SECURITIES AND EXCHANGE COMMISSION
       Washington, D.C.  20549

             FORM 10-K/A

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

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

For the fiscal year ended: March 31, 1997

Commission File Number: 0-16734

       C.E.C. INDUSTRIES CORP.
(Exact name of registrant as specified in its charter)

     Nevada                                       87-0217252
(State  or  other jurisdiction of                 (I.R.S. Employer
incorporation or organization)                    Identification No.)

     3450 E Russell Road
     Las Vegas, Nevada                            89120
(Address of principal executive offices)          (Zip Code)

Registrant's telephone number including area code: (702) 214-4253

Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $0.05 par value

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.05 par value

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

     Indicate  by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not
contained  herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to  this Form 10-K.  [     ]

     The  aggregate  market  value (the average  bid  and
asked prices)  of  the  voting  stock held by non-affiliates  of
the registrant on March 31, 1997, was approximately
$3,257,184.  The number of shares of Common Stock, $0.05
par value, outstanding on March 31, 1997, was 17,736,795
shares, held by approximately 1704 shareholders.

PART I

ITEM 1.   BUSINESS
<PAGE>

(a) General

     C.E.C.  Industries  Corp.  is  a  Nevada  corporation
with principal and  executive offices located  at 3450 E Russull
Road, Las Vegas, Nevada 89120, telephone
(702)  214-4253. C.E.C. Industries Corp. and it's
consolidated  subsidiaries  are referred to as either C.E.C. or
the "Company." C.E.C. is  engaged in several unrelated
businesses through its  primary subsidiaries, Custom
Environmental International, (hereinafter referred to as
"CEI"), (carbon reactivation technology),  Mid-Nevada Art,
Inc. (hereinafter referred to  as "Mid-Nevada  Art"),  (art
collection), and Basia  Holding,  Inc. (hereinafter referred to
as  "Basia"), (holds title to 9,000 acres of land and mineral
leases in Tennessee).  The Company also has methane gas
interests in Alabama (hereinafter referred to as "Atlas
Methane Leases") and a 24.5% interest in Victory Village
Associates Limited III (hereinafter referred to as "Victory
Village"), (320 unit multi-family project in Henderson,
Nevada).  The Company's current organization was
accomplished through a merger and acquisition program
during the  last  two fiscal years ended March 31, 1997, and
continuing through the present.

     C.E.C.  was incorporated as Justheim Petroleum
Company  in Nevada in 1952.  C.E.C. Management Corp.
was merged into Justheim Petroleum  Company effective
December 31, 1986, and was  renamed C.E.C.  Industries
Corp.  Prior to  the  merger,  Justheim  had historically
engaged in the business of  acquiring,  holding  and selling
oil and gas leaseholds and retaining overriding  royalty
rights.  C.E.C. Management Corp. primarily was in the
business of engineering consulting  and designing and
marketing  customized minerals  processing systems and
equipment.

     C.E.C.'s primary business had been the manufacture
and sale of  minerals  processing equipment  through  its
wholly-owned subsidiary, "CEI" formerly Custom
Equipment Corporation.  Custom was a  pioneer in  the
development of custom gold processing equipment  in  the
early   to   mid-1980's, thus,  business  was very  profitable.
However,  as  gold prices declined after the early 1980's,
fewer gold plants were built, more competitors entered the
market,  and Custom's business was negatively impacted.
The Company attempted to   use  its  expertise  and
know-how  to  develop  the  carbon reactivation furnace
technology in the water treatment  industry, but  the
continued losses in the metallurgical business caused  a
capital drain necessitating other measures.  Custom
Environmental International became  the renamed
subsidiary to carry on the efforts, building a new prototype
carbon furnace still in the development stage.   The
metallurgical equipment business  was  sold  in fiscal year
1991.

     A spin-off of CEI was proposed in late 1995,
however, on August 5, 1996 the Board of Directors had a
formal meeting regarding the proposed spin-off (previously
filed in the 8-K of October 4, 1995) of the Company's
subsidiary C.E.I.  Due to the fact that the prior Board of
Directors did not complete the spin-off of C.E.I. and the
documentation regarding this spin-off is not included in the
official books and records of the Company, the current
Board of Directors has decided that the spin-off of C.E.I. is
not in the best interests of the Company or it's shareholders

<PAGE>
and has terminated all spin-off plans for C.E.I. at this time.

     In  September  1993,  the  Board  of  Directors  of
C.E.C considered expanding  the Company's  business into
opportunities outside of the carbon reactivation furnace
technology business, and thus caused several new directors
with real estate expertise to join the C.E.C. board.  The
intent being to  develop land owned by the Company in St.
George, Utah as well as  other properties to be acquired.

     The Company formed Moonridge Development
Corp. as a wholly-owned subsidiary on February 24, 1994
(hereinafter referred to as "Moonridge"), to develop the
Company's property and subsequently other parcels of
property.  In 1995, Moonridge acquired a General
Contractor License and began development of a 320 unit
multi-family complex in Henderson, Nevada.  After much
discussion regarding the liability of such a project, the
Board of Directors on June 10, 1996, signed a Mutual
Release and Hold Harmless Agreement with Moonridge
Development Corp., DSM Golf Enterprises, Inc.  and
Charles McHaffie.  This agreement released the Company's
interest in Moonridge Development Corp.  However, the
Company regained title to all the lands owned by Moonridge
and retained its 24.5% interest in the Victory Village
Associates Limited III, a 320 unit multi-family HUD project
in Henderson, Nevada.

     In the fourth quarter of 1995, the Company acquired
Sterling Travel, and the revenues and expenses thereof from
February 28, 1995 to March 31, 1995, were included in the
revenues and expenses for fiscal 1995.  Pursuant to the
terms and conditions of the agreement with the 100% owner
of Sterling Travel, the Company was purchasing the travel
Company for 400,000 shares of preferred stock of the
Company, at a valued price of $5 per share, convertible to
common stock, with a total value of $2 million.  In the event
that in two years, the price of the stock of the Company was
not valued at $5 per share, then in that event the Company
was required to off set the difference with the issuance of
additional shares of common stock.  According to the
agreement, the preferred stock was to be issued according to
an earn out schedule based upon revenues earned by Sterling
Travel.  However, Sterling Travel did not receive the
revenue projections as initially anticipated, and the preferred
stock was not issued, and the transaction was canceled.

     On  March 28, 1996, the Company entered into an
agreement whereby the Company issued 8,660,000 shares of
common restricted  voting stock and 8,663,041 shares of
preferred voting stock of the company in exchange for 100%
of the issued and outstanding  common shares of Basia
Holding, Inc.,  a Tennessee Corporation  holding title to
9,000 acres of land and 100%  of  the  issued and
outstanding  shares of Mid-Nevada Art, Inc., and  100%  of
Atlas Methane  fully paid leasehold interests which
leasehold interests include approximately 13,500 acres
located in the Black  Warrior Basin  area of Alabama.  The
March  28th  agreement  further required the resignation of
three of the Company's directors.

       On May 10, 1997, the Company entered into an
agreement to sell approximately 8.5 acres of land on Russell
Road in Las Vegas, Nevada.  With the conveyance of this
land the Company reduced its indebtedness by $1,735, 185
on existing loans and also received a six month extension
with an option for an additional six months and other

<PAGE>

considerations on the existing loans on the Company's 15
acres of land in Las Vegas.

     On June 15, 1996, the Company entered into a Stock
Exchange Agreement to acquire 100% of the issued and
outstanding stock of Auto Express, Inc., a Colorado
Corporation involved in the transportation of automobiles
nationwide.  The Company subsequently became aware of
material misrepresentations as well as  undisclosed
liabilities made by Auto Express, Inc.  In light of the
material nature of these issues, C.E.C. Industries Corp.  has
determined that it was in the best interest of the Company
and its shareholders to rescind the transaction.

     On June 27, 1996 the Company entered into an
Exchange Agreement with One World Cards, Inc. &
Bruce Perlowin its President for 278  - $10,000.00 pre-paid long
distance calling cards at a rate of
approximately $0.45 per minute or better and an
expiration date of five (5) years from the date of closing
in exchange for 18 original art works by Sky M. Jones.
These paintings have an appraisal value of
$2,779,700.00 and are owned by the Company's wholly
owned subsidiary Mid-Nevada Art.

     Also on June 27, 1996 the Company entered
into an Exchange Agreement with One World Cards,
Inc. & Bruce Perlowin its President for 3 - $100,000.00
at a rate of approximately $0.45 per minute or better
with no expiration date and 45 - $10,000.00 pre-paid
long distance calling cards at a rate of approximately
$0.45 per minute or better with an expiration date of
five (5) years from the date of closing in exchange for
12 original art works by Sky M. Jones with appraisal
books and appraisals totaling $750,000.00 owned by the
Company's wholly owned subsidiary Mid-Nevada Art.
Mid-Nevada Art, Inc.  exercised its option wherein
Mid-Nevada Art, Inc.  returned the pre-paid calling
cards to One World Cards, Inc. and One World Cards,
Inc. returned the 31 original artworks to Mid-Nevada
Art, Inc.  The decision for the return of the calling cards
was the result of the failure of One World Cards, Inc. to
fully activate the prepaid calling cards.

     On December 6, 1996, the Company signed an
exchange agreement to sell it's interest in 17.44 acres of
vacant land in Las Vegas, Nevada for 165,876 free
trading shares of Synfuel Technologies, (OTC SNFL)
trading at approximately $20.00 per share.  On March
31, 1997 Gold Coast Resources assumed the existing
mortgages of approximately $1,800,000.

(b) Information About Industry Segments.

     The  Company is currently engaged in four main
businesses; real estate investment (Victory Village); carbon
furnace development ("CEI"); mineral  rights development
("Atlas Methane" and "Basia Holding") and investments in
art ("Mid-Nevada Art"). Information regarding  the
Company's reportable business segments is set forth in Item
1( c) and Note 9 to the Financial Statements.  The Company
is not involved in mining operations, and, accordingly, no
revenues are generated therefrom.

( c) Narrative Description of Business.

Victory Village Associates Limited III

<PAGE>

     320  Unit   Multi-Family Project to be built  -
Henderson, Nevada. In June, 1995, the Company acquired a
24.5% interest in a 320 unit apartment project generally
known as Victory Village, in exchange  for  1,200,000
shares  of  Rule  144  stock,  with  a simultaneous  two-year
restriction.  The project  is  located  in Henderson,  Nevada
near the intersection of Lake Mead  Blvd.  and Boulder
Highway. The City of Henderson issued bonds to facilitate
the  financing on the project, with HUD, (Department  of
Housing and  Urban  Development) insuring the
construction and permanent loan in the sum of $16,442,400,
at 6.38% interest, and due in  40 years,  which  loan was
recorded in June  of  1995 against  the approximate  17.72
acres.  The Majority of the construction on the project has
been completed and certificates of occupancy have been
issued.  The company's investment in Victory Village was
collateralized by a pledge of preferred stock owned by the
project manager.

Atlas Methane Gas Interests

     The  Company  owns  100%  of 13,500 acres of
leasehold  interest located in the Black Warrior Lagoon area
of Alabama, containing methane reserves.

     Introduction. Coal deposits in the United States are
widespread, underlying 360,000 square miles in 37 states.
Methane is  present in  nearly  all coal from the shallow
subsurface to  depths  over 10,000  feet. Coalbed basins are
generally divided into  eastern and  western  types. This
segregation is on  the  basis of both geography and geology.
The  eastern coals are primarily Pennsylvanian Age and
western coals are Cretaceous Age.  Much of the drilling for
coalbed gas has been concentrated in the  Black Warrior
Basin of North Central Alabama. This is due  to  several
factors:


          The  basin's  proximity to gas pipelines that deliver to stable
          gas markets.
          The high BTU values of the gas, from 950-1050.
          Drilling depths are shallow from 1,000 to 5,000 feet.
          The  coals are well understood in terms of their thickness,
          rank, and content.
          Long term production has been established.

     Black Warrior Basin. Coal has been produced
continuously for over 100  years in the Black Warrior Basin.
Although the presence  of gas  in  coalbeds has been
recognized from the beginning, it  had been considered only
as a hazard to coal mining.  Gas from the field was
originally  vented, but as the natural  gas  prices increased,
the gas was collected and sold.

     Market  Analysis.  The  pipeline systems situated
in  the  Black Warrior Basin, are Alabama Gas Company
(ALAGASCO), Basin Pipeline Corporation,  and Southern
Natural Pipeline Company (SONAT),  and Associated
natural  Gas Inc.  (ANGI).  The  Company  does   not
contemplate  any marketing problems related to  coalbed
methane production in the Warrior Basin.

     Competition.   There  are  a  large  number  of
companies   and individuals engaged in exploration and
development of oil and gas properties.  Accordingly,  the
Company  will  encounter   strong competition from

<PAGE>

independent operators and major oil companies in acquiring
any additional leases suitable for development. Many of the
companies  so  engaged have financial resources  and  staffs
considerably larger than those available to the  Company.
There are  likewise numerous companies and individuals
engaged  in  the organization and conduct of royalty,
production, and marketing of gas,  thus providing a high
degree of competition among companies and individuals in
the development and marketing of gas leasehold interests.

     The  ability  of  the Company to market oil and gas
will depend on numerous factors  beyond  the control  of
the Company, the effect of which factors  cannot  be
accurately  predicted  or  anticipated.  Some  of  these
factors include   the   availability  of  other domestic and
foreign production, the marketing of competitive fuels, the
proximity and  capacity  of pipelines, fluctuations in supply
and  demand,  the availability  of  a ready market, the effect
of the federal  and state  regulation  of  production, refining,
transportation  and sales, and general national and
worldwide economic conditions.

Basia Holding, Inc.

     Basia  Holdings holds title to 9,000 acres of land
Grundy County, Tennessee, pursuant to a conveyance from
Alpine Development Co., a Florida corporation, known as O
& F Tennessee Land; and is in  part of what  is  locally
referred to as the Southern Field of the Tennessee coalfield.

     The  Company currently does not have the means,
nor the intention in  the  near future to attempt to develop
and or mine  the  coal property. The Company is seeking a
buyer or a joint venture partner for the coal reserves. The
ability of  the Company to market the coal will depend on
numerous factors beyond the control of the Company, the
effect of which factors cannot be accurately predicted or
anticipated. Some of  these factors include the accessibility
of the material,  the availability   of   other   domestic  and
foreign   production, environmental  issues in both the
region where the materials are located  and  other  regions
where  competitive  materials are located, fluctuations in
supply and demand, the availability of a ready market, the
effect of the federal and state regulation  of production,
transportation and sales, and general  national  and
worldwide economic conditions.

Mid-Nevada Art, Inc.

     Mid  Nevada  Art, Inc. is a wholly owned subsidiary
of  CEC  with assets  of $1.7 million, which assets are made
up of $1.7 million in  appraised artworks by Sky M. Jones, a
noted American  artist. Sky  Jones is a painter from the
American West, born October  3, 1947 in Salt Lake City,
Utah. He graduated with a bachelor degree in  Art from the
University of Utah in 1971. He has written books on Art and
Life. Jones deals in Multiple Imagery, that is, layers upon
layers  of  3D  forms overlaid and  interwoven.  Sky Jones
originals  have  been  in  the  private  collections   of   Queen
Elizabeth, Governor Michael Dukakis, the late Lucille  Ball,
and Mohammed Ali to name a few. He has created various
movie posters including  Star  Trek, the Never Ending Story,
Final  Countdown, etc.  Limited edition prints and paintings
by Sky Jones have been collected by or displayed in
museums, corporations and galleries world wide.  Prior to
1985 he used the name of Michael Whipple.

<PAGE>

Custom Environmental International

     Custom Environmental International, ("CEI") is
engaged in the business of development and implementation
of a patented carbon reactivation furnace.  CEI developed a
cost effective vertical kiln used for the recovery of gold.
Production models were sold throughout the world.  CEI has
gained valuable field experience which has lead to improved
models.

     Federal  and  State  Regulation. General. The
activities  of  the Company  with  respect to methane gas and
coal,  are  subject  to federal and state environmental laws
and regulations which impose limitations on the discharge
of pollutants into the air and water and which also establish
standards for the treatment, storage and disposal  of solid
and hazardous waste. Management believes  that the
Company  is substantially in compliance with such  laws
and regulations, and there are no pending proceedings which
question compliance with all applicable environmental,
health and safety.

     Although   the  Company  does  not  consider
current  laws   and regulations relating to such matters to be
materially burdensome, especially  in  light  of  the reserve
status  of  the  Company's involvement  as opposed to
operations, there can be no  assurance that  future
legislative  or  governmental  actions  or  judicial decisions
will not adversely affect the Company or its ability to retain
the mineral rights set forth herein. The Company  is  not
aware  of  any  proposed or pending legislative,
governmental  or judicial  action  that  would  materially
adversely  affect  the Company's properties.

     Methane Extraction. The chief potential for
environmental harm in the extraction of coalbed methane,
the gas trapped in underground coal streams, is the
discharge of salt water into streams. Weekly and monthly
water-quality samples are required to  monitor  the water
quality  during extraction. Currently the Company  is  not
involved  in  the  extraction of  its methane reserves,  and
thus faces no immediate environmental challenges.


Executive Offices

      C.E.C.'s executive offices are located at 23 Cactus
Garden Drive, F-60, Green Valley, Nevada 89014.


PATENTS

     C.E.C. had obtained certain patents for its low
temperature furnaces developed by CEI and used in
regenerating carbon.

EMPLOYEES

     On April 1, 1996 the Company signed an agreement
with WWW Consulting, wherein, WWW Consulting would
provide the Company with management and personnel and
other qualified technical and office personnel as required.
The Company agreed on the following monthly
compensation to be paid in cash or stock in the Company for
services rendered: Gerald Levine $8,500 per month; Marie
Levine $8,500 per month; misc.  office personnel at varying
rates depending on services needed.

<PAGE>

ITEM 2.   PROPERTIES

     Principal and Executive Offices. C.E.C. leases
2,622 square feet  of  office  space for its executive offices
at  23  Cactus Garden  Drive,  F-60, Green Valley, Nevada
89014.

     320 Unit - Victory Village Apartments. A general
discussion of  the 320 unit Victory Village project is
included under  Item 1(c),  "Narrative Description of
Business", "Operations".  During June  1995, the Company
acquired a 24.5% interest in the  Victory Village  III,  Ltd.
partnership utilizing Rule  144  restricted common  stock  of
the Company valued at $700,000.  A  $16,442,400 loan  was
recorded against the approximate 17.72 acres providing the
construction financing for the project.  The project was
completed in early 1997 and certificates of occupancy have
been obtained.

     Basia Holding, Inc. A general discussion  of  the
Basia Holding are included under Item 1(c),"Narrative
Description  of Business", "Operations".  Basia Holding
holds title to 9,000 acres of land in  Grundy  County,
Tennessee known as O & F Tennessee land; and is in part
of  what is  locally  referred to as the Southern Field of  the
Tennessee coalfield.

     Atlas  Methane Gas Interests. A general
discussion  of  the Atlas  Methane holdings are included
under Item 1(c),  "Narrative Description of  Business",
"Operations". The Company owns 100% of 13,500  acres of
leasehold interest located in the Black  Warrior Lagoon area
of Alabama, containing methane gas reserves.

     The  Black  Warrior  basin encompasses an area  of
about  35,000 square miles   in  northeastern Mississippi
and  Northwestern Alabama.  The  basin  is  named for the
Black  Warrior  River,  a prominent  navigable river over
most of its  length  through  the area.  The Black Warrior
basin  straddles  the Cumberland  Plateau, Appalachian
Valley and Ridge  province,  and East  Gulf  Coastal Plain.
Although the basin's exact limits  are not  firmly  established
in the literature,  it  is  structurally bounded on the north by
the Nashville-Cincinnati arch and on  the southeast by the
Appalachian fold and thrust belt. The  basin  is largely
covered by Cretaceous and younger sediments of the  Gulf
Coastal Plain and Mississippi Embayment.

ITEM 3.   LEGAL PROCEEDINGS

     Fernando Aldecoa, et. al. v. Softpoint, Inc., United
States District Court,  Southern District of California,  Case
Number 951654H(LSP) was instituted in October, 1995.
The Principal parties included Softpoint, Inc., Robert Cosby,
C.E.C. Industries, Inc., George Matthews, Ron Robinson,
Ron Stoecklein, and Don Stocklein.  The action pertains the
allegations made by certain Softpoint shareholders that the
defendants materially misrepresented, or allowed certain
misrepresentations to occur, which were relied upon by the
plaintiffs in purchasing their stock in Softpoint.  The only
relationship between the plaintiffs and the Company is that
the Company was attempting a merger with Softpoint,
which merger was not completed.  Further, one of the past
directors of the Company was a past president of Softpoint,
Inc.; however the dual relationship existed after the merger

<PAGE>

termination.  The plaintiffs are seeking an unknown damage,
which must be established upon determining liability, if any.
Because the Company and its outside counsel, are of the
opinion that the Company has no exposure in the litigation,
the Company is not aware of any governmental authority
which has interest in the matter from the standpoint of the
Company.  The Company, through its independent counsel
has filed a motion to have the case dismissed against the
Company, which motion will be heard by the Federal Court
on September 22, 1997.


     Medera Component Systems, Inc.  v.  Prime
Construction, Inc.  et.  al., Nevada Federal District Court
Case Number 596-01105 was instituted on November 27,
1996.  The principal parties include Moonridge
Development Corp., as well as C.E.C. Industries Corp.  The
action alleges that the Company entered into an indemnity
agreement with Medera Component Systems, in relation to
the use of Medera's roof trusses on the Victory Village
project.  The Company has filed a cross complaint alleging
that no contract was entered into nor did the Company ever
elicit any indemnity agreement.  The Company is strongly
responding to the litigation and believes that a judgment will
be rendered in their favor.  The case is in the discovery
stage.  A provision in the agreement wherein the Company
invested in the Victory Village project, contained an
indemnification in favor of the Company collateralized by
preferred stock.  In the event of a loss, the Company is in a
position of offset against the value of the preferred stock.


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

     No  matter  was  submitted to a vote of  security
holders, through  the  solicitation of proxies or otherwise,
during  the fourth quarter of  the Company's fiscal year
ended March 31, 1997.


PART II

ITEM 5.   MARKET   FOR  REGISTRANT'S
          COMMON  EQUITY  AND  RELATED
          STOCKHOLDER MATTERS

     The Company's Common Stock is traded in the
over-the-counter securities market through the National
Association of Securities Dealers Automated Quotation
Bulletin Board System, under the NASDAQ symbol CECN.
The following table sets forth the quarterly high  and  low
bid  prices for the Company's Common Stock during the last
two fiscal years  of  the  Company, as reported by the
National Quotations Bureau.   The  quotations  reflect
inter-dealer  prices,  without retail mark-up, mark-down or
commission, and may not necessarily represent actual
transactions.

                         1997                1996
                    High      Low       High      Low

     1st Quarter    $.53125   $.15625   $1.00     $ .5625
     2nd Quarter     .62       .30        .71875    .125
     3rd Quarter     .785      .44        .3125     .1875
     4th Quarter     .51       .185       .3125     .15625

<PAGE>

     No  dividend  was  declared or paid by the
Company  during fiscal year  1997 or 1996.  A decision to
pay dividends  in  the future  will depend upon the
Company's profitability,  need  for liquidity   and  other
financial  considerations.    There   are approximately 1704
shareholders of the 17,736,795 outstanding shares, as of
March 31, 1997.

<TABLE>
<CAPTION>
ITEM 6.   SELECTED FINANCIAL DATA

                             1997           1996           1995            1994          1993
<S>                          <C>            <C>            <C>             <C>           <C>
Revenue from continuing
   operations                $5,937,779     $ 1,276,068    $87,501         $142,238      $  137,316

Revenue from discontinued
    operations               1,166,573      1,187,208      0             0                    0

Net income (loss) from
   continuing operations     $1,102,673     $(970,803)     $(1,809,381)    $(296,992)    $1,838

Net gain/ loss from
   Discontinued operations   (49,935)       (312,510)      (17,170)        0             0

Gain/loss per common share:
   Continuing operations     .05            (0.09)         (1.22)          (0.19)        0.00
   Discontinued operations   .01            (0.03)         0.00            0.00          0.00

Total Assets                 $7,662,230     $11,115,648    $ 6,274,983     $6,094,026    $2,116,918

Long term obligations        0              0              0               0             0

Cash dividends per
     common share            0              0              0               0             0
</TABLE>

ITEM 7.   MANAGEMENT'S   DISCUSSION  AND ANALYSIS  OF   FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS

The  following discussion should be read in conjunction
with  the financial statements and the notes thereto.

Overview

     The company has continued to go through major
transitions pertaining to direction and continued operations.
During fiscal 1997, the Company earned revenues primarily
through the sales of its commercial real
estate properties with other income from royalty and sales of
services from Mid-Nevada Art..

     Moonridge Development Corp. The Company
divested itself of all interest to Moonridge Development
Corp. in June of 1996 regaining all interest in properties
located in Las Vegas, Nevada, (approximately 25 acres of
commercial real estate which was sold in the second and
third quarters of 1996)  and 24.5% interest in Victory
Village Associates Limited III (320 unit apartment project in
Henderson, Nevada, which is completed and has received
certificates of occupancy.

     On May 10, 1996, the Company entered into an
agreement to sell approximately 8.5 acres of land on Russell
Road in Las Vegas, Nevada. With the conveyance of this
land the company reduced its indebtedness by
$1,735,185 on existing loans and also received a six month
extension with an option for an additional six months and
other consideration on the existing loans on the Company's
15 acres of land in Las Vegas, which was subsequently sold.

<PAGE>

     On December 6, 1996, the company signed an
exchange agreement to sell it's interest in 15 and 2.2 acres of
vacant land in Las Vegas, Nevada for 165,876 free trading
shares of Synfuel Technologies, (OTC SNFL) trading at
approximately $20.00 per share on March 31, 1997  The
existing mortgage on the property of approximately
$1,800,000 was assumed by the buyer.

     CEI.  The Company, through its subsidiary, CEI,
continued to incur expenses related to the carbon
reactivation furnace. The spin off that was announced in
October of 1995 was never completed and the Board of
Directors decided that the spinoff of CEI was not in the best
interest of the Company or it's shareholders and the
Company terminated all spin off plans at this time.

     Basia Holdings, Inc.  The Company holds title to
approximately 9,000 of land in Tennessee through its wholly
owned subsidiary, Basia Holdings, and 13,500 acres of
methane gas leases in Alabama.  The Company has not
developed these assets at this time.

     Mid-Nevada Art, Inc. continues to generate revenues
from its broadcasting services.  The company also entered
into an Exchange Agreement with One World Cards, Inc.
for the purchase of 31 art works by Sky M. Jones for
approximately $3.5 Million in pre-paid calling cards at a
rate of $.45 per minute..  Mid-Nevada Art exercised its
option wherein Mid-Nevada Art returned the pre-paid
calling cards to One Wold Cards, Inc. and One World Cards,
Inc. returned the art works to Mid-Nevada Art, Inc.  The
decision for the return of the calling cards was the result of
the failure of One World Cards, Inc. to fully activate all of
the prepaid calling cards.

     Auto Express, Inc.  On June 15, 1996, the company
entered into a Stock Exchange Agreement to acquire 100%
of the issued and outstanding stock of Auto Express, Inc., a
Colorado Corporation involved in the transportation of
automobiles nationwide.  The Company subsequently
became aware of material misrepresentations as well as
undisclosed liabilities made by Auto Express, Inc.  In light
of the material nature of these issues, the Company has
determined that it is in the best interest of the Company and
its shareholders to rescind the transaction.

Liquidity and Capital Resources

     Cash requirements of C.E.C. have been met by
funds provided from (a) royalty income; (b) sale of
developed and undeveloped land; and borrowing. The ratio
of current assets to current liabilities at March 31, 1997 was
5 to 1 compared to .27 to 1 at March 31, 1996.

     The working capital of the Company as of March
31, 1997, was $2,473,765. The working capital at March 31,
1996 was $773,070.

     Cash was $786 at fiscal 1997 year end versus
$3,276 at fiscal 1996 year end.

Analysis of Operating, Investing and Financing Activities
During 1997.

     During 1997, the Company reduced its restricted
cash by $500,000 and paid down its credit line by the same

<PAGE>

amount. Accounts Receivable decreased by $543,566 as a
result of collections by its construction subsidiary. Inventory
decreased by $4,157,528 as a result of the sale of developed
and undeveloped land. Reductions on Notes Receivable -
Related Parties amounted to $1,217,000, while Accounts
Receivable - Related Parties increased by $220,635.
Accounts Payable, Payroll Taxes, and Other Accrued
Liabilities decreased by $631,166 as a result of increased
cash flows.

During 1997, the Company paid an additional $2,410,480 on
its debt in addition to the $500,000 paid on its line of credit
for a total reduction of $2,910,480. The reduction was
possible by the sale of developed and undeveloped land
sales during 1997. Additionally, the Company reduced its
debt to related parties by $203,429.

Significant Customers

     The Company had a principal customer which
accounted for approximately 84% of its total revenue in land
sales.


Borrowing Activities

During the past three years, the Company's operations and
investing activities have been financed extensively from
borrowings. Borrowings have been approximately $0,
$207,000 and $1,100,000 in fiscal years 1997, 1996 and
1995, respectively.

     Fiscal  1996.  During fiscal 1996, the Company
repaid 50% of the $1,000,000 line of credit from Pioneer
Citizens Bank, and  as  of the  date  of  this  report,
approximately  $10,000  in  accrued interest is owed on the
loan as of March 31, 1997. Also during fiscal 1996, the
Company  borrowed private money in the  approximate
amount  of $199,900  for  the purpose of funding the
Company's construction activities  through Moonridge
Development Corporation. Subsequent to  year  end,  the
Company eliminated  approximately  $3,935,000  of  debt
in  the sale of its 7.28  acre mini-warehouse project.  Of  the
$3  million dollar loan with Bank  of  America, included  in
the $3,935,000 amount, only approximately  $600,000 had
been  drawn down by the Company's construction division
for purposes of constructing the mini-warehouse project.

     Fiscal 1995. During fiscal 1995, the Company drew
down on a $1,000,000 line of credit from Pioneer Citizens
Bank. Also during 1995,  the Company entered into a
construction loan agreement in the  sum of $3,000,000 with
Bank of America, for the construction of its mini-storage
facility in Las Vegas, Nevada. The collateral for  the  Bank
of America loan was a 7.28 acre parcel of  property upon
which the Company is building its mini-storage facility.
These loans were both retired in Fiscal 1996-1997.  (See
Above.)


Results of Operations

Fiscal Year 1997 Compared to Fiscal Year 1996

     Revenues.  The Company's revenues increased
365% from $1,276,068 in 1996 to $5,937,739 in 1997.
Revenue increases were attributable primarily to

<PAGE>

increases in sales of development property in the
amount of $5,937,779 in 1997 as compared to
$1,200,400 in 1996, and a decrease in royalty income
from $75,668 to $1,414.

     Selling, General and Administrative Expenses.
The Company's selling, general and administrative
expenses decreased 18% from $1,012,538 in 1996 to
$853,954 in 1997, a decrease of $158,584. Selling,
General and Administrative Expenses (S,G&A) net
decreases were primarily attributable to management's
decisions to reduce personnel and salaries and wages
from $191,692 in 1996 to $0 in 1997, a decrease of
$191,692, directors fees and expenses from $1,075 in
1996 to $0 in 1997, a decrease of $1,075, research and
development from $64,090 in 1996 to $0 in 1997, a
decrease of $64,090, consulting expenses $449,079 in
1996 to $358,175, a decrease of $90,904, legal,
accounting and auditing from $37,094 in 1996 to
$289,696 in 1997, an increase of $252,602, and other
selling, general and administrative expenses from
$268,908 in 1996 to $206,083 in 1997, a decrease of
$62,825.

     Interest Expense. Interest expense for the
Company increased 32% from $354,923 in 1996 to
$468,129 in 1997. The substantial increase was the
result of borrowings by the Company to finance its
inventory of developed and undeveloped land.

     Other Income and Expense. Other income and
expense for the Company increased from $21,747 in
1996 to $224,655 in 1997. The income for 1997 was
from miscellaneous sources.

     Gain or Loss on Sale of Assets. Gain or loss on
sale of assets for the Company decreased from an
income of $91,812 in 1996 to a loss of $28,160. The
loss in 1997 was the result of loss on the sale of office
furniture and equipment.

     Loss from Discontinued Operations.  The
Company discontinued the operations of Moonridge
Development Corp. by sale on May 31, 1996. No
results of operations were reported during the fiscal
year 1997 and the results of operations for fiscal 1996
and 1995 were restated accordingly.
Additionally, the Company acquired Auto Express, Inc.
during June, 1996 and discontinued its operations
during January, 1997, reporting a loss from
discontinued of $49,935.

     Gain on Disposal of Discontinued Operations.
The Company reported a gain from the disposal of
Moonridge Development Corp. in the amount of
$301,795 and Auto Express, Inc. in the amount of
$49,935. The operations of both companies required
more cash outlay to finance its operations than was
deemed prudent by the Company.



Fiscal Year 1996 Compared to Fiscal Year 1995


     Revenues. The Company's revenues increased
1463% from $87,201 in 1995 to $1,276,068 in 1996.

<PAGE>

Revenue  increases were attributable  primarily  to increases
attributable  to sales of development property in the amount
of $1,200,400 in 1996 as compared to $0 in 1995, and an
increase in royalty income from $19,278 to $75,668.
Additionally, commission and affiliation income decreased
to $0 from $68,223 in the prior.

     Selling, General and Administrative Expenses. The
Company's selling, general and administrative expenses
decreased 15%  from $1,428,721  in  1995  to  $1,012,538 in
1996, a decrease of $416,183.  Selling, General  and
Administrative  Expense (S,G&A) net increases  were
primarily attributable  to managements  decisions to reduce
personnel and salaries and wages from $191,692 in 1995 to
$242,345 in 1996, a increase of $50,653, directors fees and
expenses form $54,009 in 1995 to $1,075 in 1996, a
decrease of $52,934, bad debt expense from $39,153 in 1995
to $0 in 1996, a decrease of $39,153.  However, research
and development expenses increased from $3,358 in 1995 to
$64,690 in 1996, an increase of $61,332, consulting
expenses decreased from $329,561 in 1995 to $449,079, an
decrease of $119,518, and other selling, general and
administrative expenses decreased from $234,318 to
$206,083, an decrease of $28,235.

     Other Income and Expense.  Interest and dividend
income for the Company increased 122% from $45,212 in
1995 to $100,508, an increase of $55,296.  The substantial
increase was in interest income and was due to an increase
in notes receivable during the year 1996.

     Interest Expense.  Interest expense for the
Company increased 104% from  $255,156  in  1995  to
$354,923 in  1996, an increase of $99,767.  The  substantial
increase in interest expense was the result of borrowings by
the Company  to facilitate expansion, primarily in the area
of  real estate development.

     Other Income and Expense.  Other income and
expense for the Company increased from an expense of
$209,450 in 1995 to an income of $21,747 in 1996.  The
expense for 1995 was the result of loan extension fees and
related expenses.  The income for 1996 was from
miscellaneous sources.

     Gain or Loss on Sale of Assets.  Gain or loss on
sale of assets for the Company increased from an expense of
$46,198 in 1995 to an income of $91,812.  The expense was
the result of the further write down of the investment in
Logos International, Inc.  in 1995.  The income for 1996 was
the result of a gain on the sale of oil and gas interests.

     Loss from Discontinued Operations.  The Company
discontinued the operations of two subsidiaries during the
year 1996, Islet Transplant Technology and Microsphere
Technology.  The loss was the result of the subsidiaries
being unable to develop the acquired technology as a result
of the recision of a contract with Bio-Sphere Technology (an
unaffiliated entity) that was entered into for the development
of the technology.  The Company concluded that the
continued investment in the technology was not an
appropriate means of diversifying the Company's operations
and required more cash to finance its operations than
appeared prudent.  Accordingly, the Company ceased the
pursuit of its medical technology investments.  This resulted
in charges to operations of $186,043 for Islet Transplant
Technology and $82,905 for Microsphere Technology.

<PAGE>

ITEM 8.   FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA

     See Financial Statements and Financial Statement
Schedules appearing on  F-1 to F-27  of this Form 10-K
Annual Report.


ITEM 9.   CHANGES IN AND DISAGREEMENTS
          WITH ACCOUNTANTS ON
          ACCOUNTING AND FINANCIAL
          DISCLOSURE

NONE.


              PART III

ITEM 10.  DIRECTORS AND EXECUTIVE
OFFICERS OF THE REGISTRANT

The Directors and Officers of the Company as of March 31, 1997
are as follows:

Name and Address              Age            Position Held

Gerald H.  Levine             64             Chairman of the Board, Director
23 Cactus Garden Drive, F23                  Chief Executive Officer,
Henderson, Nevada 89014                      President

Marie A.  Levine              50             Principal Financial Officer,
23 Cactus Garden Drive, F23                  Director, Principal Accounting
Henderson, Nevada 89014                      Officer, Secretary/Treasurer

Alvin B. Green                67             Director
16601 Ventura Blvd.
Encino, California 91436

Janice E.  Smith, Esq.        49             Director
23 Cactus Garden Drive, F23
Henderson, Nevada 89014

Gerald Krupp                  68             Director
16601 Ventura Blvd.
Encino, California 91436


     Gerald H.  Levine is Chairman of the Board, Chief
Executive Officer and President of C.E.C. Industries Corp.
Mr. Levine attended from John Carroll University,
Cleveland, Ohio, with a degree in Business Administration.
Mr. Levine was Executive Vice President of Lincoln
Automotive and Lincoln Bearing form 1955 to 1970.  Form
1970 to 1979 he was President and Chief Operations Officer
of Cle-Ware Industries which purchased Rayco Industries
building sales to over 90 Million and employing 3,000
workers.  From 1979 to 1988, Mr. Levine operated Centrun
Consulting Corp.  Working with companies seeking merger
partners.  In 1988, Mr. Levine became President of On
Target Sports Selections, a computerized Line Service.  In
November of 1990, On Target Sports completed a reverse
merger with American Jet Holdings, Inc., later changing the
name of the corporation to O.T.S. Holdings, Inc.

     Marie A.  Levine is Chief Financial Officer and
Secretary/Treasure of C.E.C. Industries Corp.  Mrs.  Levine

<PAGE>

worked for the University of Nevada at Las Vegas
Computing Center form 1972 to 1977.  From 1977 to 1988,
Mrs.  Levine operated privately held companies including
property management and bookkeeping services.  In 1988,
she became involved with the automation of the On Target
Sports Selections computerized system, and became
Secretary/Treasure of O.T.S. Holdings, Inc.

     Alvin B.  Green is a Director of C.E.C. Industries
Corp.  Mr. Green has practiced international business law
for over 30 years.  His offices are located in Encino,
California.  Mr. Green is also the corporate attorney of
C.E.C. Industries Corp.

     Janice E.  Smith is a Director of C.E.C. Industries
Corp.  Ms. Smith is practicing Bankruptcy and Trust
Planning law in the Las Vegas area.

     Gerald Krupp is a Director of C.E.C. Industries
Corp.  Mr. Krupp practices Business Law in California.

ITEM 11.  EXECUTIVE COMPENSATION

     The Compensation which the Company paid to the
President for services in all capacities and for the fiscal
years indicated, was as follows:


Name and Principal Position             Year    Salary              Other

Gerald H.  Levine, President            1997    $102,000(1)

Gerald H.  Levine, President            1996    $0

George Matthews, President              1996    $156,500

Richard Cope, President                 1996    $0

Ronald J.  Robinson, President          1995    $100,000

Donald J.  Stoecklein, Secretary        1995    $100,000

Ronald G.  Stoecklein, Treasurer        1995    $100,000


Company's contribution to the Savings and Protection Plan.

(1)  On April 1, 1996 the Company signed an agreement
     with WWW Consulting, wherein, WWW
     Consulting would provide the Company with
     management personnel and other qualified technical
     and office personnel as required.


Insider Participation in Compensation Decisions

     The  Company has no separate Compensation
Committee;  the entire Board of Directors makes decisions
regarding  executive compensation.   Two of the five
directors are officers of the Company. Gerald H. Levine is
the President and a  director  and Marie A. Levine is the
Secretary/Treasurer and a Director.  Both of them
participated in deliberations of the Company's Board of
Directors concerning executive officer compensation.

Board of Directors Report on Executive Compensation

<PAGE>

     The Board of Directors has no existing policy with
respect to the specific relationship of corporate performance
to  executive compensation.  Since the Company's sale,
effective  December  31, 1990, of all of the Company's
assets relating to its then primary active business of
engineering consulting and customized minerals processing,
the Board has set executive compensation at what  the Board
considered to be the minimal levels necessary to retain and
compensate  the officers of the company for their activities
on the Company's behalf.

          Gerald H. Levine
          Marie A. Levine
          Alvin B. Green
          Janice E. Smith
          Gerald Krupp

EMPLOYEE BENEFIT PLAN

     Effective  February,  1996, the Savings  and
Protection  Plan (the "Savings Plan") was terminated by
C.E.C. Management Corp.

1987 NONQUALIFIED STOCK OPTION PLAN

     The  Company's 1987 Nonqualified Stock Option
Plan  (the "NSOP") was terminated in 1996


ITEM 12.  SECURITY OWNERSHIP OF
          CERTAIN BENEFICIAL OWNERS
          AND           MANAGEMENT

BENEFICIAL STOCK OWNERSHIP

     The  following table sets forth, as of March 31,
1997, Common Stock ownership of (1) the directors of the
Company, (2) the only persons  known to management to be
the beneficial owners of  more than five percent of the
Common Stock of the Company, and (3) the Company's
directors and officers as a group:

                                      Amount and               Options
                                      Nature of                or Other
Title of  Name and Address            Beneficial     Percent   Beneficial
Class     of Beneficial Owner(1)      Ownership of   Class     Owners(2)(3)


Common    Gerald H. Levine            0              0%

Common    Marie A. Levine             0              0%

Common    Alvin B. Green              30,000         .0017%

Common    Gerald Krupp                10,000         .00056%

Common    Janice E. Smith             0              0%

Common    O.T.S. Holdings, Inc.       7,298,173      .4114%
          4535 W. Sahara,
          Suite 105 13B
          Las Vegas, Nevada 89102

Common    DSM Golf Enterprises, Inc.  1,200,000      .0676%    720,000(proxy)
          1350 E. Flamingo Rd. #246
          Las Vegas, NV  89119

<PAGE>

Common    Wire To Wire, Inc.          308,667        .0174%

Common    Directors and Officers      40,000         .0022%
          as a group (5 persons)



(1)  Addresses  are furnished only for those beneficial
     owners of 5% or more of the Company's Common
     Stock.
(2)  All  beneficial  owners have sole voting and
     investment power over all of the shares they own,
     except as indicated in column five and these
     footnotes.
(3)  The  amounts in column three include the amounts
     in column five.


Agreements Changing Control of the Company

     None.


ITEM 13.  CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS

(a) Transactions with Management and Others.

Management Transactions as of March 31, 1997

     Gerald Levine, President and Director of the
Company is also the President and Director of O.T.S.
Holdings, Inc.  and President and a Director of Wire to
Wire, Inc.  dba WWW Consulting.

     Marie A.  Levine, Secretary and Director of the
Company is also the Secretary and a Director of Wire to
Wire, Inc.  dba WWW Consulting.

Loans Made to the Company by, or Guaranteed by
Affiliates

     The Company has borrowed $207,000 from WWW
Consulting, with an interest rate of 10% per annum.

Stock Options Exercised by Board Members

     In  February of 1996, two directors executed options
to  acquire 300,000 shares of common stock, each, in the
Company in exchange for  consideration paid pursuant to
the terms and  conditions  of promissory notes executed
concurrent with the exercise.


ITEM  14. EXHIBITS, FINANCIAL STATEMENT
          SCHEDULES AND  REPORTS ON
          FORM 8-K

(a) Documents filed as part of this Report

     1. Financial Statements:

     Independent Auditors' Report                               F-1
     Consolidated Balance Sheets at March 31, 1997 & 1995       F-2 & F-3
     Consolidated Statements of Operations for the years ended
          March 31, 1997, 1995 & 1994                           F-4

<PAGE>

     Consolidated Statements of Stockholders' Equity for the
          years ended March 31, 1997, 1995, and 1994            F-5
     Consolidated Statements of Cash Flows for the years ended
          March 31, 1997, 1995 & 1994                           F-6 to F-9
     Notes to Consolidated Financial Statements                 F-10 to F-27

     2. Exhibits required to be filed are listed below.

     Exhibit Number           Description

     (b)  During the fiscal year 1996, the Company filed
     the following  8-Ks.

     (1)  June 10, 1996, Moonridge Mutual Release
          and Hold Harmless
     (2)  June 15, 1996, Issuance of Common shares
          to O.T.S. Holdings for the acquisition of
          Basia Holding, Inc., Mid-Nevada Art, Inc.
          and gas and mineral leases.  Letter of intent
          with Auto Express.  Notice of pursual of
          legal remedies on Landmark deal.  Change
          in accountant from Deloitte & Touche LLP
          to William L.  Clancy.
     (3)  June 15, 1996, Auto Express Stock
          Exchange Agreement
     (4)  June 27, 1996, One World Cards Exchange
          Agreement for CEC.  One World Cards
          Exchange agreement with Mid-Nevada Art,
          Inc.
     (5)  August 5, 1996, CEI spin-off cancellation.
     (6)  August 21, 1996, Election of new Board of
          Directors at Annual Shareholders Meeting.
          Letter of intent with Cybernetic Services,
          Inc.
     (7)  November 22, 1996, Reevaluation of Coal
          property.
     (8)  December 6, 1997, Sale of 17.44 acres of
          land.  Mid-Nevada Art, Inc.  cancellation of
          One World Card agreement.
     (9)  March 12, 1997, Cancellation of the Auto
          Express, Inc.  exchange agreement.

Subsequent to the end of the fiscal year, the Company  filed
the following reports on Form 8-K

     NONE


             SIGNATURES

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

C.E.C. INDUSTRIES CORP.

By:  /s/ Brian Dvorak                 Dated:  October 20, 2000
     ---------------------
     Brian Dvorak, President

<PAGE>
          C.E.C. Industries, Corp. and Subsidiaries
                (A DEVELOPMENT STAGE COMPANY)

                    FINANCIAL STATEMENTS
                     March 31, 1997
                          and
                     March 31, 1996

<PAGE>


                        TABLE OF CONTENTS

                                                           PAGE
INDEPENDENT AUDITORS' REPORT

BALANCE SHEET - ASSETS                                     F-1

BALANCE SHEET - LIABILITIES AND SHAREHOLDER'S EQUITY       F-2

STATEMENT OF OPERATIONS                                    F-3

STATEMENT OF STOCKHOLDERS' EQUITY                          F-4

STATEMENT OF CASH FLOWS                                    F-5

NOTES TO FINANCIAL STATEMENTS                              F-7 - F-26

<PAGE>


James E. Slayton, CPA
2858 WEST MARKET STREET
SUITE C
AKRON, OHIO 44333
1-330-864-3553

INDEPENDENT AUDITORS' REPORT

Board of Directors                           May 19, 2000
C.E.C. Industries Corporation (the Company)
Las Vegas, Nevada 89120

     I have audited the Balance Sheet of C.E.C. Industries Corporation,
as of March 31, 1997 and  March 31, 1996, and the related Statements of
Operations, Stockholders' Equity and Cash Flows for the years ending
March 31, 1997 and March 31, 1996.  These financial statements are the
responsibility of the Company's management.  My responsibility is to
express an opinion on these financial statements based on my audit.

     I conducted my audit in accordance with generally accepted
auditing standards.  Those standards require that I 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 statement presentation.  An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation.  I believe that my audit provides a
reasonable basis for my opinion.

     In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of C.E.C.
Industries Corporation, as of March 31, 1997, and  March 31, 1996, and
the results of its operations and cash flows for the period in
conformity with generally accepted accounting principles.

     The accompanying financial statements have been prepared assuming
the Company will continue as a going concern.  As discussed in Note 3
to the financial statements, the Company has had limited operations and
have not commenced planned principal operations.  This raises
substantial doubt about its ability to continue as a going concern.
Management's plan in regard to these matters are also described in Note
3.  The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

/s/ James E. Slayton
---------------------------
James E. Slayton, CPA
Ohio License ID# 04-1-15582

<PAGE>

C.E.C. Industries, Corp. and Subsidiaries
                (A DEVELOPMENT STAGE COMPANY)
                      BALANCE SHEET

                          ASSETS

<TABLE>
<CAPTION>

                                March 31         March 31
                                    1997             1996
<S>                             <C>              <C>

CURRENT ASSETS
Cash                                  786.00         3,276.00
Restricted Cash                                    500,000.00
Accounts Receivable                                543,566.00
Inventory                         181,199.00       181,199.00
                                -------------    -------------
Total Current Assets              181,985.00     1,228,041.00

PROPERTY AND EQUIPMENT
Property and Equipment
(net of depreciation)                   0.00        59,265.00
Land                                             4,157,528.00
                                -------------    -------------
Total Property and Equipment            0.00     4,216,793.00

OTHER ASSETS
Notes Receivable-Related Parties  163,000.00       180,000.00
Accrued Interest Receivable        11,473.00        46,554.00
Other Assets                                        64,115.00
Security Deposits                   4,012.00
Accounts Receivalbe-
Related Parties                   220,635.00
Patents                            92,196.00       101,696.00
Investment-Limited Partnership    300,000.00       300,000.00
Investment in Synfuel              36,900.00
Artworks                                         1,150,267.00
Coal Reserves                                      449,243.00
Oil & Gas Interests               116,415.00       691,415.00
                                -------------    -------------
Total Other Assets                944,631.00     2,983,290.00
                                -------------    -------------
TOTAL ASSETS                    1,126,616.00    $8,428,124.00
                                -------------    -------------
                                -------------    -------------

</TABLE>


                 See accompanying notes to financial statements
                                     F-1

<PAGE>

          C.E.C. Industries, Corp. and Subsidiaries
                (A DEVELOPMENT STAGE COMPANY)
                      BALANCE SHEET

                   LIABILITIES & EQUITY
<TABLE>
<CAPTION>

                                                 March 31         March 31
                                                    1997            1996
<S>                                              <C>              <C>

CURRENT LIABILITES
Accounts Payable                                   239,919.00       293,112.00
Bank Overdraft                                           0.00        29,411.00
Payroll Taxes Payable                                    0.00       119,422.00
                                                 -------------    -------------
Total Current Liabilities                          239,919.00       441,945.00

OTHER LIABILITIES
Line of Credit                                           0.00       500,000.00
Accrued Liabilities-Related Parties                      0.00       125,788.00
Accrued Liabilities-Other                                0.00       303,352.00
Notes Payable-Related Parties                    1,578,781.00       582,210.00
Long Term Notes                                          0.00     2,723,319.00
                                                 -------------    -------------
Total Other Liabilities                          1,578,781.00     4,676,614.00

                                                 -------------    -------------
Total Liabilities                                1,818,700.00     4,676,614.00

   EQUITY
Common Stock, $0.05 par value, shares: authorized, 886,840.00       783,590.00
50,000,000 shares, issued and outstanding at
March 31, 1997, 17,736,795 shares and
15,671,795 shares in 1996
Additional Paid in Capital                       7,084,580.00     7,828,030.00
Converible Preferred stock, $0.001 par value,
shares authorised, 100,000,000 shares, issued
and outstanding 10,663,041 shares in 1997 and
13,063,041 shares in 1996                           10,663.00        13,063.00
Donated Capital                                          0.00             0.00
Retained Earnings
(Deficit accumulated during development state)  (8,674,167.00)   (4,873,173.00)
                                                 -------------    -------------
Total Stockholders' Equity                        (692,084.00)    3,751,510.00
                                                 -------------    -------------
   TOTAL LIABILITIES & OWNER'S EQUITY           $1,126,616.00    $8,428,124.00
                                                 -------------    -------------
                                                 -------------    -------------

</TABLE>

                 See accompanying notes to financial statements
                                     F-2

<PAGE>
           C.E.C. Industries, Corp. and Subsidiaries
                (A DEVELOPMENT STAGE COMPANY)
                  STATEMENT OF OPERATIONS
                         FOR PERIOD
                March 31, 1997 and March 31, 1996

<TABLE>
<CAPTION>

                                                 March 31         March 31
                                                    1997            1996
<S>                                              <C>              <C>

   REVENUE
Sales                                                1,365.00           400.00
Royalty Income                                       1,414.00        75,668.00

   COSTS AND EXPENSES
Selling, General and Administrative                853,954.00     1,012,538.00
Interest Expense                                   468,129.00       354,923.00
Loss on Impairment                               2,174,510.00             0.00
Sales of Assets- Gain(Loss)                         28,160.00       (91,812.00)
Discontinued Operations (Loss)                      49,935.00       312,510.00
                                                 -------------    -------------
     Total Costs and Expenses                    3,574,688.00     1,588,159.00
                                                 -------------    -------------
          Net Ordinary Income or (Loss)         (3,571,909.00)   (1,512,091.00)
                                                 -------------    -------------
                                                 -------------    -------------
Weighted average
number of common
shares outstanding                                 21,388,879       10,536,294


  Net Loss Per Share                                    (0.17)           (0.14)

</TABLE>

                 See accompanying notes to financial statements
                                     F-3

<PAGE>

            C.E.C. Industries, Corp. and Subsidiaries
                (A DEVELOPMENT STAGE COMPANY)
    CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
        FOR YEARS ENDED March 31, 1997 and March 31, 1996


<TABLE>
<CAPTION>
                                                                                    Deficit
                                                                                accumulated
                  Preferred                   Common               Additional        during    Treasury
                      Stock                    Stock                  paid-in   development       Stock
                     Shares      Amount       Shares     Amount       capital         stage       shares      Amount       Total
               ------------  ----------  -----------  ---------  ------------  ------------  -----------  ----------  ----------
<S>            <C>           <C>         <C>          <C>        <C>           <C>           <C>          <C>         <C>

Balance at
March 31, 1995     725,000        $725    1,867,459    $93,373    $5,287,443   ($2,385,041)   (5,986.00)   ($23,527)  $2,972,973
Bio-Sphere Shares
Canceled in
Connection with
Asset Purchase
Cancellation      (125,000)       (125)                                                                                    (125)
Canceled Sterling
Travel Purchase                                                      (30,788)       (4,819)                             (35,607)
24.5% Interest Victory
Village Limited Partnership               1,200,000     60,000       240,000                                            300,000
Exchanged Preferred
$.001 Shares For
Preferred $.50
Redeemable Shares (600,000)       (600                                                                                     (600)
Issued Preferred
$.50 Redeemable
Shares           4,200,000       4,200                                (3,476)                                               724
S-8 Shares
Issued             200,000         200    3,372,830    168,642       933,920                                          1,102,762
Rosenbaum Shares Canceled                   (30,000)    (1,500)      (21,000)                                           (22,500)
Issued to 401-K                               1,506         75       (19,856)                     5,986      23,527       3,746
Stock Options Exercised                     600,000     30,000       150,000                                            180,000
Exchanged  for
100% Interest
in Mid-Nevada
Art, Inc.        4,016,734       4,017    2,886,667    144,333     1,213,124                                      0   1,361,474
Exchanged  for
100% Interest
in Basia Holding,
Inc.             1,797,385       1,797    2,309,333    115,467       682,736                                            800,000
Exchanged for
100% Interest
in Oil and Gas
Interest         2,848,922       2,849    3,464,000    173,200     1,055,201                                          1,231,250
Expenses of Exchange
Agreement                                                           (171,750)                                          (171,750)
Net Loss                                                                        (1,512,091)                          (1,512,091)
               ------------  ----------  -----------  ---------  ------------  ------------  -----------  ----------  ----------
Balance at
March 31,1996   13,063,041     $13,063   15,671,795   $783,590    $9,315,554   ($3,901,951            0          $0  $6,210,256
S-8 Shares issued for                     2,065,000    103,250       454,150                                            557,400
Services
Exchanges for 100% Interest
in Auto Express, Inc. on
June 15, 1996                               495,000     24,750       148,500                                            173,250
Issued for Telephone
Calling Cards                               200,000     10,000        60,000                                             70,000
Auto Express Exchange
Canceled on January 31, 1997               (495,000)   (24,750)     (148,500)                                          (173,250)
Shares Issued for Telephone
Calling Cards Canceled                     (200,000)   (10,000)      (60,000)                                           (70,000)
Shares Redeemed in
Connection with
pay-off of Note
Receivable      (2,400,000)     (2,400)                           (1,197,600)                                        (1,200,000)
Net Loss                                                                        (3,571,909)                          (3,571,909)
Dividends Paid on
Preferred Stock                                                                   (165,372)                            (165,372)
               ------------  ----------  -----------  ---------  ------------  ------------  -----------  ----------  ----------
Balance at
March 31,1997   10,663,041     $10,663   17,736,795   $886,840    $8,572,104   ($7,639,232)           0          $0  $1,830,375
               ------------  ----------  -----------  ---------  ------------  ------------  -----------  ----------  ----------
               ------------  ----------  -----------  ---------  ------------  ------------  -----------  ----------  ----------

</TABLE>

                 See accompanying notes to financial statements
                                     F-4
<PAGE>

            C.E.C. Industries, Corp. and Subsidiaries
                (A DEVELOPMENT STAGE COMPANY)
             CONSOLIDATED STATEMENT OF CASH FLOWS
                     FOR THE YEARS ENDED


<TABLE>
<CAPTION>

                                                    March 31, 1997     March 31, 1996
                                                    --------------     --------------
<S>                                                 <C>                <C>

CASH FLOWS FROM OPERATING ACTIVITIES

Net (loss) from operations                            ($3,571,909)       ($1,512,091)
Adjustments to reconcile net income or loss
to net cash used in operation activities
Depreciation Expense                                        6,786             22,530
Amortization                                                9,500              9,500
Loss on Impairment of Assets                            2,174,510
(Gain) Loss on Sale of Marketable Securities                    0             34,996
Redemption of Preferred Stock                          (1,200,000)
(Gain) Loss on Investments                                      0             56,206
(Gain) Loss on Equipment                                   28,160                  0
Treasury Stock Issued for 401(k)                                0             23,527
Common Stock Issued for Professional Fees &
Directors Fees                                            557,400          1,102,762
Changes in Assets and Liabilities
(Increase) Decrease in Restricted Cash                    500,000            500,000
(Increase) Decrease in Accounts Receivable                543,566           (538,405)
(Increase) Decrease in Inventory                                0          1,092,258
(Increase) Decrease in Current Assets                      64,115            268,139
(Increase) Decrease in Accrued Interest Receivable         35,081                  0
(Increase) Decrease in Property and
Equipment less costs                                    4,080,733
(Increase) Decrease in Security Deposits                   (4,012)                 0
Increase (Decrease) in Accounts Payable                   (53,193)           259,024
Increase (Decrease) in Bank Overdraft                     (29,411)            29,411
Increase (Decrease) in Payroll Taxes                     (119,422)           119,422
Increase (Decrease) in Accrued Liabilities               (429,139)            62,568
                                                    --------------     --------------
Total Adjustments                                       6,164,674          3,041,938
                                                    --------------     --------------
     Net Cash provided by Operating Activities       2,592,765.00       1,529,847.00


                 See accompanying notes to financial statements
                                     F-5

<PAGE>


CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investment land                                     0           (514,266)
Proceeds from sale of assets                                  500             70,000
Capital Expenditures                                            0             (4,389)
Payments Received on Notes Receivable                           0             14,547
Proceeds from Sales of Marketable Securities                    0             34,996
Investment - Limited Partnership                                0           (300,000)
Patent Expenditures                                             0             (3,548)
Advances or Payments Notes
Receivable - Related Parties                            1,217,000         (1,426,554)
Advances or Payments Accounts
Receivable - Related Parties                             (220,635)                 0
                                                    --------------     --------------
      Net cash used by investing activities               996,865         (2,129,214)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds Sale of Common Stock (Net)                             0             49,906
Principal Payments on Debt                             (3,426,748)          (635,000)
Proceeds From Notes Payable                                     0          1,160,283
Preferred Dividends Paid                                 (165,372)                 0
                                                    --------------     --------------
      Net cash provided by financing activities        (3,592,120)           575,189
                                                    --------------     --------------
      Net increase (decrease)  in cash
      and cash equivalents                                 (2,490)           (24,178)
      Cash and cash equivalents at
      beginning of year                                     3,276             27,454
                                                    --------------     --------------
      Cash and Cash Equivalents at End of Year               $786             $3,276
                                                    --------------     --------------
                                                    --------------     --------------
Supplemental Disclosures of Cash Flow Information
Cash paid during the year for interest                   $383,568           $467,358
                                                    --------------     --------------
                                                    --------------     --------------
Income Taxes                                                   $0               $200
                                                    --------------     --------------
                                                    --------------     --------------

</TABLE>

                 See accompanying notes to financial statements
                                     F-6-

<PAGE>

            C.E.C. Industries, Corp. and Subsidiaries
                (A DEVELOPMENT STAGE COMPANY)
                NOTES TO FINANCIAL STATEMENTS

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

Supplemental Schedule of Non_Cash Investing and Financing Activities

During 1996 and 1995, the Company issued 5,986 and 45,189 and shares of
treasury stock valued at $23,527 and $11,298, respectively, as a contribution
to the retirement plan.
(See Note 7)

During 1994, the Company issued 600,000 shares of preferred stock at $4.00
per share ($2,400,000) as additional value for the unimproved land purchased
in Las Vegas, Nevada.

During 1996, the Company converted the 600,000 shares of $4.00 preferred
stock into 4,200,000 shares of new series "B" non_converting preferred stock
with a par value of $0.001 per share,  with a redemption value of $.50 per
share, that has attached to the issue one vote per share, equal in value to
one vote of common stock and each share pays a cumulative preferred dividend
of 10% per year. The Company may redeem the 4,200,000 shares of new Series B"
non_converting preferred stock through October 12, 1999.  On December 20,
1995, the Company issued an additional 100,000 nonvoting preferred shares
with a par value of $.001 per share, redeemable at $.50 per share and 100,000
voting preferred shares with a par value of $.001 per share, redeemable at
$.50 per share in consideration of raising DMS Golf Enterprises, Inc. note
receivable from $1,000,000 to $1,200,000.

In fiscal 1996, the remaining investment Logos International, Inc. was sold
for $34,996. In fiscal 1994, the investment in Logos International, Inc. was
written down to its market value resulting in a loss of $625,960. (See Note
3)

During 1995, the Company purchased 100% of Sterling Travel with net assets
valued at $30,788 through incurring accrued expenses of $30,788.  During
1996, the Company rescinded the purchase agreement with Sterling Travel for
nonperformance on the agreement. (See Note 13)

During 1995, the Company issued 125,000 shares of preferred stock to
Bio_Sphere Technology valued at $62,500 for medical technology. (See Notes 8
and 13). During 1996, the Company agreed to cancel the agreement with
Biosphere Technology, and accordingly, canceled the preferred shares issued.

In fiscal 1997, the Company issued 2,065,000 shares of common stock on Form
S_8 for professional services. In fiscal 1996, the Company issued 3,972,830
shares of common stock on Form S_8 for directors' fees and professional
services. In fiscal 1995, the Company issued 449,974 shares of common stock
on Form S_8 for directors' fees and professional services. The shares were
valued at $557,400, $1,102,762, and $489,447 respectively, for an average of
$0.20 per share.

                                    F-7

<PAGE>

            C.E.C. Industries, Corp. and Subsidiaries
                NOTES TO CONSOLIDATED FINANCIAL
                         STATEMENTS
                   MARCH 31, 1997, AND 1996

The accompanying notes are an integral part of these financial statements.
Supplemental Schedule of Non_Cash Investing and Financing Activities
(Continued)


On March 28, 1996, the Company issued 8,660,000 shares of common stock and
8,663,041 shares of preferred stock in exchange for 100% of the common stock
of Mid_Nevada Art, Inc., 100% of the common stock of Basia Holding, Inc. and
100% interest in oil and gas leases. The shares were valued at $1,361,474,
$800,000 and $1,231,250, respectively, less expenses of the exchanges of
$171,500.

On June 15, 1996, the Company issued 495,000 shares of common stock in
exchange for 100% of the common stock of Auto Express, Inc. The shares were
valued  at $.035 at per share or $173,250. On January 31, 1997, the exchange
was canceled for nonperformance under the exchange contract.

During June, 1996, the Company issued 200,000 shares of common stock in
exchange for Telephone Calling Cards. The shares were valued at $0.35 per
share or $70,000. On January 31, 1997, the exchange was canceled because of
the inability of the Telephone Calling Card Company to activate the Calling
Cards.

On March 31, 1997, a note receivable in the amount of $1,200,000 plus accrued
interest of $165,372 was paid off by cancellation of 2,400,000 shares of
preferred stock with a cost of $1,200,000 plus preferred stock dividends of
$165,372  that paid the principal and interest in full.

NOTE 1 _ SIGNIFICANT ACCOUNTING POLICIES

Business and Principles of Consolidation

The consolidated financial statements include the accounts of C.E.C.
Industries Corp. (the  Parent) and its subsidiaries, Custom Environmental
International, Inc. ("CEI") (80% owned the reduction in ownership of CEI from
90% was due to the issuance of additional shares of common stock to employees
in lieu of salaries), Plata Oro (57% owned), Moonridge Development Corp.
(100% owned), Sterling Travel (100% owned), Microsphere Technology (100%
owned), Islet Transplant Technology (100% owned), Mid_Nevada Art, Inc. (100%
owned) and Basia Holding, Inc. (100% owned.). During the fiscal year 1996,
the Sterling Travel (100%) purchase was canceled do to nonperformance by
Sterling Travel. During the fiscal year 1996, Microshpere Technology (100%)
and Islet
Transplant Technology (100%) operations were discontinued. During the fiscal
year 1997, the Company sold Moonridge Development Corp. All material
intercompany transactions have been eliminated.

                                    F-8

<PAGE>

            C.E.C. Industries, Corp. and Subsidiaries
                NOTES TO CONSOLIDATED FINANCIAL
                         STATEMENTS
                   MARCH 31, 1997, AND 1996

Custom Environmental International, Inc. is developing and marketing a carbon
regeneration furnace.  Plata Oro is involved in minerals exploration but has
been inactive for several years.  Moonridge Development Corp. develops
unimproved land in Las Vegas, Nevada.  Sterling Travel is a travel agency in
Boca Raton, Florida. Microsphere Technology and Islet Transplant Technology
are engaged in research and development of medical technology.  Mid_Nevada
Art, Inc. purchases artworks for lease and rental. Basia Holding, Inc. holds
title to approximately 9,000 unencumbered acres of land and coal  reserves.
(See Note 12)

Revenue Recognition

The Company's undeveloped land is carried at cost. Prior to 1996, if land was
sold, the Company recognized gain or loss on the difference between the
carrying value and the sales price, using the full accrual method of
accounting.  During the fiscal year 1996, the Company determined that it
would develop its undeveloped land, and accordingly, would recognize revenue
on sales of land as the parcels are further developed and sold. Since there
have not been any sales of the undeveloped parcels land prior to 1996, no
retroactive restatement is necessary.

Royalty revenues are recorded as received from oil and gas leasehold
interests and retained overriding royalty rights. During the fiscal year 1996
all oil and gas rights were sold. The Company is not involved in mining or
extraction of coal, oil or gas, and accordingly, no revenues are generated
therefrom.  Revenues from travel consultants are recognized as commissions
earned from bookings of travel reservations net of ticketing costs and from
affiliation fees. Revenue from travel consultants occurred only during the
year 1995.

NOTE 1 _ SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

Revenue Recognition (Continued)

Lease and rental income from artworks are recorded as received. During the
years 1996 there was no lease and rental income received. Sales of artworks
is recorded net of its original cost as gain or loss on the sale of
investments. There were no sales of artworks during the year 1997 and 1996.

Revenue from fixed_price contracts are recognized on the percentage of
completion method, measured by the percentage of cost incurred to date to
estimated costs for each contract, by management monthly and approved by the
engineer, architect and owner. An asset, "Costs and estimated earnings in
excess of billings on uncompleted contracts" represents revenues recognized
in excess of amounts billed and are recognized on the balance sheet. Since
the construction company was sold on May 16, 1997, no revenues are included
in the results of operations for 1997 and prior year Statements of
Consolidated Operations have been restated. (See Note 14)

                                    F-9

<PAGE>

            C.E.C. Industries, Corp. and Subsidiaries
                NOTES TO CONSOLIDATED FINANCIAL
                         STATEMENTS
                   MARCH 31, 1997, AND 1996

Property and Equipment

Expenditures that increase asset lives are capitalized at cost. Normal
maintenance and repairs are expensed as incurred.  The cost and accumulated
depreciation of assets retired or disposed are removed from the accounts and
any resulting gain or loss is included in the consolidated statements of
operations. Depreciation is reported on a straight_line basis over the
estimated useful lives on the assets which range from 3 to 7 years.
Office Equipment                  5 to 7 Years
   Automobiles                    3 Years

Inventories Manufactured Goods

Inventories of manufactured goods are valued at the lower of cost (determined
on a first_in first_out basis) or market.

Undeveloped Land

Undeveloped land is recorded at its cost of acquisition. The portion that was
purchased in exchange for preferred stock was recorded at the appraisal price
of the real estate.

Patents

Costs incurred in connection with obtaining patents are capitalized and
amortized on a straight_line basis over 17 years from the date of issuance of
such patent.

Long_Lived Assets

The company's long_lived assets consist of patents, that are being amortized
on a straight_line basis over 17 years from the date of issuance of such
patents, net of amortization, is equal to its current book value. The
artworks are recorded at cost. The artworks are appraised annually and the
current appraisal is equal to or exceeds cost.

Earnings (Loss) Per Common Share

Earnings (Loss) per common share is computed based on the weighted average
number of common shares and common share equivalents outstanding.  Stock
options are included as common share equivalents using the treasury stock
method except for 1995 when they were anti dilutive.

The number of shares used in computing earnings (loss) per common share was
21,388,879  in 1997, 10,536,294 in 1996, and 1,502,648 in 1995.

                                    F-10

<PAGE>

            C.E.C. Industries, Corp. and Subsidiaries
                NOTES TO CONSOLIDATED FINANCIAL
                         STATEMENTS
                   MARCH 31, 1997, AND 1996

 NOTE 1 _ SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

Cash Equivalents

For purposes of the consolidated statement of cash flows, the Company
considers all highly liquid debt instrument purchased with an original
maturity of three months or less to be cash equivalents.

Use of Estimates

Management uses estimates and assumptions in preparing financial statements
in accordance with generally accepted accounting principles. Those estimates
and assumptions affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities,  and the reported revenues
and expenses. Actual results could vary from the estimates that were assumed
in preparing the financial statements.

Presentation

Certain accounts from prior years have been reclassified to conform with the
current year's presentation.

Pending Accounting Pronouncements

It is anticipated that current pending accounting pronouncements will not
have an adverse  impact on the financial statements of the Company.


NOTE 2 _ INVENTORIES

Inventories consists of manufactured finished goods held for sale, and
developed and undeveloped land for sale as follows:
                                        1997          1996
    Manufactured finished goods        $181,199      $181,199
                                      ---------     ----------
                                       $181,199    $4,338,727
                                      ---------     ----------
                                      ---------     ----------

Land previously classified as inventory has been reclassified as Land.


                                    F-11

<PAGE>

            C.E.C. Industries, Corp. and Subsidiaries
                NOTES TO CONSOLIDATED FINANCIAL
                         STATEMENTS
                   MARCH 31, 1997, AND 1996

NOTE 3 _ INVESTMENTS _ MARKETABLE
SECURITIES

Investment in Trading Securities

On December 6, 1996, the Company exchanged 17.44 acres of undeveloped and
developed land for 139,824 common shares of Synfuel Technologies, Inc.  This
stock was originally valued at $2,656,656.  Based on subsequent events, the
transaction is being revalued at $36,900, the value at December 31, 1997.


Investment in Equity Securities _ Logos International, Inc.

In fiscal year 1992 the Company acquired 776,857 shares of common stock of
Associated Trades, Inc. (ATI) valued at $.875 per share (the market value of
the Company's stock), or $679,750.  The shares were acquired in exchange for
a building, Company stock, and majority interest in GLI Industries, Inc.
Effective April 1, 1992, ATI was merged into Logos International, Inc.
(Logos), and after two reverse stock splits and additional shares being
issued, the Company's shares were reduced to 430,320 shares.

On October 28, 1991, C.E.C. entered into an Agreement to Purchase with Oxford
House, Inc., a Utah corporation and a wholly_owned subsidiary of Associated
Trades, Inc., by which  C.E.C. sold all of its right, title, and interest in
the real property and building in which  C.E.C.'s offices were located, for a
total purchase price of $786,478.  The purchase price by Oxford House, Inc.
included its assumption of the outstanding mortgage of the property in the
amount of $719,229 and 76,857 shares of the common stock of ATI, valued by
C.E.C. at $67,250.  The ATI stock was subsequently exchanged for Logos stock.

In connection with the Agreement, C.E.C. and ATI entered into an Exchange
Agreement by which the companies exchanged 500,000 shares of one another's
common stock.  C.E.C. has valued the shares of common stock received in the
transaction at $.875 per share (the bid price of C.E.C.'s common stock on the
date of the exchange), for a total value of  $437,500. The ATI stock was
subsequently exchanged for Logos stock.

Pursuant to a Reorganization Agreement dated as of December 1, 1991, C.E.C.
sold 18,000,000 shares of its subsidiary's common stock, GLI Industries,
Inc., to ATI.  This represented 90% of the total outstanding common stock of
GLI. In return C.E.C. received 200,000 shares of the common stock of ATI, and
was entitled to a  royalty on gross sales of GLI products of two and one_half
percent (2 1/2%).  The ATI stock was subsequently exchanged for Logos stock.

                                    F-12

<PAGE>

            C.E.C. Industries, Corp. and Subsidiaries
                NOTES TO CONSOLIDATED FINANCIAL
                         STATEMENTS
                   MARCH 31, 1997, AND 1996

NOTE 3 _ INVESTMENTS _ MARKETABLE SECURITIES (CONTINUED)

Logos was incorporated November 6, 1981, under the laws of the State of
Nevada and  acquired several companies in printing and publishing, arts and
framing, automotive and    towing services, aerospace, and real estate.  The
market price of Logos stock dropped from a bid of $10.00 per share at
September 18, 1992 and $5.00 bid per share at June 1, 1993, to   $.125 per
share at March 31, 1994 and $.25 at March 31, 1995.

Management believes the  drop in value is permanent and is due to the
inability of Logos'  management to supply adequate funding or provide
management of its newly acquired companies.  Management has thereby elected
to write off its investment in Logos to its current market value. The
transaction resulted in a loss of $625,960 in 1994, and a further loss of
$46,305 in 1995.  The  remainder of 10,420 shares is $2,605. During the
fiscal year 1996 all the remaining shares were sold for $34,996.

 NOTE 4 _ INCOME TAXES

The provision or benefit for income taxes is based on pretax loss reported in
the consolidated financial statements.  The tax effect of temporary
differences generating Federal income tax is summarized as follows:

                                            1997        1996          1995

      Tax Benefit at Statutory Rate       $700,294    $1,250,413    $639,293
      Surtax Amount    	                   (20,070)      (35,636)    (18,266)
      Valuation Allowance for Benefit
        of Net Operating Loss
        Carryforward Not Recognized
                And Other Items.          (680,224)   (1,214,777)   (621,027)
                                         ----------  ------------  ----------
      Total                                     $0            $0          $0
                                         ----------  ------------  ----------
                                         ----------  ------------  ----------

A reconciliation of the Federal statutory income tax rate to the effective
income tax rate based on income before income tax follows:

                                            1997        1996          1995

      Statutory Rate                         35%         35%           35%
      Surtax Amount                          (1)         (1)           (1)
      Decrease in Tax Rate Resulting
      From:
        Net Operating Loss Limitation
        and Other  Items                     (34)        (34)          (34)
                                         ----------  ------------  ----------
                                              $0            $0          $0
                                         ----------  ------------  ----------
                                         ----------  ------------  ----------

                                    F-13

<PAGE>

            C.E.C. Industries, Corp. and Subsidiaries
                NOTES TO CONSOLIDATED FINANCIAL
                         STATEMENTS
                   MARCH 31, 1997, AND 1996

NOTE 4 _ INCOME TAXES (CONTINUED)

The tax net operating loss carryforward at March 31, 1995, 1996 and 1997 was
approximately $1,990,171, $3,273,484 and $2,000,840 respectively, expiring
through 2012. The valuation allowance has increased to $621,027 from March
31, 1994 to March 31, 1995,  and has increased to $1,214,777 from March 31,
1995 to March 31, 1996. For the March 31,1996 to March 31, 1997, the
valuation allowance has decreased $534,553 to $680,224.

The temporary differences and tax carry forwards which created deferred tax
assets and liabilities at March 31, 1997 are detailed below:

           Deferred Tax Assets:
           Net Operating Loss            $2,000,840
                                        ------------
           Total Deferred Tax Assets     2,000,840
           Valuation Allowance          (2,000,840)
                                        ------------
Net Deferred Tax Asset                       $0
                                        ------------
                                        ------------

 NOTE 5 _ RELATED PARTIES

During the year 1996, George Matthews, the former President of the Company
received 131,000 shares of common stock, pursuant to an employment contract,
in lieu of paid salary in the amount of $65,500. During fiscal 1995, George
Matthews, the former President of the Company borrowed $50,000 from the
Company, whose loan was paid off during the  same fiscal year. George
Matthews received in fiscal 1996, pursuant to an employment contract, a stock
bonus of 262,000 shares of Rule 144 stock valued at $91,000 and accrued at
March 31, 1995. In fiscal 1995, Mr. Matthews also received a $50,000 cash
bonus. George  Matthews, the former President of the Company borrowed $10,000
from the Company during fiscal 1996. The loan is still outstanding at end of
fiscal 1997.

Directors of the Company received S_8 stock issued as director compensation,
2,500 shares  per quarter, per director.

The President, Secretary, and Treasurer of the Company received a  monthly
salary of $8,333  per month, through fiscal 1996, which, in the event of a
lack of cash available for the payment of such sums, accrues, and or is paid
pursuant to the issuance of S_8 stock.  As of March 31, 1997, and 1996,  $0
and $125,788 is accrued for such salaries.

Prior to the company's acquisition of Sterling Travel, Laurie Doll, the
President, and at the time, sole shareholder of Sterling Travel, borrowed at
different times, money from Sterling  Travel, which sums totaled $14,547 as
of March 31, 1995. During the fiscal year 1996, the purchase agreement with
Sterling Travel was canceled due to nonperformance by Sterling Travel.

                                    F-14

<PAGE>

            C.E.C. Industries, Corp. and Subsidiaries
                NOTES TO CONSOLIDATED FINANCIAL
                         STATEMENTS
                   MARCH 31, 1997, AND 1996

 NOTE 5 _ RELATED PARTIES (CONTINUED)

On November 14, 1995, the Company sold 80.5 acres of land in St. George, Utah
to DMS Golf Enterprises, Inc. and its agent Charles McHaffie in exchange for
a note in the amount of $1,200,000 that is due November 14, 1999, with
interest payable at 10% per annum. The note  is collateralized by 2,100,000
preferred shares of the Company's preferred $.001 par value stock, redeemable
at $.50 per share. On March 31, 1997, the note in the amount of   $1,200,000
plus accrued interest of $165,372 was paid off by cancellation of 2,400,000
shares of preferred stock with a cost of $1,200,000 plus preferred stock
dividends of  $165,372.  This transaction was not reported as a sale of real
estate due to the related party transaction.  The transaction was reported at
the Company's historical cost with no gain being reported due to the
transaction being a non monetary transaction without any monetary
consideration being involved.

During the fourth quarter of fiscal 1995, the Company, through its wholly


owned subsidiary, borrowed $35,000 from IGLLC, an affiliate party, which loan
was utilized for the financing of the acquisition of a new GMC Suburban
vehicle utilized by the President of Moonridge.  This note is evidenced by a
demand note bearing interest at the rate of 10%. During the fiscal year 1996,
the note was assumed by DSM Golf Enterprises, Inc. under the same terms and
conditions. Additionally during fiscal 1996, DSM Golf Enterprises, Inc. had
advanced otherfunds in the amount of 164,900 that is due on demand, carries
no interest rate, for a total of  $199,900.

As part of the acquisition on March 28, 1996, of Mid_Nevada Art, Inc., Basia
Holding, Inc.  and 100% interest in oil and gas leases, the Company assumed a
note payable to O.T.S. Holdings, Inc. in the amount of $382,310. During
fiscal 1997, principal payments of $3,530 were applied to the note, leaving a
balance at March 31, 1997 of $378,781. The note is payable on demand  and
includes interest payable at the rate of 8% per annum.

On April 1, 1996, the Company entered into a management agreement with WWW
Consulting that will supply the management services of Gerald and Marie
Levine, as President and Secretary of Company.  The agreement provides that a
monthly fee of $8,500 each will be paid for such services and will also lease
two vehicles at a monthly rate not to exceed $600. Additionally, WWW
Consulting will advance short term loans as needed at aninterest rate of 10%
per annum.

On May 16, 1996, the Company, as part of the sale of the subsidiary,
Moonridge Development Corp. agreed to carry an accounts receivable in the
amount of $210,635.  There  has been no activity on the note through March
31, 1997.

NOTE 6 _ STOCK OPTIONS

The Company has issued stock options to various directors, officers and
employees.  The option prices are based on the fair market value of the stock
at the date of grant.  The

                                    F-15

<PAGE>

            C.E.C. Industries, Corp. and Subsidiaries
                NOTES TO CONSOLIDATED FINANCIAL
                         STATEMENTS
                   MARCH 31, 1997, AND 1996

NOTE 6 _ STOCK OPTIONS (CONTINUED)

Company makes no charge to operations in relation to option grants.
The Company's stock option transactions for the years ended March 31, 1997,
1996, and 1995 are summarized as follows:


                                               Number of     Option
                       	                        Shares        Price


       Options Outstanding and Exercisable
             at March 31, 1993                  35,000        $1.25-12.50
       Options Canceled in 1994                 (5,000)        5.00
       Options Granted in 1994               1,200,000         1.375
                                            ----------
       Options Outstanding and Exercisable
            at March 31, 1994                1,230,000         1.25-12.50
       Options Canceled in 1995             (5,000)           12.50
                                           -----------
       Options Outstanding and Exercisable
            at March 31, 1995                1,225,000     1.25-12.50
       Options granted in 1996               4,900,000      .20-.50
       Options exercised in 1996              (600,000)    5.00
                                            ----------
       Options Outstanding and Exercisable
            at March 31, 1996                5,525,000      .50-5.00

      Options exercised in 1997               0
                                            ----------
       Options Outstanding and Exercisable
            at March 31, 1997               5,525,000      .50-5.00
                                           -----------
                                           -----------


NOTE 7 _ RETIREMENT PLAN

The Company has established a qualified plan under Section 401(k) of the
Internal Revenue Code as a retirement plan for all employees who elect to
participate.  The Plan allows the Company to contribute up to 100% of the
employees' contributions (limited to 10% of the  employees' annual salary) to
the retirement plan. The Plan's fiscal year is July 1 to June 30.  During
1995 and 1994, the Company issued 22,595 and 3,392 shares of treasury stock
valued $5,649 and $5,300, respectively, as a matching contribution to the
retirement plan.  No contributions were made in 1993.  The Company's expense
relating to this plan for the years ended March 31, 1995 and 1994 was $5,649
and $5,300, respectively.  All contributions and expenses relating to the
plan were paid in treasury stock.  Also in 1995 the Company issued 22,595
shares of treasury stock valued at $5,649 as employee compensation. During
the year 1996, the 401(k) plan was canceled and 100% distribution was made to
all employees.

                                    F-16

<PAGE>

            C.E.C. Industries, Corp. and Subsidiaries
                NOTES TO CONSOLIDATED FINANCIAL
                         STATEMENTS
                   MARCH 31, 1997, AND 1996

NOTE 8 _ COMMITMENTS & CONTINGENCIES

The Company's subsidiary, Custom Environmental International ("CEI"), filed
suit in the United States District Court for the Central Division of Utah,
Custom Environmental International, a Utah corporation, Plaintiff vs.
Lockhead_Haggerty Engineering & Manufacturing Co., Ltd., a Canadian
corporation, Defendant, Case No. 2:95CV0153B, in   which CEI is claiming an
infringement of CEI's patent.  The Defendant has responded to thecomplaint by
(i) requesting an extension of time to file a responsive pleading and (ii)
making an offer of settlement which has been rejected.

Fernando Aldecoa, et. al. v. Softpoint, Inc., United States District Court,
Southern District of  California, Case Number (951654H(LSP).  An action
brought by shareholders of another public company wherein C.E.C. Industries
Corp. is alleged to be an alter ego of the other public company.  Independent
counsel for the Company, selected by the Company's  insurance company, is
handling the litigation, which is not anticipated to result in a judgment
against the Company.

Madera Component Systems, Inc. Nevada Federal District Court, Case No.
(596_01105PMP). An action against the Company alleging that the Company
entered into a contract with Prime Construction, et al and executed an
indemnity agreement. The Company filed a cross_complaint alleging no contract
was ever entered into nor did the Company ever execute any indemnity
agreement. Counsel strongly responded to this litigation and believesthat a
judgment will be rendered in their favor. This case is in the discovery
stage.

As of the date hereof, the Company is not aware of any other material legal
proceedings, pending or contemplated, to which the Company is, or would be, a
party of which any of its property is, or would be the subject.

The Company leases 2,622 sq.ft. of office space for its executive offices at
23 Cactus Garden Drive, F_60, Green Valley, Nevada. This is a three year
lease which expires December 31, 2001. Lease expense for the years ended
March 31, 1997, March 31, 1996, and March 31, 1995, was $55,090, $65,523, and
$42,030, respectively. Future minimum lease obligations  are as follows:

    Fiscal Year Ended March 31, 1998                         $   38,827
    Fiscal Year Ended March 31, 1999                             38,827
    Fiscal Year Ended March 31, 2000                             38,827
    Fiscal Year Ended March 31, 2001                             29,121

On December 1, 1996, the Company entered into a sublease, whereby the Company
will receive $700 per month for 3 offices, on a month to month basis.


                                    F-17

<PAGE>

            C.E.C. Industries, Corp. and Subsidiaries
                NOTES TO CONSOLIDATED FINANCIAL
                         STATEMENTS
                   MARCH 31, 1997, AND 1996

 NOTE 9 _ SEGMENT INFORMATION AND MAJOR CUSTOMERS

Segment Information for Fiscal 1997

                    CEC            CEI             Other        Total
                    Real Estate    Oil
                    Development    Royalties

Revenue             $5,935,243     $1,414          $0           $5,937,657

Income/Loss          1,401,038    (14,709)        3,279          1,412,468

Identifiable
  Assets             4,840,731    273,39      2,548,104          7,662,230

Depreciation             6,786      0               0                6,786


Segment Information for Fiscal 1996

                CEC          Moonridge     CEI        Other       Total
                Real Estate  Construction  Oil
                Development  Residential   Royalties

Revenues        $1,263,854   $1,187,207    $12,215    $0          $2,463,276

Income/Loss       (788,374)    (312,510)  (182,429)    0          (1,283,313)

Identifiable
  Assets         7,157,395    1,115,223    295,613    2,545,520   11,115,648

Depreciation         9,049        6,214      7,267     0              22,530

                                    F-18

<PAGE>

            C.E.C. Industries, Corp. and Subsidiaries
                NOTES TO CONSOLIDATED FINANCIAL
                         STATEMENTS
                   MARCH 31, 1997, AND 1996

NOTE 9 _ SEGMENT INFORMATION AND MAJOR
CUSTOMERS (CONTINUED)

 Segment Information for Fiscal 1995

                CEC          Moonridge     CEI        Other       Total
                Real Estate  Construction  Oil
                Development  Residential   Royalties

Revenue         $19,105      $0            $3,173     $0          $2,463,276

Income/Loss  (1,717,924)   (17,170)       (96,276)   4,819        (1,826,551)

Identifiable
  Assets      2,197,457   3,772,280        305,957   49,289        6,274,983

Depreciation      4,261       2,036          8,450       58          13,805


      Major Customers        Year Ended     Year Ended      Year Ended
                             March 31,      March 31,       March 31,
                             1997           1996            1995

         Customer A          84%            47%             None

         Customer B          None           47%             None

         Customer D          None           None            None

Revenue from Customer A represents a single land sale in each of the years
1997 and 1996.
Revenues from Customer B represents a single construction contract in 1996.


NOTE 10 _ REVERSE STOCK SPLIT

On September 30, 1992, the Company consummated a 1:10 reverse stock split.
The reverse stock split also reduced the outstanding stock options on the
same basis of 1:10.

                                    F-19

<PAGE>

            C.E.C. Industries, Corp. and Subsidiaries
                NOTES TO CONSOLIDATED FINANCIAL
                         STATEMENTS
                   MARCH 31, 1997, AND 1996

NOTE 11 _ NOTES PAYABLE & LINES OF CREDIT

On February 4, 1994, the Company purchased approximately 23.91 acres of
undeveloped land in Las Vegas, Nevada, for $3,327,158 which included three
separate parcels; 15.24 acres, 1.39 acres and 7.28 acres.  At the same time,
the Company borrowed $1,800,000 utilizing the approximate 23.91 acres as
collateral for the loan from National Investors Corp.et al (Lender), to meet
the down payment, closing costs of $904,692, and providing a balance for
development proceeds. The annual interest rate is 12.5% payable monthly.  As
additional consideration, the Company issued 600,000 shares of preferred
stock (Note 13). The note for $1,800,000 was initially due on February 4,
1995, however, it was subsequently  extended to February 4, 1996 after
payment of extension fees and late fees of $50,000 in fiscal 1995, with an
additional $150,000 being added to principal in fiscal 1996 as part of the
agreement to renew to the note, adjusting the principal to $2,000,000.
Further, pursuant to the terms of the note, the Company is obligated to pay
principal payments of $150,000 per month until a  total of $800,000 is paid
as principal reduction on the total loan amount. The note further provides
that in the event that payments are not paid when due, the Company  incurs a
late charge of 10%. On May 10, 1996, the Lender agreed to add to the note all
accrued interest and extension fees through May 10, 1996, in the amount of
$236,905,  bringing the total note balance to $2,365,051. Additionally, the
Company, as part of this agreement, conveyed the 7.28 acre and the 1.39 acre
tracts to the Lender in satisfaction of  $935,185 principal, reducing the
outstanding balance to $1,433,866, plus an additional extension fee of
$71,693 or $1,505,559. The Lender further agreed to a six month extension to
October 20, 1996. On October 20,1996,  the Lender agreed to an additional
extension to April 20, 1996, adding an extension fee to the note in the
amount of $71,693 bringing the balance to $1,577,252. On December 6, 1996,
the Company exchanged the 15.24 acre tract  in full satisfaction of the note
in the amount of  $1,577,252, plus interest of $96,098 or $1,673,350 for
139,824 shares of common stock of Synfuels Technologies, Inc. The Company was
released from any further liability on the note. (See Note 3)

On March 31, 1995, the Company executed a construction loan agreement for
$3,000,000  with Bank of America, which loan is collateralized by 7.28 acres
of property owned by the Company. The proceeds of the loan are being utilized
for the construction of a mini_storage project. At year end 1995 there was a
balance due of $573,318. The principal balance of the  mini_storage loan
bears interest at the per annum rate of interest publicly announced from
time to time by Bank of America National Trust and Savings Association in San
Francisco,  California, plus one and one_half percentage (1.5%) points.  The
mini_storage loan converts from a construction loan to a permanent loan upon
completion of construction and upon     reaching certain debt coverage ratio
requirements.  In the event the company does not meet  the debt coverage
ratio, the Bank of America may elect, in its sole discretion, to either
refuse to convert the loan indebtedness to permanent loan indebtedness, or to
permit the conversion of such lesser amount of the loan as will cause the
debt coverage ratio to comply

                                    F-20

<PAGE>

            C.E.C. Industries, Corp. and Subsidiaries
                NOTES TO CONSOLIDATED FINANCIAL
                         STATEMENTS
                   MARCH 31, 1997, AND 1996

NOTE 12 _ NOTES PAYABLE _ CONTINUED

with the minimum debt coverage ratio. As of March 31, 1996, the loan was in
default. On  May 10, 1996, the Company conveyed this note to National
Investor Corp., et al as part of the consideration in the transfer of the
7.28 acre tract. The Company was released from any  further liability on the
note.

On April 20, 1994, the Company purchased approximately 2.20 acres of
undeveloped land in Las Vegas, Nevada for $200,000.  The Company paid
$100,000 cash and the seller carried a note for $100,000 with interest in the
amount of 8%, collateralized by the 2.20 acres, principal and interest all
being due by April 20, 1995. On June 28, 1995, the Company paid the $100,000
note in full and borrowed $150,000, the balance at March 31, 1996, with
interest in the amount of 14%, collateralized by the 2.20 acres, principal
and interest all being due June 28, 1996. During fiscal 1997 the real estate
was exchanged as part of the December 6, 1996 transaction and the note was
paid in full.  The Company, during fiscal year 1995, executed an agreement
with Pioneer Citizens Bank  for an initial line of credit for $500,000 with a
compensating balance in the form of a certificate of deposit.  As of March
31, 1995, the Pioneer Citizens Bank line of credit was increased to
$1,000,000 with a compensating balance in the form of certificates of deposit
inthe sum of $1,000,000. Interest on the line of credit is 4.5% per annum.
The Company has drawn $825,000 down on the line of credit as of March 31,
1995. During the fiscal year 1996 the Company drew down the balance of the
$1,000,000 line of credit. During February, 1996, the Company paid down the
line of credit to $500,000, leaving a balance as of March 31, 1996 of
$500,000. The balance of the line of credit was paid off in May, 1996.


NOTE 12 _ NOTES PAYABLE _ RELATED PARTIES

During the fourth quarter of fiscal 1995, the Company, through its wholly
owned subsidiary, borrowed $35,000 from IGLLC, an affiliate party, which loan
was utilized for the financing of the acquisition of a new GMC Suburban
vehicle utilized by the President of Moonridge.  This note is evidenced by a
demand note bearing interest at the rate of 10%. During the fiscal year 1996,
the note was assumed by DSM Golf Enterprises, Inc. under the same terms and
conditions.  Additionally during fiscal 1996, DSM Golf Enterprises, Inc. had
advanced other funds in the amount of 164,900 that is due on demand, carries
no interest rate, for a total of  $199,900.

As part of the acquisition on March 28, 1996, of Mid_Nevada Art, Inc., Basia
Holding, Inc  and 100% interest in oil and gas leases, the Company assumed a
note payable to O.T.S. Holdings, Inc. in the amount of $382,310. During
fiscal 1997, principal payments of $3,530 were applied to the note, leaving a
balance at March 31, 1997 of $378,781. The note is payable on demand  and
includes interest payable at the rate of 8% per annum.

                                    F-21

<PAGE>

            C.E.C. Industries, Corp. and Subsidiaries
                NOTES TO CONSOLIDATED FINANCIAL
                         STATEMENTS
                   MARCH 31, 1997, AND 1996

 NOTE 13 _ PREFERRED STOCK

During 1994, the Company amended its Articles of Incorporation authorizing
100,000,000 shares of preferred stock at a par value of $.001 per share.  On
February 4, 1994, the  Company issued 600,000 shares at $4.00 per share, or
$2,400,000 as additional consideration to purchase the unimproved land in Las
Vegas, Nevada  (Note 11).  The issued  shares are designated as series "A"
preferred stock convertible, after two years (24 months), to common stock at
a guaranteed "bid" price of not less than $4.00 per share.  In the event said
"bid" price is less than the stated $4.00 at the time in which the shares are
offered for conversion, additional common stock shares will be issued to
satisfy any shortfall.  The preferred shares are non_voting.  In addition,
C.E.C. Industries Corp. will have an option to  purchase 50% of said shares
at a price of $8.00 per share.  The option exercising period will be for 30
days following the two year (24 month) period, but closing of the option will
occur  within 60 days from the end of the two year period (24 months). On
October 12, 1995, the Company entered into a conversion agreement that
canceled the 600,000 shares of  preferred stock series "A" at a par value of
$.001 and issued 4,200,000 of new series "B" preferred stock at a par value
of $.001, with a redemption value of $.50 per share, which has attached to
the issue one vote per share, equal in value to one vote of common stock and
pays a cumulative dividend of 10%  per year. Preferred cumulative stock
dividends payable at  March 31, 1997 is $105,878. Each preferred share of
Series "B"  preferred stock shall have attached a warrant for 1/6 of a share
of common stock which shall be exercisable prior to thefour (4) year
redemption  period for a redemption price of $0.20 per share of common stock.
If exercised by Holder these warrants will result in the issuance of 700,000
shares of common stock for a price of $.020 per share or a total price of
$140,000. On March 31, 1997, the Company redeemed 2,400,000 preferred shares
in payment of a note receivable of  $1,200,000 using the redemption value of
$.50. This reduces the attached warrants for 1/6 of a share of common stock
to 300,000 at $.20 or a total price of  $60,000.

On April 22, 1994, the Company entered into an agreement with Bio_Sphere
Technology wherein the Company issued 125,000 shares of preferred stock for
certain medical   technology.  The agreement  called for the Company to form
two wholly owned subsidiaries, Microsphere Technology and Islet Transplant
Technology, for purposes of pursuing the development of the technology.
Subsequent to the issuance of the preferred shares to Bio_Sphere, the Company
was notified of an attempted unilateral rescission by Bio_Sphere of the
agreement with C.E.C. (See Note 8).  As a result, the Company wrote down its
investment in the medical technology which amounted to $62,500. During 1996,
the Company agreed to cancel the agreement with Bio_Sphere Technology, and
accordingly, cancel the preferred shares issued.

On January 18, 1995, the Company entered into an agreement with Lauri Doll
Gladstone wherein the company, in exchange for 100% of the outstanding common
stock of Sterling Travel, agreed to issue 400,000 shares of preferred
non_voting stock, convertible to  common stock at a price of $5 per share.

                                    F-22

<PAGE>

            C.E.C. Industries, Corp. and Subsidiaries
                NOTES TO CONSOLIDATED FINANCIAL
                         STATEMENTS
                   MARCH 31, 1997, AND 1996

 NOTE 13 _ PREFERRED STOCK (CONTINUED)

The shares are issued pursuant to an earn_out provision. At this time the
preferred shares have not been issued to Lauri Doll Gladstone.   Results of
operations from Sterling Travel have been accounted for the period starting
with  March 1, 1995 and ending with fiscal year end 1995. The acquisition was
accounted for utilizing the purchase method of accounting. During 1996, the
Company rescinded the purchase agreement with Sterling Travel for
nonperformance on the agreement. (See Note 13)

On June 7, 1995, the Company acquired a 24.5% limited partnership interest in
Victory Villages Ltd. III that is constructing a 320 unit apartment project
generally known as Victory  Village, in exchange for 1,200,000 shares of Rule
144 stock in the Company valued at  $300,000.  The shares are restricted from
resale for a period of two years, and 720,000 of the shares are subject to a
voting agreement wherein the Company directors vote the shares. On June 10,
1995, an Amended and Restated Limited Partnership Agreement of Victory
Village Ltd. III Limited Partnership was executed with Moonridge Development
Corp., a wholly owned subsidiary of the Company, in which Moonridge
Development Corp. became the 24.5% Limited Partner. On May 31, 1996, an
assignment was made to the  Company for the 24.5% Limit Partner interest in
Victory Village Associates, LTD III as part  of the sale of Moonridge
Development Corp.

During 1995, the Company issued 1,216,844 shares of S_8 stock for director,
employee, and consulting fees, issued as follows: 264,830 shares were issued
as consulting fees; 500,000  S_8 shares were options received by certain
consultants; 300,000 shares of S_8 stock were  R.V. Jones' options and were
exercised by the Company and given to him as his construction  fee for the
Mission Valley Mini Storage project; and the remainder of the S_8 stock was
issued to directors, consultants, and employees pursuant to the C.E.C.
Industries Corp. 1995Stock Award Plan.  George Matthews received 262,000
shares (See Note 5).  Value of the  shares issued per the S_8 Registration
was the bid price at the time of the issue, ranging from  $.56 to $.94 per
share.  During 1996,  the Company issued 3,372,830 shares of S_8 stock to
directors, consultants, and employees pursuant to the C.E.C. Industries Corp.
1996 Stock Award Plan. Value of the shares was the bid price at the time of
the issue, averaging $.32 per share.

On March 28, 1996, the Company issued 8,660,000 shares of common stock and
8,663,041 shares of preferred stock in exchange for 100% of the common stock
of Mid-Nevada Art, Inc., 100% of the common stock of Basia Holding, Inc. and
100% interest in oil and gas leases. The assets were valued at .22 cents per
common share, the market price of the preferred stock is considered zero as
it had no convertible feature.

The Company has adopted FASB 121.  Management has accordingly reviewed the
values of the Company's artwork and coal reserves.  Based on what management
beliefs is significant impairment of the assets, the assets have been written
down to zero.  Factors

                                    F-23

<PAGE>

            C.E.C. Industries, Corp. and Subsidiaries
                NOTES TO CONSOLIDATED FINANCIAL
                         STATEMENTS
                   MARCH 31, 1997, AND 1996

NOTE 14 _ DISCONTINUED OPERATIONS

which influenced management's decision include cash flow from these assets
are projected to be zero for the next five years.  The Company is in the
process of determining a current fair market value of these assets.  These
valuations if any will be disclosed in footnotes to future financial
statements.

Management has accordingly reviewed the values of oil and gas reserves.
Based on what management beliefs is significant impairment of the assets, the
assets have been written down to $116,415.  Factors which influenced
managements decisions include cash flow from these assets are projected to be
$116,415.00 for the next five years.

On May 16, 1996, the Company sold Moonridge Development Corp. at book value.
No Revenues or expenses were included in the consolidated financial
statements for the year ended March 31, 1997. The statements of operations
for the years ended March 31, 1996 and 1995 have been restated to reflect the
net losses of $312,510 and $17,170, respectively. Gross revenues for the
years ended March 31, 1996 and 1995, were $1,187,207 and $0. The Company
reflected a gain on the transaction of $390,796.

The following is a condensed balance sheet of Moonridge Development Corp. as
of March 31, 1996:

    Condensed Balance Sheet

    Current Assets                                   $533,869
    Equipment, Net                                     23,819
    Other Assets                                      557,015
                                                   -----------
    Total Assets                                     1,114,703
                                                   -----------
                                                   -----------

    Current Liabilities                              1,424,498
    Common Stock                                        20,000
    Deficit                                           (329,795)
                                                   ------------
    Total Liabilities and Capital                   $1,114,703
                                                   ------------
                                                   ------------


On June 15, 1996, the Company entered into a purchase agreement with Auto
Express, Inc.  wherein the Company purchased 100% of the issued and
outstanding shares of Auto Express, Inc. The agreement called for the
issuance of 495,000 common shares at $.35 per share or  $173,250. The
agreement was completed on June 28, 1996. Auto Express, Inc. is involved in
the business of transporting vehicles across the United States for major

                                    F-24

<PAGE>

            C.E.C. Industries, Corp. and Subsidiaries
                NOTES TO CONSOLIDATED FINANCIAL
                         STATEMENTS
                   MARCH 31, 1997, AND 1996

 NOTE 14 _ DISCONTINUED OPERATIONS (CONTINUED)

 businesses as well as consumers. The transaction was accounted for using the
Purchase Method. Loss from discontinued operations was reported during the
period of ownership in the amount of  $49,935. On January 31, 1997 the
purchase agreement was canceled  because of non performance on the part of
Auto Express, Inc.

The following are condensed balance sheets and statements of operations as of
June 30, 1996, the date of purchase and December 31, 1996, the date the
agreement was canceled.

    Condensed Balance Sheet          June 30, 1996     December 31, 1996

    Current Assets                     $  201,459             $210,161
       Equipment, Net                     253,455              200,428
                                       -----------          -----------
    Total Assets                          454,914              410,589
                                       -----------          -----------
                                       -----------          -----------

    Liabilities                           509,051              490,559
    Common Stock                           14,350               14,350
    Deficit                               (68,487)             (94,320)
                                       -----------          -----------
Total Liabilities and Capital            $454,914             $410,589
                                       -----------          -----------
                                       -----------          -----------
    Condensed Statement of Operations

    Gross Revenues                       $834,208           $1,166,573
    Expenses                              858,310            1,216,508
                                       -----------          -----------
    Net Operating Loss                   $(24,102)            $(49,935)
                                       -----------          -----------
                                       -----------          -----------


On June 27, 1996, the Company entered into an Exchange Agreement with One
World Cards, Inc. & Bruce Perlowin, its President for 278 _ $10,000 prepaid
long distance calling  cards at a rate of approximately $0.45 per minute or
better and an expiration date of five (5) years from the date of closing in
exchange for 18 original art works by Sky M. Jones  with appraisal books and
appraisals totaling $2,779,700 owned by the Company's wholly owned subsidiary
Mid_Nevada Art, Inc. Because of the inability of One World Cards, Inc. to
activate the prepaid calling cards, the exchange agreement was canceled.

On June 27, 1996, the Company entered into an Exchange Agreement with One
World Cards, Inc. and Bruce Perlowin, its President for 3 _ $100,000 prepaid
long distance calling

                                    F-25

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            C.E.C. Industries, Corp. and Subsidiaries
                NOTES TO CONSOLIDATED FINANCIAL
                         STATEMENTS
                   MARCH 31, 1997, AND 1996

NOTE 14 _ DISCONTINUED OPERATIONS (CONTINUED)


cards at a rate of $0.45 per minute or better with no expiration date and 45-
$10,000 prepaid long distance calling cards at a rate of approximately $0.45
per minute or better and an expiration date of five (5) years from the date
of closing in exchange for 12 original arts works by Sky M. Jones with
appraisal books and appraisals totaling $750,000 owned by the Company's
wholly owned subsidiary Mid_Nevada Art, Inc. On June 27, 1996 the Company
issued 200,000 shares of common stock at $.35 per share or $70,000. On
September 24, 1996, the Company canceled the shares as a result of One World
Cards, Inc. inability to activate the prepaid calling cards.

                                    F-26
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