UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934
For the fiscal year ended:                                         June 30, 2000
                                       OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
For the transition period from -------------------- to -------------------------


Commission file number:                                                  0-16749
                                  CERBCO, Inc.
             (Exact name of registrant as specified in its charter)

    Delaware                                                    54-1448835
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                             Identification No.)

3421 Pennsy Drive, Landover, Maryland                            20785
(Address of principal executive offices)                       (Zip Code)

          Registrant's telephone and fax numbers, including area code:
                      301-773-1784 (tel)
                      301-322-3041 (fax)
                      301-773-4560 (24-hour public information FaxVault System)

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

                     Common Stock, par value $.10 per share
                 Class B Common Stock, par value $.10 per share
                                (Title of Class)

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
                                            -----------

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
                                    Yes          X            No
                                            -----------

The  aggregate   market  value  of  the   registrant's   voting  stock  held  by
non-affiliates  of the  registrant  computed by  reference  to the last price at
which such stock was sold, as of September 5, 2000, was $4,688,133.

As of September 5, 2000, the following  number of shares of each of the issuer's
classes of common stock were outstanding:
                                    Common Stock              1,189,476
                                    Class B Common Stock        293,480
                                                             ----------
                                      Total                   1,482,956

Documents Incorporated by Reference:  None

Total number of pages of this report:    189
Index to Exhibits located at page:        45


<PAGE>




                                TABLE OF CONTENTS

PART I                                                                     Page

Item 1.  Business............................................................3

Item 2.  Properties..........................................................8

Item 3.  Legal Proceedings...................................................8

Item 4.  Submission of Matters to a Vote of Security Holders.................9

PART II

Item 5.  Market for Registrant's Common Equity and Related
         Stockholder Matters.................................................9

Item 6.  Selected Financial Data............................................10

Item 7.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations..........................................10

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.........14

Item 8.  Financial Statements and Supplementary Data........................14

Item 9.  Changes in and Disagreements with Accountants on Accounting
         and Financial Disclosure...........................................14

PART III

Item 10. Directors and Executive Officers of the Registrant.................33

Item 11. Executive Compensation.............................................35

Item 12. Security Ownership of Certain Beneficial Owners and Management.....42

Item 13. Certain Relationships and Related Transactions.....................43

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K...44




                                  CONSOLIDATED
                            STATEMENTS OF OPERATIONS
                               AND BALANCE SHEETS
                               Pages 16 through 18



<PAGE>

                                     PART I

Item 1.  Business

(a)      General Development of Business

         CERBCO, Inc. ("CERBCO", the "Company" or "Registrant") [NASDAQ:CERB] is
a parent holding company with a controlling  interest,  through its wholly-owned
subsidiary,  CERBERONICS, Inc. ("CERBERONICS"), in Insituform East, Incorporated
[NASDAQ:INEI] (excavationless sewer and pipeline rehabilitation).

         CERBCO was  incorporated on December 23, 1987 in the State of Delaware.
CERBCO was formed for the purpose of implementing a Plan of  Reorganization  and
Merger (the "Plan"), whereby its then publicly-traded predecessor,  CERBERONICS,
became a wholly-owned  subsidiary of CERBCO. Under the Plan, owners of shares of
stock  previously  held in  CERBERONICS,  by  class,  received  ownership  of an
equivalent  number of shares of stock,  by class,  in CERBCO.  The Company  thus
consisted of CERBCO, a parent holding company, and three principal subsidiaries,
CERBERONICS, Insituform East, Incorporated and Capitol Office Solutions, Inc.

         CERBERONICS,  which  had been  providing  engineering,  analytical  and
technical  support  services  to  the  United  States  Government,  discontinued
operations in 1991 but continues as a Delaware holding company subsidiary.

         Capitol  Office  Solutions,   Inc.,  formerly  known  as  Capitol  Copy
Products,  Inc.  ("Capitol"),  is in the  business  of  selling,  servicing  and
providing  supply  products  for copier and  facsimile  equipment in the greater
Baltimore and Washington, DC metropolitan areas. On June 30, 1997, the Company's
two-thirds   majority   interest  in  Capitol   was   redeemed  by  Capitol  for
approximately  $19 million in cash plus  two-thirds of an approximate $5 million
pre-redemption dividend,  leaving Insituform East, Incorporated as the Company's
sole remaining operating subsidiary.

         The  principal  office and  corporate  headquarters  of the Company are
located in suburban Washington,  D.C., collocated with the offices of Insituform
East,  Incorporated,  at  3421  Pennsy  Drive,  Landover,  Maryland  20785.  The
Company's telephone number is (301) 773-1784,  its fax number is (301) 322-3041,
and its twenty-four hour public information FaxVault number is (301) 773-4560.

(b)      Financial Information About Industry Segments

         Substantially  all of the Company's  revenues and operating results are
attributable to Insituform East,  Incorporated.  Insituform  East,  Incorporated
primarily  rehabilitates  and repairs  underground  sewers and other  pipelines,
which business  constitutes  the Company's only industry  segment.  See Part IV,
Item 14,  Exhibit  99,  "CERBCO,  Inc.  Consolidating  Schedules:  Statement  of
Operations  Information  for  the  Year  Ended  June  30,  2000;  Balance  Sheet
Information  and  Consolidating  Elimination  Entries  as of June 30,  2000" for
additional financial information pertaining to Insituform East, Incorporated.

(c)      Narrative Description of Business

                                  CERBCO, Inc.

GENERAL

         CERBCO is a parent holding  company with a controlling  interest in one
operating subsidiary, Insituform East, Incorporated, and a wholly-owned interest
in CERBERONICS,  Inc., a Delaware holding company.  CERBCO officers  participate
directly on the management  team of these  subsidiary  corporations,  in varying
capacities  and  officerships,  with  a  view  to  overseeing,   protecting  and
developing   the  long-term   value  of  the  Company's   investments   in  such
subsidiaries.   A  business  description  of  CERBCO  is  primarily  a  business
description of its one operating subsidiary,  Insituform East, Incorporated,  as
given below.

                          Insituform East, Incorporated

GENERAL

         Insituform East, Incorporated  ("Insituform East," or for this section,
the "Company") was organized under the laws of the State of Delaware on February
26, 1970 under the name Universal  Construction and Supply Company.  Its present
name was adopted on August 24, 1978.  The Company was engaged in the business of
underground  conduit  construction  from inception  until 1974 and  construction
equipment  rental from 1974 to 1978.  The Company then phased out these lines of
business  and  entered  into  sublicensing  agreements  for the  Insituform  (R)
process, a patented  technology for  reconstructing  pipelines with little or no
excavation.  Since July 1978, the Company and its subsidiaries have been engaged
in the  business  of  rehabilitating  underground  sewers  and other  pipelines,
principally using cured-in-place pipe ("CIPP") processes,  with primary revenues
generating from the Company's Insituform(R) process product line.

         Between 1982 and 1986,  the Company added western  Pennsylvania,  Ohio,
three  Kentucky  counties and West Virginia to its original  Insituform  process
licensed territory of Maryland, Virginia, the District of Columbia, Delaware and
eastern Pennsylvania.

         In  December  1985,  Midsouth  Partners  was  organized  as a Tennessee
General Partnership and became the exclusive licensee for the Insituform process
in  Tennessee,  the rest of Kentucky and northern  Mississippi.  The Company was
assigned  three   representatives   to  a  seven-member   Management   Committee
established to manage the business activities of the partnership and allocated a
42.5% interest in partnership profits and losses.

         In  September  1987,  the  Company  established  a branch  facility  in
Cincinnati,  Ohio, to support operating  activities in the western region of its
licensed territory. In March 1998, the Company closed its Ohio branch office and
completed an orderly plan to transfer the functions,  personnel and equipment to
the Company's  Landover,  Maryland  headquarters  facility.  In March 1999,  the
Company reestablished a branch facility in Cincinnati, Ohio.

         In May 1989,  the Company  acquired an 80%  interest in Try Tek Machine
Works, Inc. ("Try Tek"). Try Tek, located in Hanover,  Pennsylvania, was founded
in  September  1985 to custom  design  and build  special  machinery,  including
machinery used in the Insituform process. The Company acquired an additional 10%
interest in Try Tek in February  1993 and the  remaining  10%  interest in March
1995.

         In December  1990,  the Company  acquired an exclusive  license for the
sale and  installation of preformed PVC  thermoplastic  pipe under the NuPipe(R)
process and trademark for a sales region  identical to the territories  licensed
to the Company for the Insituform process.

         In September  1991,  the Company  added cement mortar lining of potable
water lines to its service  capability.  A formal plan to discontinue  providing
cement mortar lining services, adopted in June 1993, was substantially completed
in June 1994.

         On June 12,  1996,  as the result of a default  by a partner  under the
Partnership  Agreement,  the Company was issued an arbitration award granting it
the  unilateral  right to  appoint  a  Midsouth  Partners  Management  Committee
representative in place of the defaulted partner's representative.  Accordingly,
the  Company  obtained  majority  representation  on  the  Management  Committee
effective June 12, 1996.

         In March 1999, Insituform  Technologies,  Inc. ("ITI") gave notice of a
purported  termination  of  the  Midsouth  Partners   partnership,   purportedly
terminated Midsouth Partners' Insituform(R) License Agreement and simultaneously
commenced litigation in the Chancery Court of Delaware to deny Midsouth Partners
any  rights to further  utilize  CIPP  rehabilitation  processes  as  previously
practiced under such license.  In April 1999, Midsouth Partners responded to the
Delaware  Chancery Court  litigation and filed a demand for arbitration with the
American Arbitration Association.

         The Company  subsequently  settled  its  disputes  with ITI  concerning
Midsouth  Partners  under the terms of an  agreement  reached July 20, 1999 (the
"Midsouth Settlement Agreement"), and actions before the Delaware Chancery Court
and the American Arbitration Association were dismissed.  Under the terms of the
Midsouth  Settlement  Agreement,  a  wholly-owned   subsidiary  of  the  Company
purchased ITI's interests in the Midsouth Partners partnership at book value and
Midsouth  Partners remained entitled to continue the business of the partnership
under its present name. The Insituform(R)  License Agreement and its requirement
to pay royalties were relinquished under the settlement,  henceforth  permitting
direct competition  between ITI and Midsouth Partners.  The Midsouth  Settlement
Agreement  expressly provides that Midsouth Partners may utilize processes other
than the  Insituform  process  to  perform  pipe  rehabilitation  services,  and
Midsouth  Partners also obtained a  royalty-free  non-exclusive  right,  without
limitation in time and within the partnership's  previously  licensed territory,
to  continued  use of the  process  that it formerly  practiced  pursuant to its
since-terminated Insituform(R) License Agreement as the same existed on July 20,
1999.

         Insituform  East and its  subsidiaries  are  engaged in the  trenchless
rehabilitation of underground sewers and other pipelines  principally using CIPP
rehabilitation  processes  to produce a  shape-conforming  "pipe-within-a-pipe."
Since 1978,  the Company has performed work in six  Mid-Atlantic  states and the
District of Columbia using the patented  Insituform process under  territorially
exclusive sublicense agreements.  Utilizing other trenchless CIPP processes, the
Company's  wholly-owned  subsidiary,  Midsouth Partners,  operates substantially
without  geographic  restriction.  The Company's CIPP  rehabilitation  processes
utilize  a custom  manufactured  unwoven  polyester  fiber-felt  tubing  with an
elastomeric  coating on the exterior  surface.  The flat,  pliable tube is later
impregnated with a liquid thermosetting resin, and the resin-saturated  material
is inserted in the pipe through an existing manhole or other access point. Using
a  temporary  inversion  duct and cold water  pressure,  the  material is turned
inside out as it is forced through the pipeline.  When the inverted and inflated
tube is fully  extended,  the cold  water  within it is  recirculated  through a
heat-exchange  unit.  The heated water cures the  thermosetting  resin to form a
new, hard, jointless,  impact and corrosion resistant cured-in-place pipe within
the original  pipe.  Lateral or side  connections  are then reopened by use of a
remotely controlled cutting device.

         The  principal  office and  corporate  headquarters  of the Company are
located at 3421 Pennsy Drive, Landover,  Maryland 20785. The Company's telephone
number is (301) 386-4100, and its fax number is (301) 386-2444.

RELATIONSHIP WITH INSITUFORM TECHNOLOGIES, INC.

         On December 9, 1992, Insituform Technologies, Inc. (formerly Insituform
of North America, Inc.) through its acquisition of Insituform Group, Ltd., N.V.,
acquired the worldwide patent rights for the Insituform process. Insituform East
is a  sublicensee  of ITI for use of the  Insituform  process.  The  Company has
entered into six sublicense agreements with ITI that grant the Company exclusive
rights to perform  the  Insituform  process  in the  designated  territories  of
Virginia, Maryland,  Delaware, Ohio, the District of Columbia,  Pennsylvania and
West Virginia.

         The sublicense  agreements  require the Company to pay ITI a royalty of
8% of the revenue,  excluding certain  deductions,  from all contracts using the
Insituform process,  with a minimum annual royalty requirement for each licensed
territory.  In the event the Company performs the Insituform process outside its
exclusive  territory,  the sublicense  agreements require it to pay a royalty of
from 8% to 12% of the gross contract price to the independent Insituform process
sublicensee of such other territory in addition to all royalties due ITI.

         The sublicense agreements extend for the life of the underlying patents
or patent rights,  including any  improvements or  modifications  extending such
life. The agreements may be terminated by the Company upon two calendar quarters
written  notice to ITI.  The  agreements  may only be canceled by ITI in certain
events. In addition, ITI has the right to approve the quality and specifications
of equipment and materials not purchased directly from ITI.

         In 1981,  the Company was assigned the rights to an agreement (the "SAW
Agreement")   regarding  the  introduction  of  potential   Insituform   process
sublicensees to ITI. The Company currently  receives quarterly payments from ITI
equal to 0.5% of contract  revenue  from  Insituform  process  installations  in
Insituform East's licensed  territory.  The Company received  quarterly payments
from  ITI  equal  to  0.5%  of  contract   revenues  form   Insituform   process
installations  in the states of New York,  New  Jersey,  North  Carolina,  South
Carolina,  Georgia and Alabama in  connection  with the  introduction  of former
Insituform process licensees to ITI.

         On December 29,  1997,  Insituform  East entered into a revised  supply
agreement  with  ITI  whereby  the  Company  committed  to  purchase  90% of its
Insitutube requirements from ITI for an initial five year period from January 1,
1998 to December 31, 2002. The agreement will automatically  extend for one year
periods  unless  notice of  termination  is provided by either  party six months
prior to the end of any such annual period.

         Under the terms of the Midsouth Settlement Agreement effective July 20,
1999,  Midsouth  Partners  became a  wholly-owned  subsidiary of the Company and
obtained a  royalty-free  non-exclusive  right,  without  limitation in time, to
continued  use within the  partnership's  previously  licensed  territory of the
process  practiced  pursuant  to  its  since-terminated   Insituform(R)  License
Agreement  as the same  existed  on July 20,  1999.  The  Insituform(R)  License
Agreement and its  requirement  to pay  royalties  were  relinquished  under the
settlement, henceforth permitting direct competition between ITI and Midsouth.

         Effective July 20, 1999,  Midsouth Partners executed a Felt Tube Supply
Agreement  with  ITI  for  the  purchase  of  felt  tubes  to be  used  in  CIPP
rehabilitation  in  the  partnership's   previously   licensed   territories  of
Tennessee,  most of Kentucky and northern  Mississippi.  The agreement,  with an
initial five year term,  automatically  extends for  successive one year periods
unless notice of termination is provided by either party six months prior to the
expiration  date of the  initial  five  year  period or any such  annual  period
thereafter.

         The Company has also  entered  into a license  agreement  with  NuPipe,
Inc., a previously  wholly-owned and now merged  subsidiary of ITI, for the sale
and  installation of preformed PVC  thermoplastic  pipe under the NuPipe process
and  trademark.  The  Company's  licensed  NuPipe  territory is identical to the
Company's  licensed  Insituform  territory.  The Company has  committed to pay a
royalty equal to 6.75% of gross  contract  revenue  utilizing the process and to
purchase certain installation  equipment and installation materials from ITI. In
connection with the Midsouth Settlement Agreement,  Midsouth Partners' NuPipe(R)
License Agreement was relinquished effective July 20, 1999.

PATENTS

         The Insituform process was developed in the United Kingdom in 1971. The
Company's  rights to utilize the patents are  derived  from its  licensor,  ITI.
There are presently 76 United States  patents that cover various  aspects of the
Insituform process.  The last patent to expire will remain in effect until 2016.
Two initial  method  patents  relating to the  Insituform  process (one of which
covers  material  aspects of the  inversion  process)  expired in 1994. A method
patent  relating  to the  Insitutube  material  saturation  process  expires  in
February 2001 and a patent  relating to the  Insitutube  material will expire in
May 2001.

         Although management of the Company believes these patents are important
to the  Insituform  business of the Company,  there can be no assurance that the
validity of the patents  will not be  successfully  challenged  or that they are
sufficient to afford  protection  against  another  company  utilizing a process
similar to the Insituform process. It is possible that the Company's  Insituform
business  could be adversely  affected  upon  expiration  of the patents,  or by
increased  competition  in the  event  that  one or  more  of the  patents  were
adjudicated  to be  invalid or  inadequate  in scope to  protect  the  Company's
operations.  Management of the Company believes, however, that while the Company
has relied on the strength and validity of  Insituform  patents,  the  Company's
other CIPP process alternatives and its significant CIPP installation experience
coupled with the Company's high degree of market  recognition  should enable the
Company to continue to compete effectively in the pipeline rehabilitation market
in the future as Insituform patents expire or become obsolete.

CUSTOMERS

         The  Company  performs   services  under  contracts  with  governmental
authorities,  private  industries and commercial  entities.  In each of the last
three fiscal years,  more than 58% of the  Company's  sales have come from state
and local government entities -- cities,  counties,  state agencies and regional
authorities.  During the year ended June 30,  2000, a county  government  in the
Washington, D.C. metropolitan area, Federal government contracts (collectively),
a  municipal  government  in  Tennessee  and a regional  sanitary  authority  in
southwest  Ohio  accounted  for  17%,  14%,  10% and 10%,  respectively,  of the
Company's sales. During the year ended June 30, 1999, the same county government
in  the  Washington,   D.C.  metropolitan  area,  Federal  government  contracts
(collectively)  and the same  regional  sanitation  authority in southwest  Ohio
accounted for 18%, 12% and 11%, respectively, of the Company's sales. During the
year ended June 30, 1998, the Perry Nuclear Power Plant project, a combined city
and county  metropolitan  government in Tennessee and the same county government
in the  Washington,  D.C.  metropolitan  area  accounted  for 19%,  12% and 12%,
respectively, of the Company's sales.

SUPPLIERS

         The Company's  materials and  equipment  are generally  available  from
several suppliers.  Although the Company believes that ITI is presently the sole
source of  proprietary  Insitutube(R)  material,  the  Company is aware of other
suppliers   of  felt  tube   materials   and  other   materials   used  in  CIPP
rehabilitation.  The  Company  presently  relies  upon  ITI  for its  supply  of
Insitutube material for its Insituform process product line.

         During  the last  three  years  the  Company  has not  experienced  any
difficulty in obtaining  adequate supplies of Insitutube  material from ITI and,
subject to ITI's right to approve the quality and specifications of material not
purchased  from ITI,  the  Company  has the  right to  substitute  an  alternate
polyester  fiber-felt or other tube material  available in the  marketplace.  In
connection  with the  Midsouth  Settlement  Agreement  effective  July 20, 1999,
Midsouth  Partners is no longer an Insituform  process licensee and therefore no
longer subject to ITI approval for the use of alternate installation  materials.
Midsouth  Partners does purchase felt tube materials  from suppliers  other than
ITI.

REVENUE RECOGNITION AND BACKLOG

         The Company  recognizes revenue using the units of completion method as
pipeline  sections are  rehabilitated  using CIPP processes.  Installations  are
generally   performed  between  manholes  or  similar  access  points  within  a
twenty-four  hour  period.  A  rehabilitated   pipeline  section  is  considered
completed  work  and is  generally  billable  to the  customer.  In most  cases,
contracts  consisting of  individual  line sections have a duration of less than
one year.

         The Company's  total backlog value of all  uncompleted  and  multi-year
contract awards was approximately  $27.1 million at June 30, 2000 as compared to
$31.1 million at June 30, 1999.  The  twelve-month  backlog at June 30, 2000 was
approximately  $15.2 million as compared to $13.5 million at June 30, 1999.  The
total backlog value of all uncompleted and multi-year contracts at June 30, 2000
and 1999 includes work not estimated to be released and installed  within twelve
months, as well as potential work included in terms contract awards which may or
may not be fully ordered by contract expiration.  While potentially helpful as a
possible trend indicator, "total" and "twelve-month" backlog figures at specific
dates are not  necessarily  indicative of sales and earnings for future  periods
due to the irregular timing and receipt of major project awards including large,
multi-year,  menu-priced contracts with estimated but uncertain order quantities
further subject to the specifics of individual work releases.  On a week-to-week
and  month-to-month  basis,  the  availability  of often  volatile  "immediately
workable"  backlog most directly affects  productivity,  with such  availability
subject to unpredictable changes such as weather,  customer-initiated delays and
found variances in site conditions.

COMPETITION

         The general pipeline replacement, rehabilitation and repair business is
significantly   competitive.   The  Company  faces   conceptual   and  practical
competition both from a number of contractors  employing  traditional methods of
pipeline  replacement  and  repair  and from  contractors  offering  alternative
trenchless products and technologies including CIPP technology.

         Traditional Methods. CIPP rehabilitation processes conceptually compete
with  traditional  methods of pipe  rehabilitation  including full  replacement,
point repair and sliplining. The Company believes CIPP processes usually offer a
cost  advantage  over full  replacement  as well as the  practical  advantage of
avoiding excavation. In addition, CIPP processes also offer qualitatively better
rehabilitation  than sliplining which may  significantly  reduce the diameter of
the pipe.  Grouting is also  undertaken  in the United  States,  but the Company
considers  grouting a short-term  repair technique and not a long-term  pipeline
rehabilitation  solution competitive with CIPP processes. As a practical matter,
competition  for the  Company  typically  begins  at the  point  an end user has
conceptually   determined  to  employ  trenchless  technology  over  traditional
rehabilitation methods involving substantial excavation.

         Trenchless Cured-in-Place Technologies. Over the years, the Company has
witnessed a  continuing  stream of entrants  into the CIPP  marketplace,  few of
which the Company believes are able to offer the quality or technical capability
of the  Company.  The  Company  believes  it remains  the  dominant  provider of
trenchless  cured-in-place  pipeline  rehabilitation in its Insituform  licensed
territory  and  believes  there is  significant  potential  into the  future for
Midsouth Partners using the alternative CIPP processes available.

         Modified Sliplining Techniques.  Several modified sliplining techniques
have been  introduced in the trenchless  marketplace to include the use of "fold
and formed"  thermoplastic  pipe. The NuPipe product offered by the Company is a
folded thermoplastic product installed using modified sliplining techniques. The
Company  believes that the majority of customers will select CIPP processes over
modified  sliplining  techniques  due to the quality and  longevity  of the CIPP
product,   the  proven   performance   record  of  the  Company's  CIPP  process
installations  over the past twenty-two  years,  and the broader range of design
alternatives  available  with a CIPP process.  The Company does offer its NuPipe
product  to  customers  in  situations  where,  for budget  restraints  or other
reasons,  such  customers or their  consulting  engineers will accept a modified
sliplining technique technologically inferior to cured-in-place technology.

         Other Trenchless Competition. The Company is aware of a number of other
trenchless  technologies both under development and from time to time introduced
into  the  marketplace  with  mixed  results.  The  Company  believes  that  its
significant years of proven performance  continues to present a significant CIPP
capability advantage over alternative trenchless products and newer entrants.

         The principal  areas of  competition in general  pipeline  replacement,
rehabilitation and repair include the quality of the work performed, the ability
to  provide  a  long-term  solution  to  the  pipeline  problems  rather  than a
short-term repair, the amount of disruption to traffic and commercial  activity,
and the price.  The Company  believes that CIPP processes  compete  favorably in
each  of  these  areas  with  traditional  replacement  or  repair  methods.  In
particular, the ability to install CIPP products with little or no excavation at
prices typically at or below traditional open trench  replacement  methods is of
substantial  competitive  advantage.  Further,  and despite a small reduction in
pipe diameter resulting from the installation of a CIPP product against the wall
of the  original  pipe,  the  smooth  finished  interior  reduces  friction  and
generally increases flow capacity.

SALES AND MARKETING

         The  Company's  sales  and  marketing  effort is  directed  by its Vice
President  of Sales and  Marketing.  The  Company's  sales and  marketing  group
includes three sales representatives  assigned to serve the Company's municipal,
Federal  government  and  industrial  market  customers.   Sales  and  marketing
personnel are full-time  employees  compensated  through a combination of salary
and bonus.  The Company  also  participates  in seminars  and trade  shows,  and
provides  promotional  materials  to  current  and  prospective  users  of  CIPP
processes.

RESEARCH AND DEVELOPMENT

         The Company is confident of its present  capability to provide pipeline
rehabilitation  services  to  its  customers  primarily  using  CIPP  processes.
Insituform  East  relies on its  Insituform  process  licensor,  ITI,  for major
research and development of its Insituform process product line. On a continuing
basis,  however,  the  Company  expends  engineering  efforts  to  improve  CIPP
installation methods and design techniques for specific customer applications.

GOVERNMENTAL REGULATIONS

         The Company does not anticipate any material  impediments to the use of
CIPP  processes  arising from existing or future  regulations  or  requirements,
including those regulating the discharge of materials into the environment.

EMPLOYEES

         At June 30, 2000, the Company employed 155 full-time persons.

Item 2.  Properties

         Insituform  East  owns  four  buildings  totaling  76,700  square  feet
situated on a 15.45 acre site in the Ardwick  Industrial  Park,  Prince George's
County, Maryland. This facility houses the maintenance,  operations,  marketing,
administration and executive offices of the Company. Insituform East also leases
a 5,460  square foot  facility in  Cincinnati,  Ohio to serve  customers  in the
western region of its licensed territory.

         Try Tek owns 13,885 square feet of land in Hanover, Pennsylvania,  with
6,139 square feet of manufacturing, administration and storage facilities housed
in three buildings.

         Midsouth  Partners  leases a 15,000  square foot facility in Knoxville,
Tennessee to serve customers in the southeastern United States.

Item 3.  Legal Proceedings

         See Part II, Item 8, "Notes to Consolidated Financial Statements - Note
8.  Contingencies"  for  details  concerning  (a)  settlement  of  a  previously
disclosed lawsuit brought in the Superior Court of the District of Columbia, and
(b) a previously  disclosed  lawsuit pending in the United States District Court
for the Middle  District  of  Tennessee  against  Insituform  East and  Midsouth
Partners.

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

         Not applicable.

                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

(a)      Market Information

         (i)      Common Stock

         CERBCO's Common Stock is traded in the  over-the-counter  market and is
included in the National  Association of Securities Dealers ("NASD")  SmallCapSM
Market  System.  Quotations  for  such  shares  are  reported  in  the  National
Association of Securities Dealers Automated  Quotations  ("NASDAQ") System under
the trading symbol CERB.  Holders of Common Stock have one vote per share on all
matters on which stockholders are entitled to vote together.

         The following  table shows the range of bid  quotations  for the period
indicated as reported by NASDAQ:

                                                           Common Stock
Fiscal Year Ended June 30, 2000                       High              Low
-------------------------------                       ----              ---
1st Quarter                                           $6.750           $5.500
2nd Quarter                                           $6.125           $5.063
3rd Quarter                                           $6.063           $4.500
4th Quarter                                           $5.438           $4.188

Fiscal Year Ended June 30, 1999                       High              Low
-------------------------------                       ----              ---
1st Quarter                                           $9.625           $7.625
2nd Quarter                                           $8.250           $7.125
3rd Quarter                                           $8.125           $6.375
4th Quarter                                           $7.125           $5.875

         The quotations in the above table  represent  prices  between  dealers,
without  retail  mark-ups,  markdowns or  commissions,  and may not  necessarily
represent actual transactions.

         (ii)     Class B Common Stock

         There is no public trading market for shares of CERBCO's Class B Common
Stock. Holders of shares of Class B Common Stock have ten votes per share on all
matters,  with the  exception of the election of directors  and any other matter
requiring the vote of  stockholders  separately  as a class.  Holders of Class B
Common Stock are entitled to elect the remaining directors after election of not
less than 25% of the directors by the holders of Common Stock, voting separately
as a class. Shares of Class B Common Stock are convertible at any time to shares
of Common Stock on a share-for-share basis.

(b)      Holders

         As of September 5, 2000,  the  approximate  number of  shareholders  of
record of each class of common equity of CERBCO was as follows:

        Common Stock                               272
        Class B Common Stock                       119

(c)      Dividends

         On June 9, 2000,  the Company  declared a regular cash  dividend of ten
cents per share,  both on its  shares of Common  Stock and its shares of Class B
Common  Stock,  payable  July 17, 2000 to its  shareholders  of record as of the
close of business on June 30,  2000.  On June 11, 1999,  the Company  declared a
regular cash dividend of ten cents per share, both on its shares of Common Stock
and  its  shares  of  Class  B  Common  Stock,  payable  July  15,  1999  to its
shareholders of record as of the close of business on June 30, 1999. On June 16,
1998, the Company declared a regular cash dividend of ten cents per share,  both
on its shares of Common  Stock and its shares of Class B Common  Stock,  payable
July 15, 1998 to its  shareholders of record as of the close of business on June
30, 1998.

         The declaration of any future dividends will be determined by the Board
of Directors  based upon  conditions  then  existing,  including  the  Company's
operating results, financial condition,  capital requirements and other factors.
While there can be no assurances as to the declaration of any future  dividends,
it is presently  contemplated  that dividends  will be declared  annually with a
record date of June 30th and a payment date on or about July 15th.

Item 6.  Selected Financial Data

         The  selected  financial  data  set  forth  below  should  be  read  in
conjunction  with the Company's  consolidated  financial  statements and related
notes included elsewhere in this report.

(in thousands, except per share information and return on equity amounts)

<TABLE>
STATEMENT OF OPERATIONS INFORMATION
<CAPTION>
                                                                       Years ended June 30
                                                 ------------ ------------ ------------ ------------ -------------
                                                   2000         1999         1998         1997         1996
                                                   ----         ----         ----         ----         ----
<S>                                                <C>          <C>          <C>          <C>          <C>
Sales                                              $22,422      $23,315      $23,891      $26,542      $30,471
Operating profit (loss)                            $(3,708)     $(3,605)     $(2,607)     $(1,633)     $ 2,551
Earnings (loss) before non-owned  interests and
   income taxes                                    $(2,035)     $(2,362)     $  (899)     $(1,243)     $ 3,121
Earnings (loss) before  non-owned  interests in
   Insituform East                                 $(2,015)     $(1,632)     $   127      $  (565)     $ 1,389
Earnings (loss) from continuing operations         $  (343)     $  (213)     $   359      $  (199)     $   247
Net earnings (loss)                                $  (343)     $  (213)     $   359      $10,169      $ 2,055
Earnings (loss) per share:
  Continuing operations                            $ (0.23)     $ (0.14)     $  0.24      $ (0.13)     $  0.17
  Net earnings (loss)                              $ (0.23)     $ (0.14)     $  0.24      $  6.91      $  1.40
Weighted average number of shares                    1,483        1,483        1,483        1,471        1,465
Dividends declared per share                       $  0.10      $  0.10      $  0.10      $  1.55      $  0.05

BALANCE SHEET INFORMATION
                                                                       Years ended June 30
                                                 ------------ ------------ ------------ ------------ -------------
                                                   2000         1999         1998         1997         1996
                                                   ----         ----         ----         ----         ----
Accounts receivable                                $ 6,295      $ 6,593      $ 5,185      $ 6,691      $ 8,497
Working capital                                    $15,868      $20,898      $24,004      $24,537      $17,886
Total assets                                       $36,737      $41,353      $43,211      $51,471      $39,451
Short-term debt                                    $    30      $   442      $   285      $    29      $    55
Long-term debt                                     $    43      $    63      $   105      $   139      $   136
Non-owned interests                                $ 7,004      $10,262      $12,068      $13,042      $16,509
Stockholders' equity                               $24,327      $24,818      $25,180      $24,935      $17,002
Book value per share                               $ 16.40      $ 16.89      $ 16.98      $ 16.88      $ 11.58
Average stockholders' equity
   [Weighted average equity during year
   exclusive of current earnings]                  $24,744      $25,105      $24,878      $17,033      $15,010
Return on equity
[Net earnings divided by average
   stock-holders' equity as defined above]              --           --          1.4%        59.7%        13.7%
</TABLE>

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

Overview and Outlook

         The Company reported a consolidated  net loss of -$343,197  (-$0.23 per
share) on sales of $22.4  million  for the fiscal year ended June 30,  2000.  In
fiscal year 1999,  the Company  reported a  consolidated  net loss of  -$213,274
(-$0.14 per share) on sales of $23.3  million.  In fiscal year 1998, the Company
reported  consolidated  net  earnings of $358,790  ($0.24 per share) on sales of
$23.9 million.

         The  Company  attributed  its  unfavorable  results for the fiscal year
ended  June 30,  2000,  to the  unfavorable  results  of  Insituform  East,  the
Company's majority-controlled  subsidiary and only operating segment. Insituform
East  recognized  a  consolidated  net  loss of  -$2,761,306  on  sales of $22.4
million,  which contributed a loss of -$1,083,131 to CERBCO in fiscal year 2000.
Insituform East attributed its unfavorable results in fiscal year 2000 primarily
to a  significant  decrease in  immediately  workable  backlog from October 1999
through May 2000.

         The  Company  attributed  its  unfavorable  results for the fiscal year
ended  June  30,  1999  also to the  unfavorable  results  of  Insituform  East.
Insituform  East  recognized a consolidated  net loss of -$1,115,534 on sales of
$23.3  million,  contributing a loss of -$389,832 to CERBCO in fiscal year 1999.
Insituform East  attributed its  unfavorable  results in fiscal year 1999 to the
acceptance by Midsouth Partners, its majority-controlled subsidiary partnership,
of  additional  job  completion  costs on  several  incomplete  projects,  costs
incurred in connection  with  litigation  initiated by Insituform  Technologies,
Inc.  against  Insituform  East  and  Midsouth  Partners,  and  an  increase  in
discounted sales performed by Insituform East and its wholly-owned  subsidiaries
(collectively, "East").

         The Company  attributed  its  positive net earnings for the fiscal year
ended June 30, 1998, primarily to the short-term  investment earnings of CERBCO,
the parent  company,  which  increased  $0.8  million  (300%) as a result of the
investment of cash  realized from the sale of the Company's  interest in Capitol
Office  Solutions on June 30, 1997, and which was more than enough to offset the
unfavorable   results  of  Insituform   East.   Insituform   East  recognized  a
consolidated  net loss of -$331,907 on sales of $23.9  million,  contributing  a
loss of -$108,453 to CERBCO,  in fiscal year 1998.  While the operations of East
produced  results  that were  modestly  positive  in fiscal year 1998 due to the
favorable impact of the Perry Nuclear project in the first quarter of the fiscal
year,  these results were more than offset by contributory  losses from Midsouth
Partners, which experienced significantly reduced margins throughout the year.

         With  respect to  forward-looking  information,  while  there can be no
assurances  regarding the Company's future operating  performance,  based on the
volume and mix of Insituform  East's present and expected  immediately  workable
backlog  of  customer  orders,  the  Company  currently  anticipates  modest but
positive  operating  results for Insituform East for the first quarter of fiscal
year 2001. A  combination  of a favorable  mix of work and a  consistently  high
volume of  immediately  workable  backlog  will be required to sustain  positive
operating  results for Insituform East for the remaining  quarters of the fiscal
year.  Income  from  the  Company's   non-operating   activities   presently  is
anticipated to  approximate  the normal levels of its holding  company  expenses
into the future; accordingly, absent unusual items, the Company's future results
are  anticipated   substantially  to  parallel  the  Company's  approximate  39%
participation in the future results of Insituform East.

         As previously  reported,  Insituform East's Insituform process licensor
and  former   partner  in  the   Midsouth   Partners   partnership,   Insituform
Technologies,  Inc.  ("ITI")  initiated a second  calendar 1999 lawsuit  against
Insituform  East and Midsouth  Partners on December 3, 1999,  following the July
20, 1999 settlement (the Midsouth  Settlement  Agreement) of earlier  litigation
filed March 11, 1999.  The newest  litigation  appears again  targeted by ITI to
usurp for itself  certain  rights  belonging to  Insituform  East or to Midsouth
Partners,  including  Insituform  East's  legitimate  competitive  rights  as  a
licensee and the competitive  rights of Midsouth  Partners  acquired pursuant to
the Midsouth Settlement Agreement.  While the ultimate outcome of any litigation
including ITI's most recent December litigation cannot be predetermined, pending
resolution  Insituform East and Midsouth Partners intend to continue to exercise
their  respective  rights under license  agreements and the Midsouth  Settlement
Agreement as exercised prior to the instigation of such litigation. Trial of the
December litigation is currently scheduled for July 31, 2001.

         Insituform East's total backlog value of all uncompleted and multi-year
contract awards was approximately $27.1 million at June 30, 2000, as compared to
$31.1 million at June 30, 1999.  The  twelve-month  backlog at June 30, 2000 was
approximately  $15.2 million as compared to $13.5 million at June 30, 1999.  The
total backlog value of all uncompleted and multi-year contracts at June 30, 2000
and 1999 includes work not estimated to be released and installed  within twelve
months,  as well as potential work included in term contract awards which may or
may not be fully ordered by contract expiration.  While potentially helpful as a
possible trend indicator, "total" and "twelve month" backlog figures at specific
dates are not  necessarily  indicative of sales and earnings for future  periods
due to the irregular timing and receipt of major project awards including large,
multi-year,  menu-priced contracts with estimated but uncertain order quantities
further subject to the specifics of individual work releases.  On a week-to-week
and  month-to-month  basis,  the  availability  of often  volatile  "immediately
workable"  backlog most directly affects  productivity,  with such  availability
subject to unpredictable changes such as weather,  customer-initiated delays and
found variances in site conditions.

         In addition to immediately workable backlog, a primary factor affecting
the Company's  future  performance  remains the volatility of Insituform  East's
earnings as a function of sales volume at normal margins. Accordingly, because a
substantial  portion  of  Insituform  East's  costs are  semi-fixed  in  nature,
earnings  can, at times,  be severely  reduced or eliminated  during  periods of
either  depressed  sales at normal  margins or material  increases in discounted
sales,  even where total revenues may experience an apparent  buoyancy or growth
from the addition of discounted sales undertaken from time to time for strategic
reasons.  Conversely,  at normal  margins,  increases in period sales  typically
leverage positive earnings significantly.

         In response to continuing  unfavorable operating margins in fiscal year
2000, Insituform East embarked on an aggressive cost reduction program to return
Insituform  East to positive  operating  results in fiscal  year 2001.  As noted
earlier,  Insituform East currently  anticipates  modest but positive  operating
results for the first  quarter of fiscal year 2001 ending  September  30,  2000.
Insituform East intends going forward to provide a range of customer service and
quality in response to market  demand,  including  being the efficient  low-cost
provider  where  product  price  is the  predominantly  controlling  procurement
factor.

Results of Operations

         The following table sets forth, for the periods indicated, the relative
percentages that certain items of expense and earnings or loss bear to the sales
of CERBCO and the  percentage  increases or  decreases in the dollar  amounts of
each item from period to period:

<TABLE>
<CAPTION>
                                               Percentage Relationship to Revenues   Period to Period Changes
                                               -----------------------------------   ------------------------
                                                        Years ended June 30             Years ended June 30
                                          --------------------------------------------- -------------------
                                                                                           2000         1999
<S>                                                   <C>          <C>         <C>       <C>          <C>
                                                      2000         1999        1998      vs 1999      vs 1998
                                                      ----         ----        ----      -------      -------

Sales                                                 100.0%       100.0%       100.0%      (3.8%)      (2.4%)
                                                      -----        -----        -----
Costs and Expenses:
  Cost of sales                                        95.0         92.7         88.7       (1.4)        2.0
  Selling, general and administrative expenses         21.5         22.7         22.2       (9.2)       (0.1)
                                                     ------       ------       ------
    Total Costs and Expenses                          116.5        115.4        110.9       (2.9)        1.6
                                                      -----        -----        -----
Operating Loss                                        (16.5)       (15.4)       (10.9)      (2.9)      (38.3)
Investment Income                                       3.1          3.7          4.3      (20.0)      (16.1)
Interest Expense                                       (0.1)        (0.1)        (0.3)     (48.9)      (30.5)
Other Income - net                                      4.4          1.7          3.1      141.0       (43.4)
                                                    -------      -------      -------
Loss Before Non-Owned Interests
  and Income Taxes                                     (9.1)       (10.1)        (3.8)      13.9      (162.8)
Non-Owned Interest in Midsouth Partners                 0.1          3.1          4.3       97.3        28.8
                                                    -------      -------      -------
Earnings (Loss) Before Non-Owned Interests in
  Insituform East and Income Taxes                     (9.0)        (7.0)         0.5      (23.5)   (1,381.6)
Credit for Income Taxes                                (0.0)        (3.0)        (0.0)    (100.9)    8,562.5
                                                    -------      -------     --------
Earnings (Loss) Before Non-Owned Interests in
  Insituform East                                      (9.0)        (4.0)         0.5     (115.3)   (7,938.1)
Non-Owned Interests in Insituform East                  7.5          3.1          1.0     (131.2)     (224.8)
                                                    -------      -------      -------
  Net Earnings (Loss)                                  (1.5%)       (0.9%)        1.5%     (60.9)   (1,594.4)
                                                    ========     ========     =======
</TABLE>

                                  2000 vs. 1999

         Consolidated  sales  decreased  $0.9 million (-4%) in fiscal year 2000,
primarily as a result of significant  decreases in Insituform East's immediately
workable backlog from October 1999 through May 2000.

         Consolidated  operating  results  decreased  $0.1 million (-3%) from an
operating  loss of -$3.6  million in fiscal  year 1999 to an  operating  loss of
-$3.7  million in fiscal  year  2000.  Insituform  East's  gross  profit  margin
decreased  from 7% to 5% due  primarily to  increased  indirect  costs  incurred
during fiscal year 2000 to support  increased  productive  capacity,  to include
support costs associated with the Company's Ohio branch office  reestablished in
March 1999.  Insituform  East's  selling,  general and  administrative  expenses
decreased  $0.4  million  in fiscal  year  2000,  primarily  as a result of cost
reduction  measures  implemented  during  fiscal  year 2000,  plus the impact of
additional legal costs associated with the future of Midsouth  Partners incurred
during fiscal year 1999.  The parent  company's  unallocated  general  corporate
expenses  decreased $0.1 million,  primarily as a result of increased legal fees
in connection with  preparation of proxy materials for the annual  stockholder's
meeting incurred in fiscal year 1999.

         Other income  increased  $0.6  million,  primarily as the result of the
payments to the parent  company in  settlement of the legal  proceedings  in the
Superior Court of the District of Columbia in fiscal year 2000.

         Insituform  East's operating results for fiscal year 2000, and thus the
consolidated  operating results of the Company,  were significantly  affected by
the recognition of all but $19,889 of the negative operating results of Midsouth
Partners for the fiscal year and a valuation  allowance  recorded by  Insituform
East against its tax  provision  calculated  at statutory  rates.  The Company's
-$2,362,440  Loss Before  Non-Owned  Interests  and Income Taxes for fiscal year
1999 was reduced by the $730,464 allocation of Midsouth Partners' pretax loss to
non-owned  interests  and  a  $713,000  credit  for  income  taxes  recorded  by
Insituform  East. A credit for income taxes of $219,000,  recorded by Insituform
East for fiscal  year  2000,  is 7% of its pretax  loss of  -$2,980,306,  as the
credit calculated using applicable enacted federal and state tax rates of 39% of
Insituform  East's  pretax  loss was reduced by a $943,000  valuation  allowance
recorded against the deferred tax asset during the year.

                                  1999 vs. 1998

         Consolidated  sales  decreased  $0.6 million (-2%) in fiscal year 1999,
primarily  as a result of  significant  revenues  from  Insituform  East's Perry
Nuclear project recognized during the first quarter of fiscal year 1998.

         Consolidated  operating  results  decreased $1.0 million (-38%) from an
operating  loss of -$2.6  million in fiscal  year 1998 to an  operating  loss of
-$3.6  million in fiscal  year  1999.  Insituform  East's  gross  profit  margin
decreased  from  11%  to 7%  due  primarily  to  acceptance  of  additional  job
completion  costs on several  incomplete  projects and an increase in discounted
sales. Insituform East's selling,  general and administrative expenses decreased
$0.1  million in fiscal  year 1999,  primarily  as a result of reduced  costs to
support decreased  production  activities more than offsetting  additional legal
and  arbitration  costs  associated  with the future of Midsouth  Partners.  The
parent company's  unallocated general corporate expenses increased $0.1 million,
primarily as a result of increased  fees for legal  counsel in  connection  with
preparation of proxy materials for the annual stockholders' meeting.

         Other  income  decreased  $0.3  million,  primarily  as a result of the
payment of damages to CERBCO in connection with the Delaware Action in 1998.

Liquidity and Capital Resources

         Liquidity  may be defined as the  Company's  ability to mobilize  cash.
Cash and cash  equivalents  decreased  $14.7  million  in  fiscal  year 2000 due
primarily  to  capital  expenditures  and  the  purchase  of  $12.0  million  in
marketable  securities.  Cash and cash  equivalents  decreased  $3.3  million in
fiscal  year 1999 due  primarily  to capital  expenditures  and an  increase  in
accounts receivable.  Cash and cash equivalents decreased $6.7 million in fiscal
year 1998 due  primarily to payment of income taxes on the gain  resulting  from
the sale of Capitol Office Solutions and cash dividends to stockholders.

         The Company's operating activities provided  approximately $1.0 million
in cash in fiscal year 2000 and used approximately $0.3 million and $2.7 million
in cash in fiscal years 1999 and 1998, respectively.

         Net cash used in investing  activities was approximately $15.1 million,
$3.0 million and $1.7 million in fiscal years 2000, 1999 and 1998, respectively.
The  primary  use of such funds in fiscal  year 2000 was the  investment  of the
Company's excess cash in marketable securities and Insituform East's purchase of
the remaining  non-owned interests in Midsouth Partners.  In addition,  cash was
used for capital  expenditures by Insituform East in each of the fiscal years to
upgrade, expand and improve production  capabilities,  and purchases of vehicles
and production equipment to replace aging units.

         Net cash used in financing  activities  was $0.6 million,  $33 thousand
and $2.3 million in fiscal years 2000, 1999 and 1998, respectively.  The primary
use of such funds in fiscal year 2000 was to repay loans from former partners to
Midsouth  Partners.  During fiscal years 2000 and 1999, CERBCO paid regular cash
dividends declared for fiscal years 1999 and 1998,  respectively.  During fiscal
year 1998, CERBCO and Insituform East each paid regular cash dividends  declared
for fiscal  year 1997,  and CERBCO  paid  special  cash  dividends  declared  in
connection with the sale of Capitol Office Solutions on June 30, 1997.

         The  Company's  liquidity  remained  strong  with  working  capital  of
approximately  $15.9  million and a current  ratio of 4.7 to 1 at June 30, 2000.
The Company  anticipates that Insituform  East's increased  production levels in
the future will require  additional  capital  expenditures.  The parent company,
CERBCO,  has cash and  temporary  investments  in excess of $13  million  which,
pending longer term  investment,  it believes are more than adequate to meet its
own cash flow requirements and the temporary  requirements of Insituform East in
the foreseeable future.

         As previously disclosed,  the Company may purchase additional shares of
Common Stock of Insituform East in the future. The Company expects that any such
purchases  would be made in open  market  transactions,  at the  then-prevailing
market price, and executed through brokers.  Any such purchases will require use
of the Company's working capital.

Forward-Looking Information

         This report contains  forward-looking  statements within the meaning of
Section 27A of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking statements that are
based  on  certain  assumptions  and  describe  future  plans,  strategies,  and
expectations  of the  Company  are  generally  identifiable  by use of the words
"believe," "expect," "intend,"  "anticipate,"  "estimate,"  "project" or similar
expressions.  The Company's  ability to predict  results or the actual effect of
future plans or strategies is  inherently  uncertain.  Factors that could have a
material  adverse affect on the  operations and future  prospects of the Company
include,  but are not  limited  to, the  availability  of  immediately  workable
backlog,  mix of work,  weather,  changes in interest rates and general economic
conditions,  and  legislative/regulatory  changes. These risks and uncertainties
should be considered in evaluating forward-looking statements and undue reliance
should not be placed on such statements.

Item 7A.   Quantitative and Qualitative Disclosures About Market Risk

           Not applicable.

Item 8.    Financial Statements and Supplementary Data

           See financial  statements  and  supplementary  financial  information
provided following Item 9 below.

Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure

           Not applicable.




<PAGE>




INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders of CERBCO, Inc.

We have audited the accompanying consolidated balance sheets of CERBCO, Inc. and
subsidiaries  as of  June  30,  2000  and  1999,  and the  related  consolidated
statements of operations,  stockholders'  equity, and cash flows for each of the
three years in the period ended June 30, 2000.  These  financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on the financial statements based on our audits.

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

In our opinion,  such consolidated  financial  statements present fairly, in all
material respects, the financial position of CERBCO, Inc. and subsidiaries as of
June 30, 2000 and 1999, and the results of their operations and their cash flows
for each of the three years in the period  ended June 30,  2000,  in  conformity
with accounting principles generally accepted in the United States of America.


/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
McLean, Virginia
September 22, 2000


<PAGE>


<TABLE>
                                  CERBCO, Inc.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<CAPTION>
                                                                             Years Ended June 30
                                                                 2000                 1999               1998
                                                            ----------------    -----------------   ----------------

<S>                                                            <C>                 <C>                 <C>
Sales                                                          $22,421,875         $23,315,198         $23,891,215
                                                            ----------------    -----------------   ----------------
Costs and Expenses:
    Cost of sales                                               21,314,391          21,617,623          21,190,803
    Selling, general and administrative expenses                 4,815,439           5,302,679           5,307,431
                                                            ----------------    -----------------   ----------------
        Total Costs and Expenses                                26,129,830          26,920,302          26,498,234
                                                            ----------------    -----------------   ----------------
Operating Loss                                                  (3,707,955)         (3,605,104)         (2,607,019)
Investment Income                                                  696,015             870,552           1,037,186
Interest Expense                                                   (21,473)            (42,043)            (60,489)
Other Income - net                                                 998,152             414,155             731,256
                                                            ----------------    -----------------   ----------------
Loss Before Non-Owned Interests and Income Taxes                (2,035,261)         (2,362,440)           (899,066)
Non-Owned Interest in Pretax Loss of Midsouth Partners              19,889             730,464           1,026,402
                                                            ----------------    -----------------   ----------------
Earnings (Loss) Before Non-Owned Interests in Insituform
   East, Inc. and Income Taxes                                  (2,015,372)         (1,631,976)            127,336
Provision (Credit) for Income Taxes                                  6,000            (693,000)             (8,000)
                                                            ----------------    -----------------   ----------------

Earnings (Loss) Before Non-Owned Interests in Insituform
   East, Inc.                                                   (2,021,372)           (938,976)            135,336
Non-Owned Interests in Loss of Insituform East, Inc.             1,678,175             725,702             223,454
                                                            ----------------    -----------------   ----------------
                               NET EARNINGS (LOSS)          $     (343,197)     $     (213,274)     $      358,790
                                                            ================    =================   ================

Net Earnings (Loss) per Share of Common Stock:
    Basic Earnings (Loss) per Share                         $        (0.23)     $        (0.14)      $        0.24
                                                            ================    =================   ================
    Diluted Earnings (Loss) per Share                       $        (0.23)     $        (0.14)      $        0.24
                                                            ================    =================   ================

See notes to consolidated financial statements.
</TABLE>


<PAGE>


<TABLE>
                                  CERBCO, Inc.
                           CONSOLIDATED BALANCE SHEETS

<CAPTION>
                                                                                        June 30
                                                                     ----------------------------------------------
                                                                           2000                         1999
                                                                     -----------------            -----------------

ASSETS

Current Assets:
<S>                                                                      <C>                       <C>
    Cash and cash equivalents                                            $ 2,344,077               $   17,050,119
    Marketable securities                                                  9,844,593                            0
    Accounts receivable                                                    6,294,655                    6,592,913
    Inventories                                                            1,421,104                    1,273,402
    Prepaid and refundable taxes                                              22,895                      550,453
    Prepaid expenses and other                                               204,381                      339,928
                                                                     -----------------
                                                                                                  -----------------
        Total Current Assets                                              20,131,705                   25,806,815
                                                                     -----------------            -----------------

Property, Plant and Equipment:
    Land and improvements                                                  2,018,587                    2,018,587
    Buildings and improvements                                             6,203,270                    5,880,498
    Vehicles and production equipment                                     13,330,849                   13,303,716
    Small tools, radios and machine shop equipment                         4,637,721                    4,466,896
    Office furniture and equipment                                         1,366,049                    1,274,822
                                                                     -----------------            -----------------
                                                                          27,556,476                   26,944,519
    Less accumulated depreciation and amortization                       (17,247,839)                 (15,432,983)
                                                                     -----------------
                                                                                                  -----------------
        Total Property, Plant and Equipment                               10,308,637                   11,511,536
                                                                     -----------------            -----------------

Other Assets:
    Excess of acquisition cost over value of net
     assets acquired - net of accumulated amortization
     of $1,323,521 in 2000 and $1,253,580 in 1999                          1,618,629                    1,998,822
    Deferred income taxes - net of valuation allowance
     of $943,000 in 2000 and $0 in 1999                                            0                            0
    Cash surrender value of SERP life insurance                            2,387,287                    1,730,964
    Marketable securities                                                  2,231,052                            0
    Deposits and other                                                        60,056                       70,489
                                                                     -----------------            -----------------
        Total Other Assets                                                 6,297,024                    3,800,275
                                                                     -----------------            -----------------
            Total Assets                                                 $36,737,366               $   41,118,626
                                                                     =================            =================

See notes to consolidated financial statements.
</TABLE>


<PAGE>


<TABLE>
                                  CERBCO, Inc.
                           CONSOLIDATED BALANCE SHEETS

<CAPTION>
                                                                                     June 30
                                                                                   -------------
                                                                  -----------------             -----------------
                                                                        2000                          1999
                                                                  -----------------             -----------------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
<S>                                                                    <C>                         <C>
    Partner's loans to Midsouth Partners                               $         0                 $     400,000
    Accounts payable and accrued liabilities                             2,961,927                     2,958,136
    Income taxes payable                                                 1,271,708                     1,508,353
    Current portion of capital lease obligations                            30,177                        42,167
                                                                  -----------------             -----------------
        Total Current Liabilities                                        4,263,812                     4,908,656
                                                                  -----------------             -----------------

Long-Term Liabilities:
    Accrued SERP liability                                               1,099,720                       847,560
    Capital lease obligations (less current portion shown above)            42,584                        62,662
    Deferred income taxes                                                        0                       219,000
                                                                  -----------------             -----------------
                                                                  -----------------
    Total Long-Term Liabilities                                          1,142,304                     1,129,222
                                                                  -----------------             -----------------
        Total Liabilities                                                5,406,116                     6,037,878
                                                                  -----------------             -----------------

Commitments and Contingencies

Non-Owned Interests in Consolidated Subsidiaries                         7,004,314                    10,262,319
                                                                  -----------------             -----------------

Stockholders' Equity:
    Common stock, $.10 par value
        Authorized:  3,500,000 shares
        Issued and outstanding: 1,189,476 shares                           118,947                       118,947
    Class B Common stock (convertible), $.10 par value
        Authorized:  700,000 shares
        Issued and outstanding: 293,480 shares                              29,348                        29,348
    Additional paid-in capital                                           7,527,278                     7,527,278
    Retained earnings                                                   16,651,363                    17,142,856
                                                                  -----------------             -----------------
        Total Stockholders' Equity                                      24,326,936                    24,818,429
                                                                  -----------------             -----------------
            Total Liabilities and Stockholders' Equity                 $36,737,366                 $  41,118,626
                                                                  =================             =================


See notes to consolidated financial statements.
</TABLE>


<PAGE>


<TABLE>
                                  CERBCO, Inc.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                    YEARS ENDED JUNE 30, 2000, 1999 and 1998

<CAPTION>
                                                                                   Additional                 Total Stock-
                                     Common Stock          Class B Common Stock     Paid-in       Retained      holders'
                               ---------------------------------------------------
                                  Shares      Amounts       Shares      Amounts     Capital       Earnings       Equity
                               ---------------------------------------------------------------------------------------------

<S>            <C>                <C>           <C>          <C>        <C>         <C>          <C>            <C>
BALANCE - JULY 1, 1997            1,180,601     $118,060     296,355    $29,635     $7,493,378   $17,293,931    $24,935,004

Net earnings                              0            0           0          0              0       358,790        358,790
Issuance of stock pursuant to
    exercise of stock options         6,000          600           0          0         33,900             0         34,500
Conversion of Class B stock
    into Common stock                   375           37        (375)       (37)             0             0              0
Dividends declared                        0            0           0          0              0      (148,296)      (148,296)
                               ---------------------------------------------------------------------------------------------

BALANCE - JUNE 30, 1998           1,186,976      118,697     295,980     29,598      7,527,278    17,504,425     25,179,998

Net loss                                  0            0           0          0              0      (213,274)      (213,274)
Conversion of Class B stock
    into Common Stock                 2,500          250      (2,500)      (250)             0             0              0
Dividends declared                        0            0           0          0              0      (148,295)      (148,295)
                               ---------------------------------------------------------------------------------------------

BALANCE - JUNE 30, 1999           1,189,476      118,947     293,480     29,348      7,527,278    17,142,856     24,818,429

Net loss                                  0            0           0          0              0      (343,197)      (343,197)
Dividends declared                        0            0           0          0              0      (148,296)      (148,296)
                               ---------------------------------------------------------------------------------------------

                               =============================================================================================
BALANCE - JUNE 30, 2000           1,189,476     $118,947     293,480    $29,348     $7,527,278   $16,651,363    $24,326,936
                               =============================================================================================


See notes to consolidated financial statements.
</TABLE>


<PAGE>


<TABLE>
                                  CERBCO, Inc.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<CAPTION>
                                                                                    Years Ended June 30
                                                                           2000             1999             1998
                                                                      ---------------  ---------------  ---------------
Cash Flows from Operating Activities:
<S>                                                                   <C>              <C>              <C>
    Net earnings (loss)                                               $    (343,197)   $    (213,274)   $     358,790
    Adjustments to reconcile net earnings (loss) to net cash
        provided by (used in) operations:
        Depreciation and amortization                                     2,383,800        2,211,811        2,209,231
        Amounts attributable to non-owned interests                      (1,698,064)      (1,456,166)      (1,249,856)
        Deferred income taxes                                              (219,000)        (696,000)        (159,000)
        (Increase) decrease in other assets                                       0           17,990              358
        Changes in operating assets and liabilities:
            (Increase) decrease in accounts receivable                      298,258       (1,407,866)       1,591,684
            (Increase) decrease in inventories                             (147,702)         108,459          156,156
            (Increase) decrease in other current assets                     663,105          479,036         (303,973)
            Increase (decrease) in accounts payable and accrued               3,791          256,458         (978,703)
expenses
            Increase (decrease) in income taxes payable                    (236,645)         157,528       (4,453,899)
                                                                      ---------------  ---------------  ---------------
    Net Cash Provided by (Used in) Operating Activities                     704,346         (542,024)      (2,829,212)
                                                                      ---------------  ---------------  ---------------

Cash Flows from Investing Activities:
    Capital expenditures                                                 (1,156,897)      (2,433,828)      (1,704,188)
    Disposal of equipment - net                                              87,086           28,797          170,950
    Purchase of marketable securities                                   (12,075,645)               0                0
    Increase in investment in Insituform East                              (300,981)        (115,827)               0
    Cash contributions to Midsouth Partners by non-owned interests                0                0          276,000
    Purchase of remaining interests in Midsouth Partners                   (948,707)               0                0
    Increase in cash surrender value of SERP life insurance                (656,323)        (500,709)        (451,214)
    Increase in SERP liability                                              252,160          241,587          165,023
    Increase in other assets                                                (20,000)               0                0
                                                                      ---------------  ---------------  ---------------
     Net Cash Used in Investing Activities                               (14,819,307)      (2,779,980)      (1,543,429)
                                                                      ---------------  ---------------  ---------------

Cash Flows from Financing Activities:
    Proceeds from revolving lines of credit and long-term borrowings              0                0        1,800,000
    Principal payments on revolving lines of credit, capital lease
        obligations and long-term borrowings                                (42,785)         (34,621)      (1,828,538)
    Loans to Midsouth Partners from non-owned interests                           0          400,000          250,000
    Repayment of loans to Midsouth Partners from non-owned interests       (400,000)        (250,000)               0
    Dividends paid                                                         (148,296)        (148,295)      (2,559,694)
    Proceeds from exercise of stock options                                       0                0           34,500
                                                                      ---------------  ---------------  ---------------
    Net Cash Used in Financing Activities                                  (591,081)         (32,916)      (2,303,732)
                                                                      ---------------  ---------------  ---------------

Net Decrease in Cash and Cash Equivalents                               (14,706,042)      (3,354,920)      (6,676,373)
Cash and Cash Equivalents at Beginning of Year                           17,050,119       20,405,039       27,081,412
                                                                      ---------------  ---------------  ---------------
Cash and Cash Equivalents at End of Year                              $    2,344,077   $   17,050,119   $   20,405,039
                                                                      ===============  ===============  ===============

Supplemental disclosure of cash flow information:
    Interest paid                                                     $       21,473   $       85,013   $       60,489
    Income taxes paid (refunded)                                      $      (65,913)  $     (552,561)  $    4,739,513

Supplemental disclosure of non-cash investing and financing activities:
    Additions to capital leases                                       $       10,717   $            0   $            0

See notes to consolidated financial statements.
</TABLE>


<PAGE>

                                  CERBCO, Inc.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    YEARS ENDED JUNE 30, 2000, 1999 AND 1998

1.       Summary of Significant Accounting Policies

Basis of Presentation

         The  consolidated  financial  statements  include  the  accounts of the
parent holding  company,  CERBCO,  Inc.  ("CERBCO") and its  majority-controlled
subsidiary,  Insituform East, Incorporated  ("Insituform East"). All significant
intercompany balances and transactions have been eliminated in consolidation.

Business Operations

         CERBCO is a parent holding  company with a controlling  interest in one
principal operating subsidiary. Insituform East and its subsidiaries are engaged
in the trenchless rehabilitation of underground sewers and other pipelines using
cured-in-place   pipe   ("CIPP")   rehabilitation   processes   to   produce   a
shape-conforming "pipe-within-a-pipe." Since 1978, Insituform East has performed
work in six Mid-Atlantic  states and the District of Columbia using the patented
Insituform(R)  process under territorially  exclusive  sublicense  agreements as
explained in Note 7:  Commitments.  Utilizing  other  trenchless CIPP processes,
Insituform East's wholly-owned subsidiary,  Midsouth Partners, operates from and
after July 20, 1999, substantially without geographic restriction.

Revenue Recognition

         The Company recognizes revenue under contracts to rehabilitate pipeline
sections using the units of completion method.  Installation of CIPP products is
generally   performed  between  manholes  or  similar  access  points  within  a
twenty-four  hour  period.  A  rehabilitated   pipeline  section  is  considered
completed  work  and is  generally  billable  to the  customer.  In most  cases,
contracts  consisting of  individual  line sections have a duration of less than
one year.

Cash and Cash Equivalents

         Cash  and  cash  equivalents  are  composed  of  unrestricted  checking
accounts and  short-term  investments  in  repurchase  agreements,  money market
funds,  certificates of deposit and U.S. Treasury  instruments.  For purposes of
the  consolidated  statements of cash flows,  the Company  considers only highly
liquid debt instruments  purchased with a maturity of three months or less to be
cash  equivalents.  Cash  equivalents  are stated at cost plus accrued  interest
which approximates market.

Marketable Securities

         Marketable  securities  include all investments with a maturity greater
than three months and are accounted for under Statement of Financial  Accounting
Standards  No.  115,  Accounting  for  Certain  Investments  in Debt and  Equity
Securities.  The  Company  determines  the  appropriate  classification  of  the
securities at the time of purchase.  All of the Company's marketable  securities
are debt  securities and the Company has the positive intent and ability to hold
these  securities to maturity.  Held-to-maturity  securities are stated at cost,
adjusted for amortization of premiums and discounts to maturity.

Inventories

         Inventories  are  stated  at  the  lower  of  cost  (determined  by the
first-in,  first-out method) or market. Substantially all inventories consist of
raw materials utilized in CIPP rehabilitation processes.

Property, Plant and Equipment

         Property, plant and equipment are stated at cost. Depreciation has been
provided  in the  financial  statements  using the  straight-line  or  declining
balance  methods  at rates  which are based  upon  reasonable  estimates  of the
properties'  useful  lives.  These  lives  range  from  three to ten  years  for
vehicles,  equipment  and  furniture,  and twenty to forty years for  buildings.
Leasehold  improvements  are amortized using the  straight-line  method over the
life of the lease.

         Betterments or improvements which increase the estimated useful life of
an asset are  capitalized.  Repairs  and  maintenance  are  charged  directly to
expense as incurred.


Goodwill

         The  excess  of cost  over the fair  value of the  Insituform  East net
tangible   assets   ("goodwill")   acquired  in  1985  is  amortized  using  the
straight-line method over forty years. The Company annually reviews its goodwill
recoverability by assessing the historical  profitability of Insituform East and
expectations as to its future nondiscounted cash flows and operating income; the
continued use of its name; the continued use of its license agreements;  and the
status of various  patents which govern the Insituform  process.  Based upon its
most recent analysis, the Company believes that no impairment of goodwill exists
at June 30, 2000.

Income Taxes

         The  Company  provides  for  federal  and  state  income  taxes  at the
statutory rates in effect on taxable  income.  Deferred income taxes result from
recognizing  certain  items of income  and  expense  in  consolidated  financial
statements in different years from those in income tax returns.  These temporary
differences  relate principally to use of accelerated  depreciation  methods for
income tax purposes; net operating loss carryforwards;  timing of the payment of
compensated absences; and timing of the recognition of the results of operations
of the  Company's  investment in Midsouth  Partners  (see Note 5:  Investment in
Midsouth Partners).

         Insituform East files separate  federal and state tax returns,  and its
provision  is  combined  with  CERBCO's  consolidated  provision  for  financial
reporting purposes.

Use of Estimates in the Preparation of Financial Statements

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

Recent Accounting Pronouncements

         In June 1998, the Financial Accounting Standards Board issued Statement
of Accounting  Standards No. 133,  Accounting  for  Derivative  Instruments  and
Hedging  Activities  ("SFAS No. 133").  SFAS No. 133 establishes  accounting and
reporting  standards for derivative  instruments,  and for hedging activities by
requiring  that all  derivatives be recognized in the balance sheet and measured
at fair value. The Company has determined that the adoption of SFAS No. 133 will
not  have a  significant  effect  on its  financial  statement  presentation  or
disclosures,  or on its results of operations and financial  position.  SFAS No.
133 is effective for fiscal years beginning after June 15, 2000.

         In March 2000,  the Financial  Accounting  Standards  Board issued FASB
Interpretation  No. 44,  Accounting  for Certain  Transactions  involving  Stock
Compensation  - an  interpretation  of APB Opinion No. 25, which  clarifies  the
application  of APB Opinion No. 25,  Accounting  for Stock  Issued to  Employees
("Opinion  No. 25") for certain  issues.  The  Interpretation  clarifies (a) the
definition of "employee"  for purposes of applying  Opinion 25; (b) the criteria
for  determining  whether a plan  qualifies as a  noncompensatory  plan; (c) the
accounting  consequence  of various  modifications  to the terms of a previously
fixed stock  option or award;  and (d) the  accounting  for an exchange of stock
compensation awards in a business combination.  The Interpretation was effective
July 1, 2000, but certain  conclusions  cover specific  events  occurring  after
December 15, 1998 or January 12, 2000, for which the effects are recognized on a
prospective basis from July 1, 2000. The adoption of this  Interpretation had no
impact on the Company's financial position or results of operations.

2.       Marketable Securities

         At June 30,  2000,  the Company held  investments  in  marketable  debt
securities which were classified as held-to-maturity. Securities with a maturity
date  within  one year are  classified  as  Marketable  Securities  as a part of
Current  Assets.  Securities  with a maturity  date beyond one year are included
under Other Assets. All securities are stated at amortized cost.

         Marketable securities consist of:
                                                            2000
                                                       ----------------
        Current:
            U.S. Government and Agencies                 $ 5,844,593
            Corporate                                      4,000,000
                                                       ----------------
                                                           9,844,593
        Non-current:
            U.S. Government and agencies                   2,231,052
                                                       ----------------
                Total marketable securities              $12,075,645
                                                       ================

3.       Accounts Receivable

<TABLE>
         Accounts receivable consist of:
<CAPTION>
                                                            2000                       1999
                                                       ----------------          -----------------

<S>                                                       <C>                      <C>
        Due from municipal and commercial customers       $5,400,317               $6,514,843
        Miscellaneous                                        894,338                   78,070
                                                       ----------------          -----------------
                                                           6,294,655                6,592,913
        Less: Allowance for doubtful accounts                      0                        0
                                                       ----------------          -----------------
                                                          $6,294,655               $6,592,913
                                                       ================          =================
</TABLE>

4.       Equity in Insituform East

         At  June  30,  2000,  CERBCO  beneficially  held  1,412,850  shares  of
Insituform  East Common Stock and 296,141 shares of convertible  Insituform East
Class B Common Stock representing approximately 34.8% of the Common Stock, 99.5%
of the Class B Common  Stock,  39.2% of the total  equity and 62.2% of the total
voting power of all  outstanding  classes of Insituform  East stock. At June 30,
1999, CERBCO  beneficially held 1,226,400 shares of Insituform East Common Stock
and  296,141  shares  of  convertible  Insituform  East  Class  B  Common  Stock
representing  approximately  30.2% of the  Common  Stock,  99.5% of the  Class B
Common  Stock,  34.9% of the total equity and 59.5% of the total voting power of
all  outstanding  classes of  Insituform  East stock.  At June 30, 1998,  CERBCO
beneficially  held 1,127,500  shares of Insituform East Common Stock and 296,141
shares  of  convertible  Insituform  East  Class  B  Common  Stock  representing
approximately  27.8% of the  Common  Stock,  99.5% of the Class B Common  Stock,
32.7% of the total equity and 58.1% of the total voting power of all outstanding
classes  of  Insituform  East  stock.  Holders of Class B Common  Stock,  voting
separately  as a class,  have the right to elect the  remaining  members  of the
Insituform  East Board of Directors  after  election of not less than 25% of the
directors by holders of shares of Common Stock, voting separately as a class.

         During the years ended June 30, 2000 and 1999,  CERBCO acquired 186,450
shares and 98,900  shares of  Insituform  East  Common  Stock for  $300,981  and
$115,827,  respectively.  The differences  between the cost of the stock and the
net book value thereof, $310,252 in 2000 and $233,950 in 1999 have been credited
to excess of acquisition cost over value of net assets acquired.

         From time to time, Insituform East issues additional shares of stock as
a result of stock  dividends and  exercised  stock  options.  Changes in capital
structure  resulting from such additional stock issues decrease  CERBCO's equity
ownership.  No additional  shares were issued in 2000,  1999 or 1998. If all the
options and warrants outstanding at June 30, 2000 were exercised,  the resulting
percentages of CERBCO's  equity  ownership and total voting power would be 35.6%
and 58.4%, respectively.

         From  time to time,  Insituform  East  purchases  shares  of stock  for
treasury.  Changes  in capital  structure  resulting  from such stock  purchases
increase CERBCO's equity  ownership.  No shares were purchased in 2000, 1999, or
1998.

5.       Investment in Midsouth Partners

         CERBCO's  consolidated  financial  statements as of June 30, 2000, 1999
and 1998 and for each of the years then ended  include the  accounts of Midsouth
Partners, Insituform East's majority-controlled subsidiary partnership from June
12, 1996 to July 20,  1999,  and  wholly-owned  subsidiary  since July 20, 1999.
Midsouth  Partners was organized as  Insituform  Midsouth,  a Tennessee  general
partnership,  in  December  1985  with  Insituform  East as a  general  partner.
Midsouth  Partners was the  exclusive  licensee for the  Insituform  process and
NuPipe  process in Tennessee,  Kentucky  (excluding  Boone,  Kenton and Campbell
counties) and northern  Mississippi from December 2, 1985 through July 20, 1999.
The  Partnership's  general  partners to July 20,  1999,  were  Insitu,  Inc., a
wholly-owned  subsidiary  of  Insituform  East;  Insituform  Technologies,  Inc.
("ITI"); and Insituform Southwest, Inc., an affiliate of ITI.

         Partnership profits and losses were allocated through June 30, 1999 and
until July 20, 1999 to the partners as follows:

         Insitu, Inc.                              42.5%
         Insituform Technologies, Inc.             42.5%
         Insituform Southwest, Inc.                15.0%

         Insituform East and ITI had each  unconditionally  committed to advance
funds to Midsouth  Partners,  up to a maximum of $500,000  each,  with  interest
payable at Chase Manhattan  Bank's Prime Lending Rate. These  commitments  which
initially extended through December 31, 1999, were cancelled  effective July 20,
1999.

         In March  1999,  ITI gave  notice  of a  purported  termination  of the
Midsouth  Partners  partnership,   purportedly   terminated  Midsouth  Partners'
Insituform(R)  License Agreement and simultaneously  commenced litigation in the
Chancery  Court of  Delaware  to deny  Midsouth  Partners  any rights to further
utilize  cured-in-place  pipe  ("CIPP")  rehabilitation  processes as previously
practiced under such license.  In April 1999, Midsouth Partners responded to the
Delaware  Chancery Court  litigation and filed a demand for arbitration with the
American Arbitration Association.

         Insituform  East  settled its  disputes  with ITI  concerning  Midsouth
Partners  under the terms of an agreement  reached July 20, 1999 (the  "Midsouth
Settlement  Agreement")  and actions before the Delaware  Chancery Court and the
American Arbitration Association were dismissed. Under the terms of the Midsouth
Settlement  Agreement,  a wholly-owned  subsidiary of Insituform  East purchased
ITI's interests in the Midsouth Partners  partnership at book value and Midsouth
Partners remained entitled to continue the business of the partnership under its
present name. The  Insituform(R)  License  Agreement and its  requirement to pay
royalties were relinquished under the settlement,  henceforth  permitting direct
competition between ITI and Midsouth Partners. The Midsouth Settlement Agreement
expressly  provides that Midsouth  Partners may utilize processes other than the
Insituform  process  to  perform  pipe  rehabilitation  services,  and  Midsouth
Partners also obtained a royalty-free non-exclusive right, without limitation in
time and within the partnership's  previously licensed  territory,  to continued
use of the  cured-in-place  pipe  processes,  technique and  inventions  that it
formerly  practiced  pursuant  to  its  since-terminated  Insituform(R)  License
Agreement as the same existed on July 20, 1999.

         Effective  July 20, 1999,  Insituform  East,  through its  wholly-owned
subsidiary,  Midsouth,  LLC,  acquired the remaining 57.5% interests in Midsouth
Partners previously held by ITI and Insituform Southwest, Inc. for $948,707, the
book  value of their  respective  partnership  accounts  on July 20,  1999.  The
acquisition  was accounted for as a purchase.  Partnership  pretax  earnings and
losses  attributable  to these  interests,  previously  allocated  to  non-owned
interests in  consolidation,  have been  allocated to the Company  subsequent to
July 20, 1999.

         Unaudited pro forma results of operations,  assuming acquisition of the
remaining interests in Midsouth Partners had occurred as of July 1, 1997, are as
follows:

<TABLE>
<CAPTION>
                                                                      Years Ended June 30,
                                                               ----------------------------------
                                                                   2000              1999
                                                                   ----              ----
<S>                                                            <C>               <C>
        Sales                                                  $22,421,875       $23,315,198
        Net Earnings (Loss)                                    $  (350,998)      $  (392,009)
        Net Earnings (Loss) Per Share
           Basic                                                    $(0.24)           $(0.26)
           Diluted                                                  $(0.24)           $(0.26)
</TABLE>

6.       Accounts Payable and Accrued Liabilities

<TABLE>
<CAPTION>
         Accounts payable and accrued liabilities consist of:
                                                                    2000              1999
                                                                    ----              ----

<S>                                                              <C>              <C>
        Accounts payable                                         $1,633,378       $1,448,725
        Accrued compensation and related expenses                 1,180,253        1,361,115
        Dividends payable                                           148,296          148,296
                                                               ------------     ------------
                                                                 $2,961,927       $2,958,136
</TABLE>

7.       Commitments

         The Company utilizes  certain  equipment and facilities under operating
leases  providing  for  payment of fixed rents and the  pass-through  of certain
landlord  expenses.  Rental  expense was  approximately  $267,000,  $163,000 and
$452,000  for the years ended June 30,  2000,  1999 and 1998,  respectively.  In
addition,   the  Company  obtains  certain  mobile  production  equipment  under
long-term capital leases. The net book value of equipment under capital lease at
June 30, 2000 is approximately $38,000.  Minimum future rental commitments under
long-term  capital  and  operating  leases in effect  at June 30,  2000,  are as
follows:
<TABLE>

<CAPTION>
        Years Ending June 30                            Capital Leases                     Operating Leases
        --------------------
                                                        -----------------                  -------------------

<S>     <C>                                                  <C>                                 <C>
        2001                                                 $43,844                             $72,036
        2002                                                  38,968                              72,036
        2003                                                  10,134                              31,524
        2004                                                       0                              18,561
        2005                                                       0                                   0
        2006 and thereafter                                        0                                   0
                                                        ------------                       --------------
        Total Minimum Payments                                92,946                            $194,157
                                                                                                ========
        Less:  Interest                                       20,185
                                                            --------
        Present Value of Minimum Payments                     72,761
        Less:  Current Portion                                30,177
                                                            --------
        Long-term Capital Lease Obligations                  $42,584
                                                             =======
</TABLE>

         Insituform  East has entered into six  sublicense  agreements  with ITI
which  grant  Insituform  East the right to perform  the  Insituform  process in
Maryland, Virginia, Delaware, the District of Columbia, Pennsylvania, Ohio, West
Virginia, and three counties of Kentucky. The agreements are for the life of the
patents or the patent rights unless sooner  terminated by a specified  action of
either  party.  The  agreements  specify that a royalty equal to 8% of the gross
contract price of all contracts  performed  utilizing the process,  less certain
fees, be paid to ITI.

         The agreements obligate Insituform East to pay minimum annual royalties
during the terms of the  agreements  unless  waived upon  approval of Insituform
East's marketing and sales plans for licensed processes by ITI. Payments of such
minimum annual  royalties for Insituform  East for the years ended June 30, 1999
and 1998 have been  waived by ITI.  Payments  of minimum  annual  royalties  for
Midsouth  Partners  for the years  ended  December  31,  1998 and 1997 were also
waived by ITI.  During the year ended June 30, 2000,  Insituform  East  incurred
$1,215,929 in royalty  expense,  including  $220,806 in minimum annual royalties
not waived by ITI.  During the years  ended June 30,  1999 and 1998,  Insituform
East  incurred  royalty  expense of  $1,244,954  and  $1,409,696,  respectively.
Insituform  East has not received a waiver of minimum  annual  royalties for the
year ending June 30, 2001.

         Midsouth  Partners  entered into a sublicense  agreement with ITI which
granted  Midsouth  Partners  the right to  perform  the  Insituform  process  in
Tennessee,  most of Kentucky and  northern  Mississippi  under terms  similar to
Insituform East's sublicense  agreements discussed above. In connection with the
Midsouth Settlement  Agreement,  Midsouth Partners' Insituform License Agreement
and its requirement to pay royalties were relinquished effective July 20, 1999.

         Insituform East has also entered into license  agreements for identical
territories  with NuPipe,  Inc., a wholly-owned  subsidiary of ITI, for the sale
and  installation  of  pre-formed  PVC  thermoplastic  pipe under the  NuPipe(R)
process and  trademark.  Insituform  East has  committed to pay royalty equal to
6.75% of gross  contract  revenues  utilizing the NuPipe process and to purchase
certain installation equipment and installation materials from NuPipe, Inc.

         Midsouth  Partners entered into a license  agreement with NuPipe,  Inc.
for the sale and installation of pre-formed  thermoplastic pipe under the NuPipe
process and  trademark in Tennessee,  most of Kentucky and northern  Mississippi
under terms similar to Insituform East's license  agreement  discussed above. In
connection with the Midsouth  Settlement  Agreement,  Midsouth  Partners' NuPipe
License  Agreement  and  its  requirement  to pay  royalties  were  relinquished
effective July 20, 1999.

         On December 29, 1997,  Insituform East entered into a supply  agreement
with ITI whereby  Insituform  East  committed to purchase 90% of its  Insitutube
requirements  from ITI for an initial  five year period from  January 1, 1998 to
December 31, 2002. The agreement will automatically  extend for one year periods
unless notice of termination is provided by either party six months prior to the
end of any such annual period.

         Effective July 20, 1999,  Midsouth Partners executed a Felt Tube Supply
Agreement  with  ITI  for  the  purchase  of  felt  tubes  to be  used  in  CIPP
rehabilitation  in  the  partnership's   previously   licensed   territories  of
Tennessee,  most of Kentucky and northern  Mississippi.  The agreement,  with an
initial five year term,  automatically  extends for  successive one year periods
unless notice of termination is provided by either party six months prior to the
expiration  date of the  initial  five  year  period or any such  annual  period
thereafter.

8.       Contingencies

Stockholder Suit - Superior Court of the District of Columbia

         As previously  reported by the Company,  in March 1990, the controlling
stockholders  of the Company,  Messrs.  George Wm. Erikson and Robert W. Erikson
(together,  the  "Eriksons"),  executed  a letter  of  intent  and  subsequently
executed four amendments thereto (collectively referred to herein as the "Letter
of Intent") with Insituform Technologies, Inc. ("ITI") to effect a sale of their
controlling  interest  in the  Company  to ITI  for  $6,000,000  (the  "Proposed
Transaction").  The Proposed  Transaction,  if  consummated,  would have had the
effect  of  making  ITI  the  controlling   stockholder  of  the  Company,  and,
indirectly,  of each of the  Company's  three direct  subsidiaries  at the time,
including  Insituform East. In September 1990, the Eriksons informed the Company
that the Letter of Intent had expired without  consummation of any  transaction,
that it would not be further extended,  that  negotiations had ceased,  and that
the Eriksons had no further  intention at the time of pursuing the proposed sale
of their controlling interest in the Company to ITI.

         Also as previously reported by the Company, two stockholders  commenced
a derivative  lawsuit in the Delaware Court of Chancery  against the Eriksons in
August,  1990,  making certain  claims with respect to the Proposed  Transaction
(the "Delaware  Action").  The Delaware Action finally was concluded on December
3, 1997, when the Delaware Supreme Court issued its order affirming the findings
of the Court of Chancery  with respect to (a) the trial  court's  assessment  of
certain  damages  against the Eriksons on remand from a previous  appeal and (b)
the renewed  petition of plaintiffs'  attorneys for an award of attorneys'  fees
and  expenses.  Those  findings by the Court of Chancery had been made on remand
from the same  Delaware  Supreme  Court after a 1996 ruling in which the Supreme
Court affirmed the Court of Chancery's  holding that CERBCO had not suffered any
transactional damages with respect to the Proposed Transaction.

         Also as previously  reported by the Company, in January 1993, a lawsuit
against the partners in the law firm of Rogers & Wells and the Company,  arising
out of the subject matter of the Delaware litigation,  was filed in the Superior
Court of the District of Columbia (the "D.C.  Complaint").  Plaintiffs  were the
same two stockholders  who were plaintiffs in the Delaware Action,  and a former
director of the Company,  and alleged  that Rogers & Wells  breached its duty of
loyalty and care to the Company by representing  allegedly conflicting interests
of the Eriksons in the Proposed  Transaction  with ITI.  Plaintiffs also claimed
that Rogers & Wells committed malpractice by allegedly making misrepresentations
to the Company's  Board and allegedly  failing to properly  inform the Company's
Board.  Plaintiffs claimed that the conduct of Rogers & Wells caused the Company
to lose an opportunity to sell its control of Insituform East to ITI, caused the
Company to incur substantial  expense, and unjustly enriched Rogers & Wells. The
D.C.  Complaint  sought to recover  from Rogers & Wells (i) damages in an amount
equal to all fees paid to Rogers & Wells,  (ii)  damages  in an amount  not less
than $6  million  for the loss of the  opportunity  for the  Company to sell its
control of Insituform East to ITI, and (iii) punitive damages. Although the D.C.
Complaint stated that it was filed on behalf of the Company,  management did not
believe  that  Rogers & Wells  should  be sued on any of the  claims  set  forth
therein.

         Motions to  dismiss  this case by the  Company  and Rogers & Wells were
denied,  but a stay of the  proceedings  was granted  until  after the  Delaware
trial. Plaintiffs agreed to a stay of the D.C. Superior Court action pending the
outcome of the appeal of the trial court's ruling in the Delaware  Action to the
Delaware Supreme Court and, subsequently,  the stay was continued at least until
such time as the  Delaware  Court of  Chancery  ruled upon  plaintiffs'  pending
motion for  post-remand  relief.  After the Delaware  Supreme  Court's ruling on
December 3, 1997,  finally affirming the Delaware Court of Chancery with respect
to such post-remand relief and a renewed petition for counsel fees and expenses,
the stay of the District of Columbia action was lifted,  and plaintiffs filed an
amended D.C.  Complaint.  In the amended  D.C.  Complaint,  plaintiffs  asserted
essentially  the same conflicts of interest  charges  against Rogers & Wells but
shifted  their  focus  from the value of the  alleged  lost  opportunity  to the
litigation  expenses incurred by the Company in the Delaware Action.  Plaintiffs
sought to recover from Rogers & Wells (i) damages in an amount equal to all fees
paid to Rogers & Wells, (ii) damages for more than $2 million in attorneys' fees
and  expenses  incurred by CERBCO in the Delaware  Action and other  unspecified
compensatory damages, and (iii) punitive damages. On March 27, 1998, the Company
filed its answer to the amended D.C. Complaint, in which it denied all liability
and asserted certain affirmative  defenses. On the same day, it filed its motion
for summary  judgment,  together  with a  supporting  memorandum  of law, on the
grounds  of  collateral  estoppel  and res  judicata.  Rogers  & Wells  likewise
answered the amended D.C. Complaint,  denying liability,  and filed a motion for
summary judgment on collateral  estoppel grounds. On February 18, 1999, the D.C.
Superior  Court entered an Order  denying the Company's  motion on the ground of
res judicata,  but granting the defendants' summary judgment motion on the issue
of  punitive  damages  only.  On April 9, 1999,  the Court  conducted  a hearing
limited  to the issues of  causation,  damages,  and  collateral  estoppel  with
respect to the defendants'  pending  motions.  On May 20, 1999, the Court denied
the Company's motion for summary judgment on the ground of collateral  estoppel.
The matter was then referred to mediation in the District of Columbia.

         During  the  mediation  proceeding,  the  parties  to the D.C.  lawsuit
entered into  settlement  negotiations.  On or about April 10, 2000, the parties
signed a  stipulation  of settlement  of that lawsuit (the  "Stipulation").  The
tentative  settlement  described  in the  Stipulation  provided for a payment by
Rogers  & Wells  to the  Company  of  $700,000  and for an  exchange  of  mutual
releases, including releases of the Company and its directors by plaintiffs. The
Stipulation  further  provided  for  plaintiffs'  counsel to  petition  the D.C.
Superior  Court for an award of $233,333 in  attorneys'  fees  (one-third of the
proposed settlement  proceeds) and approximately  $32,000 in expenses.  On April
17, 2000,  the Company sent a notice of pendency of the D.C.  lawsuit and of the
proposed settlement to the Company's stockholders. In a hearing on May 31, 2000,
the D.C. Superior Court determined that (i) the proposed settlement described in
the Stipulation was fair,  reasonable,  adequate and in the best interest of the
Company  and its  stockholders,  and  (ii)  the  requested  attorneys'  fees and
expenses  were awarded to  plaintiffs.  The Company has received the  settlement
payment from Rogers & Wells and out of that payment has paid the attorneys' fees
and  expenses  awarded  by the  Court to  plaintiffs'  counsel.  The D.C.  legal
proceedings are now complete.

Dispute  with ITI - United  States  District  Court for the Middle  District  of
Tennessee

         As previously reported, on December 3, 1999,  Insituform  Technologies,
Inc.  and its  Netherlands  affiliate  (collectively,  "ITI")  filed suit in the
United  States  District  Court for the Middle  District  of  Tennessee  against
Insituform East and its subsidiary Midsouth Partners.  In its Amended Complaint,
which was filed on June 13,  2000,  ITI  contends  that  Midsouth  Partners  has
violated  a  Settlement  Agreement  entered  into in July 1999 (the  "Settlement
Agreement")  with  respect to certain  litigation  initiated  earlier in 1999 by
allegedly using or failing to timely remove from certain materials and equipment
the  Insituform(R)  trademark.  ITI contends that these alleged  breaches of the
Settlement Agreement also constitute violations of the Lanham Act, the Tennessee
Model Trademark Act, and applicable  state law for the alleged  unauthorized use
of the Insituform trademark. ITI seeks to terminate the Settlement Agreement and
with it Midsouth  Partners' rights to continue to exploit the Insituform process
as  provided  in the  Settlement  Agreement.  ITI  seeks  declarations  (i) that
Midsouth  Partners  has  committed  one  or  more  noncurable  breaches  of  the
Settlement  Agreement;  (ii) that Midsouth  Partners has violated the Lanham Act
and the Tennessee Model Trademark Act; (iii) that Midsouth Partners is no longer
entitled to exploit the Insituform process, to use certain tube labeled with the
name  "Insituform,"  and to  continue  buying  tube from ITI as  provided in the
Settlement  Agreement,  and (iv)  that  the  Settlement  Agreement  is or can be
terminated.  ITI also seeks a declaration  that the right of Insituform East and
its  subsidiaries  to perform  certain  subcontract  work for Midsouth  Partners
pursuant to the Settlement  Agreement is or can be terminated and that the other
provisions  of the  Settlement  Agreement  remain in full force and  effect.  In
addition, ITI seeks unspecified damages.

         ITI  also  contends  that  the  various  license   agreements   between
Insituform  East and ITI bar  Insituform  East from  exploiting  the  Insituform
process,  using the  Insituform  trademark,  or practicing  any CIPP  techniques
outside of Insituform  East's  territories  without  payment of the  appropriate
cross-over  royalty  and  regular  royalty  totaling  20%  (except as  otherwise
provided by the  Settlement  Agreement)  and that these  restrictions  extend to
Midsouth  Partners as well,  because  Midsouth  Partners and Insituform East are
allegedly alter egos of one another.  ITI contends that Insituform East is using
Midsouth  Partners  to practice  CIPP  rehabilitation  processes  outside of the
territory provided for in the Settlement Agreement and that the failure to pay a
royalty  and  cross-over  royalty  constitutes  a breach  of  Insituform  East's
obligations under its license  agreements with ITI. ITI seeks a declaration that
Insituform  East and  Midsouth  Partners  must pay ITI a royalty and  cross-over
royalty totaling 20% (except as otherwise provided by the Settlement  Agreement)
for any CIPP  work  performed  in these  so-called  "Insituform  Owner  Reserved
Territories." ITI also seeks damages in the form of any and all unpaid royalties
and cross-over royalties that are allegedly owed.

         In addition,  ITI seeks a declaration that it is no longer obligated to
make  payments  to  Insituform  East  under its  August 4, 1980  agreement  with
Insituform East's predecessor-in-interest (the "SAW Agreement"), under which ITI
agreed to pay Insituform East's predecessor-in-interest for recruiting potential
licensees of the Insituform process. ITI contends that its acquisition or merger
of  several  such  licensees  has  extinguished  its  obligations  under the SAW
Agreement  to pay  Insituform  East,  which was  assigned  the right to  receive
payments for such licensees in April 1981.

         Trial is  currently  scheduled  for July 31,  2001,  and  discovery  is
underway.  Insituform East has  counterclaimed  for a determination in its favor
that all of its  practices  are lawful and in accord with  existing  agreements.
Insituform East seeks  unspecified  damages from ITI in its  counterclaims.  The
ultimate  outcome and  consequences  of this suit cannot be  ascertained at this
time.

         While it is not possible at this time to establish the ultimate  amount
of  liability,  if any,  associated  with this  suit,  it is the  opinion of the
management of Insituform  East that the aggregate  amount of any such  liability
will not have a material adverse effect on the financial  position of Insituform
East. Conversely, in the opinion of management, in the unforeseen event that the
plaintiffs/counter-defendants  substantially  prevailed on their claims  against
Insituform East and its subsidiary Midsouth Partners,  including the restriction
or elimination of Midsouth  Partners existing rights to expand nationally and to
practice CIPP rehabilitation  process methods,  such event could have a material
adverse effect on the future financial position of Insituform East.

Summary and Other

         Management  believes ultimate resolution of the matters discussed above
will  not  have  a  material  effect  on the  financial  statements  of  CERBCO.
Accordingly,  no provision for these  contingencies has been reflected  therein.
The Company is also involved in other contingencies, the aggregate of which will
not, in the opinion of  management,  materially  affect the Company's  financial
position or results of operations.

9.       Common Stock

         The Company has two classes of Common  Stock,  which are  designated as
Common Stock and Class B Common Stock. Each share of Class B Common Stock can be
converted  into one share of Common Stock at any time.  In fiscal year 2000,  no
shares of Class B Common Stock were converted to Common Stock. In 1999 and 1998,
2,500 shares and 375 shares, respectively, were converted.

         Each share of Common  Stock is  entitled  to one vote and each share of
Class B Common  Stock is  entitled  to ten  votes,  except  with  respect to the
election of directors and any other matter  requiring  the vote of  shareholders
separately as a class. The holders of Common Stock,  voting as a separate class,
are entitled to elect that number of  directors  which  constitutes  twenty-five
percent (25%) of the authorized number of members of the Board of Directors and,
if such 25% is not a whole number, then the holders of Common Stock are entitled
to elect the nearest  higher whole  number of directors  that is at least 25% of
such membership.  The holders of Class B Common Stock, also voting as a separate
class, are entitled to elect the remaining directors.  In addition,  the holders
of Common Stock have certain dividend preferences.

10.      Income Taxes

<TABLE>
         The  provision  (credit)  for taxes is  composed of the  following  (in
thousands):
<CAPTION>
                                                              2000                  1999                 1998
                                                              ----                  ----                 ----
        Current Taxes:
<S>                                                          <C>                  <C>                 <C>
            Federal                                          $  225               $     5             $    158
            State                                                 0                    (2)                  (7)
                                                             ------               -------             --------
                Total current tax expense (benefit)             225                     3                  151
                                                             ------               -------             --------
        Deferred Taxes:
            Federal                                            (191)                 (607)                (139)
            State                                               (28)                  (89)                 (20)
                                                            -------               -------             --------
                Total deferred tax expense (benefit)           (219)                 (696)                (159)
                                                            -------               -------             --------
                    Total provision (credit) for taxes      $     6               $  (693)            $     (8)
                                                            =======               =======             ========
</TABLE>
<TABLE>

         The provision (credit) for income taxes is different from that computed
using the statutory federal income tax rate of 34% for the following reasons (in
thousands, except percentages):

<CAPTION>
                                                               2000                   1999                  1998
                                                               ----                   ----                  ----
                                                        Amounts         %      Amounts         %     Amounts         %
                                                        -------         -      -------         -     -------         -

<S>                                                     <C>           <C>      <C>           <C>       <C>          <C>
        Taxes computed at statutory rate                $(678)        (34)     $(552)        (34)      $44          34
        Increase (decrease) in taxes resulting from:
            State and  local  income  taxes,  net of
              federal income tax benefit (expense)       (171)         (8)      (112)         (7)      (45)        (35)
            Non-taxable income                           (135)         (7)       (80)         (4)      (54)        (42)
            Nondeductible items                            47           2         51           3        47          37
            Valuation allowance                           943          47           0          0         0           0
                                                        -----          --    --------       ----      ----         ---
                Total provision (credit) for taxes     $    6           0      $(693)        (42)      $(8)         (6)
                                                       ======         ===      =====         ===       ====         ===
</TABLE>

         The  calculation  of Insituform  East's credit for income taxes for the
year ended June 30,  2000,  using  applicable  enacted  federal and state rates,
resulted in a net deferred tax asset as temporary  differences  attributable  to
operating loss carryforwards  exceeded deferred tax liabilities  attributable to
other  temporary  differences,   principally  the  recognition  of  depreciation
expense.  The deferred tax asset of $943,000 at June 30, 2000,  has been reduced
by a valuation  allowance of $943,000  because,  based on the weight of evidence
available,  to include  Insituform  East's pretax  operating  losses  recognized
during the past three fiscal years, it is more likely than not that the deferred
tax asset will not be realized.

<TABLE>
         The primary components of temporary  differences which give rise to the
Company's  net  deferred  tax asset  (liability)  at June 30,  2000 and 1999 are
presented below:

<CAPTION>
                                                                   June 30,
                                                      ------------------------------------
                                                            2000                1999
                                                            ----                ----
        Deferred Tax Assets:
<S>                                                       <C>               <C>
             Net operating loss carryforwards             $1,858,000        $     729,000
             Deferred compensation                            17,000               19,000
             Other                                            55,000              104,000
             Valuation allowance                            (943,000)                   0
                                                      -----------------    ---------------
                 Total deferred tax assets                   987,000              852,000

        Deferred Tax Liability:
             Depreciation                                   (987,000)          (1,071,000)
                                                      -----------------    ---------------
        Net deferred tax asset (liability)                $        0        $   (219,000)
                                                      =================    ===============
</TABLE>

11.      Earnings (Loss) Per Share

         Basic earnings  (loss) per share data have been computed based upon the
weighted average number of common shares outstanding during each period. Diluted
earnings  (loss) per share have been  computed  based upon the weighted  average
number of common shares  outstanding  during the period  including  common stock
equivalents  from dilutive stock options.  The following  numbers of shares have
been used in the earnings (loss) per share computations:

                  2000                      1999                    1998
                  ----                      ----                    ----

Basic          1,482,956                  1,482,956              1,482,808
               =========                  =========              =========
Diluted        1,482,956                  1,482,956              1,482,808
               =========                  =========              =========

12.      Retirement Benefit Plans

         Employees of East (including  employees of the parent company,  CERBCO)
and Midsouth Partners who meet certain minimum eligibility  requirements and who
are not covered by  collective  bargaining  agreements  participate  in separate
profit-sharing  plans. No employees of either company were covered by collective
bargaining  agreements  as of June 30,  2000.  Contributions  to the  plans  are
determined annually by the respective companies. During the years ended June 30,
2000,  1999  and  1998,  the  Company   recognized  profit  sharing  expense  of
approximately $15,000, $243,000 and $48,000, respectively.


13.      Supplemental Executive Retirement Plans

         CERBCO  has  an  unfunded  supplemental  pension  plan  for  its  three
executive  officers,  effected  January 1, 1994.  The  expense for this plan was
approximately  $209,000,  $186,000  and $165,000 for the fiscal years ended June
30, 2000, 1999 and 1998, respectively.  CERBCO established a trust to facilitate
the  payment of  benefits  under the plan.  Funds in the trust are  invested  in
variable life insurance policies and are included in the Company's balance sheet
as cash surrender  value of life  insurance.  Assets of the trust are subject to
the claims of CERBCO's creditors in the event of bankruptcy or insolvency.

         On January 1, 1998,  Insituform  East  established  a similar  unfunded
supplemental pension plan for its three executive officers who are not otherwise
participants  in the CERBCO  plan.  The expense for this plan was  approximately
$49,000,  $60,000 and $18,000 for the fiscal years ended June 30, 2000, 1999 and
1998,  respectively.  On July 1, 1998,  Insituform  East  established a trust to
facilitate  the  payment  of  benefits  under its plan.  Funds in this trust are
invested in variable  life  insurance  policies on the lives of two of the three
plan-covered  officers.  One of the  three  officers  did not  qualify  for such
insurance  and,  therefore,  any  premature  death  of  this  officer  prior  to
retirement would result in an accelerated  recognition by Insituform East of his
unaccrued  plan  benefits.  Assets  of the trust are  subject  to the  claims of
Insituform East's creditors in the event of bankruptcy or insolvency.

14.      Stock Option Plans

         During  fiscal  year 1998,  CERBCO  adopted the 1997  Directors'  Stock
Option Plan.  Under the terms of this plan, up to 125,000 shares of Common Stock
have been reserved for the Company's  Directors.  All grants of options are made
at the market price on the date of the grant.  CERBCO granted  options on 20,000
shares  (options on 5,000 shares to each of four  directors) of CERBCO's  Common
Stock on December  10, 1999,  December  18, 1998 and  December 19, 1997,  at the
option  prices of $5.375 per share,  $7.656  per share and  $9.40625  per share,
respectively,  exercisable  within  five  years of the date of the  grants.  The
following  is a summary of  transactions  for the 1997  Directors'  Stock Option
Plan:

<TABLE>
<CAPTION>
                                                                                 Shares Under Option
                                                                 ----------------- ---------------- -----------------
                                                                        2000              1999             1998
                                                                        ----              ----             ----
<S>                                                                   <C>               <C>                   <C>
        Outstanding, beginning of year                                40,000            20,000                0
        Granted during the year                                       20,000            20,000           20,000
        Exercised during the year                                          0                 0                0
        Expired/canceled during the year                                   0                 0                0
                                                                  ----------        ----------       ----------
        Outstanding, end of year                                      60,000            40,000           20,000
                                                                      ======            ======           ======
</TABLE>

         The  Company  adopted  the  disclosure  requirements  of  Statement  of
Financial Accounting Standards No. 123, Accounting for Stock-Based  Compensation
("SFAS  No.  123")  during  the year  ended  June 30,  1997.  As  allowed  under
provisions  of SFAS No. 123, the Company will  continue to measure  compensation
cost for employee stock-based compensation plans using the intrinsic value based
method of accounting  prescribed by the Accounting  Principles Board Opinion No.
25, Accounting for Stock Issued to Employees. Under SFAS No. 123, the Company is
required to make pro forma  disclosures of net earnings  (loss) and net earnings
(loss)  per  share as if the fair  value-based  method  of  accounting  had been
applied.


         Summary  information  for stock options  granted during the years ended
June 30, 2000, 1999 and 1998 is as follows:

<TABLE>
<CAPTION>
                                                                                 Years ended June 30
                                                               ----------------- ------------------ -----------------
                                                                           2000               1999              1998
                                                                           ----               ----              ----

<S>                                                                    <C>                <C>                <C>
        Date of grant                                                  12/10/99           12/18/98          12/19/97
        Option shares granted                                            20,000             20,000            20,000
        Per share exercise price                                          $5.38              $7.66             $9.41
        Fair value per option share                                       $2.20              $3.26             $4.65
</TABLE>

         The fair value of options granted during the years ended June 30, 2000,
1999  and 1998  was  estimated  on the date of the  grants  using  the  binomial
option-pricing model using the following assumptions:

<TABLE>
<CAPTION>
                                                                        Years ended June 30
                                                        ----------------- ---------------- -----------------
                                                                    2000             1999              1998
                                                                    ----             ----              ----

<S>                                                              <C>              <C>               <C>
        Risk-free interest rate                                    5.98%            4.58%             4.69%
        Expected option term                                     5 years          5 years           5 years
        Expected stock price volatility                              44%              46%               55%
        Expected dividend yield                                       2%               1%                1%
</TABLE>

         If  compensation  costs for the Company's  stock option grants had been
determined using the fair value-based method of accounting per SFAS No. 123, the
Company's  pro forma net  earnings  (loss) and pro forma  basic and  diluted net
earnings (loss) per share for the years ended June 30, 2000, 1999 and 1998 would
be as follows:

<TABLE>
<CAPTION>
                                                                        Years ended June 30
                                                        ----------------- ---------------- -----------------
                                                              2000             1999              1998
                                                              ----             ----              ----
        Net Earnings (Loss):
<S>                                                       <C>               <C>                <C>
            As reported                                   $(343,197)        $(213,274)         $358,790
            Pro forma                                     $(372,247)        $(256,284)         $297,384
        Basic Net Earnings (Loss) Per Share:
            As reported                                      $(0.23)           $(0.14)            $0.24
            Pro forma                                        $(0.25)           $(0.17)            $0.20
        Diluted Net Earnings (Loss) Per Share:
            As reported                                      $(0.23)           $(0.14)            $0.24
            Pro forma                                        $(0.25)           $(0.17)            $0.20
</TABLE>

15.      Unaudited Quarterly Financial Data

         The following table provides summarized quarterly results of operations
for fiscal years 2000 and 1999 (in thousands, except per share information):

<TABLE>
<CAPTION>
                                                                            Three Months Ended
                                                     --------------------------------------------------------
        2000                                         September 30       December 31       March 31    June 30
        ----                                         ------------       -----------       --------    -------
<S>                                                        <C>               <C>            <C>        <C>
        Sales                                              $7,314            $4,672         $4,762     $5,674
        Gross profit (loss)                                 1,195              (203)          (536)       651
         Net earnings (loss)                                   45                28           (413)        (3)
        Net earnings (loss) per share                        0.03              0.02          (0.28)      0.00

        1999                                         September 30       December 31        March 31    June 30
        ----                                         ------------       -----------        --------    -------
        Sales                                              $6,048            $5,898         $4,993     $6,376
        Gross profit (loss)                                   997               867           (332)       164
        Net earnings (loss)                                    35               (11)          (142)       (95)
        Net earnings (loss) per share                        0.02             (0.01)         (0.10)     (0.05)
</TABLE>

                                    PART III

Item 10.  Directors and Executive Officers of the Registrant

(a)      Identification of CERBCO Directors
<TABLE>
<CAPTION>

Name                         Age      Director Since                Other Positions with Registrant
----                         ---      --------------                -------------------------------
<S>                          <C>      <C>                           <C>
Robert W. Erikson            55       December 1974 1/              President
George Wm. Erikson           58       November 1975 1/              Chairman & General Counsel
Webb C. Hayes, IV            52       April 1991                    None
Paul C. Kincheloe, Jr.       59       April 1991                    None

1/ Date of initial election as a director of the Company's then  publicly-traded
predecessor company, CERBERONICS. Elected as a CERBCO director in February 1988,
under  a  Plan  of  Reorganization  and  Merger  whereby  CERBERONICS  became  a
wholly-owned subsidiary of CERBCO.
</TABLE>

         Directors of CERBCO are elected at the Annual  Meeting of  Stockholders
except  that  vacancies  and newly  created  directorships  may be filled by the
directors  then in office.  Each  director  holds office until his  successor is
elected and qualified or until his earlier resignation or removal.

(b)      Identification of CERBCO Executive Officers
<TABLE>
<CAPTION>

Name                         Age      Position(s)                                 Held Since
----                         ---      -----------                                 ----------
<S>                          <C>      <C>                                         <C>
Robert W. Erikson            55       President                                   February 1988
George Wm. Erikson           58       Chairman & General Counsel                  February 1988
Robert F. Hartman            53       Vice President, Secretary & Treasurer       February 1988 1/

1/   Elected as Secretary in June 1991 and as Treasurer in December 1997.
</TABLE>

         Each officer  holds office until his successor is elected and qualified
or until his earlier resignation or removal.

(c)      Identification of Certain Significant Employees

         Not applicable.

(d)      Family Relationships

         Mr. Robert  Erikson,  Director and President,  and Mr. George  Erikson,
Director, Chairman and General Counsel are brothers.

(e)      Business Experience

         (1) Mr. Robert Erikson was a Supply Corps officer in the Navy from 1968
through 1972. Mr.  Erikson joined  CERBERONICS in December 1972. In May 1974, he
was elected Vice President of Finance and Administration  and, in December 1974,
he became Executive Vice President,  Treasurer and a Director.  In October 1977,
he was  elected  President.  In February  1988,  he was  elected  President  and
Treasurer of CERBCO.  Mr.  Erikson  currently is a Director,  Vice  Chairman and
President  of  Insituform  East and  serves as a member  of the Chief  Executive
Officer  Committee of Insituform  East.  He was a Director,  Vice Chairman and a
member of the Chief Executive Officer Committee of Capitol Office Solutions from
October 1987 to June 30,  1997.  He was a Director of Palmer  National  Bancorp,
Inc. and The Palmer  National Bank from 1983 to 1996,  and was a Director of The
Palmer National Bank's successor,  The George Mason Bank, N.A., from May 1996 to
June 1997.  Mr. Erikson holds a B.A.  degree in  Engineering  and Economics from
Brown University and an M.B.A. degree from The George Washington University.

         Mr. George  Erikson  joined  CERBERONICS in July 1976 as Vice President
and General Counsel, and in August 1976, he was elected Secretary.  He served as
Executive  Vice  President  until July 1987, at which time he was elected to the
position of Chairman.  He became a Director of  CERBERONICS in November 1975 and
served as  Chairman of the Board of  Directors  from  February  1979 to February
1988. In February 1988, he was elected  Chairman and General  Counsel of CERBCO.
Mr. Erikson  currently is a Director and Chairman of Insituform  East and serves
as a member of the Chief Executive  Officer Committee of Insituform East. He was
a Director,  Chairman and a member of the Chief Executive  Officer  Committee of
Capitol Office  Solutions from October 1987 to June 30, 1997. From December 1972
to July 1976, he was employed as Vice President - Legal by National Securities &
Research  Corporation and, prior thereto,  he was employed as an attorney to the
Dreyfus  Corporation.  He is a  member  of the  Bar of the  State  of New  York,
District of Columbia and  Commonwealth  of Virginia.  Mr.  Erikson  holds a B.S.
degree in Business  Administration from Pennsylvania State University,  an LL.B.
degree from Fordham  University  Law School,  and an LL.M.  degree from New York
University Law School.

         Mr. Hartman joined CERBERONICS in August 1979 as Controller and Manager
of the Accounting  Department.  In November 1981, he was elected  Assistant Vice
President and in April 1984, he was elected Vice President & Treasurer, in which
positions he served until his departure from CERBERONICS in September 1985. From
October  1985  to  February   1988,   Mr.  Hartman  was  Controller  of  Dynamac
International,  Inc. He  returned to  CERBERONICS  and his former  positions  in
February 1988 and, in addition,  was elected Vice  President  and  Controller of
CERBCO.   In  June  1991,  he  joined  Insituform  East  as  Vice  President  of
Administration  and Secretary.  He was also elected  Secretary of CERBCO in June
1991 and Treasurer and Chief  Financial  Officer in December 1997.  From 1976 to
1977,  Mr.  Hartman was an  accountant  for Coopers & Lybrand,  and from 1977 to
1979,  he was a partner in the  accounting  firm of  Hartman  and  Hartman.  Mr.
Hartman is a Certified Public Accountant and holds a B.S. degree from the United
States Naval Academy,  a B.A. degree from the University of South Florida and an
M.B.A. degree from The George Washington University.

         Mr.  Hayes  is a  Managing  Director  of  Private  Client  Services  at
Friedman,  Billings,  Ramsey  Group,  Inc. as of May 1999. He was a Director and
Vice  Chairman of United Bank from June 1997 to May 1999.  He was a Director and
Executive  Vice  President  of  George  Mason  Bankshares,  Inc.  and  Chairman,
President  and CEO of The George Mason Bank,  N.A.,  from May 1996 to June 1997.
Previously,  he was Chairman of the Board of Palmer National  Bancorp,  Inc. and
The Palmer  National  Bank from March 1985 to May 1996,  and President and Chief
Executive Officer from March 1983 to May 1996. Mr. Hayes serves as a Director of
Insituform  East and was a Director of Capitol Office  Solutions  until June 30,
1997. He is also a Director of Citizens Corporation in Eastman,  Georgia, and is
a member  of the Board of  Visitors  of the  University  of North  Carolina.  In
January  1995,  he  completed  a three  year term as a Director  of the  Federal
Reserve Bank of Richmond.  Mr. Hayes holds a B.A.  degree from the University of
North  Carolina  and an executive  management  degree from  Columbia  University
School of Business.

         Mr. Kincheloe has been a practicing attorney and businessman in Fairfax
County,  Virginia,  since 1967. Mr. Kincheloe serves as a Director of Insituform
East and was a Director of Capitol Office Solutions until June 30, 1997. He also
currently  serves on the Board,  as Finance  Chairman,  of Flint Hill  School in
Oakton,  Virginia,  and on the Board of Trustees for Randolph-Macon  College. He
previously  served on the Board of Herndon Federal Savings & Loan and then First
Federal  Savings & Loan of Alexandria.  Mr.  Kincheloe  holds a B.A. degree from
Randolph-Macon  College  and a J.D.  degree  from T.C.  Williams  School of Law,
University of Richmond.

         (2) Directorships. See Part III, Item 10 (e)(1), paragraphs 1, 2, 4 and
5, as to  Messrs.  Robert  Erikson  and  George  Erikson,  Hayes and  Kincheloe,
respectively.

(f)      Involvement in Certain Legal Proceedings

         Not applicable.

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

         Section  16(a) of the  Securities  Exchange  Act of 1934  requires  the
Company's directors, executive officers and beneficial owners of greater than 10
percent of any class of the Company's equity securities ("Reporting Persons") to
file with the Securities and Exchange  Commission  initial  reports of ownership
and reports of changes in ownership of the Company's equity  securities.  To the
best of the  Company's  knowledge,  based  solely on its review of the copies of
such reports furnished to the Company during and with respect to the fiscal year
ended June 30,  2000,  all  Section  16(a)  filing  requirements  applicable  to
Reporting Persons were complied with during the fiscal year.

Item 11.  Executive Compensation

         CERBCO is a parent holding company with a controlling interest, through
its wholly-owned  subsidiary,  CERBERONICS,  in Insituform East ("IEI").  CERBCO
officers  participate  in the  management  of each of  these  subsidiaries.  The
following table sets forth information  concerning the compensation paid to each
of the named  executive  officers of the Company  and its  subsidiaries  for the
fiscal years ended June 30, 2000, 1999 and 1998:



<PAGE>
<TABLE>
                                                      SUMMARY COMPENSATION TABLE
<CAPTION>
                                                                                              Long-Term Compensation
                                                                                            --------------------------
                                                            Annual Compensation                    Awards      Payouts
                                             ---------------------------------------------- ------------------ -------
         Name                                                        Other        Total     Restricted
          and                                                        Annual       Annual      Stock   Options/   LTIP     All Other
       Principal                              Salary      Bonus    Compensation Compensation  Awards   SARs    Payouts  Compensation
       Position          Year                  ($)          ($)        ($) 2/     ($)          ($)     (#)       ($)        ($) 3/
------------------------------------------------------------------------------------------------------------------------------------

<S>                      <C>                <C>             <C>        <C>     <C>              <C>   <C>           <C>      <C>
Robert W. Erikson        2000   CERBCO      $ 11,819        $0         $0      $ 11,819         $0     5,000        $0       $     0
Director & President 1/         IEI          223,106         0          0       223,106          0    15,000         0         1,140
                                CERBERONICS   93,359         0          0        93,359          0         0         0             0
                                            --------        --         --      --------         --    ------        --       -------
                                            $328,284        $0         $0      $328,284         $0    20,000        $0       $ 1,140
                                            ========        ==         ==      ========         ==    ======        ==        ======

                         1999   CERBCO      $ 11,475        $0         $0      $ 11,475         $0     5,000        $0       $     0
                                IEI          216,607         0          0       216,607          0    15,000         0        13,076
                                CERBERONICS   90,640         0          0        90,640          0         0         0             0
                                            --------        --         --      --------         --    ------        --       -------
                                            $318,722        $0         $0      $318,722         $0    20,000        $0       $13,076
                                            ========        ==         ==      ========         ==    ======        ==       =======

                         1998   CERBCO      $ 11,480        $0         $0      $ 11,480         $0     5,000        $0       $     0
                                IEI          215,030         0          0       215,030          0    15,000         0         2,345
                                CERBERONICS   90,339         0          0        90,339          0         0         0             0
                                            --------        --         --      --------         --    ------        --       -------
                                            $316,849        $0         $0      $316,849         $0    20,000        $0       $ 2,345
                                            ========        ==         ==      ========         ==    ======        ==        ======

George Wm. Erikson       2000   CERBCO      $ 11,819        $0         $0      $ 11,819         $0     5,000        $0       $     0
Director, Chairman              IEI          223,106         0          0       223,106          0    15,000         0         3,540
 & General Counsel 1/           CERBERONICS   93,359         0          0        93,359          0         0         0             0
                                            --------        --         --      --------         --    ------        --       -------
                                            $328,284        $0         $0      $328,284         $0    20,000        $0       $ 3,540
                                            ========        ==         ==      ========         ==    ======        ==        ======

                         1999   CERBCO      $ 11,475        $0         $0      $ 11,475         $0     5,000        $0       $     0
                                IEI          216,607         0          0       216,607          0    15,000         0        15,476
                                CERBERONICS   90,640         0          0        90,640          0         0         0             0
                                            --------        --         --      --------         --    ------        --       -------
                                            $318,722        $0         $0      $318,722         $0    20,000        $0       $15,476
                                            ========        ==         ==      ========         ==    ======        ==       =======

                         1998   CERBCO      $ 11,480        $0         $0      $ 11,480         $0     5,000        $0       $     0
                                IEI          215,030         0          0       215,030          0    15,000         0         4,745
                                CERBERONICS   90,339         0          0        90,339          0         0         0             0
                                            --------        --         --      --------         --    ------        --       -------
                                            $316,849        $0         $0      $316,849        $0     20,000        $0       $ 4,745
                                            ========        ==         ==      ========         ==    ======        ==        ======

Robert F. Hartman        2000   CERBCO      $  8,729        $0         $0      $  8,729         $0     5,000        $0       $     0
Vice President,                 IEI           94,962         0          0        94,962          0    15,000         0         1,004
 Secretary &                    CERBERONICS    3,089         0          0         3,089          0         0         0             0
 Treasurer                                  --------        --         --      --------         --    ------        --       -------
                                            $106,780        $0         $0      $106,780         $0    20,000        $0       $ 1,004
                                            ========        ==         ==      ========         ==    ======        ==        ======

                         1999   CERBCO      $  8,475        $0         $0      $  8,475         $0         0        $0       $     0
                                IEI           92,195         0          0        92,195          0         0         0         7,626
                                CERBERONICS    3,000         0          0         3,000          0         0         0             0
                                            --------        --         --      --------         --    ------        --       -------
                                            $103,670        $0         $0      $103,670         $0         0        $0       $ 7,626
                                            ========        ==         ==      ========         ==    ======        ==        ======

                         1998   CERBCO      $  9,207    $    0         $0      $  9,207         $0         0        $0       $     0
                                IEI           91,524     2,000          0        93,524          0         0         0         2,874
                                CERBERONICS    2,273         0          0         2,273          0         0         0             0
                                            --------    ------         --      --------         --    ------        --       -------
                                            $103,004    $2,000         $0      $105,004         $0         0        $0       $ 2,874
                                            ========    ======         ==      ========         ==    ======        ==        ======

1/   The Company's Corporate Executive Committee, consisting of the Chairman and
     the  President,  exercises  the  duties and  responsibilities  of the Chief
     Executive Officer of the Company.
2/   None of the named executive officers received perquisites or other personal
     benefits in excess of the lesser of $50,000 or 10% of his total  salary and
     bonus.
3/   Insituform East contributions to the IEI Advantage Plan.
</TABLE>


COMPENSATION PURSUANT TO PLANS

CERBCO, Inc. Plans

CERBCO Supplemental Executive Retirement Plan

         During fiscal year 1994,  CERBCO  entered into  Supplemental  Executive
Retirement  Agreements with Messrs.  Robert  Erikson,  George Erikson and Robert
Hartman  pursuant  to a  Supplemental  Executive  Retirement  Plan (the  "CERBCO
SERP").  The agreements  provide for monthly  retirement  benefits of 50% of the
executive's  final aggregate  monthly salary from CERBCO and its subsidiaries as
defined in and limited by the executive's agreement,  for Messrs. Robert Erikson
and George Erikson.  In the case of Mr. Robert Hartman,  the agreement  provides
for 25% of the executive's  final  aggregate  monthly salary from CERBCO and its
subsidiaries  as  defined  in and  limited by the  executive's  agreement.  Each
covered  executive's  benefit under the plan is payable in equal monthly amounts
for the remainder of the covered executive's life beginning as of any date on or
after his 62nd birthday (at the covered executive's election) but not before his
termination  of service.  Payments  under the CERBCO SERP are not subject to any
reduction  for Social  Security or any other  offset  amounts but are subject to
Social Security and other applicable tax withholding.

         To compute the monthly  retirement  benefits,  the  percentage of final
monthly salary is multiplied by a ratio (not to exceed 1) of:

         the completed years of employment by CERBCO after 1992
                  to
         the total number of years of  employment  after 1992 that the executive
         would have completed if he had continued in employment to age 65.

         If the executive dies prior to retirement,  the executive's beneficiary
will receive a  pre-retirement  death  benefit  under a split  dollar  insurance
arrangement.  The  executive's  beneficiary  will  receive a  one-time  lump sum
payment in the amount of $1,400,000  (in the case of Messrs.  Robert  Erikson or
George  Erikson)  or  $700,000  (in the  case  of Mr.  Robert  Hartman).  If the
executive dies after  commencement  of the payment of retirement  benefits,  but
before receiving 180 monthly payments, the executive's beneficiary will continue
to receive  payments until the total payments  received by the executive  and/or
his beneficiary equal 180.

         The CERBCO SERP is  technically  unfunded,  except as described  below.
CERBCO will pay all benefits from its general revenues and assets. To facilitate
the payment of benefits  and  provide the  executives  with a measure of benefit
security without  subjecting the CERBCO SERP to various rules under the Employee
Retirement  Income  Security Act of 1974,  CERBCO has established an irrevocable
trust called the CERBCO,  Inc.  Supplemental  Executive  Retirement  Trust. This
trust is subject to the claims of CERBCO's  creditors in the event of bankruptcy
or  insolvency.  The  trust has  purchased  life  insurance  on the lives of the
executive officers covered by the Supplemental  Executive Retirement  Agreements
to provide for  CERBCO's  financial  obligations  under the plan.  Assets in the
trust  consist of the cash  surrender  values of the  executive  life  insurance
policies and are carried on CERBCO's balance sheet as assets. The trust will not
terminate  until  participants  and  beneficiaries  are no  longer  entitled  to
benefits under the plan.  Upon  termination,  all assets  remaining in the trust
will be returned to CERBCO.

         The  following  tables set forth the annual  retirement  benefits  that
would be received under the CERBCO SERP at various compensation levels after the
specified years of service:


<TABLE>
Pension Plan Table Where Formula Provides 50% of Compensation 1/

<CAPTION>
                          Years of Service (Under Plan)
---------------------------------------------------------------------------------------------------------------------
(Final) Remuneration
                                     15                  20                 25                  30                 35
                                     --                  --                 --                  --                 --

<S>         <C>                 <C>                 <C>                <C>                 <C>                <C>
            $125,000            $58,594             $62,500            $62,500             $62,500            $62,500
            $150,000            $70,313             $75,000            $75,000             $75,000            $75,000
            $175,000            $82,031             $87,500            $87,500             $87,500            $87,500
            $200,000            $93,750            $100,000           $100,000            $100,000           $100,000
            $225,000           $105,469            $112,500           $112,500            $112,500           $112,500
            $250,000           $117,188            $125,000           $125,000            $125,000           $125,000
            $300,000           $140,625            $150,000           $150,000            $150,000           $150,000
            $350,000           $154,627            $175,000           $175,000            $175,000           $175,000
            $400,000           $154,627            $182,101           $200,000            $200,000           $200,000
            $450,000           $154,627            $182,101           $201,055            $221,961           $225,000
            $500,000           $154,627            $182,101           $201,055            $221,961           $245,085

1/ Assumes at the time the Plan was  established  (i) the  individual is age 50,
(ii) maximum  covered  compensation  is $250,000 and is increased 2% (compounded
annually) each year of service after 1992, and (iii)  retirement is effective at
the beginning of the year.
</TABLE>
<TABLE>

Pension Plan Table Where Formula Provides 25% of Compensation 2/

<CAPTION>
                          Years of Service (Under Plan)
---------------------------------------------------------------------------------------------------------------------
(Final) Remuneration
                                     15                  20                 25                  30                 35
                                     --                  --                 --                  --                 --

<S>         <C>                 <C>                 <C>                <C>                 <C>                <C>
             $50,000             $8,929             $11,905            $12,500             $12,500            $12,500
             $75,000            $13,393             $17,858            $18,750             $18,750            $18,750
            $100,000            $17,858             $23,810            $25,000             $25,000            $25,000
            $200,000            $21,206             $31,218            $36,190             $39,957            $44,115
            $300,000            $21,206             $31,218            $36,190             $39,957            $44,115
            $400,000            $21,206             $31,218            $36,190             $39,957            $44,115
            $500,000            $21,206             $31,218            $36,190             $39,957            $44,115

2/ Assumes at the time the Plan was  established  (i) the  individual is age 45,
(ii) maximum  covered  compensation  is $90,000 and is increased 2%  (compounded
annually) each year of service after 1992, and (iii)  retirement is effective at
the beginning of the year.
</TABLE>

         Each executive's covered compensation under the CERBCO SERP is equal to
his final base  salary as defined in and limited by the  executive's  agreement.
The maximum covered  compensation for Messrs.  Robert Erikson and George Erikson
is limited to $20,834  per month  ($250,000  annually),  increased  2%  annually
beginning in 1993. The maximum  covered  compensation  for Mr. Robert Hartman is
limited to $7,500 per month ($90,000 annually),  increased 2% annually beginning
in 1993.

         The following  table sets forth  information  concerning  vested annual
benefits  as of  June  30,  2000  for  the  executives  listed  in  the  Summary
Compensation Table covered by the CERBCO SERP:
<TABLE>
<CAPTION>

                                Years of Credited      Current Annual Covered        Vested          Vested Annual
Name                            Service Under Plan          Compensation            Percentage          Benefit
----                            ------------------          ------------            ----------          -------

<S>                                      <C>                  <C>                     <C>               <C>
Robert W. Erikson                        8                    $287,171                44.44%            $63,816
George Wm. Erikson                       8                    $287,171                53.33%            $78,579
Robert F. Hartman                        8                    $103,382                40.00%            $10,338
</TABLE>

CERBCO 1997 Directors' Stock Option Plan

         CERBCO adopted, with stockholder approval at the 1997 Annual Meeting of
Stockholders,  the CERBCO,  Inc. 1997 Board of Directors' Stock Option Plan (the
"CERBCO  1997  Directors'  Plan").  The  purpose of this plan is to promote  the
growth and general  prosperity of CERBCO by permitting the Company,  through the
granting  of options to  purchase  shares of its Common  Stock,  to attract  and
retain the best available persons as members of CERBCO's Board of Directors with
an  additional  incentive  for such persons to  contribute to the success of the
Company.  A maximum of  125,000  shares of Common  Stock may be made  subject to
options under the CERBCO 1997 Directors'  Plan.  Options shall be granted to all
directors of CERBCO pursuant to the terms of the plan. Each option granted under
the CERBCO Directors' Plan entitles each director to whom such option is granted
the right to purchase  shares of CERBCO's  Common Stock at a  designated  option
price, any time and from time to time, within five years from the date of grant.

         The CERBCO Board of Directors  administers  the CERBCO 1997  Directors'
Plan and has  exclusive  authority  to  interpret,  construe and  implement  the
provisions  of the plan,  except as may be  delegated in whole or in part by the
Board to a committee  of the Board which may consist of three or more members of
the Board. No such  delegation of authority has been made.  Each  determination,
interpretation  or other  action  that may be taken  pursuant to the CERBCO 1997
Directors'  Plan by the  Board is  final  and  binding  and  conclusive  for all
purposes and upon all persons. The Board from time to time may amend the plan as
it deems necessary to carry out the purposes thereof.

         The terms of the CERBCO 1997  Directors'  Plan  contemplated  that each
director  of the Company be granted an option to  purchase  5,000  shares of the
Company's Common Stock each year for five years, for a total of 25,000 shares of
Common Stock per director,  beginning in fiscal year 1997. On December 10, 1999,
options on a total of 20,000 shares of Common Stock were granted to directors of
the Company  (options on 5,000 shares to each of four  directors) at a per share
price of $5.375. No options available under the plan were exercised by directors
of the Company during fiscal year 2000.

Insituform East, Incorporated Plans

Insituform East Employee Advantage Plan

         As executive  officers of  Insituform  East,  Messrs.  Robert  Erikson,
George  Erikson  and  Robert  Hartman   participate  in  the  Insituform   East,
Incorporated  Employee  Advantage  Plan  (the  "IEI  Advantage  Plan").  The IEI
Advantage Plan is a  noncontributory  profit sharing  (retirement) plan in which
all employees not covered by a collective bargaining agreement and employed with
Insituform East for at least one year are eligible to  participate.  No employee
is covered by a  collective  bargaining  agreement.  The IEI  Advantage  Plan is
administered by the Insituform East Board of Directors which determines,  at its
discretion, the amount of Insituform East's annual contribution.  The Insituform
East Board of Directors  can authorize a  contribution,  on behalf of Insituform
East, of up to 15% of the compensation  paid to  participating  employees during
the year.  The plan is  integrated  with  Social  Security.  Each  participating
employee is allocated a portion of Insituform East's  contribution  based on the
amount of that  employee's  compensation  plus  compensation  above FICA  limits
relative to the total  compensation  paid to all  participating  employees  plus
total compensation above FICA limits.  Amounts allocated under the IEI Advantage
Plan  begin to vest  after  three  years of  service  (at which  time 20% of the
contribution  paid vests) and are fully vested after seven years of service.  No
contribution was authorized for the fiscal year ended June 30, 2000.

         The IEI Advantage Plan also includes a salary  reduction profit sharing
feature under Section 401(k) of the Internal  Revenue Code. Each participant may
elect to defer a portion of his  compensation by any whole percentage from 2% to
16% subject to certain  limitations.  As mandated by the plan,  Insituform  East
contributed an employer matching  contribution equal to 25% of the participant's
deferred  compensation up to a maximum of 1.5% of the  participant's  total paid
compensation  for the fiscal year.  Participants are 100% vested at all times in
their deferral and employer matching accounts. During the fiscal year ended June
30, 2000,  Insituform  East made the following  contributions  for the Company's
officers:


<TABLE>
<CAPTION>
Names and Capacities in Which                                     Contributions for           Vested Percent
Cash Contributions Were Made                                      Fiscal Year 2000  1/        as of 6/30/00
----------------------------                                      ----------------            --------------

<S>                                                                     <C>                          <C>
George Wm. Erikson, Chairman                                            $2,400                       100%
Robert W. Erikson, President                                            $    0                       100%
Robert F. Hartman, Vice President - Administration & Secretary          $  337                       100%
Executive Officers of Insituform East as a Group,
  (6 persons, including those named above)                              $7,199                        N/A

1/   Total  contributions  to employees  of $78,810  include  Insituform  East's
     matching  contribution of $54,760 and reallocated  amounts totaling $24,050
     forfeited by former participants who terminated  employment with Insituform
     East during fiscal year 2000.
</TABLE>

Insituform East 1999 Board of Directors' Stock Option Plan

         Insituform East adopted,  with stockholder  approval at the 1999 Annual
Meeting  of  Stockholders,  the  Insituform  East,  Incorporated  1999  Board of
Directors'  Stock Option Plan (the "IEI 1999 Directors'  Plan").  The purpose of
this plan is to promote the growth and general  prosperity of Insituform East by
permitting  Insituform East,  through the granting of options to purchase shares
of its Common Stock, to attract and retain the best available persons as members
of Insituform  East's Board of Directors  with an additional  incentive for such
persons to contribute to the success of Insituform East. The term of the plan is
for ten years, unless terminated sooner by the Board of Directors.  The IEI 1999
Directors' Plan is  administered  and options are granted by the Insituform East
Board of Directors.  As directors of Insituform East, Messrs. Robert Erikson and
George Erikson participate in this plan.

         Each grant of options under the IEI 1999  Directors'  Plan will entitle
each  Insituform  East  director  to whom such  options are granted the right to
purchase 15,000 shares of Insituform  East's Common Stock at a designated option
price, any time and from time to time, within five years from the date of grant.
Options are granted  under the IEI  Directors'  Plan each year for five years to
each member of the Board of Directors of Insituform  East serving as such on the
date of grant;  that is, for each  director  serving for five years,  a total of
five options covering in the aggregate 75,000 shares of Common Stock (subject to
adjustments upon changes in the capital structure of Insituform East). Under the
terms of this plan, up to 525,000 shares of Insituform  East's Common Stock have
been reserved for directors of Insituform East.

         On December 10,1999, options on a total of 105,000 shares of Insituform
East's  Common Stock were granted to directors of  Insituform  East  (options on
15,000 shares to each of then seven directors,  including Messrs. Robert Erikson
and George Erikson) at a per share option price of $1.328.  No options available
under this plan were  exercised by directors of  Insituform  East during  fiscal
year 2000.

Insituform East 1994 Board of Directors' Stock Option Plan

         Insituform East adopted,  with stockholder  approval at the 1994 Annual
Meeting  of  Stockholders,  the  Insituform  East,  Incorporated  1994  Board of
Directors Stock Option Plan (the "IEI 1994 Directors' Plan). The purpose of this
plan is the same as the IEI 1999  Directors'  Plan.  The term of the plan is for
ten years,  unless  terminated  sooner by the Board of  Directors.  Options were
first  granted to directors on December 9, 1994 and each of the four  succeeding
Board of Directors  meetings  following the Annual  Meetings of  Stockholders in
1995,  1996,  1997 and 1998.  Each grant of options under the plan entitles each
director to whom such options were granted the right to purchase  15,000  shares
of  Insituform  East's Common Stock at a designated  option price,  any time and
from time to time, within five years from the date of grant. Although no further
options  are  anticipated  to be granted  under this  plan,  options  previously
granted,  and which have not already been  exercised or expired,  will remain in
effect until exercise or expiration, whichever comes first. No options available
under the plan were exercised by directors of Insituform East during fiscal year
2000.  Under the terms of this plan,  up to 360,000  shares of  Insituform  East
Common Stock remain reserved for the directors of Insituform  East. As directors
of Insituform  East,  Messrs.  Robert Erikson and George Erikson  participate in
this plan.
OPTION/SAR GRANTS TABLE

     The  following  table sets forth  information  concerning  options or Stock
Appreciation  Rights  granted  to each of the named  executive  officers  during
fiscal  year  2000  under  the  CERBCO  1997  Directors'  Plan  and the IEI 1999
Directors' Plan:

<TABLE>
<CAPTION>
                      OPTION/SAR GRANTS IN LAST FISCAL YEAR
                                                                                                  Potential Realized
                                                                                                   Value at Assumed
                                              Individual Grants                                 Annual Rates of Stock
                                                                                                  Price Appreciation
                                                                                                   for Option Term
                         ------------------------------------------------------------           -----------------------
                              Option/        % of Total Options/SARs     Exercise or   Expiration
           Name                 SARs         Granted to Employees in         Base         Date      5% ($)   10% ($)
                            Granted (#)            Fiscal Year            ($/Share)
--------------------------- ------------- ------------------------------ ------------- ----------- --------- ---------
Robert W. Erikson
  CERBCO 1997
<S>                            <C>                      <C>                  <C>        <C>        <C>       <C>
     Directors' Plan            5,000                   25%                  $5.375     12/10/04   $7,425    $16,405
  IEI 1999 Directors' Plan     15,000                   14%                  $1.328     12/10/04   $5,505    $12,165

George Wm. Erikson
CERBCO 1997
     Directors' Plan            5,000                   25%                  $5.375     12/10/04   $7,425    $16,405
  IEI 1999 Directors' Plan     15,000                   14%                  $1.328     12/10/04   $5,505    $12,165
</TABLE>

AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUE

         No option or Stock Appreciation Right grants made under the CERBCO 1997
Directors'  Plan or the IEI 1999 and 1994  Directors'  Plans to any of the named
executive  officers were exercised  during fiscal year 2000. The following table
sets forth information concerning option or Stock Appreciation Right grants held
by each of the named executive officers under all plans as of June 30, 2000:

<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
--------------------------------------------------------------------------------

<CAPTION>
                                                               Number of Unexercised       Value of Unexercised in the
                                                               Options/SARs at FY-End(#)   Money Options/SARs at FY-End($)
                                                               -------------------------   -------------------------------
                                 Shares
Name                             Acquired     on  Value  Realized  Exercisable  Unexercisable Exercisable Unexercisable
                                 Exercise (#)     ($)
-------------------------------- ---------------- ---------------- ------------ ------------- ----------- -------------

Robert W. Erikson
  CERBCO 1997
<S>                                     <C>             <C>          <C>             <C>        <C>            <C>
    Directors' Plan                     0               $0           15,000          0          $    0         $0
  IEI 1994 Directors' Plan              0               $0           60,000          0          $4,460         $0
  IEI 1999 Directors' Plan              0               $0           15,000          0          $1,648         $0

George Wm. Erikson
  CERBCO 1997
    Directors' Plan                     0               $0           15,000          0          $    0         $0
  IEI 1994 Directors' Plan              0               $0           60,000          0          $4,460         $0
  IEI 1999 Directors' Plan              0               $0           15,000          0          $1,648         $0
</TABLE>

REPRICING OF OPTIONS/SARs

         Neither  the  Company  nor its  subsidiaries  adjusted  or amended  the
exercise price of stock options or SARs  previously  awarded to any of the named
executive officers during fiscal year 2000.

LONG-TERM INCENTIVE PLAN AWARDS

         Neither the Company nor its subsidiaries  have any long-term  incentive
plans.

DEFINED BENEFIT OR ACTUARIAL PLANS

         The  Company  maintains  a  defined  benefit  plan  called  the  CERBCO
Supplemental  Executive Retirement Plan to provide annual retirement benefits to
covered  executives.  See "Compensation  Pursuant to Plans - CERBCO, Inc. Plans,
CERBCO  Supplemental  Executive  Retirement  Plan" as to the  basis  upon  which
benefits under the Plan are computed.

EMPLOYMENT  CONTRACTS  AND  TERMINATION  OF  EMPLOYMENT  AND   CHANGE-IN-CONTROL
ARRANGEMENTS

         There  are  no  employment   contracts   between  the  Company  or  its
subsidiaries and any named executive officer.  There are no arrangements between
the Company or its  subsidiaries  and any named executive  officer,  or payments
made  to  an  executive  officer,  that  resulted,  or  will  result,  from  the
resignation,  retirement or other  termination of employment with the Company or
its subsidiaries, in an amount that exceeds $100,000.

COMPENSATION OF DIRECTORS

         Non-officer  directors  of the Company are paid an annual fee of $5,000
and an attendance fee of $1,000 for each meeting of the Board of Directors,  and
each committee meeting,  attended in person.  Meetings attended by telephone are
compensated at the rate of $200.  Directors who are also officers of the Company
do not receive separate fees for service as directors, but are eligible with all
other directors to participate in the CERBCO 1997 Directors'  Stock Option Plan,
as  described  under the  section  entitled,  "Compensation  Pursuant to Plans -
CERBCO,  Inc.  Plans." All directors of the Company are  reimbursed  for Company
travel-related expenses.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         The  Company's   Board  of  Directors  does  not  have  a  compensation
committee; the Board of Directors as a whole serves in that equivalent capacity.
Messrs.  George  Erikson  and  Robert  Erikson,  both  members  of the  Board of
Directors and executive officers of the Company, holding the offices of Chairman
& General Counsel and President,  respectively,  participated during fiscal year
2000 in deliberations  of the Board of Directors  concerning  executive  officer
compensation.

         Messrs. George Erikson and Robert Erikson are both members of the Board
of Directors and executive  officers of Insituform  East. In their capacities as
directors of this subsidiary company,  they participated during fiscal year 2000
in  deliberations  of  its  Board  of  Directors  concerning  executive  officer
compensation.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

(a)      Security Ownership of Certain Beneficial Owners

         The following  table  reflects,  as of June 30, 2000,  the only persons
known to the Company to be the  beneficial  owners of more than five  percent of
any class of CERBCO's voting securities:
<TABLE>
<CAPTION>

Name & Address of                                                  Amount and Nature of
Beneficial Owner                      Title of Class               Beneficial Ownership           Percent of Class
----------------                      --------------               --------------------           ----------------

<S>                                     <C>                               <C>      <C>                     <C>
Robert W. Erikson                       Common Stock                       60,700  1/                       5.1%
3421 Pennsy Drive                       Class B Common Stock              131,750  1/                      44.9%
Landover, MD 20785

George Wm. Erikson                      Common Stock                       59,602  2/                       5.0%
3421 Pennsy Drive                       Class B Common Stock              115,814  2/                      39.5%
Landover, MD 20785

Schaenen Capital Management, LLC        Common Stock                      165,000  3/                      13.9%
200 Park Avenue, Suite 3900
New York, NY 10166

1/   Record and beneficial ownership, sole voting and sole investment power.
2/ Record and beneficial ownership. Includes 2,246 shares of each class of stock
owned jointly with Mr. Erikson's  spouse, as to which there is shared voting and
investment power. 3/ Beneficial ownership, sole voting and sole investment power
as publicly  disclosed in Form 4 filed on February 14, 2000 with the  Securities
and Exchange Commission.
</TABLE>

(b)      Security Ownership of Management

         The following information is furnished with respect to all directors of
CERBCO who were the beneficial owners of any shares of CERBCO's Common Stock and
Class B Common Stock as of June 30, 2000,  and with respect to all directors and
officers of CERBCO as a group:
<TABLE>
<CAPTION>

                                                        Amount & Nature of Beneficial Ownership
Name of Beneficial Owner      Title of Class           Owned Outright        Exercisable Options  Percent of Class
------------------------      --------------           --------------        -------------------  ----------------
<S>                                                           <C>       <C>           <C>                   <C>
Robert W. Erikson               Common Stock                  60,700    1/            15,000                6.1%
                                Class B Common Stock         131,750    1/                 0               44.9%

George Wm. Erikson              Common Stock                  59,602    2/            15,000                6.0%
                                Class B Common Stock         115,814    2/                 0               39.5%

Webb C. Hayes, IV               Common Stock                   4,500                  15,000                1.6%

Paul C. Kincheloe, Jr.          Common Stock                   7,500                  15,000                1.8%

All  Directors and Officers as  Common Stock                 132,302                  60,000               15.4%
   a    Group    (5    persons  Class B Common Stock         247,564                       0               84.4%
   including    those    named
   above) 3/

1/ Record and beneficial ownership, sole voting and sole investment power.
2/ Record and beneficial ownership. Includes 2,246 shares of each class of stock
owned jointly with Mr. Erikson's  spouse, as to which there is shared voting and
investment  power.
3/ Mr. George  Erikson also is the  beneficial  owner of 16,500 shares of Common
Stock  (less  than  1% of  such  class)  of  Insituform  East,  Incorporated,  a
subsidiary  of the  Company.  In  addition,  Messrs.  George  Erikson and Robert
Erikson each are the beneficial  owners of exercisable  options on 75,000 shares
of the Common  Stock  (approximately  1.7% of such  class) of  Insituform  East,
Incorporated,  pursuant to the Insituform East 1999 and 1994 Board of Directors'
Stock Option Plans.
</TABLE>

(c)      Changes in Control

         There were no changes in control of the  Company  during the year ended
June 30, 2000.

Item 13.  Certain Relationships and Related Transactions

(a)      Transactions with Management and Others

         See Item 13.(c) below.

(b)      Certain Business Relationships

         Not applicable.

(c)      Indebtedness of Management

         In accordance with the Company's By-laws and pursuant to authorizations
by the Board of Directors,  the Company made certain  advancements to Mr. George
Erikson,  Director,  Chairman & General Counsel, and certain advancements to Mr.
Robert  Erikson,  Director and  President  (together the  "Eriksons")  for their
respective  legal fees and  expenses  which each  incurred  for  personal  legal
representation  in connection  with a  stockholder  lawsuit filed in August 1990
challenging  a  proposed  but  unconsummated  transaction  between  each  of the
Eriksons and Insituform Technologies,  Inc. The Company expensed and advanced in
total  $600,482 to Mr. George Erikson and $600,482 to Mr. Robert  Erikson.  Such
advances were made subject to an agreement with the Company  executed by each of
the  Eriksons  and  delivered  to the  Board  of  Directors  that  should  it be
ultimately  determined by the Board of Directors or otherwise in accordance with
Section 145 of  Delaware  Corporation  Law that Mr.  George  Erikson  and/or Mr.
Robert  Erikson  were not  entitled to  indemnification  for such legal fees and
expenses under Section 145 of Delaware  Corporation  Law, such advances would be
reimbursed by Mr. George Erikson and/or Mr. Robert Erikson to the Company.

         Pending a final outcome of these legal proceedings, and as contemplated
by the Company's By-laws, the Board of Directors had deferred  consideration and
ultimate  determination  of  entitlement of Mr. George Erikson and/or Mr. Robert
Erikson to  indemnification  by the Company  for their legal fees and  expenses.
These  legal  proceedings  are now  complete.  On June 30,  2000,  the  Board of
Directors,  having  completed its  consideration  of the  Erikson's  request for
indemnification  under Section 145 of Delaware  Corporation Law, determined that
Mr. George Erikson and Mr. Robert Erikson were each entitled to  indemnification
for 96% of the total  amounts  of legal  fees and  expenses  for which  they had
requested  indemnification and for which they had received certain advances.  In
accordance with their  agreements  with the Company,  Mr. George Erikson and Mr.
Robert  Erikson  have each  repaid to the  Company  all amounts in excess of the
amounts advanced to them.

(d)      Transactions with Promoters

         Not applicable.
                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)      (1)      Financial Statements

The following consolidated financial statements of CERBCO, Inc. and subsidiaries
are included in PART II, Item 8:
                                                                           Pages

Independent Auditors' Report                                                  15

Consolidated Statements of Operations for the Years Ended
June 30, 2000, 1999 and 1998                                                  16

Consolidated Balance Sheets as of June 30, 2000 and 1999                   17-18

Consolidated Statements of Stockholders' Equity for the Years
Ended June 30, 2000, 1999 and 1998                                            19

Consolidated Statements of Cash Flows for the Years Ended
June 30, 2000, 1999 and 1998                                                  20

Notes to Consolidated Financial Statements                                 21-32

         (2)      Financial Statement Schedules

         Schedules  have been omitted for the reason that they are not required,
or are  not  applicable,  or that  the  required  information  is  given  in the
financial statements and notes thereto.

         (3)      Exhibits

         Exhibit
         Number *                                                         Pages
                                                                          -----
         3.1             CERBCO, Inc. Certificate of Incorporation        47-55

         3.2             CERBCO, Inc. By-Laws                             56-67

         10.1            Insituform Process Sub-License Agreement -
                         Maryland, Virginia, D.C. Territory               68-78

         10.2            Insituform Process Sub-License Agreement -
                         Delaware, Eastern Pennsylvania Territory         79-93

         10.3            Insituform Process Sub-License Agreement -
                         Western Pennsylvania Territory                   94-112

         10.4            Insituform Process Sub-License  Agreement -
                         Northern Ohio Territory                         113-131

         10.5            Insituform Process Sub-License Agreement -
                         Southern Ohio Territory                         132-150

         10.6            Insituform Process Sub-License Agreement -
                         West Virginia Territory                         151-168

         10.7            Insituform Tube Supply Agreement                169-178

         10.8            SAW Agreement                                   179-180

         10.9            Supplemental Retirement Agreement               181-185

         10.10           1997 Board of Directors  Stock  Option Plan
                         (Incorporated  by  reference to CERBCO,  Inc.
                         Proxy Statement  filed in connection  with
                         the Company's  Annual Meeting of Stockholders
                         on December 19, 1997)

         27              Financial Data Schedule,  which is submitted
                         electronically to the Securities and Exchange
                         Commission for information only and is not
                         included here.

         99              CERBCO,  Inc.  Consolidating  Schedules:        186-189
                         Statement of Operations  Information  for the
                         Year Ended June 30, 2000;  Balance Sheet
                         Information and  Consolidating  Elimination
                         Entries as of June 30, 2000, and Related
                         Independent Auditors' Report.

* The Exhibit Number used refers to the appropriate  subsection in paragraph (b)
of Item 601 of Regulation S-K.

(b)      Reports on Form 8-K:

No  reports on Form 8-K were filed  during the last  quarter of the fiscal  year
ended June 30, 2000.

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned,  thereunto duly authorized, in Landover, Maryland, on
September 25, 2000.


                                   /s/ ROBERT  W. ERIKSON
                                   -----------------------------------------
                                   Robert W. Erikson
                                   President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the  following  persons on behalf of the  Registrant in
the capacities and on the dates indicated.

Signature & Title                     Capacity                    Date



/s/  ROBERT W. ERIKSON
-------------------------------------                            Sept. 25, 2000
Robert W. Erikson                     Director,
President                             Principal Executive Officer



/s/  GEORGE Wm. ERIKSON
-------------------------------------                            Sept. 25, 2000
George Wm. Erikson                    Director,
Chairman & General Counsel            Principal Executive Officer



/s/  ROBERT F. HARTMAN
-------------------------------------                            Sept. 25, 2000
Robert F. Hartman                     Principal Financial Officer,
Vice President, Secretary             Principal Accounting Officer
  & Treasurer



/s/  WEBB C. HAYES, IV
-------------------------------------                            Sept. 25, 2000
Webb C. Hayes, IV                     Director



/s/  PAUL C. KINCHELOE, JR.
-------------------------------------                            Sept. 25, 2000
Paul C. Kincheloe, Jr.                Director