On  March  25, 1997, the Company agreed to adjust the exercise price of 50,000
warrants  to  purchase  50,000  shares  of common stock of the Company held by
TRAKO International Company Limited, a company controlled by John H. Robinson,
a  director  of  the Company, and 50,000 warrants to purchase 50,000 shares of
common  stock  of the Company held by John H. Robinson to $2.50 from $5.00 per
share.

On March 25, 1997, the Company ratified the execution and delivery of Exchange
Agreements  between the Company and Thomas P. Muse, Mark D. Casaday and Thomas
A.  Serleth,  former  officers and directors of the Company, providing for the
exchange  (i)  by  Muse  of  242,856  warrants to purchase common stock of the
Company for 55,195 shares of common stock; (ii) by Casaday of 200,000 warrants
to purchase 200,000 shares of common stock of the Company for 50,000 shares of
common  stock;  and  (iii)  by Serleth of 260,000 warrants to purchase 260,000
share  of  common  stock  of  the  Company  for 59,091 shares of common stock.

On April 13, 1997, 300,000 warrants to purchase 300,000 shares of common stock
of  the  Company  at an exercise price of $1.25 per share, were exercised by a
director  of  the  Company  and  other  third  parties.

During  October  1996,  the  Company  issued  6.5 units in a private placement
totaling  $325,000 (the "Units").  Each Unit consists of (i) a promissory note
in  the  amount  of  $50,000 (collectively, the "Notes") and (ii) common stock
purchase  warrants (the "Warrants") to purchase Fifty thousand (50,000) shares
of  common  stock  of  the  Company  at  an exercise price of $3.00 per share.

The  Notes  accrue  interest  at  the  rate of 10% annually and are payable on
November  7,  1997 (the "Payment Date").  In the event the Company receives in
excess of two hundred fifty thousand ($250,000) dollars in connection with any
offering  of  its  securities  prior  to  the  Payment Date, the Company shall
utilize  up  to  one-half of the proceeds from such sale to satisfy the Notes.
In  the event such payment does not fully satisfy the Notes, the Company shall
pay  the  balance  due  on  the  Payment  Date.

During  April  1997,  200,000  of  the  Warrants issued in connection with the
placement  of  the  Units, were exercised at $1.75 per share and 50,000 of the
Warrants  issued in connection with the placement of the Units, were exercised
at  $2.00  per  share,  in exchange for cancellation of $250,000 of the Notes,
plus  accrued  interest thereon, and a cash payment received by the Company of
$188,438.


ITEM  3.          DEFAULTS  UPON  SENIOR  SECURITIES.

     None.


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

The  1997  Annual  Meeting  of Stockholders of the Company (the "Meeting") was
held  on May 29, 1997 at the Company's executive offices.  The record date for
the  Meeting  was  April  18,  1997.    Proxies for the meeting were solicited
pursuant  to Regulation 14A under the Exchange Act.  There was no solicitation
in opposition to the management's nominees for directors as listed in Proposal
No.  1  in  the  proxy  statement,  and  all  of  such  nominees were elected.

     The  results of the voting by the stockholders for directors is presented
below.

     Proposal  #1          Election  of  Directors

  Name of Director Elected  Votes For  Votes Withheld
  ------------------------  ---------  --------------
  Jerome B. Richter         6,672,950     18,150
  Ian T. Bothwell           6,672,950     18,150
  Jorge R. Bracamontes      6,672,850     18,250
  John P. Holmes            6,672,950     18,150
  Kenneth G. Oberman        6,672,950     18,150
  Stewart J. Paperin        6,672,850     18,250
  John H. Robinson          6,672,950     18,150


Four  proposals (designated Proposals No. 2, 3, 4 and 5) were submitted by the
Board  of  Directors  to a vote of stockholders of the Company at the Meeting.
Each proposal was approved by the stockholders of the Company by the votes set
forth  below  each  of  the  listed  proposals.
Proposal  #2          Proposal  to amend the Company's Restated Certificate of
Incorporation  to
authorize 5,000,000 shares, $.01 par value per share, of a new class of senior
preferred  stock  for possible future issuance in connection with acquisitions
and  general  corporate  purposes,  including  public  or private offerings of
shares  for  cash  and  stock  dividends.   The Board of Directors has made no
determination  with respect to the issuance of any shares of the new preferred
stock  and  has no present commitment, arrangement or plan which would require
the  issuance  of  such additional shares of new preferred stock in connection
with  any  equity  offering,  merger,  acquisition  or  otherwise.

          For        Against  Abstain  Broker Non Votes

          5,053,429  153,850   15,050      1,468,771


     Proposal  #3     Proposal to approve the amendment and restatement of the
Company's  Amended
and  Restated  By-Laws to allow, among other things, the Board of Directors of
the  Company  to  amend  the  by-laws and to take certain other actions and to
effect certain other matters by an affirmative vote of a majority of the Board
of  Directors.

          For        Against  Abstain    Broker Non Votes

          4,950,749  255,730   15,850       1,468,771


     Proposal  #4          Proposal  to  approve  and  ratify  certain private
transactions  entered  into  by  the
Company  involving  the  issuance of shares of common stock of the Company and
warrants  to  purchase shares of common stock of the Company or the incurrence
of  indebtedness  in  excess  of  $100,000.

          For        Against  Abstain

          6,643,571  39,980   7,549


     Proposal  #5      Proposal to ratify the appointment of Burton McCumber &
Prichard,  L.L.P.  as
               the  independent  auditors  of  the  Company.

          For        Against  Abstain

          6,673,701  15,450   1,949


ITEM  5.          OTHER  INFORMATION.

     None.



ITEM  6.          EXHIBITS  AND  REPORTS  ON  FORM  8-K.

a.          Exhibits
            --------

The  following  Exhibits  are  incorporated  herein  by  reference:

10.23        Interim  Operating  Agreement  between  the  Wilson  Acquisition
Corporation  and  Wilson  Technologies  Incorporated  dated  March  7,  1997 -
incorporated  herein  by reference to Exhibit 10.23 of the Registrant's 10-QSB
Quarterly  Report  for  the  quarter  ended  January  31,  1997.

10.24        Purchase  Agreement  between  the  Registrant, Wilson Acquisition
Corporation,  Wilson  Technologies  Incorporated  and  Zimmerman Holdings Inc.
dated March 7, 1997 - incorporated herein by reference to Exhibit 10.24 of the
Registrant's  10-QSB  Quarterly Report for the quarter ended January 31, 1997.

10.25    Agreement for Exchange of Warrants for Common Stock dated February 5,
1997  between  the  Registrant  and  Mark  D. Casaday - incorporated herein by
reference to Exhibit 10.25 of the Registrant's 10-QSB Quarterly Report for the
quarter  ended  January  31,  1997.

10.26    Agreement for Exchange of Warrants for Common Stock dated February 5,
1997  between the Registrant Thomas P. Muse - incorporated herein by reference
to  Exhibit  10.26 of the Registrant's 10-QSB Quarterly Report for the quarter
ended  January  31,  1997.

10.27       Agreement for Exchange of Warrants for Common Stock dated February
19, 1997 between the Registrant and Thomas A. Serleth - incorporated herein by
reference to Exhibit 10.27 of the Registrant's 10-QSB Quarterly Report for the
quarter  ended  January  31,  1997.

10.28     Agreement between Roberto Keoseyan and the Registrant dated November
12,  1996  -  incorporated  herein  by  reference  to  Exhibit  10.28  of  the
Registrant's  10-QSB  Quarterly Report for the quarter ended January 31, 1997.

10.29          Promissory  Note between Bay Area Bank and the Registrant dated
December  20,  1996 - incorporated herein by reference to Exhibit 10.29 of the
Registrant's  10-QSB  Quarterly Report for the quarter ended January 31, 1997.

The  following  Exhibits  are  included  herewith:

3.1          Restated  Certificate  of  Incorporation, as amended.

3.2          Amended  and  Restated  By-Laws

10.30          Promissory  Note and Pledge and Security Agreement between M.I.
Garcia  Cuesta  and  the  Registrant  dated  March  26,  1997.

10.31      Real Estate Lien Note, Deed of Trust and Security Agreement between
Lauren  Constructors,  Inc.  and  the  Registrant  dated  April  9,  1997.

10.32      Promissory Note and Pledge and Security Agreement between Jerome B.
Richter  and  the  Registrant  dated  April  11,  1997.

10.33          Lease  Amendment  between Registrant and Brownsville Navigation
District  Of  Cameron  County,  Texas  dated  May  7,  1997.

10.34          Lease  Amendment  between Seadrift Pipeline Corporation and the
Registrant  dated  May  29,  1997.

10.35       Lease dated as of May 22, 1997 between Nine-C Corporation and J.B.
Richter,  Capital  resources and J.B. Richter and J.B. Richter, an individual,
as  amended  with  respect  to  the  Company's  executive  offices.

10.36       Promissory Note between Bay Area Bank and the Registrant dated May
28,  1997.

10.37    Amendment  of the Interim Operating Agreement between the Registrant,
Wilson Acquisition Corporation, Wilson Technologies Incorporated and Zimmerman
Holdings  Inc.  dated  March  21,  1997.

27.0            Financial  Data  Schedule.


The  following  report  on  Form  8-K  is  incorporated  herein  by reference:


b.                  Reports  on  Form  8-K
                    ----------------------

On  February 7, 1997, the Registrant filed a Form 8-K Current Report including
a  press  release issued by the Company on February 4, 1997 in connection with
an  agreement  to  supply  CNG  buses  and  refueling  stations.

















                                  SIGNATURES


     Pursuant  to the requirements of the Securities Exchange Act of 1934, the
registrant  has  duly  caused  this  report  to be signed on its behalf by the
undersigned  thereunto  duly  authorized.



                                 PENN OCTANE CORPORATION




Date:  June  13,  1997          By: /s/ IAN T. BOTHWELL
                                   --------------------------
                                    Ian  T.  Bothwell
                                    Vice  President  and
                                    Chief  Financial  Officer