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

                                   FORM 10-KSB

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

For the fiscal year ended:                                       June 30, 2003
                                       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.
           (Name of small business issuer 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)

            Issuer's telephone and fax numbers, including area code:
                               301-773-1784 (tel)
                               301-322-3041 (fax)

Securities registered pursuant to Section 12(b) of the Exchange Act:   None
Securities registered pursuant to Section 12(g) of the Exchange Act:
                     Common Stock, par value $.10 per share
                 Class B Common Stock, par value $.10 per share
                                (Title of Class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.

                        Yes     X          No
                            -----------         ------------

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

The  registrant's  revenues for the fiscal year ended June 30, 2003 (included in
discontinued operations) were $8,880,602.

The aggregate  market value of the  registrant's  voting and  non-voting  common
stock held by non-affiliates of the registrant computed by reference to the last
price at which such stock was sold, as of September 2, 2003, was $8,824,720.

As of September 2, 2003, the following  number of shares of each of the issuer's
classes of common stock were outstanding:
                       Common Stock           1,191,538
                       Class B Common Stock     291,418
                                             ----------
                       Total                  1,482,956

Documents incorporated by reference:  None

Transitional Small Business Disclosure Format:     Yes         No     X
                                                      --------     --------


Total number of pages of this report:  52
Index to Exhibits located at page:  41



<PAGE>
<TABLE>
                                TABLE OF CONTENTS

<CAPTION>
PART I                                                                                                    Page

<S>  <C>                                                                                                    <C>
Item 1.           Description of Business....................................................................3

Item 2.           Description of Property....................................................................8

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

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

PART II

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

Item 6.           Management's Discussion and Analysis of Financial Condition and Results of Operations.....10

Item 7.           Financial Statements......................................................................13

Item 8.           Changes in and Disagreements with Accountants on Accounting and Financial Disclosure......13

Item 8A.          Controls and Procedures...................................................................13

PART III

Item 9.           Directors, Executive Officers, Promoters and Control Persons; Compliance
                  with Section 16(a) of the Exchange Act....................................................32

Item 10.          Executive Compensation....................................................................34

Item 11.          Security Ownership of Certain Beneficial Owners and Management............................40

Item 12.          Certain Relationships and Related Transactions............................................41

Item 13.          Exhibits and Reports on Form 8-K..........................................................41
</TABLE>



                                  CONSOLIDATED
                            STATEMENTS OF OPERATIONS
                                AND BALANCE SHEET
                               Pages 15 through 17



<PAGE>


                                     PART I

Item 1.  Description of Business

(a)      Business Development

     CERBCO, Inc. ("CERBCO", the "Company", "Issuer" or "Registrant") [OTC:CERB]
is  a  parent  holding  company  with  a  controlling   interest,   through  its
wholly-owned subsidiary,  CERBERONICS, Inc. ("CERBERONICS"), in INEI Corporation
("INEI") [OTC:INEI].

     CERBCO was incorporated on December 23, 1987 in the State of Delaware.  The
Company 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.

     Insituform  East,  Incorporated  ("Insituform  East"),  now  known  as INEI
Corporation  from  September  5,  2003,  primarily  rehabilitated  and  repaired
underground sewers and other pipelines, which business constituted the Company's
only industry segment.  Historical  references to Insituform East in this Report
should be read as referring to INEI.

     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  Eastas the Company's  sole  remaining  operating
subsidiary.

     On June 18, 2003,  Insituform East entered into an Asset Purchase Agreement
(the "Agreement") with Insituform Technologies,  Inc. ("ITI"), providing for the
sale to ITI of substantially all of Insituform East's non-real estate assets and
on-going  business.  The  purchase  price  of $5.5  million  was paid in cash at
closing, subject to a 10% escrow. The Agreement also required Insituform East to
change its name to INEI Corporation,  effective with the closing. The closing of
the sale to ITI occurred on September 5, 2003.

     The Agreement provided,  among other things, for the purchase by ITI of (i)
certain of Insituform East's operating vehicles, equipment and inventories, (ii)
all of Insituform  East's ongoing contracts [other than those of Try Tek Machine
Works,  Inc.  ("Try Tek"), a wholly-owned  subsidiary of Insituform  East],  and
(iii) Insituform East's sublicenses.

     On July 24,  2003,  Insituform  East  entered  into a Contract of Sale with
LINLO  Realty  L. L. C.  ("LINLO"),  a  subsidiary  of  Atlantic  Transportation
Equipment,  Ltd.,  providing for the sale to LINLO of all of  Insituform  East's
real property in Landover,  MD. The purchase price of $5.215 million,  including
prior deposits, is payable in cash at closing. The closing, expected to occur by
the end of November 2003, is subject to certain customary conditions,  including
that  LINLO  has a 70-day  period  (commencing  July 24,  2003)  to  ensure  the
suitability of the property for its use and development.

     The principal office and corporate  headquarters of the Company are located
in suburban Washington, D.C., collocated with the offices of INEI at 3421 Pennsy
Drive,  Landover,  Maryland  20785.  The  Company's  telephone  number  is (301)
773-1784 and its fax number is (301) 322-3041.

(b)  Business of Issuer

                                  CERBCO, Inc.

     CERBCO is a parent holding  company with a controlling  interest in one now
discontinued operating subsidiary,  Insituform East, and a wholly-owned interest
in CERBERONICS, 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. Substantially
all of the Company's  operations were attributable to Insituform East and, until
September 5, 2003,  a business  description  of CERBCO was  primarily a business
description of Insituform  East, as given below.  See Part III, Item 13, Exhibit
99, "CERBCO, Inc. Consolidating  Schedules:  Statement of Operations Information
for the Year Ended June 30, 2003;  Balance Sheet  Information and  Consolidating
Elimination  Entries as of June 30, 2003" for additional  financial  information
pertaining to Insituform East.

            INEI Corporation (formerly Insituform East, Incorporated)
GENERAL

     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.  The name Insituform  East,  Incorporated  was
adopted on August 24, 1978 and the name INEI  Corporation was adopted  effective
September  5, 2003.  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.  From July
1978 to September  2003,  the Company and its  subsidiaries  were 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) brand 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
allocated a 42.5% interest in partnership profits and losses.

     In May 1989,  the Company  acquired an 80% interest in Try Tek,  located in
Hanover, Pennsylvania,  which 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 March 1999,  ITI gave notice of a purported  termination of the Midsouth
Partners  partnership,  purportedly  terminated  Midsouth  Partners'  Insituform
sublicense  agreement and simultaneously  commenced  litigation to deny Midsouth
Partners  any  rights  to  further  utilize  CIPP  rehabilitation  processes  as
previously  practiced under such license.  The Company  subsequently settled its
disputes with ITI concerning  Midsouth  Partners under the terms of an agreement
executed July 20, 1999 (the "Midsouth Settlement Agreement"). 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,
giving the Company a 100%  interest  in  partnership  profits  and  losses,  and
Midsouth  Partners was then entitled to continue the business of the partnership
under such name. The Insituform  sublicense agreement and its requirement to pay
royalties were relinquished under the settlement,  permitting direct competition
between ITI and Midsouth Partners.  The Midsouth Settlement  Agreement expressly
provided  that  Midsouth   Partners  could  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  then-terminated
Insituform sublicense agreement as the same existed on July 20, 1999.

     In December 1999, ITI again initiated  litigation  against the Company over
the rights of Midsouth  Partners  acquired  pursuant to the Midsouth  Settlement
Agreement  and certain  rights  belonging  to the Company  under its  Insituform
sublicense  agreements.  A trial was held in April  2002 and these  rights  were
confirmed.  However,  due  to  continued  adverse  business  conditions  in  the
southeast region of the United States served by Midsouth  Partners,  the Company
undertook an  indefinite  suspension  of further  Midsouth  Partners  subsidiary
operations as of April 2002.

     On June 18, 2003,  Insituform East entered into an Asset Purchase Agreement
(the "Agreement")  with ITI,  providing for the sale to ITI of substantially all
of Insituform East's non-real estate assets and on-going business.  The purchase
price of $5.5 million was paid in cash at closing,  subject to a 10% escrow. The
closing of the sale to ITI occurred on September 5, 2003.

     The Agreement provided,  among other things, for the purchase by ITI of (i)
certain of Insituform East's operating vehicles, equipment and inventories, (ii)
all of Insituform  East's ongoing  contracts  (other than those of Try Tek), and
(iii) Insituform East's sublicenses and other intellectual  property,  including
its supply agreements.

     On July 24,  2003,  Insituform  East  entered  into a Contract of Sale with
LINLO, providing for the sale to LINLO of all of Insituform East's real property
in Landover, MD. The purchase price of $5.215 million, including prior deposits,
is payable in cash at  closing.  The  closing,  expected  to occur by the end of
November 2003, is subject to certain customary conditions,  including that LINLO
has a 70-day period  (commencing July 24, 2003) to ensure the suitability of the
property for its use and development.

     Until September 5, 2003,  Insituform East and its subsidiaries were 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."  From  1978 to 2003,  the  Company  performed  work in six
Mid-Atlantic  states and the District of Columbia using the patented  Insituform
brand  trenchless  CIPP  process  under   territorially   exclusive   sublicense
agreements.   Utilizing  other   trenchless   CIPP   processes,   the  Company's
wholly-owned   subsidiary,   Midsouth   Partners,   was   entitled   to  operate
substantially without geographic restriction.  The Company's CIPP rehabilitation
processes  utilized a custom  manufactured  unwoven polyester  fiber-felt tubing
with an elastomeric coating on the exterior surface.  The flat, pliable tube was
later  impregnated with a liquid  thermosetting  resin, and the  resin-saturated
material was  inserted in the pipe  through an existing  manhole or other access
point.  Using a temporary  inversion duct and cold water pressure,  the material
was turned inside out as it was forced  through the pipeline.  When the inverted
and inflated tube was fully extended,  the cold water within it was recirculated
through a heat-exchange  unit. The heated water cured 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 were 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,  ITI,  (then known as  Insituform  of North  America,
Inc.),  through its acquisition of Insituform  Group,  Ltd., N.V.,  acquired the
worldwide  patent rights for the Insituform  process.  Until  September 5, 2003,
Insituform East was a sublicensee of ITI for use of the Insituform process.  The
Company  held  six  sublicense  agreements  with ITI that  granted  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 required the Company to pay ITI a base 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. As a result of the SAW Agreement (see below) and its provisions for a
0.5% royalty  setoff,  the Company's base royalty was  effectively  7.5%. In the
event the  Company  performed  the  Insituform  process  outside  its  exclusive
territory,   the  sublicense   agreements  required  it  to  pay  an  additional
"crossover" royalty of from 8% to 12% of the gross contract price in addition to
the regular base royalty due 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 had the right to receive  quarterly  payments
from ITI equal to 0.5% of contract revenue from Insituform process installations
in its  licensed  territory.  In prior  years,  the Company  received  quarterly
payments  from ITI equal to 0.5% of contract  revenues from  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, the Company  entered into a revised supply  agreement
with ITI whereby it  committed  to purchase  90% of its  Insitutube(R)  material
requirements  from ITI for an initial  five year period from  January 1, 1998 to
December 31, 2002. The agreement would have automatically  extended for one year
periods  unless  notice of  termination  was provided by either party six months
prior to the end of any  such  annual  period.  On June 24,  2002,  the  Company
notified ITI of its election to terminate the agreement on December 31, 2002, in
order to negotiate a new agreement.

     Effective  January  1,  2003,  Insituform  East  entered  into a new supply
agreement  with ITI for the  purchase of felt  tubes.  The  agreement  was for a
period of one year and would have  continued  year-to-year  unless  cancelled by
either  party upon the giving of ninety  days  written  notice at any time.  ITI
extended certain favorable pricing for an annual order volume totaling more than
$500,000  in  exchange  for  the  Company's  commitment  to  purchase  its  tube
requirements sole source from ITI.

     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  sublicense
agreement  as the same  existed  on July 20,  1999.  The  Insituform  sublicense
agreement and its  requirement  to pay  royalties  were  relinquished  under the
settlement, permitting direct competition between ITI and Midsouth Partners.

     Effective July 20, 1999, Midsouth Partners also 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  extended for successive one year periods
unless  notice of  termination  was 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  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  was  identical  to  the
Company's licensed Insituform territory.  The Company 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' similar
NuPipe(R) License Agreement was relinquished effective July 20, 1999.

     Initially,  ITI was,  in the North  American  market,  solely a licensor of
technology  and  supplier  of felt  tube to a  licensee  network  consisting  of
approximately a dozen independent contractor installers,  including the Company.
However,  in 1992 ITI moved to become a direct  installer of its CIPP technology
brand and,  since that  time,  has  acquired  all of its former  North  American
licensees,  now  including  the  Company.  Since CERBCO  acquired a  controlling
interest in Insituform  East in 1985, ITI had, on six occasions,  made overtures
or held preliminary discussions to purchase, merge or acquire control of CERBCO,
Insituform East or both. The most recent of these commenced in December 2002.

     On June 18, 2003,  Insituform East entered into an Asset Purchase Agreement
(the "Agreement")  with ITI,  providing for the sale to ITI of substantially all
of Insituform East's non-real estate assets and on-going business.  The purchase
price of $5.5 million was paid in cash at closing,  subject to a 10% escrow. The
closing of the sale to ITI occurred on September 5, 2003.

     The Agreement provided,  among other things, for the purchase by ITI of (i)
certain of Insituform East's operating vehicles, equipment and inventories, (ii)
all of Insituform  East's ongoing  contracts  [other than those of Try Tek], and
(iii) Insituform East's sublicenses and other intellectual  property,  including
its supply agreements.

PATENTS AND COMPETITION

     The general pipeline reconstruction,  rehabilitation and repair business is
significantly   competitive.   The  Company  faced   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  processes  such as the
Insituform process.

     The Insituform  process was developed in the United Kingdom in 1971.  There
are  presently  63 United  States  patents  that  cover  various  aspects of the
Insituform  process.  Two initial  method  patents  relating  to the  Insituform
process (one of which covered material aspects of the inversion process) expired
in 1994.  The last  patent to expire  will  remain in  effect  until  2021.  The
Company's rights to utilize the patents were derived from its licensor, ITI.

     Until their  expiration in 1994, the two initial method patents relating to
the Insituform process  effectively  precluded the entry of other CIPP processes
or contractors into the marketplace.  Therefore,  the Company and North American
licensees  of the  Insituform  process  benefited  from the limited  competitive
alternatives to traditional  "dig-and-replace"  pipeline repair.  While numerous
additional  patents  existed and continue to exist in relation to the Insituform
process, the expiration of the two initial method patents effectively  permitted
the entry into the market of generic CIPP process alternatives, and numerous new
entrants  subsequently  entered the marketplace.  The 2003/2004 directory of the
North  American  Trenchless   Technology   Industry,   published  by  Trenchless
Technology  magazine,   currently  lists  over  230  contractors  and  over  130
manufacturers and suppliers under its "Pipe Relining" category.

     The influx,  over time, of significant  competition and subsequent industry
over-capacity  had a dramatic  adverse effect on the prices that the Company was
able to charge for CIPP installation, as the majority of the Company's potential
customer work shifted from  negotiated to lowest-bid  contracting.  In addition,
generic CIPP competitors typically are required to make relatively small royalty
payments,  if any. The entry of other, lower cost,  competitors into its markets
severely  and  adversely  affected  the  Company's   competitive  position  and,
consequently, its financial condition and results of operations.

CUSTOMERS

     Until  September 5, 2003, the Company  performed  services under  contracts
with governmental  authorities,  private industries and commercial entities.  In
each of the last two fiscal years,  a majority of the Company's  sales came from
state and local  government  entities -- cities,  counties,  state  agencies and
regional  authorities.  In each of these years,  the Company  performed work for
major  customers that were  significant  to its business.  During the year ended
June 30, 2003, a city government in central Virginia and a regional authority in
southwest Ohio accounted for 35% and 26%,  respectively of the now  discontinued
Company's revenues.  During the year ended June 30, 2002, a county government in
the Washington,  D.C.  metropolitan  area, a city government in central Virginia
and a regional  sanitary  authority in southwest Ohio accounted for 38%, 15% and
14%, respectively, of the Company's revenues.

SUPPLIERS

     The Company's materials and equipment were generally available from several
suppliers.  Although  the  Company  believed  that  ITI was the sole  source  of
proprietary  Insitutube  material,  there  are  other  suppliers  of  felt  tube
materials  and  other  materials  used  in  CIPP  rehabilitation.  Under  agreed
disclosures,  the Company had the right to  substitute  an  alternate  polyester
fiber-felt or other tube materials  available in the marketplace.  In connection
with  the  Midsouth  Settlement  Agreement  effective  July 20,  1999,  Midsouth
Partners was no longer an  Insituform  process  licensee and therefore no longer
subject to ITI approval for the use of alternate installation materials.  During
the last two years,  the Company did not  experience any difficulty in obtaining
adequate supplies of felt tube materials.

REVENUE RECOGNITION AND BACKLOG

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

     The  Company's  total  backlog  value  of all  uncompleted  and  multi-year
contract awards was approximately  $11.0 million at June 30, 2003 as compared to
$12.2 million at June 30, 2002.  The  twelve-month  backlog at June 30, 2003 was
approximately  $8.7 million as compared to $5.8  million at June 30,  2002.  The
total backlog value of all uncompleted and multi-year contracts at June 30, 2003
and 2002 included 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 have been  fully  ordered  by  contract  expiration.  While  potentially
helpful  as a possible  trend  indicator,  "total"  and  "twelve-month"  backlog
figures at specific dates were 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  affected  productivity,
with  such  availability  subject  to  unpredictable  changes  such as  weather,
customer-initiated delays and found variances in site conditions.

RESEARCH AND DEVELOPMENT

     The Company has relied on its Insituform  process licensor,  ITI, for major
research and  development of its Insituform  process  product line. From time to
time,  however,  the Company  expended  engineering  efforts to improve its CIPP
installation methods and design techniques for specific customer applications.

GOVERNMENTAL REGULATIONS

     The Company did not experience 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,  2003,  the Company  employed 63 full-time  persons.  Effective
September 6, 2003 and following the sale of Insituform  East's  non-real  estate
assets and on-going business, the Company had 9 full-time employees.

Item 2.  Description of Property

     The Company owns four buildings  totaling  76,700 square feet situated on a
15.45  acre  site in the  Ardwick  Industrial  Park,  Landover,  Maryland.  This
facility  housed the  maintenance,  operations,  marketing,  administration  and
executive  offices of the Company.  Until  September  5, 2003,  the Company also
leased a 5,460 square foot facility in  Cincinnati,  Ohio to serve  customers in
the western region of its licensed territory.

     The Company owns 13,885 square feet of land in Hanover,  Pennsylvania.  Try
Tek's  manufacturing,  administration and storage facilities are housed in three
buildings totaling 6,139 square feet at this site.

     Until  August 15,  2002,  the  Company  also  leased a 15,000  square  foot
facility in Knoxville,  Tennessee to serve customers in the southeastern  United
States.

     On July 24,  2003,  Insituform  East  entered  into a Contract of Sale with
LINLO, providing for the sale to LINLO of all of Insituform East's real property
in Landover,  Maryland.  The purchase price of $5.215  million,  including prior
deposits,  is payable in cash at closing. The closing,  expected to occur by the
end of November 2003, is subject to certain customary conditions, including that
LINLO has a 70-day period  (commencing  July 24, 2003) to ensure the suitability
of the property for its use and development.

Item 3. Legal Proceedings

     Not applicable.

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

     Not applicable.



                                     PART II

Item 5. Market for 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") OTC Bulletin
Board(R)   system    [www.otcbb.com]   and   also   in   daily   "pink   sheets"
[www.pinksheets.com] under the trading symbol CERB.

     The following  table shows the high and low bid  quotations  for the period
indicated as reported by Commodity Systems, Inc.:

                                                            Common Stock
         Fiscal Year Ended June 30, 2003               High              Low
         -------------------------------               ----              ---
         1st Quarter                                   $3.65            $2.55
         2nd Quarter                                   $3.10            $2.51
         3rd Quarter                                   $3.50            $2.75
         4th Quarter                                   $7.80            $2.87

         Fiscal Year Ended June 30, 2002                High              Low
         -------------------------------                ----              ---
         1st Quarter                                   $3.44            $1.90
         2nd Quarter                                   $2.59            $2.10
         3rd Quarter                                   $4.95            $2.50
         4th Quarter                                   $4.75            $3.35

     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.  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 2, 2003, the  approximate  number of shareholders of record
of each class of common equity of CERBCO was as follows:

        Common Stock                               171
        Class B Common Stock                        79

     Holders  of Common  Stock  have one vote per share on all  matters on which
stockholders are entitled to vote together.  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.

(c)  Dividends

     On June 30, 2003, 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 31, 2003 to its  shareholders  of record as of the close of
business on July 15, 2003. On June 13, 2002, 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, 2002 to its  shareholders  of
record as of the close of business on June 30, 2002.

     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 on or about June 30th and a payment date on or about July 15th.

(d)  Securities Authorized for Issuance Under Equity Compensation Plans

     The following table reflects, as of June 30, 2003,  information  concerning
all equity  compensation  plans  approved  by the  Company's  stockholders.  The
Company  has no equity  compensation  plans that have not been  approved  by the
Company's stockholders.



<TABLE>
                      EQUITY COMPENSATION PLAN INFORMATION
                                                                                                       Number of
                                                                                                      Securities
                                                                                                       Remaining
                                                                                                     Available for
                                                        Number of                                   Future Issuance
                                                     Securities to be       Weighted Average         Under Equity
                                                       Issued Upon           Exercise Price       Compensation Plans
                                                       Exercise of           of Outstanding           [excluding
                                                       Outstanding              Options,              securities
                                                    Options, Warrants         Warrants and           reflected in
                                                        and Rights               Rights               column (a)]

Plan Category                                              (a)                     (b)                    (c)
<CAPTION>
------------------------------------------------ ---------------------- --------------------     --------------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>
Equity Compensation Plans Approved by Security
    Holders                                              100,000                 $6.0125                105,000
Equity Compensation Plans Not Approved by
    Security Holders                                           0                 $0.0000                      0
                                                    -------------------                           --------------------
Total                                                    100,000                                        105,000
                                                    ===================                           ====================
</TABLE>


Item 6. Management's  Discussion and Analysis of Financial Condition and Results
     of Operations

Overview and Outlook

     The Company  reported a  consolidated  loss from  continuing  operations of
-$2,047,528  (-$1.38  per  share)  and a  consolidated  net loss of  -$2,721,806
(-$1.84  per share) for the fiscal  year ended June 30,  2003.  In the  previous
fiscal  year,  the  Company  recognized  a  consolidated  loss  from  continuing
operations  of  -$883,710  (-$0.60  per  share) and a  consolidated  net loss of
-$1,436,449 (-$0.97 per share).  Sales of $8,880,602 and $18,152,666  recognized
by  Insituform  East,  Incorporated  ("Insituform  East"),  now  known  as  INEI
Corporation, the Company's  majority-controlled and then only-operating segment,
for the fiscal years ended June 30, 2003 and 2002, respectively, are included in
the loss from discontinued operations.

     The Company  attributed its  unfavorable  results for the fiscal year ended
June 30, 2003 primarily to three factors:  (1) a loss from goodwill  impairment;
(2) the unfavorable  results of the discontinued  operations of Insituform East;
and (3) a decrease in  investment  income  resulting  from a decline in interest
rates. As a result of continuing losses and anticipated  future operating losses
to be incurred by  Insituform  East,  the Company  determined  that the carrying
amount of its investment in Insituform East, including goodwill, was impaired as
of March 31, 2003.  Accordingly,  the Company took a write-off of all previously
carried  goodwill  in the  amount  of  $1,485,660  at that  time.  In  addition,
Insituform  East  recognized a consolidated  net loss of -$1,716,979 on sales of
$8,880,602  for its now  discontinued  operations  in fiscal  year  2003,  which
contributed a net loss from discontinued  operations of -$674,278 (39.3%) to the
Company.  Finally,  interest  earned  on  the  Company's  marketable  securities
decreased  $364,282  in fiscal  year 2003,  primarily  due to a decrease  in the
average rate of return on such investments from 4.8% in fiscal year 2002 to 3.0%
in fiscal year 2003.

     On June 18, 2003,  Insituform East entered into an Asset Purchase Agreement
with Insituform  Technologies,  Inc. ("ITI"),  the licensor of the Insituform(R)
process  technology,  providing for the sale to ITI of substantially  all of the
Company's  non-real estate assets and on-going  business.  The purchase price of
$5.5 million was paid in cash at closing, subject to a 10% escrow. The Agreement
also required Insituform East to change its name to INEI Corporation,  effective
with the closing. The closing of the sale occurred on September 5, 2003.

     Commencing in 1992, ITI entered the CIPP installation business and began to
acquire  North  American  licensees  of  its  Insituform  technology.  By  2000,
Insituform  East was the only remaining  independent  North American  Insituform
licensee. In addition,  the expiration of certain initial method patents for the
Insituform  process in 1994  permitted  the entrance of new  competitors,  using
generic  processes,  into the CIPP market.  These competitors  generally enjoy a
significantly  lower cost structure  than did  Insituform  East due, among other
reasons,  to the typical absence of third-party  royalty payments.  The combined
effect of the entry of ITI into the CIPP installation  business and the entry of
other, lower cost, competitors into its markets, severely and adversely affected
Insituform  East's  competitive  position  and,   consequently,   its  financial
condition  and results of  operations.  Insituform  East's  Board of  Directors,
therefore, concluded that the independent continuation of Insituform East in the
CIPP  marketplace  was no longer  economically  viable  or in the best  economic
interest of its stockholders.

     With the  completion  of the  Asset  Sale,  the  Insituform  East  Board of
Directors,   after  due   consideration   has  undertaken   certain   additional
transactions  designed to maximize  Insituform East  stockholder  value. In this
regard, subsequent to the execution of the Asset Purchase Agreement, on July 24,
2003,  Insituform  East entered into a Real Estate Contract of Sale for the sale
of its real estate assets. Insituform East currently anticipates that additional
transactions  will take the form of the  liquidation  of its  remaining  assets,
including the sale or disposition of the assets of Try Tek, and the satisfaction
of Insituform East's liabilities,  including  personnel  termination and related
costs, sale transaction expenses and final liquidation costs.

     After  completion of the Asset Sale and  application of the net proceeds in
the manner  contemplated,  and assuming  ultimate  release to the Company of the
entire escrowed  amount and after  deduction of transaction  costs in connection
with the Asset Sale, Insituform East holds:

     o    Two contiguous  parcels of improved real property located in Landover,
          Maryland,  historically  held for the purpose of housing its corporate
          headquarters and CIPP business operations and which are the subject of
          the Real Estate Contract of Sale, which contemplates the sale of these
          properties for a combined price of $5,215,000;

     o    One parcel of improved real property located in Hanover, Pennsylvania,
          used to house the business of Try Tek, which custom designs and builds
          machinery,  including  machinery used to rehabilitate  pipelines using
          cured-in-place pipe processes;

     o    Cash and cash  equivalents  in the  approximate  amount of $1,900,000,
          substantially  all of which represents  residual net proceeds from the
          Asset Sale;

     o    Residual inventory and equipment not part of the Asset Sale; and

     o    Accounts receivable in the approximate amount of $2,000,000.


     Insituform East and,  consequently,  the Company, will not have any ongoing
operations  subsequent  to the Asset Sale,  other than those of its wholly owned
subsidiary,  Try Tek, and those  operations are not expected to continue  beyond
September 30, 2003.

     Unless  the  Insituform  East  Board  concludes,  in  accordance  with  its
fiduciary  obligations,  that dissolution of Insituform East and liquidation and
distribution  of its assets are not in the best interest of Insituform  East and
its  stockholders,  Insituform  East  has  undertaken  in the now  closed  Asset
Purchase  Agreement with ITI that it will adopt a plan of dissolution and submit
the plan to a vote of its  stockholders  no later than the next annual  meeting,
currently scheduled for December 18, 2003.

     Likewise,   the  Company's  Board  of  Directors  anticipates  that,  after
consideration  in due course,  it also will  undertake one or more  transactions
designed to maximize CERBCO stockholder  value.  Unless the Board concludes that
dissolution of the Company and  liquidation  and  distribution of its assets are
not in the best interest of the Company and its  stockholders,  it is likely the
Board  will  adopt a plan of  dissolution  and to  submit  the plan to a vote of
stockholders  no later than the Company's  next annual  meeting,  also currently
scheduled for December 18, 2003.

Results of Operations

     The  results  from  continuing  operations  are the  results  of the parent
company, CERBCO. CERBCO's interests in Insituform East's discontinued operations
are shown as a loss from  discontinued  operations - net of non-owned  interests
and income taxes.

     CERBCO's   selling,   general   and   administrative   expenses   decreased
approximately $0.4 million (-30%) in fiscal year 2003 as compared to fiscal year
2002,  primarily  as a result of a  reduction  of legal and  consulting  fees in
fiscal year 2003. The Company incurred  approximately  $380,000 in such costs in
connection with a proposed recapitalization of CERBCO in fiscal year 2002.

     Investment income decreased approximately $0.4 million (-48%), primarily as
a result of a decline in interest rates.  Other income (expense) - net increased
from a loss of -$532,739 to a gain of $66,375.  The loss in fiscal year 2002 was
primarily the result of decreases in the cash surrender values of life insurance
policies funding the parent Company's supplemental  retirement plan. The gain in
fiscal year 2003 was the result of increases in such cash surrender values.

     The  provision  for income  taxes of $105,000  for fiscal year 2003 and the
credit for income  taxes of $203,500  for fiscal year 2002 were  recorded by the
parent company,  CERBCO.  No benefit for income taxes was recorded by Insituform
East for fiscal year 2003, as the benefit  calculated using  applicable  enacted
federal and state rates of 39% of its pre-tax  loss was applied to increase  the
valuation allowance recorded against the Company's deferred tax asset. A benefit
for income  taxes for  Insituform  East for  fiscal  year 2002 of  $683,000  was
recorded  as  a  result  of  tax  legislation  enacted  during  2002  permitting
Insituform  East to carry  back tax  losses  incurred  during  fiscal  year 2001
against  taxable  income  recognized  during  fiscal year 1996.  This benefit is
included in the loss from discontinued operations for fiscal year 2002.

     The loss  from  goodwill  impairment  of  $1,485,660  in  fiscal  year 2003
resulted from a write-off in the third quarter of fiscal year 2003 of the parent
Company's remaining goodwill in its investment in Insituform East.

     The loss from discontinued  operations increased approximately $0.1 million
in fiscal year 2003 as compared to fiscal year 2002,  as a result of an increase
in  Insituform  East's  net  loss  from  -$1,407,491  in  fiscal  year  2002  to
-$1,716,979 in fiscal year 2003. The parent Company's interest in the results of
Insituform East is 39.3%.

Liquidity and Capital Resources

     The Company's operating  activities used approximately $0.3 million in cash
in fiscal year 2003 and  provided  approximately  $1.4 million in cash in fiscal
year  2002.  The net loss for  fiscal  year 2003 was  offset by $1.0  million in
depreciation  and  amortization,   and  the  $1.5  million  loss  from  goodwill
impairment,  which  did not  require  the  outlay  of cash,  and a $1.2  million
decrease in accounts receivable. The net loss for fiscal year 2002 was offset by
$1.5 million in depreciation  and  amortization not requiring the outlay of cash
and a $2.9 million decrease in accounts receivable.

     Investing   activities  used   approximately   $0.1  million  and  provided
approximately $2.6 million in fiscal years 2003 and 2002,  respectively,  as the
Company  purchased  and  redeemed  various  marketable  securities,  sold excess
equipment and accounted for  fluctuations  in the cash surrender  values of SERP
life insurance policies.

     Net cash used in financing  activities  was  approximately  $0.2 million in
both fiscal years 2003 and 2002 as the parent Company, CERBCO, paid regular cash
dividends declared for fiscal years 2002 and 2001, respectively.

     The  Company's   liquidity   remained   strong  with  working   capital  of
approximately  $16.1 million and a current ratio of approximately 9 to 1 at June
30, 2003. The Company has cash and temporary investments in market securities of
approximately $9.5 million which, it believes are more than adequate to meet its
cash flow requirements in the foreseeable future.

Off-Balance Sheet Arrangements

     Except as shown in Note 8:  Leases,  the Company has no  off-balance  sheet
arrangements.

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, 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 7. Financial Statements

     See financial statements provided following Item 8A below.

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

     This item is incorporated  by reference to CERBCO,  Inc. Report on Form 8-K
dated June 21, 2002.

Item 8A. Controls and Procedures

     As of June 30, 2003, an evaluation was performed  under the supervision and
with the  participation  of the  Company's  management,  including the Company's
Corporate Executive Committee ("CEC"), which performs as a functional equivalent
of a Chief Executive  Officer,  and CFO, of the  effectiveness of the design and
operation of the Company's  disclosure  controls and  procedures.  Based on that
evaluation, the Company's management,  including the CEC and CFO, concluded that
the Company's  disclosure  controls and procedures were effective as of June 30,
2003. There have been no significant  changes in the Company's internal controls
or in other factors that could significantly affect internal controls subsequent
to June 30, 2003.

     Disclosure  controls and procedures  are the controls and other  procedures
that are  designed to ensure that  information  required to be  disclosed by the
Company in the reports that the Company  files or submits under the Exchange Act
is  recorded,  processed,  summarized  and  reported,  within  the time  periods
specified  in  the  Securities  and  Exchange   Commission's  rules  and  forms.
Disclosure  controls and procedures include,  without  limitation,  controls and
procedures  designed to ensure that information  required to be disclosed by the
Company  in the  reports  that the  Company  files  under  the  Exchange  Act is
accumulated  and  communicated  to  the  Company's  management,   including  the
Company's  principal  executive  officers and principal  financial  officer,  as
appropriate to allow timely decisions regarding required disclosure.
<PAGE>

INDEPENDENT AUDITORS' REPORT


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



We have audited the accompanying  consolidated balance sheet of CERBCO, Inc. and
subsidiaries  as of June 30, 2003,  and the related  consolidated  statements of
operations,  stockholders' equity, and cash flows for each of the two years then
ended.  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, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of CERBCO,  Inc. and
subsidiaries as of June 30, 2003, and the results of their  operations and their
cash flows for each of the two years then ended,  in conformity  with accounting
principles generally accepted in the United States of America.




/s/ Aronson & Company

ARONSON & COMPANY
Rockville, Maryland
August 21, 2003



<PAGE>


                                  CERBCO, Inc.
                      CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
                                                                Years Ended June 30,
                                                            ------------------------------
<CAPTION>
                                                              2003                 2002
                                                              ----                 ----

<S>                                                         <C>                <C>
Sales                                                       $         0        $        0
                                                            ------------      ------------
Costs and Expenses:
    Selling, general and administrative expenses                 923,685         1,319,195
                                                            ------------      ------------
        Total Costs and Expenses                                 923,685         1,319,195
                                                            ------------      ------------

Operating Loss                                                  (923,685)       (1,319,195)

Investment Income                                                400,442           764,724
Other Income (Expense) - Net                                      66,375          (532,739)
                                                            ------------      ------------

Loss Before Income Taxes                                        (456,868)       (1,087,210)

Provision (Credit) for Income Taxes                              105,000          (203,500)
                                                            ------------      ------------

Loss from Continuing Operations before Loss from
   Goodwill Impairment                                          (561,868)         (883,710)

Loss from Goodwill Impairment                                 (1,485,660)                0
                                                            ------------      ------------

Loss from Continuing Operations                               (2,047,528)         (883,710)

Loss from Discontinued Operations - Net of Non-Owned
    Interests and Income Taxes                                  (674,278)         (552,739)
                                                            ------------      ------------

    Net Loss                                                 $(2,721,806)      $(1,436,449)
                                                            ============      ============

    Basic and Diluted Loss per Share:
          Loss from continuing operations                    $     (1.38)      $     (0.60)

          Loss from discontinued operations                        (0.46)            (0.37)
                                                            ------------      ------------

                  Net loss per share                         $     (1.84)      $     (0.97)
                                                            ============      ============
See notes to consolidated financial statements.
</TABLE>


<PAGE>


                                  CERBCO, Inc.
                           CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 2003


ASSETS

Current Assets:
    Cash and cash equivalents                                      $  5,004,444
    Marketable securities                                             9,499,207
    Accounts receivable - net                                         2,874,088
    Inventories                                                         671,010
    Prepaid and refundable taxes                                         99,654
    Prepaid expenses and other                                          126,829
                                                                 ---------------
        Total Current Assets                                         18,275,232
                                                                 ---------------

Property, Plant and Equipment, at
     cost less accumulated depreciation:                              6,030,646
                                                                 ---------------

Other Assets:
    Deferred income taxes - net of valuation allowance
     of $1,410,000                                                      895,000
    Cash surrender value of SERP life insurance                       2,023,584
    Deposits and other                                                   44,489
                                                                 ---------------
        Total Other Assets                                            2,963,073
                                                                 ---------------
            Total Assets                                            $27,268,951
                                                                 ===============

See notes to consolidated financial statements.


<PAGE>


                                  CERBCO, Inc.
                           CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 2003

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
    Accounts payable and accrued liabilities                         $ 2,078,586
    Income taxes payable                                                  10,000
                                                               -----------------
        Total Current Liabilities                                      2,088,586

Accrued SERP liability                                                 2,219,703
                                                               -----------------
        Total Liabilities                                              4,308,289
                                                               -----------------

Commitments and Contingencies

Non-Owned Interests in Consolidated Subsidiaries                       3,677,447
                                                               -----------------

Stockholders' Equity:
    Common stock, $.10 par value
        Authorized:  3,500,000 shares
        Issued and outstanding: 1,190,538 shares                         119,053
    Class B Common stock (convertible), $.10 par value
        Authorized:  700,000 shares
        Issued and outstanding: 292,418 shares                            29,242
    Additional paid-in capital                                         7,527,278
    Retained earnings                                                 11,607,642
                                                               -----------------
        Total Stockholders' Equity                                    19,283,215
                                                               -----------------
            Total Liabilities and Stockholders' Equity               $27,268,951
                                                               =================


See notes to consolidated financial statements.


<PAGE>


                                  CERBCO, Inc.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                       YEARS ENDED JUNE 30, 2003 and 2002

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

<S>            <C>                <C>           <C>             <C>          <C>         <C>             <C>            <C>
BALANCE - JULY 1, 2001            1,189,476     $118,947        293,480      $29,348     $7,527,278      $16,062,489    $23,738,062

Net loss                                  0            0              0            0              0       (1,436,449)    (1,436,449)
Dividends declared                        0            0              0            0              0         (148,296)      (148,296)
Conversion of Class B
     Stock into Common Stock             62            6            (62)          (6)             0                0              0
                               -----------------------------------------------------------------------------------------------------

BALANCE - JUNE 30, 2002           1,189,538      118,953        293,418       29,342      7,527,278       14,477,744     22,153,317

Net loss                                  0            0              0            0              0       (2,721,806)    (2,721,806)
Dividends declared                        0            0              0            0              0         (148,296)      (148,296)
Conversion of Class B
     Stock into Common Stock          1,000          100         (1,000)        (100)             0                0              0
                               -----------------------------------------------------------------------------------------------------
BALANCE - JUNE 30, 2003           1,190,538     $119,053        292,418      $29,242     $7,527,278      $11,607,642    $19,283,215
                               =====================================================================================================

See notes to consolidated financial statements.
</TABLE>


<PAGE>


                                  CERBCO, Inc.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
                                                                               Years Ended June 30,
                                                                          -------------------------------
<CAPTION>
                                                                               2003            2002
                                                                               ----            ----
Cash Flows from Operating Activities:
<S>                                                                        <C>              <C>
    Loss from continuing operations                                        $ (2,047,528)    $  (883,710)
    Loss from discontinued operations                                          (674,278)       (552,739)
                                                                           ------------    ------------
    Net loss                                                                 (2,721,806)     (1,436,449)
    Adjustments to reconcile net loss to net cash (used in) provided
        by operations:
        Depreciation and amortization                                         1,031,166       1,574,968
         Deferred income taxes                                                 (895,000)              0
        Amounts attributable to non-owned interests                          (1,042,701)       (854,752)
        Gain on sale of property and equipment                                 (376,434)       (145,262)
        Loss from goodwill impairment                                         1,485,660               0
        Increase in SERP liability                                              357,987         328,865
        Changes in operating assets and liabilities:
            Decrease in accounts receivable                                   1,242,373       2,867,020
            Decrease in inventories                                             166,207         265,304
            Decrease (increase) in other current assets                         336,772        (193,620)
            Increase (decrease) in accounts payable and accrued expenses         92,128      (1,005,481)
                                                                           ------------    ------------
    Net Cash (Used in) Provided by Operating Activities                        (323,648)      1,400,593
                                                                           ------------    ------------
Cash Flows from Investing Activities:
    Capital expenditures                                                        (33,202)       (127,812)
    Sale of equipment                                                           445,242         191,298
(Purchase) redemption of marketable securities - net                           (236,468)      2,315,133
    (Increase) decrease in cash surrender value of SERP life
insurance                                                                      (294,214)        270,737
                                                                           ------------    ------------
    Net Cash (Used in) Provided by Investing Activities                        (118,642)       2,649,356
                                                                           ------------    ------------
Cash Flows from Financing Activities:
    Principal payments on capital lease obligations                              (3,352)        (39,243)
    Dividends paid                                                             (148,296)       (148,296)
                                                                           ------------    ------------
    Net Cash Used in Financing Activities                                      (151,648)       (187,539)
                                                                           ------------    ------------

Net (Decrease) Increase in Cash and Cash Equivalents                           (593,938)      3,862,410
Cash and Cash Equivalents at Beginning of Year                                5,598,382       1,735,972
                                                                            ------------    ------------
Cash and Cash Equivalents at End of Year                                    $ 5,004,444     $ 5,598,382
                                                                            ============    ============
Supplemental Disclosure of Cash Flow Information:
    Interest paid                                                           $         0     $     4,560
    Income taxes paid (refunded)                                            $         0     $  (683,000)

See notes to consolidated financial statements.
</TABLE>


<PAGE>


                                  CERBCO, Inc.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       YEARS ENDED JUNE 30, 2003 AND 2002

1.   Summary of Significant Accounting Policies

Basis of Presentation

     The consolidated  financial  statements  include the accounts of the parent
holding  company,   CERBCO,   Inc.   ("CERBCO")  its  wholly-owned   subsidiary,
CERBERONICS,  Inc.  a  Delaware  holding  Company,  and its  majority-controlled
subsidiary,  INEI Corporation,  formerly known as Insituform East,  Incorporated
("Insituform  East")  (together,  the "Company").  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 now
discontinued operating subsidiary.  Until September 5, 2003, Insituform East and
its subsidiaries  were 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."  From 1978 to
September 2003,  Insituform East 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  8:
Commitments.  Utilizing  other  trenchless  CIPP  processes,  Insituform  East's
wholly-owned subsidiary, Midsouth Partners, operated from July 20, 1999 to April
2002 substantially without geographic  restriction,  after which the partnership
was  essentially  inactive.  On June 18, 2003,  Insituform  East entered into an
Asset  Purchase  Agreement  providing for the sale of  substantially  all of its
non-real   estate  assets  and  on-going   business  as  explained  in  Note  2:
Discontinued  Operations.  The Agreement also required Insituform East to change
its name to INEI  Corporation,  effective  with the closing.  The closing of the
sale occurred on September 5, 2003.

Revenue Recognition

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

Cash and Cash Equivalents

     Cash and cash  equivalents  consist 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.  The  Company  maintains  cash  balances  which may exceed
federally  insured  limits  but  does  not  believe  that  this  results  in any
significant credit risk.

Marketable Securities

     Marketable  securities  include all  investments  purchased 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 and totaled approximately $365,000 and $785,000 in fiscal years 2003
and 2002, respectively.

Goodwill

     Prior to July 1,  2002,  the  excess  of cost  over  the fair  value of the
Insituform East net tangible assets ("goodwill")  acquired in 1985 was amortized
using  the  straight-line  method  over  forty  years.  Statement  of  Financial
Accounting  Standards ("SFAS") No. 142, Goodwill and Other Intangibles,  changed
the accounting for goodwill from an  amortization  method to an  impairment-only
approach.  SFAS No.  142 is  effective  for the  Company as of July 1, 2002 with
respect to its investment in Insituform  East. Under the new rules, the goodwill
recorded  as part of  that  investment  was no  longer  amortized  but was to be
reviewed for impairment on an annual basis, and between annual tests if an event
occurred  or  circumstances  changed  that would more likely than not reduce the
fair value of the investment below its carrying amount.

     At March 31, 2003, the Company  believed that continuing  losses  incurred,
and losses  anticipated,  by Insituform East were an indication of a significant
non-temporary  adverse  change  in that  subsidiary's  business  such  that  the
Company's  carrying  amount of its  investment  in  Insituform  East,  including
goodwill,  had been  impaired.  Based  on an  assessment  of the  fair  value of
Insituform  East at March 31,  2003, a goodwill  impairment  of  $1,485,660  was
recognized  during the period ended March 31, 2003. The Company's  assessment of
fair value at March 31,  2003 was  liquidation  value  which  approximated  book
value.

Advertising and Sales Promotion Costs

     Advertising  and sales promotion costs are expensed as incurred and totaled
approximately $5,000 and $16,000 in fiscal years 2003 and 2002, respectively.

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  SERP  expenses.  A  valuation  allowance  is  established,  when
necessary, to reduce deferred tax assets to the amount expected to be realized.

     Insituform East files separate federal and state tax returns. Its provision
is included in the loss from discontinued operations.

Reclassifications

     Certain  amounts have been  reclassified  in the prior years'  consolidated
financial statements to conform to the current year presentation.

Fair Value of Financial Instruments

     The fair market value of the Company's  financial  instruments  included in
the consolidated financial statements approximates their carrying value.

Use of Estimates in the Preparation of Financial Statements

     The  preparation  of financial  statements  in conformity  with  accounting
principles   generally  accepted  in  the  United  States  of  America  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.

Stock-Based Compensation

     At June 30, 2003, the Company has two stock-based compensation plans, which
are described more fully in Note 14. The Company  accounts for those plans under
the recognition and measurement principles of APB Opinion No. 25, Accounting for
Stock Issued to Employees, and related interpretations.  No stock-based employee
compensation cost is reflected in the Company's net loss, as all options granted
under  those  plans  had an  exercise  price  equal to the  market  value of the
underlying  common stock on the date of grant.  The following table  illustrates
the effect on net loss and loss per share if the  Company  had  applied the fair
value  recognition   provisions  of  FASB  Statement  No.  123,  Accounting  for
Stock-Based Compensation, to stock-based employee compensation.

(in thousands, except loss per share)                2003             2002
                                                    -------         -------
Net Loss, as reported                               $(2,722)        $(1,436)
Deduct:  Total stock-based employee
      compensation under fair value based method
      for all awards, net of related tax effects        (31)            (39)
                                                    -------         -------
Pro Forma Net Loss                                  $(2,753)        $(1,475)
                                                    =======         ========
Basic and diluted loss per share:
     As reported                                  $   (1.84)      $   (0.97)
     Pro forma                                    $   (1.86)      $   (0.99)
--------------------------------------------------------------------------------


Recent Accounting Pronouncements

     During the Company's  year ended June 30, 2003,  the  Financial  Accounting
Standards Board issued Statement of Financial  Accounting Standards ("SFAS") No.
147,  Acquisitions  of Certain  Financial  Institutions  - an  amendment of FASB
Statements  No.  72 and 144  and  FASB  Interpretation  No.  9;  SFAS  No.  148,
Accounting  for  Stock-Based  Compensation  -  Transition  and  Disclosure  - an
amendment of FASB  Statement No. 123; SFAS No. 149,  Amendment of FASB Statement
133 on  Derivative  Instruments  and  Hedging  Activities;  and  SFAS  No.  150,
Accounting  for  Certain  Financial  Instruments  with  Characteristics  of both
Liabilities and Equity.

     SFAS  No.  147  addresses   Statement  No.  72,   Accounting   for  Certain
Acquisitions of Banking or Thrift  Institutions,  and FASB Interpretation No. 9,
Applying  APB Opinions  No. 16 and 17 When a Savings and Loan  Association  or a
similar Institution is Acquired in a Business  Combination  Accounted for by the
Purchase Method,  and provides  interpretive  guidance on the application of the
purchase  method  to  acquisitions   of  financial   institutions.   Except  for
transactions  between two or more mutual  enterprises,  this  Statement  removes
acquisitions of financial  institutions  from the scope of both Statement No. 72
and  Interpretation  No. 9 and requires that those transactions be accounted for
in accordance with Statement No. 141, Business  Combinations,  and Statement No.
142, Goodwill and Other Intangible Assets.  Thus, the requirement in paragraph 5
of Statement No. 72 to recognize (and  subsequently  amortize) any excess of the
fair  value  of  liabilities  assumed  over  the  fair  value  of  tangible  and
identifiable intangible assets acquired as an unidentifiable intangible asset no
longer applied to acquisitions within the scope of this Statement.  In addition,
this  Statement  amends  Statement  No. 144,  Accounting  for the  Impairment or
Disposal   of   Long-Lived   Assets,   to   include   in  its  scope   long-term
customer-relationship  intangible  assets  of  financial  institutions  such  as
depositor- and  borrower-relationship  intangible  assets and credit  cardholder
intangible assets. Consequently, those intangible assets are subject to the same
undiscounted cash flow  recoverability  test and impairment loss recognition and
measurement  provisions  that  Statement  No. 144 requires for other  long-lived
assets that are held and used. Management does not believe that adoption of this
Standard will have any significant impact on its financial statements.

     SFAS  No.  148  amends  Statement  No.  123,   Accounting  for  Stock-Based
Compensation,  to provide  alternative  methods of  transition  for a  voluntary
change to the fair value based method of  accounting  for  stock-based  employee
compensation.  In addition, this Statement amends the disclosure requirements of
Statement No. 123 to require  prominent  disclosures  in both annual and interim
financial  statements  about the method of accounting for  stock-based  employee
compensation and the effect of the method used on reported  results.  Management
will  follow  this  Standard  when  reporting  on its method of  accounting  for
stock-based employee compensation.

     SFAS No. 149 amends and clarifies  financial  accounting  and reporting for
derivative  instruments,  including certain derivative  instruments  embedded in
other  contracts  (collectively  referred  to as  derivatives)  and for  hedging
activities  under Statement No. 133,  Accounting for Derivative  Instruments and
Hedging  Activities.  Management does not believe that adoption of this Standard
will have any significant impact on its financial statements.

     SFAS 150  established  standards for how an issuer  classifies and measures
certain  financial  instruments  with  characteristics  of both  liabilities and
equity.  It  requires  that an issuer  classify a financial  instrument  that is
within its scope as a  liability  (or an asset in some  circumstances).  Many of
those instruments were previously  classified as equity.  Some of the provisions
of this Statement are consistent  with the current  definition of liabilities in
FASB Concepts Statement No. 6, Elements of Financial  Statements.  The remaining
provisions of this Statement are consistent with the Board's  proposal to revise
that definition to encompass certain  obligations that a reporting entity can or
must settle by issuing  its own equity  shares,  depending  on the nature of the
relationship  established  between  the holder and the  issuer.  While the Board
still plans to revise that definition through an amendment to Concepts Statement
No. 6, the Board decided to defer issuing that amendment  until it has concluded
its  deliberations on the next phase of this project.  That next phase will deal
with  certain  compound   financial   instruments   including  puttable  shares,
convertible bonds, and dual-indexed financial  instruments.  Management does not
believe that adoption of this Standard will have any  significant  impact on its
financial statements.

2.   Discontinued Operations

     On June 18, 2003,  Insituform East entered into an Asset Purchase Agreement
(the "Agreement") with Insituform  Technologies,  Inc. ("ITI") providing for the
sale to ITI of substantially all of Insituform East's non-real estate assets and
on-going  business.  The  purchase  price  of $5.5  million  was paid in cash at
closing, subject to a 10% escrow. The closing occurred on September 5, 2003.

     The Agreement provided,  among other things, for the purchase by ITI of (i)
certain of Insituform East's operating vehicles, equipment and inventories, (ii)
all of Insituform  East's on-going  contracts  (other than those of Try Tek) and
(iii) Insituform East's sublicenses and other intellectual  property,  including
its supply agreements.

     In May 2003,  Insituform East entered into discussions with several parties
indicating  an interest in a possible  purchase of Try Tek or some or all of its
assets. Try Tek's operations have been  significantly  curtailed since that time
and are not expected to continue beyond September 30, 2003.

     The operating results of Insituform East for the fiscal year ended June 30,
2003  are  shown  separately  in  the  accompanying  Consolidated  Statement  of
Operations as a loss from discontinued operations. The Consolidated Statement of
Operations  for the fiscal  year ended June 30,  2002 has been  restated to also
show  separately  the  operating  results  of  Insituform  East  as a loss  from
discontinued  operations.  Sales revenues of $8,880,602 and  $18,152,666 for the
fiscal  years ended June 30, 2003 and 2002,  respectively,  are  included in the
loss from discontinued operations and are not shown as sales in the accompanying
Consolidated Statements of Operations.

     As of June 30, 2003, all of Insituform  East's activities are considered to
be discontinued.  See Note 17:  Subsequent Event, for a discussion of a contract
to sell substantially all of the Company's real estate assets.

3.   Marketable Securities

     At  June  30,  2003,  the  Company  held  investments  in  marketable  debt
securities which were classified as held-to-maturity. All such securities have a
maturity date within one year and are  classified as Marketable  Securities as a
part of Current Assets. All securities are stated at amortized cost.

     Marketable securities consist of:
                                                                2003
                                                     Amortized          Fair
                                                       Cost            Value

     U.S. Government and agencies                   $5,499,207       $5,515,727
            Corporate                                4,000,000        4,000,000
                                                   -------------   -------------
                   Total marketable securities      $9,499,207       $9,515,727
                                                   =============   =============

4.   Accounts Receivable

     During the fiscal year ended June 30, 2003, the Company performed  services
under contract  primarily  with  governmental  authorities - federal,  state and
local  entities.  The  Company's  bad debt  writeoffs  have  been  insignificant
historically.  The Company  establishes an Allowance for Doubtful  Accounts,  if
any,  based on the  specific  terms  of the  Company's  pipeline  rehabilitation
contracts,  the  profiles of its  customer  base,  its  collection  and writeoff
experience and its review of specific account balances.

         Accounts receivable consist of:
                                                                 2003
                                                             ------------

        Due from municipal and commercial customers            $2,810,523
        Miscellaneous                                              81,384
                                                             -------------
                                                                2,891,907
        Less: Allowance for doubtful accounts                     (17,819)
                                                             -------------
                  Total accounts receivable                    $2,874,088
                                                             =============

5.   Property, Plant and Equipment

     Property, plant and equipment consist of the following:

                                                              June 30, 2003
                                                            -----------------

        Land and improvements                                   $ 2,018,587
        Buildings and improvements                                5,951,418
        Vehicles and production equipment                        10,325,768
        Small tools, radios and machine ship equipment            2,651,299
        Office furniture and equipment                            1,280,508
                                                              --------------
                                                                 22,227,580
        Less accumulated depreciation                           (16,196,934)
                                                              --------------
        Property, plant and equipment - net                     $ 6,030,646
                                                              ==============

     Other than the parent company's  office furniture and equipment,  at a cost
of $40,726  less  accumulated  depreciation  of  $34,359,  all of the  Company's
property,  plant and  equipment  is  classified  as held for sale as of June 30,
2003.


6.   Equity in Insituform East

     At June 30, 2003 and 2002,  CERBCO  beneficially  held 1,414,850  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,  39.3% of the total  equity and 62.2% of the total
voting power of all outstanding  classes of Insituform East stock. Each share of
Insituform  East  Common  Stock is  entitled  to one  vote,  and  each  share of
Insituform  East 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
Common  Stock or Class B Common  Stock  separately  as a class.  The  holders of
Common Stock,  voting as a separate class,  are entitled to elect that number of
directors  which  constitutes  25% of the  authorized  number of  members of the
Insituform East 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.  Shares of Class B Common Stock are convertible at any time
into shares of Common Stock on a share-for-share basis.

     Insituform  East  maintains an  intercompany  line of credit  facility with
CERBCO in the amount of $4,000,000. This facility is available for an indefinite
period but does not obligate CERBCO to provide funding to Insituform East. Loans
against this facility are due on demand.

     Non-owned  interests  in  Insituform  East were equal to 60.7% of the total
equity of Insituform East at June 30, 2003 and 2002.  Non-owned interests in the
loss of  Insituform  East for the fiscal years ended June 30, 2003 and 2002 were
recorded  by CERBCO by  applying  the above  percentages  to  Insituform  East's
consolidated net loss for the respective fiscal years.

     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 2003 or 2002. If all the options
outstanding  at June 30,  2003 were  exercised,  the  resulting  percentages  of
CERBCO's  equity  ownership  and total  voting  power  would be 35.9% and 58.8%,
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 2003 or 2002.

7.   Accounts Payable and Accrued Liabilities

     Accounts payable and accrued liabilities consist of:

                                                                   2003
                                                                ----------

        Accounts payable                                        $1,301,897
        Accrued compensation and other expenses                    628,393
        Dividends payable                                          148,296
                                                                ----------
             Total accounts payable and accrued liabilities     $2,078,586
                                                                ==========


8.   Commitments and Contingencies

Leases

     The Company  utilized  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 $85,000 and $228,000 for the
years ended June 30, 2003 and 2002,  respectively.  The Company has committed to
make minimum lease payments of approximately $22,000 on noncancelable  operating
leases during the year ending June 30, 2004.

License Agreements

     Until  September 5, 2003,  Insituform  East held six sublicense  agreements
with ITI which  granted  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 were for the
life of the patents or the patent rights unless sooner terminated by a specified
action of either party.  The agreements  specified 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.

     Until  September  5, 2003,  Insituform  East held a license  agreement  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  committed to pay a 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.

     The agreements  obligated  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. During the year
ended June 30, 2003,  Insituform East incurred  $709,412 in royalty expense,  to
include  $256,200 in minimum annual royalties not waived by ITI. During the year
ended June 30, 2002,  Insituform East incurred $1,246,508 in royalty expense, to
include $240,862 in minimum annual royalties not waived by ITI.

     Under the terms of the Asset  Purchase  Agreement  closed on  September  5,
2003, ITI purchased all licenses and sublicenses held by the Company,  including
all Insituform  and NuPipe  licenses,  sublicenses  and rights to use or operate
under Insituform or NuPipe patents or trademarks, and intangible or intellectual
property rights, including know-how,  relating thereto or to the business. Under
the terms of a side letter agreement dated June 18, 2003 between Insituform East
and ITI, in settlement of all accrued and unpaid  minimum  royalties  under such
license  agreements,  ITI received certain pieces of equipment with an aggregate
value of $200,000.

Supply Agreements

     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 would have automatically  extended for one year
periods  unless  notice of  termination  was provided by either party six months
prior to the end of any such annual period.  On June 24, 2002,  Insituform  East
notified ITI of its election to terminate the agreement on December 31, 2002, in
order to negotiate a new agreement.

     Effective  January  1,  2003,  Insituform  East  entered  into a new supply
agreement  with ITI for the  purchase of felt  tubes.  The  agreement  was for a
period of one year and would have  continued  year-to-year  unless  cancelled by
either  party upon the giving of ninety  days  written  notice at any time.  ITI
extended certain favorable pricing for an annual order volume totaling more than
$500,000  in  exchange  for  the  Company's  commitment  to  purchase  its  tube
requirements sole source from ITI.

     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  extended for successive one year periods
unless  notice of  termination  was provided by either party six months prior to
the  expiration  date of the initial five year period or any such annual  period
thereafter.

Other Contingent Liabilities

     From  time to time and until  September  5,  2003,  the  Company  performed
services for the U.S. Government under contracts which were subject to audit and
potential  adjustment.  Contract  revenues  were  recorded in amounts  that were
expected to be realized at contract  completion upon final  settlement with U.S.
Government representatives.

         The Company is a party, both as plaintiff and defendant, to claims and
litigation arising from and in the ordinary course of its business. While it is
not possible at this time to establish the ultimate amount of liability, if any,
associated with pending claims or such litigation, management of the Company is
of the opinion that the aggregate amount of any such liability will not have a
material adverse effect on the financial position of the Company.

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 years 2003 and
2002,  1,000  shares and 62 shares,  respectively,  of Class B Common Stock were
converted to Common Stock.

     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

     The  provision  (credit)  for  taxes  is  composed  of  the  following  (in
thousands):

                                                      Years ended June 30,
                                                  ----------------------------
                                                    2003               2002
   Current Taxes:
       Federal                                       $105              $(204)
       State                                            0                  0
                                                   -------            -------
         Total current tax expense (benefit)          105               (204)
                                                   -------            -------
   Deferred Taxes:
       Federal                                          0                  0
       State                                            0                  0
                                                   -------            -------
         Total deferred tax expense (benefit)           0                  0
                                                   -------            -------

            Total  provision  (credit)  for          $105              $(204)
                                                   =======            =======
        taxes

         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):



<TABLE>
                                                                 Years ended June 30,
                                                        ----------------------------------------
                                                               2003                 2002
                                                        --------------------  ------------------
<CAPTION>
                                                          Amounts        %      Amounts      %
                                                         -------        -      -------      -

<S>                                                      <C>          <C>      <C>         <C>
        Taxes computed at statutory rate                  $(155)       (34)     $(370)      (34)
        Increase (decrease) in taxes resulting from:
            State  and  local  income  taxes,  net  of
              federal income tax benefit (expense)            0          0          0         0
            Permanent differences                            82         18        185        17
            Change in valuation allowance and
              underaccrual of prior year's taxes            178         39        (19)       (2)
                                                          -----         --      -----        --

                Total provision (credit) for taxes         $105         23      $(204)      (19)
                                                           ====         ==       ====        ==
</TABLE>

     The  calculation of Insituform  East's credit for income taxes for the year
ended June 30, 2003, 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  $2,305,000  at June 30,  2003  has  been  reduced  by a
valuation  allowance  of  $1,410,000  because,  based on the weight of  evidence
available,  to include  Insituform  East's pretax  operating  losses  recognized
during the past seven  fiscal  years,  it is more  likely than not that the full
deferred tax asset will not be realized.

     The primary  components  of  temporary  differences  which give rise to the
Company's net deferred tax asset at June 30, 2003 are presented below:



                                                                   June 30, 2003
                                                                 ---------------
        Deferred Tax Asset:
            Net operating loss carryforwards                       $  3,089,000
            Other                                                       (5,000)
            Valuation allowance                                     (1,410,000)
                                                                 ---------------
                Total deferred tax asset                             1,674,000

        Deferred Tax Liability:
            Deferred compensation                                     (149,000)
            Depreciation                                              (630,000)
                                                                 ---------------
                Net deferred tax asset                             $   895,000
                                                                 ===============


11.  Loss Per Share

     Basic and  diluted  loss per share data have been  computed  based upon the
number of common  shares  outstanding  during each period which does not include
common stock equivalents since the effect would be antidilutive..  The following
numbers of shares have been used in the net loss per share computations:

           2003                        2002
           ----                        ----

         1,482,956                  1,482,956
         =========                  =========

12.  Retirement Benefit Plans

     Employees of Insituform  East  (including  employees of the parent company,
CERBCO)  who  meet  certain  minimum  eligibility  requirements  and who are not
covered by collective  bargaining  agreements  participate  in a  profit-sharing
plan. No employees were covered by collective  bargaining  agreements as of June
30,  2003.  Contributions  to the plans are  determined  annually by  Insituform
East's Board of Directors.  No  contributions  were made during the fiscal years
ended June 30, 2003 and 2002.

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
$309,000  and  $277,000  for the  fiscal  years  ended  June 30,  2003 and 2002,
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 SERP  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 then three  executive  officers  who are not
otherwise  participants  in the CERBCO plan.  One of these  officers  retired in
fiscal  year 2002.  The  expense  for this plan was  approximately  $42,000  and
$59,000 for the fiscal years ended June 30, 2003 and 2002, 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  and are  included in the  Company's  balance  sheet as cash
surrender value of SERP life  insurance.  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

     The Company  maintains  two stock option  plans.  All grants of options are
made at the market price of the Company's Common Stock at the date of the grant.

     On December 12, 2002, the  shareholders  of the Company adopted the CERBCO,
Inc. 2002 Board of Directors'  Stock Option Plan.  Under the terms of this plan,
up to 125,000 shares of Common Stock have been reserved for the directors of the
Company.  Options under this plan are  exercisable at the date of the grant.  If
not exercised,  option shares granted under this plan expire five years from the
date of the grant.

     On December 19, 1997, the  shareholders  of the Company adopted the CERBCO,
Inc. 1997 Board of Directors'  Stock Option Plan.  Under the terms of this plan,
80,000 shares of Common Stock remain  reserved for the directors of the Company.
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,  which ever comes
first. If not exercised, option shares granted under this plan expire five years
from the date of the grant.

     The following summary sets forth the activity under the 2002 and 1997 Board
of Directors' Plans during the past two fiscal years:

<TABLE>
<CAPTION>
                                 2002 Board of Directors'             1997 Board of Directors'
                                     Stock Option Plan                    Stock Option Plan
                              --------------------------------    ----------------------------------
                                 Shares         Weighted              Shares      Weighted Average
                                              Average Price
                                                Per Share                          Price Per Share
Outstanding
<S>          <C>                          <C>             <C>             <C>                 <C>
        July 1, 2001                      0               $ 0             80,000              $6.52
       Granted                            0                 0             20,000               4.00
       Exercised                          0                 0                  0                  0
       Expired                            0                 0                  0                  0
                                     -------            -------          -------             ------

Outstanding
        June 30, 2002                     0                 0            100,000               6.01
       Granted                       20,000              2.82                  0                  0
       Exercised                          0                 0                  0                  0
       Expired                            0                 0            (20,000)               9.41
                                     -------            -------          -------             ------
Outstanding
        June 30, 2003                20,000             $2.82             80,000              $5.16
                                     ======             =====             ======              =====
</TABLE>


     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.

     Summary  information  for stock options granted during the years ended June
30, 2003 and 2002 is as follows:



                                                   Years ended June 30,
                                               -----------------------------
                                                 2003                2002
                                                 ----                ----

        Date of grant                          12/12/02            5/14/02
        Option shares granted                   20,000              20,000
        Risk-free interest rate                   2.40%               3.26%
        Expected stock price volatility             65%                 55%
        Per share exercise price                 $2.82               $4.00
        Fair value per option share              $1.57               $2.91

     The fair value of options  granted during the years ended June 30, 2003 and
2002  was  estimated  on  the  dates  of  the  grants  using  the  Black-Scholes
option-pricing model: The Black-Scholes option valuation model was developed for
use in  estimating  the fair  value of  traded  options  which  have no  vesting
restrictions and are fully  transferable.  In addition,  option valuation models
require the input of highly subjective  assumptions including the expected stock
price  volatility.  Because the  Company's  stock  options have  characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate,  the
existing  models may not be a reliable  single  measure of the fair value of its
stock options.

15.      Significant Customers

     Until  September 5, 2003, the Company  performed  services under  contracts
with governmental  authorities,  private industries and commercial entities.  In
each of the last two fiscal  years,  a majority of the  Company's  revenues have
come from state and local government entities - cities, counties, state agencies
and  regional  authorities.  The Company was not the low bidder on renewal  work
during fiscal year 2002 with its largest Insituform  process customer,  a county
government  in the  Washington,  D.C.  metropolitan  area,  and the loss of such
significant work had an immediate effect on the Company's  workable backlog from
the fourth quarter of fiscal year 2002 and throughout  fiscal year 2003.  During
the year ended June 30,  2003,  a city  government  in  central  Virginia  and a
regional authority in southwest Ohio accounted for 35% and 26%,  respectively of
the now discontinued Company's revenues.  During the year ended June 30, 2002, a
county government in the Washington,  D.C.  metropolitan area, a city government
in central Virginia and a regional sanitary  authority in southeast Ohio account
for 38%, 15% and 14%,  respectively,  of the Company's revenues.  These revenues
are  included in the losses from  discontinued  operations  and are not shown as
sales in the accompanying Consolidated Statements of Operations.

16.  Unaudited Quarterly Financial Data

     The following table provides summarized quarterly results of operations for
fiscal years 2003 and 2002 (in thousands, except per share information):

<TABLE>
                                                                       Three Months Ended
                                                  -----------------------------------------------------------
<CAPTION>
        2003                                      September 30      December 31        March 31       June 30
        ----                                      ------------      -----------        --------       -------

<S>                                                <C>               <C>               <C>            <C>
        Sales                                      $      0          $      0          $      0       $     0
  Gross profit (loss)                                     0                 0                 0             0
        Earnings (loss) from continuing
             operations                                (183)             (102)           (1,868)          106
        Earnings   (loss)   from    discontinued
        operations                                     (110)             (237)             (378)           51
        Net earnings (loss)                            (293)             (339)           (2,246)          155

        Earnings (loss) per share:
             Continuing operations                    (0.12)           (0.07)             (1.26)         0.07
             Discontinued operations                  (0.08)           (0.16)             (0.25)         0.03
             Net earnings ((loss)                     (0.20)           (0.23)             (1.51)         0.10


        2002                                       September 30     December 31        March 31       June 30
        ----                                       ------------     -----------        --------       -------

        Sales                                      $      0          $     0           $      0       $     0
        Gross profit (loss)                               0                0                  0             0
        Earnings (loss) from continuing
             operations                                (328)             277               (481)         (351)
        Loss from discontinued operations              (446)              37                188           332
        Net earnings (loss)                            (774)             314               (293)         (683)

        Earnings (loss) per share:
             Continuing operations                    (0.22)            0.19              (0.33)        (0.24)
             Discontinued operations                  (0.30)            0.02               0.13         (0.22)
             Net loss                                 (0.52)            0.21              (0.20)        (0.46)
        ---------------------------------------------------------------------------------------------------------
        (1) Quarterly data for fiscal year 2002 and the first three quarters of
        fiscal year 2003 have been restated to reflect the Company's
        discontinued operations as of June 30, 2003.
</TABLE>

17.  Subsequent Event


     On July 24,  2003,  Insituform  East  entered  into a Contract of Sale with
LINLO  Realty  L. L. C.  ("LINLO"),  a  subsidiary  of  Atlantic  Transportation
Equipment,  Ltd.,  providing for the sale to LINLO of all of  Insituform  East's
real  property in  Landover,  Maryland.  The purchase  price of $5.215  million,
including prior deposits,  is payable in cash at closing. The closing,  expected
to  occur  by the  end  of  November  2003,  is  subject  to  certain  customary
conditions,  including that LINLO has a 70-day period (commencing July 24, 2003)
to ensure the suitability of the property for its use and development.


                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
     with Section 16(a) of the Exchange Act

(a)  Identification of Directors and Executive Officers

<TABLE>
<CAPTION>
Name                         Age      Director Since         Positions with Registrant             Held Since
----                         ---      --------------         -------------------------             ----------
<S>                          <C>               <C>  <C>                                                  <C>
Robert W. Erikson            58       December 1974 1/       President                          February 1988
George Wm. Erikson           61       November 1975 1/       Chairman and General Counsel       February 1988
Webb C. Hayes, IV            55       April 1991             None
Paul C. Kincheloe, Jr.       62       April 1991             None
Robert F. Hartman            56       N/A                    Vice President, Secretary          February 1988 2/
                                                                  and Treasurer
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.
2/   Date of initial  election as a vice  president of the  Company.  Elected as
     Secretary in June 1991 and as Treasurer in December 1997.
</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.  Each officer
holds office until his  successor is elected and  qualified or until his earlier
resignation or removal.

BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS

     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. 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.

     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.  In May 2002, he assumed the additional titles and
duties of Treasurer and Chief Financial  Officer.  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.

BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     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,  2003,  all  Section  16(a)  filing  requirements  applicable  to
Reporting  Persons were  complied with in a timely manner with during the fiscal
year.


(b)  Identification of Certain Significant Employees:

     Not applicable.

(c)  Family Relationships:

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

(d)  Involvement in Certain Legal Proceedings:

     Not applicable

Item 10. Executive Compensation

     CERBCO is a parent holding company with a controlling interest, through its
wholly-owned  subsidiary,  CERBERONICS,  in INEI. 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,
2003, 2002, and 2001:

<TABLE>
SUMMARY COMPENSATION TABLE
                                                                                          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
<CAPTION>
Position                Year                  ($)      ($)      ($) 2/       ($)           ($)      (#)      ($)      ($) 3/
----------------------- ----- --------------- -------- -------- ------------ ------------- -------- -------- -------- ------------
<S>                     <C>                   <C>         <C>       <C>       <C>           <C>       <C>       <C>      <C>
Robert W. Erikson       2003  CERBCO          $ 11,934    $0        $0        $ 11,934      $     0   5,000     $0       $     0
Director & President 1/       INEI             168,953     0         0         168,953            0  15,000      0             0
                              CERBERONICS       94,266     0         0          94,266            0       0      0             0
                                              --------------------------------------------------------------------------------------
                                              $275,153    $0        $0        $275,153      $     0  20,000     $0       $     0
                                              ======================================================================================

                        2002  CERBCO          $ 11,934    $0        $0        $ 11,934      $     0   5,000     $0       $      0
                              INEI             186,282     0         0         186,282            0  15,000      0            949
                              CERBERONICS       94,266     0         0          94,266            0       0      0              0
                                              --------------------------------------------------------------------------------------
                                              $292,481    $0        $0        $292,481      $     0  20,000     $0       $    949
                                              ======================================================================================

                        2001  CERBCO          $ 11,934    $0        $0        $ 11,934      $     0   5,000     $0       $      0
                              INEI             225,271     0         0         225,271            0  15,000      0          1,463
                              CERBERONICS       94,266     0         0          94,266            0       0      0              0
                                              --------------------------------------------------------------------------------------
                                              $331,471    $0        $0        $331,471      $     0   20,000    $0       $  1,463
                                              ======================================================================================

George Wm. Erikson      2003  CERBCO          $ 11,934    $0        $0        $ 11,934      $     0    5,000    $0       $      0
Director, Chairman            INEI             168,953     0         0         168,953            0   15,000     0              0
 & General Counsel 1/         CERBERONICS       94,266     0         0          94,266            0        0     0              0
                                             --------------------------------------------------------------------------------------
                                              $275,153    $0        $0        $275,153      $     0   20,000    $0       $      0
                                              ======================================================================================

                        2002  CERBCO          $ 11,934    $0        $0        $ 11,934      $     0    5,000    $0        $     0
                              INEI             186,282     0         0         186,282            0   15,000     0            949
                              CERBERONICS       94,266     0         0          94,266            0        0     0              0
                                              --------------------------------------------------------------------------------------
                                              $292,481    $0        $0        $292,481      $     0   20,000   $0         $   949
                                              ======================================================================================

                        2001  CERBCO          $ 11,934    $0        $0        $ 11,934      $     0    5,000    $0        $     0
                              INEI             225,271     0         0         225,271            0   15,000     0          1,463
                              CERBERONICS       94,266     0         0          94,266            0        0     0              0
                                              --------------------------------------------------------------------------------------
                                              $331,471    $0        $0        $331,471      $     0    20,000   $0        $ 1,463
                                              ======================================================================================

Robert F. Hartman       2003  CERBCO          $  9,122    $0        $0        $  9,122      $     0         0   $0        $     0
Vice President,               INEI             101,596     0         0         101,596            0         0    0              0
 Secretary & Treasurer        CERBERONICS        3,229     0         0           3,229            0         0    0              0
                                              --------------------------------------------------------------------------------------
                                              $113,947    $0        $0        $113,947      $     0         0   $0        $     0
                                              ======================================================================================

                        2002  CERBCO          $  9,039    $0        $0        $  9,039      $     0         0   $0        $     0
                              INEI              96,427     0         0          96,427            0         0    0            509
                              CERBERONICS        3,200     0         0           3,200            0         0    0              0
                                              ---------- ---------------------------------------------------------------------------
                                              $ 108,666   $0        $0        $108,666      $     0         0   $0        $   509
                                              ======================================================================================

                        2001  CERBCO          $   8,814   $0        $0        $  8,814     $      0         0   $0        $     0
                              INEI               95,883    0         0          95,883            0    30,000    0            783
                              CERBERONICS         3,120    0         0           3,120            0         0    0              0
                                              --------------------------------------------------------------------------------------
                                              $ 107,817   $0        $0        $107,817     $      0    30,000   $0        $    783
                                              ======================================================================================

------------------------------------------------------------------------------------------------------------------------------------
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/   Amounts allocated under the Insituform East Advantage Plan. -
</TABLE>


<PAGE>


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.

     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,  2003  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                       11                    $304,749                61.11%            $93,118
George Wm. Erikson                      11                    $304,749                73.33%            $111,741
Robert F. Hartman                       11                    $109,709                55.00%            $15,085
</TABLE>

CERBCO 2002 Directors' Stock Option Plan

     CERBCO  adopted,  with  stockholder  approval at the 2002 Annual Meeting of
Stockholders,  the CERBCO,  Inc. 2002 Board of Directors' Stock Option Plan (the
"CERBCO  2002  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.  The term of the plan is for ten years, unless terminated sooner by the
Board of  Directors.  A maximum  of 125,000  shares of Common  Stock may be made
subject to options  under the CERBCO  2002  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 2002 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 2002
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  2002  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 2002. On December 12, 2002,
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 $2.82. No options  available under the plan were exercised by directors
of the Company during fiscal year 2003.

CERBCO 1997 Directors' Stock Option Plan

     CERBCO  adopted,  with  stockholder  approval  at 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 the same as the
CERBCO  2002  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  19,  1997 and at each of the four  succeeding  Board of
Directors  meetings  following the Annual  Meetings of  Stockholders  for fiscal
years 1998,  1999,  2000 and 2001. Each grant of options under the plan entitles
each  director to whom such  options  were  granted the right to purchase  5,000
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.  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.  Under the terms of
this plan, up to 80,000  shares of CERBCO  Common Stock remain  reserved for the
directors of the Company.  No options available under the plan were exercised by
directors of the Company during fiscal year 2003.

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, 2003.

     The IEI Advantage  Plan also  includes a salary  reduction  profit  sharing
feature under Section  401(k) of the Internal  Revenue  Code.  Participants  may
elect to defer a portion of their  compensation by any whole  percentage from 2%
to 16% subject to certain  limitations.  At its  discretion,  Insituform  East's
Board of Directors may authorize 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.  No
matching contribution was authorized for the fiscal year ended June 30, 2003.

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 12,  2002,  options on a total of 60,000  shares of  Insituform
East's  Common Stock were granted to directors of  Insituform  East  (options on
15,000 shares to each of four directors,  including  Messrs.  Robert Erikson and
George Erikson) at a per share option price of $0.66. No options available under
this plan were  exercised  by directors of  Insituform  East during  fiscal year
2003.

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 at 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.  Under the terms of this plan,  up to 60,000  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. No options  available  under the plan were  exercised by directors of
Insituform East during fiscal year 2003.

Insituform East 1999 Employee Stock Option Plan

     Insituform  East  adopted,  with  stockholder  approval  at the 1999 Annual
Meeting of Stockholders,  the Insituform East,  Incorporated 1999 Employee Stock
Option  Plan (the "IEI  1999  Employee  Plan").  The  purpose  of the plan is to
advance the growth and development of the Company by affording an opportunity to
full-time  employees of the Company to purchase  shares of the Company's  Common
Stock and to provide  incentives  for them to put forth maximum  efforts for the
success of the Company's  business.  Any employee of the Company who is employed
on a full-time basis is eligible for participation. Under the terms of the plan,
up to 350,000  shares of  Insituform  East's Common Stock have been reserved for
the  employees of Insituform  East.  The plan is  administered  by the Incentive
Stock Option Plan Committee  consisting of Messrs.  Paul C.  Kincheloe,  Jr. and
Webb C. Hayes, IV.

     On December  8, 2000,  options on a total of 140,000  shares of  Insituform
East's Common Stock were granted to then four  executive  officers of Insituform
East (including Mr. Robert Hartman, but not including Messrs. Robert Erikson and
George  Erikson) at a per share price of $1.5625.  These  options were vested on
December  8,  2002 and are  exercisable  any time  and from  time-to-time  until
December  8, 2005,  unless  exercisable  sooner as set forth in the  executives'
option  agreements.  No  options  available  under this plan were  exercised  by
executive  officers  of  Insituform  East  during the fiscal year ended June 30,
2003.

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  2003  under  the  CERBCO  2002  Directors'  Plan  and the IEI 1999
Directors' Plan:

<TABLE>
                      OPTION/SAR GRANTS IN LAST FISCAL YEAR


                                              Individual Grants
                           ------------------------------------------------------------
                              Options/       % of Total Options/SARs      Exercise or     Expiration
           Name                 SARs         Granted to Employees in       Base Price        Date
<CAPTION>
                            Granted (#)            Fiscal Year              ($/Sh)
-------------------------- ------------- -  -----------------------------  -------------  -----------
Robert W. Erikson
  CERBCO 2002
<S>                             <C>                     <C>                  <C>          <C>   <C>
     Directors' Plan            5,000                   25%                  $2.82         12/12/07
  IEI 1999 Directors' Plan     15,000                   25%                  $0.66         12/12/07

George Wm. Erikson
  CERBCO 2002
     Directors' Plan            5,000                   25%                  $2.82         12/12/07
  IEI 1999 Directors' Plan     15,000                   25%                  $0.66         12/12/07
</TABLE>

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

     No option or Stock Appreciation Right grants made under the CERBCO 2002 and
1997 Directors'  Plans,  the IEI 1999 and 1994 Directors'  Plans or the IEI 1999
Employee  Plan to any of the named  executive  officers  were  exercised  during
fiscal year 2003. 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, 2003:

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

                                                                                            Value of Unexercised In The
                                                                 Number of Unexercised         Money Options/SARs at
                                                              Options/SARs at FY-End(#)              FY-End($)
                                                              --------------------------    -----------------------------
                                Shares
Name                         Acquired on      Value Realized  Exercisable Unexercisable     Exercisable   Unexercisable
                             Exercise (#)         ($)
<CAPTION>
---------------------------- --------------- ---------------- ----------- --------------    ------------ ----------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>
Robert W. Erikson
  CERBCO 1997
    Directors' Plan                0               $0           20,000              0         $50,720          $0
  CERBCO 2002
    Directors' Plan                0               $0            5,000              0         $24,400          $0
  IEI 1994 Directors' Plan         0               $0           15,000              0         $     0          $0
  IEI 1999 Directors' Plan         0               $0           60,000              0         $ 3,900          $0

George Wm. Erikson
  CERBCO 1997
    Directors' Plan                0               $0           25,000              0         $50,720          $0
  CERBCO 2002
    Directors' Plan                0               $0            5,000              0         $24,400          $0
  IEI 1994 Directors' Plan         0               $0           30,000              0         $     0          $0
  IEI 1999 Directors' Plan         0               $0           45,000              0         $ 3,900          $0

Robert F. Hartman
  IEI 1999 Employee Plan           0               $0           30,000              0         $     0          $0
---------------------------- --------------- ---------------- ----------- -------------- -- ------------ ----------------
</TABLE>


LONG-TERM INCENTIVE PLAN AWARDS

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


REPRICING OF OPTIONS/SARS

     The Company did not adjust or amend the exercise  price of stock options or
SARs  previously  awarded to any of the named  executive  officers during fiscal
year 2003.


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

     During  fiscal year 2001,  one of the  Company's  executive  officers,  Mr.
Robert Hartman, entered into a severance agreement with Insituform East whereby,
in the  event of a change  in  control  of  Insituform  East and the  subsequent
termination of the executive's employment by Insituform East, the executive will
receive  payment  of one  year's  base  salary and  annual  bonus,  if any.  The
agreement  also provides that, in the event the executive  voluntarily  resigns,
the  executive  will  not,  without  consent  of  Insituform  East,  enter  into
employment or other association with any other pipeline  rehabilitation business
in the United States.

     During  fiscal year 2002,  Mr.  Hartman  entered  into a similar  severance
agreement with CERBCO whereby, in the event of a change in control of CERBCO and
the  subsequent  termination  of  the  executive's  employment  by  CERBCO,  the
executive  will receive  payment of one year's base salary and annual bonus,  if
any.  No other  compensatory  plan or  arrangements  between the Company and any
named executive officer,  or payment to an executive  officer,  resulted or will
result from the resignation,  retirement or other termination of employment with
the  Company,  or from a change in  control  of the  Company  or a change in the
executive officer's  responsibilities following a change-in-control 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 2002 and 1997  Directors'  Stock
Option Plans, 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.



Item 11. Security Ownership of Certain Beneficial Owners and Management

(a)  Security Ownership of Certain Beneficial Owners

     The following table  reflects,  as of June 30, 2003, 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>
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

Remnant Partners L.P.                   Common Stock                       60,650  3/                       5.1%
714 St. Johns Road
Baltimore, MD  21210

F. Scott Koonce                         Common Stock                       67,059  4/                       5.6%
6550 Rock Spring Drive, Suite 600
Bethesda, MD  20817
--------------------------------------- ---------------------------- ------------- ---------------- ------------------
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/   Based upon an Amended  Schedule 13G filed with the  Securities and Exchange
     Commission  on February  14, 2003.  That  Schedule  indicates  that Remnant
     Partners  L.P., of which Mr. John C. Boland is the President of the General
     Partner,  has sole  voting and  dispositive  power  with  respect to 49,300
     shares  of Common  Stock and that Mr.  Boland  holds an  additional  11,350
     shares of Common Stock in his personal accounts.
4/   Beneficial  ownership,  sole voting and sole  investment  power as publicly
     disclosed in Schedule 13G filed with the Securities and Exchange Commission
     on June 27, 2003.
</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 September 2, 2003,  and with respect to all directors
and officers of CERBCO as a group:

<TABLE>
                                                      Amount & Nature of Beneficial Ownership
Name of Beneficial Owner      Title of Class           Owned Outright        Exercisable Options  Percent of Class
<CAPTION>
------------------------      --------------           --------------        -------------------  ----------------
<S>                                                           <C>       <C>           <C>                   <C>
Robert W. Erikson               Common Stock                  60,700    1/            20,000                6.4%
                                Class B Common Stock         131,750    1/                 0               44.9%

George Wm. Erikson              Common Stock                  59,602    2/            20,000                6.3%
                                Class B Common Stock         115,814    2/                 0               39.5%

Webb C. Hayes, IV               Common Stock                   4,500                  20,000                1.9%

Paul C. Kincheloe, Jr.          Common Stock                   7,500                  20,000                2.2%

All  directors and officers as  Common Stock                 132,302                  80,000               16.7%
   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 INEI Corporation, 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 INEI Corporation,  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, 2003.

Item 12. Certain Relationships and Related Transactions

     Not applicable.

Item 13. Exhibits and Reports on Form 8-K

(a)  Exhibits


<TABLE>
<CAPTION>
Exhibit  Number*                                                                                                Pages
----------------
<C>                                                          <C> <C>
2                Asset Purchase  Agreement  dated as of June 18, 2003  (Incorporated  by reference to
                   Exhibit 99.1 to Current Form 8-K dated June 18, 2003)

3.1              CERBCO, Inc. Certificate of Incorporation

3.2              CERBCO, Inc. By-Laws

10.1             Insituform Process Sublicense Agreement - Maryland, Virginia, D.C. Territory

10.2             Insituform Process Sublicense Agreement - Delaware, Eastern Pennsylvania Territory

10.3             Insituform Process Sublicense Agreement - Western Pennsylvania Territory

10.4             Insituform Process Sublicense Agreement - Northern Ohio Territory

10.5             Insituform Process Sublicense Agreement - Southern Ohio Territory

10.6             Insituform Process Sublicense Agreement - West Virginia Territory

10.7             SAW Agreement

10.8             Supplemental Retirement Agreement

                 Exhibits 3.1, 3.2 and 10.1 through 10.8 are incorporated by
                   reference to Exhibits to CERBCO, Inc. Annual Report on Form
                   10-K for the fiscal year ended June 30, 2000.

10.9             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)

10.10            2002 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 12, 2002)

10.11            Insituform East, Inc. Incentive Stock Option Agreement

10.12            Insituform East, Inc. Severance Agreement

                 Exhibits 10.11 and 10.12 are incorporated by reference to
                   Exhibits to CERBCO, Inc. Annual Report on Form 10-KSB for the
                   fiscal year ended June 30, 2001.

10.13            CERBCO,  Inc.  Severance  Agreement  (Incorporated  by  reference  to  CERBCO,  Inc.
                   Annual Report filed on Form 10-KSB for the fiscal year ended June 30, 2002)

31.1             Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                        45


31.2             Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                        46


31.3             Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                        47

32               Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                        48

99               CERBCO,  Inc.  Consolidating  Schedules:  Statement of Operations  Information  for the
                   Year Ended June 30, 2003;  Balance Sheet  Information and  Consolidating  Elimination
                   Entries as of June 30, 2003, and Related Independent Auditors' Report.                       49
---------------------------------------------------------------------------------------------------------------------
* The Exhibit Number used refers to the appropriate subsection in paragraph (b)
of Item 601 of Regulation S-B. ** Stockholders may obtain copies of any of the
documents not included herein but filed with the SEC by writing to CERBCO, Inc.,
Attn: Corporate Secretary, 3421 Pennsy Drive, Landover, Maryland 20785-1608; or
on the internet at www.sec.gov.
</TABLE>

(b) Reports on Form 8-K

     The Company  filed three  reports on Form 8-K during the quarter ended June
30, 2003.  The first report,  dated May 14, 2003,  did not include any financial
statements and reported under Item 5. Other Events:  Issuance of a press release
dated May 14, 2003  announcing  the  Company's  financial  results for the three
months ended March 31, 2003.

         The second report, dated June 18, 2003, did not include financial
statements and reported under the following items:

          Item 2. Acquisition or Disposition of Assets

     On June 18, 2003,  Insituform  East,  Incorporated  ("East"),  an indirect,
majority  owned  subsidiary  of the  Company,  entered  into an  Asset  Purchase
Agreement with Insituform  Technologies,  Inc. ("ITI") providing for the sale by
East to ITI of  substantially  all of East's non-real estate assets and on-going
business; and.

          Item 5. Other Events

     Press release announcing the execution of the Asset Purchase Agreement.

     An amendment to this report was filed on August 13, 2003  providing the pro
forma  financial  information  required  by  Item  7(b)  with  respect  to  this
transaction.

     The third  report,  dated June 30,  2003,  did not  include  any  financial
statements and reported under Item 5. Other Events:  Issuance of a press release
dated June 30, 2003  announcing  that the Company had declared cash dividends on
June 30, 2003.
<PAGE>


                                   SIGNATURES

     In  accordance  with of  Section  13 or  15(d)  of the  Exchange  Act,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned,  thereunto duly authorized, in Landover, Maryland, on September 29,
2003. CERBCO, Inc.

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


In  accordance  with the Exchange  Act, 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
--------------------------
Robert W. Erikson              Director,                      September 29, 2003
President                      Principal Executive Officer


/s/ GEORGE Wm. ERIKSON
--------------------------
George Wm. Erikson             Director,                      September 29, 2003
Chairman & General Counsel     Principal Executive Officer


/s/ ROBERT F. HARTMAN
---------------------------
Robert F. Hartman              Principal Financial Officer,   September 29, 2003
Vice President, Secretary &    Principal Accounting Officer
   Treasurer


/s/ WEBB C. HAYES, IV
---------------------------
Webb C. Hayes, IV              Director                       September 29, 2003


/s/ PAUL C. KINCHELOE, JR.
---------------------------
Paul C. Kincheloe, Jr.         Director                       September 29, 2003