SECURITIES AND EXCHANGE COMMISSION
                    Washington, D.C.  20549
                        _______________

                          FORM 10-KSB
(Mark One)
 [X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES AND EXCHANGE ACT OF 1934 [FEE REQUIRED]
         For the fiscal year ended September 30, 1995
                               OR
[    ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
         For the transition period from ________ to ________

                 Commission file number 0-11372

                                        CHURCHILL TECHNOLOGY INC.
         (Name of Small Business Issuer in Its Charter)
                                   Colorado
                           84-0904172
                  (State or other jurisdiction
                        (I.R.S. Employer
                 incorporation or organization)
                       Identification No.)
                                
             181 Cooper Avenue, Tonawanda, New York
                              14150
(Address of Principal Executive Offices)                    (Zip
                              Code)
                                
Registrant's telephone number, including area code:   (716)  874-
8696
Securities registered pursuant to Section 12(b) of the Act:  None
Securities registered pursuant to Section 12(g) of the Act:
                                        Common  Stock,  $.02  Par
Value
                        (Title of Class)

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

Check 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-KSB or any amendment to this Form 10-KSB.  [
]

Stated  issuer's  revenues  for  its  most  recent  fiscal  year.
$878,842

State the aggregate market value of the voting stock held by non-
affiliates computed by reference to the price at which such stock
was sold, or the average bid and asked prices of such stock, as
of a specified date within 60 days prior to the date of filing.

            APPLICABLE ONLY TO CORPORATE REGISTRANTS
The   number  of  outstanding  shares  of  Common  Stock  of  the
Registrant as of December 11, 1995 was 99,930,311.

Transitional Small Business Disclosure Format (Check One):
Yes___  No  X

               DOCUMENTS INCORPORATED BY REFERENCE
Registrant's  definitive Proxy Statement to be filed  within  120
days  of the close of Registrant's fiscal year.  Incorporated  by
Reference in Items 9, 10, 11 and 12 of Part III of this Form  10-
KSB.
                       TABLE OF CONTENTS

Page
PART I

     Item 1.   Business                                         2

     Item 2.   Description of Property                          5

     Item 3.   Legal Proceedings                                5

     Item 4.        Submission of Matters to a Vote of
               Security Holders                                 5

PART II

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

     Item 6.        Management's Discussion and Analysis
               or Plan of Operation                             6

     Item 7.                                 Financial Statements     10

     Item 8.        Changes in and Disagreements with Accountants
               on Accounting and Financial Disclosure          10

PART III

      Item 9.        Directors, Executive Officers, Promoters and
Control
                Persons;  Compliance with Section  16(a)  of  the
Exchange Act   10

     Item 10.  Executive Compensation                          12

     Item 11.  Security Ownership of Certain Beneficial
               Owners and Management                           13

     Item 12.  Certain Relationships and Related
               Transactions                                    14

       Item   13.   Exhibits  and  Reports  on  Form   8-K     14
<PAGE>
                             PART I

ITEM 1.   BUSINESS

          The Company was organized under the laws of the State
of Colorado on March 16, 1983.  From its incorporation until mid-
1987, the Company was primarily engaged in the business of
providing management and consulting services to affiliates,
subsidiaries, and new and existing companies.  From 1987 through
1989, the Company essentially limited its activities to the
review and reorganization of companies involved in Chapter 11
bankruptcy proceedings.  Such activity resulted in the Company
acquiring, through plans of reorganization, the assets of three
oil and gas companies and their affiliates and an equity position
in a fourth.  During fiscal 1990, the Company acquired equity
positions in two oil and gas companies.  In order to facilitate
these transactions, the Company incorporated Trans Energy, Inc.,
a wholly-owned subsidiary.  In fiscal 1991, the Company
concentrated its efforts in providing to other companies, through
synergy of size, cost-effective and efficient comprehensive
management services in the areas of engineering, administration,
facilities and records management, and oil and gas accounting.
In fiscal 1993, the Company merged its wholly-owned subsidiary,
Churchill Italy, Inc., into Traiana, Inc., a Florida corporation
("Traiana").  Subsequently, Traiana distributed sixty percent
(60%) of the Company's ownership in Traiana to the Company's
shareholders.

     On December 8, 1993, the Company exchanged 2.5 million
shares of its Common Stock for ten percent of the issued share
capital of Churchill Technology (Isle of Man) Limited ("CTI-
IOM"), an Isle of Man company which owned certain intellectual
property rights related to a process of manufacturing composite
polymeric articles referred to as "biodegradable" plastic.  On
February 22, 1994, the Company exchanged 28,750,000 shares of its
Common Stock to acquire the remaining 90 percent of CTI-IOM.  The
Company accounted for the transaction as a recapitalization of
the Company with CTI-IOM as the accounting acquirer (reverse
acquisition). On February 22, 1995, the Company assigned and
transferred all of the issued and outstanding capital stock of
CTI-IOM to a former officer of CTI-IOM.  In exchange, Novon
International, Inc., a Delaware corporation, ("Novon") a recently
acquired merged company in the business of biodegradable
additives and compounds, was assigned all of the intellectual
property rights relating to biodegradable plastics.

     As a condition precedent to the acquisition of CTI-IOM, a
separation of the assets of the Company was effected for the
benefit of the Churchill shareholders of record as of February
22, 1994 (the "Churchill Record Shareholders").  The Company
transferred all of the assets, property, subsidiaries,
investments, equity interests, cash, contract rights, royalty
rights and other rights owned or held by the Company immediately
prior to the closing date (the "Churchill Properties"), excluding
the ten percent (10%) of CTI-IOM acquired in December 1993, to
Churchill USA, Inc., a wholly-owned subsidiary of Churchill
("CUSA").  CUSA also assumed all liabilities associated with the
Churchill Properties.  Concurrent with the acquisition of CTI-
IOM, the Company assigned 100% of the CUSA Common Stock to a
trust (the "CUSA Trust").  Wendy Cribari, former executive
officer of the Company, is the trustee under the CUSA Trust (the
"Trustee").  The CUSA Trust will hold the CUSA shares until
February 2001.  The recipients of the total of 31,250,000 shares
of the Company's Common Stock issued in the CTI-IOM transaction
and any subsequent recipients of newly issued shares have
relinquished certain rights to the CUSA shares in favor of
Churchill Record Shareholders until February 2001.

<PAGE>

     On December 30, 1994, the Company, CUSA and the Trustee,
amended the CUSA Trust Agreement to clarify certain provisions
related to the shares and assets of CUSA and contingent
consideration to be paid to Churchill Record Shareholders.  The
Amendment provided for the issuance of Series A Convertible
Preferred Stock (the "Convertible Preferred Stock") of the
Company to the Trustee to be held in trust until February 2001,
at which time the shares of Convertible Preferred Stock will be
converted, if possible pursuant to the designated terms of the
Convertible Preferred Stock, into shares of the Company's Common
Stock and distributed to the Churchill Record Shareholders.  The
shares of Convertible Preferred Stock are convertible into shares
of Common Stock at the end of seven years based upon the fair
market value of the net assets of the Company, excluding CUSA,
divided by the Average Daily Common Share Value, as defined.  See
"Description of Capital Stock -- Series A Convertible Preferred
Stock."

     The Company's principal executive offices are located at 181
Cooper Avenue, Tonawanda, New York 14150 and its telephone number
is (716) 874-8696.

Recent Developments

     Acquisition and disposition of Stark Industries, Inc./CHC.
On December 1, 1994, the Company entered into an agreement to
renegotiate and acquire all of the issued and outstanding shares
of Stark Industries, Inc., a Michigan corporation ("Stark") whose
sole asset is a 54% equity interest in Consolidated Health
Corporation of Mississippi, Inc. ("CHC"), a Mississippi
corporation for 4.0 million newly issued shares of common stock
of the Company and $300,000 cash.  On July 13, 1995, the Company
sold its 54% interest in CHC for $825,000 cash and preferred
convertible stock of the purchaser.

     Acquisition of Novon.  Novon was incorporated in February
1994.  In December 1994, Novon acquired biodegradable technology
from Warner-Lambert Company for $1,950,000 in cash.  This
technology included patents, trademarks, copyrights and contract
rights.  In January 1995, Ecostar International L.P. ("Ecostar
L.P."), a limited partnership in the business of biodegradable
additives and compounds, merged into Novon, with each of the
limited partners receiving a proportionate number of shares of
Novon for their interest in Ecostar L.P.  On February 10, 1995,
the Company completed the acquisition of 100% of the issued and
outstanding stock of Novon.  The former shareholders of Novon
received 11 million restricted shares of the Company's Common
Stock.  Pursuant to the Agreement and Plan of Merger dated
February 10, 1995 among the Company, Novon and Novon Acquisition
Corp. (the "Acquisition Agreement"), the Company has agreed to
adjust the purchase price in the event that the sixty (60) day
average closing bid price of the Company's Common Stock as
reported by Nasdaq for the 60-day period preceding the one-year
anniversary of the closing is less than $1.00 per share.  If such
event should occur, the Company has agreed to issue, within 30
days of the one-year anniversary, that number of additional
shares of the Company's Common Stock as is necessary so that the
aggregate value of all shares of Common Stock issued pursuant to
the Acquisition Agreement is equal to $11,000,000, but not to
exceed 11,000,000 additional shares.

     At the time of the Novon acquisition, Robert Downie, the
Chairman, Chief Executive Officer, President and Director of the
Company was the beneficial owner of 5,432,000 shares of Common
Stock of Novon and the President and Director of Novon.  Brian
Aldous, the Vice President -- Operations of the Company, Graham
M. Chapman, the Vice-President -- Technology of the Company, and
Richard
<PAGE>

Meyers, the Vice-President -- Sales of the Company held similar
positions with Novon.  At the time of the transaction, Mr.
Chapman was the beneficial owner of 72,000 shares of Common Stock
of Novon See "Business -- Recent Developments."

Products

     Ecostar Technologies.  The technologies developed by Ecostar
L.P. consist of an array of additive packages whose addition in
processing polyethylene, polypropylene and polystyrene degrades
such materials to a proven ultimate fate of CO2, water, and
biomass.  This composition of polymers, starch, chemicals and
catalyst systems are specially formulated to provide accelerated
bio and photodegradation of plastic products. Such additives
provide a complete breakdown of polymers into biodegradable
residues.

     Novon Technologies.  The "Novon" technologies, developed by
the polymer product division of Warner Lambert consist of a
sophisticated grouping of compounds of proven biodegradability.
This entirely new polymeric range of materials is designed with
the prime objective of being completely biodegradable yet with
exceptional performance as plastic.  Not only will the Novon
specialty polymers extrude and mold like orthodox plastics, they
will decompose like paper, leaves, and wood chips, leaving no
synthetic or toxic residues. The Novon specialty polymers are an
entirely new materials technology for packaging, food service,
waste bags and a host of other applications in a variety of
industries.  Some grades of the Novon polymer disintegrate in
water and can be turned into products that are most suited to
flushing down the sewer or disposed of at sea. "Novon" is a name
established by Warner Lambert and recognized as a product of
quality and performance.  Management of the Company believes its
availability will provide Churchill with commercial growth by
continuing the supply of product to the existing market and by
meeting the increasing international demand for a host of the
Company's degradable products.

     Vertix Technologies.  The Vertix technologies, the original
component of the Company, consist of a preferentially soluble
family of polymers which radically extends the production
possibilities of polyvinyl alcohol (P.V.A).  Vertix and its line
of products is manufactured using technology based on the co-
processing of different grades of polyvinyl alcohols (P.V.A.)
from hydrolyzed Polyvinyl acetates, "raw" materials long
established in the polymer industry.  Vertix combines useful and
environmentally beneficial properties of P.V.A. in a proprietary
process to produce a laminated film, each layer of which is
selected to meet the overall needs in terms of physical and
biodegradation properties and is thus "tailored" to a particular
product.

Major Customers

     For the year ended September 30, 1995, two customers
accounted for 32 percent and 22 percent of total revenues,
respectively.  As of September 30, 1995, two customers accounted
for 48 percent and 10 percent, respectively, of total trade
accounts receivable.  The loss of any such customers may have a
material adverse effect on the Company.

Employees

     At December 11, 1995, the Company had 30 full-time
employees.
<PAGE>

Patents and Patent Applications

     The Company through Novon, owns the rights to over 350
patents and patent applications worldwide.



ITEM 2.   DESCRIPTION OF PROPERTY
                                
     The Company currently leases its administrative and
manufacturing facilities, located at 181 Cooper Avenue,
Tonawanda, New York.  The lease provides for approximately 25,000
square feet at a base annual rent of $105,468.  The lease expires
in October 1996 and has a five year renewal option.

                                
ITEM 3.   LEGAL PROCEEDINGS

     The Division of Enforcement of the Securities and Exchange
Commission ("SEC") commenced a private investigation of the
Company and others in August 1995 (File No. H-3071), to determine
whether, since September 1993, any persons have engaged, are
engaged, or are about to engage in violations of the Federal
Securities laws.

     The current management of the Company, which is cooperating
with the SEC in the private investigation, cannot at this early
stage determine whether any enforcement proceeding may be
instituted by the SEC against the Company or others or, if so,
whether any such enforcement proceeding would have a material and
adverse effect upon the Company, its business or its financial
position and condition.

     The Company's subsidiary Novon, is a defendant in actions
involving the interpretation of license agreements relating to
its Ecostar technologies.  Management and legal counsel for the
Company are of the opinion the Plaintiffs do not have the legal
capacity to commence the action, and filed a motion for the
dismissal of the action in 1993.  The actions commenced by two of
the three plaintiffs were dismissed.  The remaining plaintiff
must file an amended claim to continue the actions.  To date,
there has not been an amended claim filed.  Accordingly, based
upon the facts known to date, management and legal counsel
believe Novon has a meritorious defense to the actions asserted
against it and should prevail.

     Except as set forth above, the Company is not a party to any
material litigation and is not aware of any pending or threatened
litigation that could have a material adverse effect on it or its
business.


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

      There  have been no matters submitted to a vote of security
holders during the fiscal year ended September 30, 1995.
                                
<PAGE>

                             PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

      As of December 7, 1995, the Common Stock is traded on the
over-the-counter market.  Previously, the Common Stock was traded
on The Nasdaq SmallCap Market, trading symbol "CHUR."  On
December 6, 1995, the Nasdaq Listing Qualifications Committee
decided to remove the Company's Common Stock from listing on the
Nasdaq SmallCap Market.



      The following table presents, on a quarterly basis, the
high and low bid quotations for the Common Stock as reported by
The Nasdaq SmallCap Market for the period from October 1, 1993
through September 30, 1995.  Such quotations reflect inter-dealer
prices, without retail markup, markdown or commission and do not
necessarily represent actual transactions.

<TABLE>
<CAPTION>
      Period                                 High      Low

     <S>                                     <C>       <C>
     1993:

     October 1 to December 31                       7/8
9/32

     1994

     January 1 to March 31                   2 23/32        1/2
     April 1 to June 30                           2 5/16
31/32
     July 1 to September 30                  1 5/16         5/8
     October 1 to December 31                     1 1/2
27/32

     1995

     January 1 to March 31                   1 1/8          6/32
     April 1 to June 30                           23/32
1/4
     July 1 to September 30                  21/32          13/32

</TABLE>

      The number of record holders of the Common Stock as of the
close of business on December 11, 1995 was 1,185.


<PAGE>

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
                                
Liquidity and Capital Resources

     The Company's acquisition strategy resulted in the
acquisition of CTI-IOM in February 1994, Stark in December 1994
and Novon in February 1995.  The Company has issued a total of
46,250,000 of Common Stock to complete these acquisitions.  (In
conjunction with the acquisition of Novon, the Company has agreed
to provide financing to Novon not to exceed $6.0 million.)  This
financing will enable Novon to acquire additional manufacturing
equipment and capacity.  A portion of the financing will be used
to satisfy working capital requirements.  As of September 30,
1995, an amount of $3,755,923 has been advanced to Novon.

     On March 28, 1995, the Company entered into a letter of
intent to sell its 54% interest in Consolidated Health
Corporation of Mississippi, Inc. ("CHC").  The transaction closed
on July 13, 1995 and the Company received $825,000 cash and
preferred convertible stock of the purchaser.  This transaction
reflects management intent to exit the health care management
industry.  The Company has no influence in the management of the
issuer of the preferred stock or its subsidiary entity.

     In October 1994, the Company completed the sale of 1,000,000
shares of common stock which generated net proceeds of
approximately $577,000.  The proceeds of these sales of Common
Stock were used for working capital.

     In January 1995, the Company completed the offering of $2.25
million in convertible debentures.  The net proceeds of
$2,025,000 were used to purchase patents, technology and
equipment relating to the polymer products division of Warner
Lambert.  The convertible debentures bear interest at 6% and were
due on December 31, 1995.  The debentures were convertible at the
option of the holder into common shares of the Company at a
discount of 25% to the closing bid price on the date of
conversion.  In the year ended September 30, 1995, holders of the
$2.25 million of convertible debentures gave notice to the
Company of their demand to convert the debentures.  The Company
issued 10,487,408 shares upon conversion of the debentures.

     In May 1995, the Company entered into a private placement
agreement with an investment banking firm whereby the Company
raised net proceeds of approximately $1.6 million through the
issuance of 9,170,140 shares of restricted stock.  Additionally,
the Company issued 2,100,000 shares valued at $687,500 to the
same investment banking firm as payment of investment banking
services rendered.

     During the year ended September 30, 1995, the Company was
loaned $3,513,980 from two shareholders.  During the year ended
September 30, 1995, the Company made payments of $2,913,980 on
these shareholder loans.  In May 1995, one shareholder agreed to
convert loans in the amount of $1,030,000 into 5,493,000 common
shares of the Company.  The loan was converted at a discount of
25% to the market price of the Company's common stock on the date
of conversion.  Additionally, the Chief Executive Officer had
made loans to Novon prior to its acquisition by the Company.  The
loans are due on demand and total $175,092 at September 30, 1995.
Also, the Chief Executive Officer has personal assets
collateralizing loans totalling $450,000 and personal guarantees
on loans totalling $2,446,816.

<PAGE>

     In May 1995, the Company settled a ten year consulting
contract through the issuance of 1,607,000 shares valued at
$450,000.  The consulting contract was with a shareholder of the
Company whose services would no longer be necessary due to the
relocation of activities related to the biodegradable products
and patents to Novon.

     In May 1995, the Company issued 1,000,000 shares valued at
$250,000 as severance pay to the former president of the Company.

     In April 1994, the Board of Directors approved the issuance
of 4,350,000 shares of common stock as bonus compensation to the
former Chairman of the Board and Chief Executive Officer, all of
which have since been issued.

     The Company entered into an agreement with a financial
consulting group to act as its financial advisor with respect to
identifying and evaluating various financing opportunities.  The
financial consulting group will assist the Company in order to
raise working capital up to a minimum aggregate value of $10
million, and the Company will pay a fee equal to 10% of the
principal amount of financings.  Furthermore, the Company agreed
to issue to the financial consulting group a total of 6,000,000
shares of common stock.  The Company has paid cash commissions of
$107,680 through September 30, 1995 pursuant to this agreement.
On July 5, 1995, the Company issued 200,000 shares valued at
$100,000 in conjunction with commissions due.  Additionally, on
July 5, 1995, the Company issued 6,000,000 shares valued at
$2,389,500 pursuant to this agreement. The Company has recorded
$479,334 in stock issuance costs which have been offset against
proceeds from sale of Common Stock in private offerings pursuant
to this agreement and it has recorded $1,910,166 as unearned
consulting fees.

     In October 1995, the Company entered into an agreement with
Discovery Capital, Inc. ("Discovery Capital") for a $1,000,000
private placement of up to 4,000,000 shares of restricted Common
Stock of the Company.  Each share of stock purchased through this
placement includes an option for a period of three years from the
date of the agreement to purchase one additional share of Common
Stock of the Company at an exercise price of $1.00 per share.  To
date, the Company has sold 2,180,000 shares for net proceeds of
$517,750.  Additionally, the Company is committed to pay
Discovery Capital a placement fee of ten percent of all capital
raised.  Fifty percent of the placement fee is to be paid in
shares of the Company's restricted Common Stock.  The private
placement terminates on December 26, 1995, or earlier if
determined by Discovery Capital.  On December 20, 1995 the
Company entered into a modification agreement of the Discovery
Capital private placement which extends the option term to four
years and revises the exercise price to $0.72 per share.
Additionally, the Company has agreed to adjust the total number
of shares issued in the private placement if, at the one-year
anniversary of the placement, the bid price of the Company's
shares is below the original purchase price, up to an aggregate
maximum of shares equal to the original number of shares issued.
As of December 8, 1995 the Company has sold 2,740,000 shares for
net proceeds of $685,000.

     The Company anticipates that it will satisfy its working
capital requirements from a combination of medium term
financings, working capital and trade lines of credit and, if
necessary, from proceeds of sales of Common Stock.  The Company
also expects to establish license agreements and joint
development partnerships for its technologies in certain
geographical and product specific areas.  The Company expects
these activities will generate additional working capital.
However, there can be no assurances that the operations of the
Company's subsidiaries will achieve profitability or that
additional financing will be available to the Company on terms
that will be acceptable to it.
<PAGE>

Results of Operations

     The consolidated statement of operations for the year ended
September 30, 1995 include the historical results of CTI-IOM
using the accounting treatment consistent with a reverse
acquisition.  Accordingly, the historical statement of operations
for CUSA has not been included in the consolidated statement of
operations due, in part, to the CUSA investment being recorded on
the cost basis.  The results of operations of Novon are included
from the acquisition date.  Additionally, the results of
operating for Stark are included as discontinued operations due
to the sale of CHC.

Year Ended September 30, 1995 and 1994

Revenues

     During the year ended September 30, 1995, the Company
recorded revenues of $878,842 related to sales of its
biodegradable and related products.  These revenues represent
eight months of results of Novon subsequent to the acquisition on
February 10, 1995.

Expenses

     During the year ended September 30, 1995, the Company
incurred cost of sales of $841,275.  The costs of sales relates
entirely to raw materials, labor, direct and indirect
manufacturing cost, excluding depreciation, associated with the
production of Novon's biodegradable additives and compounds and
related products.

     During the year ended September 30, 1995, the Company
incurred selling, general and administrative expenses of
$3,790,863.  Of this total, approximately $2,415,516 related to
the operations of the parent company's executive offices which
are now integrated into Novon.  Included in the year ended
September 30, 1995 were several non-recurring items such as
$250,000 severance to the former president of the Company, a
settlement of a long term consulting contract for $450,000 and
payment of investment banking fees of $687,500.  All non-
recurring items noted above were paid in Common Stock of the
Company and did not require cash expenditures.  An additional
$408,646 was incurred by CTI-IOM in conjunction with its office
and activities.  In February 1995, the Company closed the offices
of CTI-IOM and the operations relating to it will now be operated
at the facilities of Novon.  The remaining selling, general and
administrative expense of $966,701 was incurred by Novon.

     In conjunction with the sale of CHC, the Company has
recorded the results of operations of CHC as discontinued
operations.  Accordingly, the net loss of CHC for the seven
months from acquisition date of December 1, 1994 through July 13,
1995 of $58,770 is recorded as loss from discontinued operations.
This net loss was generated on revenues of $2,079,441 and
expenses of $2,187,772.  Additionally, the Company recorded a
loss on disposal of discontinued operations of $2,665,484 to
reflect a write-down of its investment in and advances to CHC to
its estimated net realizable value.

<PAGE>

Period Ended September 30, 1994 Compared With the Year Ended
September 30, 1993

     In the year ended September 30, 1994, the Company recorded a
$1,000,000 write-down on its investment in CUSA.

     The consolidated statement of operations for the period
ended September 30, 1994 includes the historical results of CTI-
IOM using the accounting treatment consistent with a reverse
acquisition.  Accordingly, the historical statement of operations
for CUSA have not been included in the consolidated statement of
operations due, in part, to the CUSA investment being recorded on
the cost basis.  Additionally, CTI-IOM had no results from
operations for the year ended September 30, 1993 and therefore,
comparisons between periods are not included.

Revenues

     As of September 30, 1994, no material revenues have been
generated by CTI-IOM from the commercialization of the "bio-
degradable" plastic patents.

Expenses

     General and administrative expenses were approximately
$687,000 for the period ended September 30, 1994.  Of this total,
approximately $527,000 related to parent company activities such
as travel expenses and office expenses.  The current fiscal
period experienced an increase over normal operating expenses due
to the relocation of the corporate offices from Lakewood,
Colorado to Delray Beach, Florida.  Additionally, travel expense
was unusually high due to the activity related to the various
acquisitions and the different locations of the officers of the
Company.  Additionally, CTI-IOM recorded approximately $160,000
in general and administrative expenses related to the operation
of its office in the Isle of Man.

     Salaries and bonus expense was approximately $8,949,000 for
the period ended September 30, 1994.  Included in this total was
a bonus expense of approximately $8,564,000 paid to the Chief
Executive Officer in recognition of his role in the recent
acquisitions and reorganization of the Company.  This bonus was
payable in total through the issuance of 4,350,000 newly-issued
common shares of the Company.

     Professional and consulting fees were approximately
$1,283,565 for the period ended September 30, 1994.  Included in
this total was $462,520 for shareholder relations and mergers and
acquisitions consulting paid by the issuance of 400,000 common
shares in April 1994.  Legal and accounting fees, management
consulting fees and shareholder relations fees were approximately
$312,045 and were incurred in relation to the acquisitions and
corporate reorganization.  Also included was approximately
$509,000 of consulting fees related to consultants involved in
the commercialization, production and licensing of the Company's
bio-degradable plastics patents.

      The  Company recorded an allowance for notes receivable  of
approximately  $490,000 in the period ended September  30,  1994.
In  conjunction with the Stark acquisition in April  1994,  which
was  amended  in  December  1994,  the  Company  made  loans   of
approximately   $879,000  to  Stark  and  its  subsidiaries   and
affiliates.  A reserve of approximately $340,000 was recorded  on
these notes receivable.
<PAGE>

The remaining reserve of $150,000 recorded in the period ended
September 30, 1994 relates to loans of approximately $301,000
made to an entity in which the Company owns certain distribution
rights.

ITEM 7.   FINANCIAL STATEMENTS

The  consolidated  financial statements of  Churchill  Technology
Inc.  and  its  subsidiaries are filed as a part of  this  Annual
Report on Form 10-KSB.

ITEM  8.    CHANGES  IN  AND DISAGREEMENTS  WITH  ACCOUNTANTS  ON
ACCOUNTING AND FINANCIAL DISCLOSURE

There  have  been  no disagreements between the Company  and  its
independent accountants on any matter of accounting principles or
practices  or financial statement disclosure since the  Company's
inception.


                            PART III

ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Directors and Executive Officers
     The current executive officers and directors of the Company
are as follows:

<TABLE>
<CAPTION>
               Name                Age
Position                             _
<S>                 <C>       <C>
Robert H. Downie    71        Chairman, Chief Executive Officer,
                              President and Director

Gamal Marwan        27        Director

Graham M. Chapman   54        Vice President -- Technology
Brian Aldous        57        Vice President -- Operations

Bertha Mitchell          54        Vice President, Treasurer,
Secretary, Chief Financial                        Officer of
Churchill and Director

Richard Meyers           44        Vice President -- Sales

John J. Stanulonis       49        Vice President -- Marketing

</TABLE>

<PAGE>

       Each director is elected to hold office  until the next
annual meeting of stockholders and until his successor is elected
and qualified.  All officers serve at the discretion of the Board
of Directors.

     The following sets forth certain biographical information
with respect to the directors and executive officers of the
Company.

     Robert H. Downie is Chairman, Chief Executive Officer,
President and Director.  Mr. Downie joined the Company in
February 1995.  Mr. Downie had been President and a Director of
Ecostar International, Inc. since its formation in 1989.  In
1984, Mr. Downie founded and served as President of International
Imaging Materials, Inc. ("IIMAK"), a manufacturer of thermal heat
transfer ribbons whose stock is currently traded on the Nasdaq
National Market.  Mr. Downie is a member of the Board of Trustees
of the Rochester Institute of Technology.  Member Executive
Committee of Board at Webcraft Technologies.

     Gamal Marwan is a Director of the Company.  He is also
currently Vice President and a Director of Fima Capital
Corporation and the Chairman and Director of Fima Resources
Limited, an institutional investment group with offices in
Geneva, Switzerland and London, England.  Mr. Marwan was
previously employed as a Financial Consultant with Merrill Lynch
International Bank.  He is also a Director of Alpha International
Investments Limited, Taz Investment Corporation Limited and
Excess Investments Corporation, Ltd.

     Dr. Graham Chapman has been the Vice President - Technology
since September 1995.  He also serves as the Chairman of the
Technical Committee of the Society of the Plastics Industry's
Degradable Plastic Council.  Dr. Chapman was previously employed
by Ecostar International, Inc. and its predecessor, from 1985
until 1993, where he served in various positions in the research
and marketing aspects of the business.  Dr. Chapman received his
Ph.D. in Organic Chemistry from Cambridge University.

     Brian Aldous has been the Vice President - Operations of
Novon since December 1994 and of the Company since September
1995.  Prior to joining the Company, Mr. Aldous was one of the
founding officers of IIMAK.  From 1983 to 1993, he held Vice
President positions in Manufacturing, Engineering and Development
at IIMAK.  He was responsible for the technology transfer from
the licensor in Japan, all manufacturing equipment purchasing and
installation, and the design of the initial facility and three
expansions.

     Bertha H. Mitchell is Vice President, Treasurer, Secretary,
Chief Financial Officer and a Director.  She was previously with
Buffalo Ventures Inc., a venture capital firm and with Royal
Trust of Toronto, a financial services company.  Ms. Mitchell
spent over 20 years with Citibank in the corporate finance field
with postings in Latin America, the U.S. and Canada.

     Richard Meyers has been  Vice President - Sales of Novon
since December 1994 and of the Company since September 1995.  He
is responsible for international sales as well as the design of
totally biodegradable end products.  Prior to joining Novon, Mr.
Meyers was employed by Ecostar International, Inc. where he
served in various positions in sales beginning in 1991.  Prior to
then, Mr. Meyers worked for Sony Corporation Standard Electronics
in marketing and sales of new products.

<PAGE>

     John Stanulosis joined the Company in November 1995 as Vice
President -- Marketing and is responsible for business
development.  He has more than 2.0 years experience in the oil,
chemical and environmental services business.  Most recently he
was employed for six years with Chemical Waste Management as
general manager of one of its treatment, storage and disposal
facilities.  Mr. Stanulosis received his Ph.D. in physical
organic chemistry from the University of Delaware.

ITEM 10.  EXECUTIVE COMPENSATION
                                
Summary Compensation Table

     The following summary compensation table sets forth certain
information regarding compensation paid during each of the
Company's last three fiscal years to the persons serving as the
Company's Chief Executive Officer during the last year.  Except
as set forth below, no executive officer's salary and bonus
exceeded $100,000 during any of the Company's last three fiscal
years:

<TABLE>
<CAPTION>
                   SUMMARY COMPENSATION TABLE
                                                        Long-Term
                                                      Compensation
                                     Annual
Compensation                                                 Awards
                                         Other       Restricted
All
Name and Principal  Fiscal                       Annual
Stock          Stock             Other
       Position             Year      Salary         Bonus
Compensation<F1>    Award(s)       Options(#)        Compensation

<S>          <C>    <C>     <C>    <C>       <C>     <C>     <C>
Robert Downie<F2>                1995    $98,077       0
$59,198               0              2,000,000
0
Chairman, Chief                  1994           0           0
0                0          0                0
Executive Officer                1993           0      0
0                0          0                0
President & Director

Alexander Hamilton<F3>           1995                     0
0              0               0               2,000,000
0
                       1994    $ 3,000          $8,564,003<F4>
0               0          0                0
                       1993           0      0              0
0           0                0

</TABLE>
[FN]
_______________
(1)  Does not include perquisites and other personal benefits
where the aggregate value of such compensation to the executive
officer is less than 10% of annual salary and bonus.
(2)  Mr. Downie was elected Chief Executive Officer in May 1995.
(3)  Mr. Hamilton resigned as Chief Executive Officer in May
1995.
(4) Represents the fair market value of an aggregate of 4,350,000
shares of restricted and unrestricted shares of the Company's
Common Stock issued to Mr. Hamilton as bonus compensation.
                                
                  Option Grants in Last Fiscal Year

     The following table sets forth information covering the
grant of options to acquire Common Stock in the last year to the
persons named in the Summary Compensation Table.

<PAGE>
<TABLE>
<CAPTION>
               Options       % of Total Options Granted
Exercise or         Expiration
Name           Granted        to Employees in Fiscal Year
Base Price/Share    Date
<S>            <C>                     <C>           <C>    <C>
Robert Downie       2,000,000        50%               $ .35
April 18, 1997
Alexander Hamilton  2,000,000        50%               $ .35
April 18, 1997
</TABLE>
                                
                                
                                
             Value of Options at September 30, 1995
<TABLE>
<CAPTION>
                                              Value of Unexercised
              Shares        Number of UnexercisedIn-the-Money O
ptions
           Acquired on Value Options at FY-End(#)  FY-End(1)
Name       Exercise(#)RealizedExercisableUnexercisable Exercisable
Unexercisable

<S>                 <C>           <C>   <C>             <C>
<C>                   <C>
Robert Downie            -0-       -0-         2,000,000
-0-            -0-            -0-
Alexander Hamilton       -0-       -0-         2,000,000
-0-            -0-            -0-
</TABLE>




ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

     The following table sets forth, as of September 30, 1995,
the beneficial ownership of Common Stock of all directors of the
Company, each of the executive officers of the Company named in
the Summary Compensation Table, all directors and officers of the
Company as a group, and each person who is known to the Company
to own beneficially more than 5% of the Company's Common Stock.

<TABLE>
<CAPTION>
                                         Amount of     Percent
Name and Address of Beneficial Owner                   Nature of
Ownership                          of Class

<S>                                     <C>                <C>
Robert H. Downie                             7,432,000<F1>
7.3%
181 Cooper Avenue
Tonawanda, New York 14150

Alexander Hamilton                           5,450,000<F1>
5.3%
Riverside One, Heater Road
London SW11 4AN England

<PAGE>

Bertha H. Mitchell                           -0-                -
0-
181 Cooper Avenue
Tonawanda, New York 14150

Gamal Marwan                            6,363,686<F2>
6.2%
181 Cooper Avenue
Tonawanda, New York 14150

All executive officers and directors as a group<F3>
13,867,686                        13.6%
</TABLE>
[FN]
_____________

(1)  Includes stock options which are exercisable to acquire
2,000,000 shares.
(2)  Such shares are indirectly owned through Fima Capital
Corporation Ltd.
(3)  Includes all shares currently outstanding and those which
are not outstanding as of September 30, 1995, but which are
subject   to issuance upon exercise of stock options.  See
footnote (1).




ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The Company has two demand notes totalling $175,092 payable
at September 30, 1995 to Robert Downie.  Of that amount, $113,481
bears interest at 8 percent and $61,611 bears interest at 12
percent.  Neither notes have payments due in fiscal 1996.

ITEM 13.  EXHIBITS, LISTS AND REPORTS ON FORM 8-K
                                
     (a)  The exhibits required to be filed by this report are
listed in the Exhibit Index which commences on page 15 hereof.

     (b)  Reports on Form 8-K:

     There were no reports on Form 8-K filed during the last
quarter of the fiscal year ended September 30, 1995.
<PAGE>
                           SIGNATURES

In accordance with the requirements of Section 13 or 15(d) of the
Exchange  Act, the Registrant has duly caused this report  to  be
signed   on  its  behalf  by  the  undersigned,  thereunto   duly
authorized.


                                   CHURCHILL TECHNOLOGY INC.




Dated:    December 28, 1995
                                   Robert H. Downie, Chairman


In  accordance  with the requirements of the Exchange  Act,  this
report is signed below by the following persons on behalf of  the
Registrant in the capacities and on the dates indicated.

     Name and Capacity                            Date


                                        December 28, 1995
Name:  Robert H. Downie
Title: Chief Executive Officer and
Director


                                                         December
28, 1995
Name:  Bertha H. Mitchell
Title:   Chief Financial Officer and Accounting
Officer and Director


                                        December 28, 1995
Name:   Gamal Marwan
Title:  Director
<PAGE>
<TABLE>
<CAPTION>
                          EXHIBIT INDEX
                                
Exhibit
Page
Number              Document
Number
<S>                 <C>                                     <C>
3.1                 Restated Certificate of Incorporation
(1)

3.11                Designation of Series A Convertible Preferred
(3)

3.2                 Bylaws                                  (1)

10.1                Stock Purchase Agreement dated December 1,
1994      (2)
                    between and among the Company, Stark
Industries,
                    Inc. and the shareholders of Stark.

10.2                Amendment to CUSA Trust Agreement dated
(3)
                    February 16, 1994 between and among the
                    Company, Churchill U.S.A., Inc. and Wendy A.
                    Cribari.

10.3                Agreement and Plan of Merger by and among the
(4)
                    Company and Novon Acquisition Corp. and
                    Novon International, Inc.

10.4                Plan and Agreement of Merger by and among
                    Rx Medical Service Corporation and
Consolidated
                    Health Corporation of Mississippi, Inc.

21.1                Various Oil and Gas Disclosures of Churchill
U.S.A., Inc.

27.1                Financial Data Schedule
</TABLE>
____________________________

(1)  Filed as exhibit to the Current Report on Form 8-K dated
February 27, 1994, which is
     incorporated by reference herein.
(2)  Filed as exhibit to the Current Report on Form 8-K dated
December 23, 1994, which
     is incorporated by reference herein.
(3)  Filed as exhibit to the Annual Report on Form 10-KSB for the
year ended September 30,
     1994 dated January 13, 1995.
(4)  Filed as exhibit to the Current Report on Form 8-K dated
February 10, 1995, which is
     incorporated by reference herein.
<PAGE>

CHURCHILL TECHNOLOGY INC. AND SUBSIDIARIES


Index to Consolidated Financial Statements

     Independent Auditor's Report                    F-1 - F-2

     Consolidated Balance Sheet                      F-3 - F-4

     Consolidated Statements of Operations                 F-5

     Consolidated Statements of Shareholders' Equity F-6 - F-7

     Consolidated Statements of Cash Flows           F-8 - F-9

     Notes to Consolidated Financial Statements    F-10 - F-25


Index  to  Unconsolidated Financial Statements  of  Wholly  Owned
Subsidiary

     Independent Auditor's Report                         F-27

     Consolidated Balance Sheet                    F-28 - F-29

          Consolidated Statements of Operations           F-30

     Consolidated Statements of Shareholders' Equity      F-31

     Consolidated Statements of Cash Flows         F-32 - F-33

     Notes to Consolidated Financial Statements    F-34 - F-46

<PAGE>

                  INDEPENDENT AUDITOR'S REPORT



Shareholders and Board of Directors
Churchill Technology Inc.
Tonawanda, New York

We  have  audited the accompanying consolidated balance sheet  of
Churchill Technology Inc. and subsidiaries (the "Company") as  of
September  30,  1995 and the related consolidated  statements  of
operations,  shareholders' equity and cash  flows  for  the  year
ended September 30, 1995 and for the period from December 8, 1993
(inception)  to  September 30, 1994.  These financial  statements
are   the  responsibility  of  the  Company's  management.    Our
responsibility  is  to express an opinion on  these  consolidated
financial statements based upon our audits.

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

In our opinion, the consolidated financial statements referred to
above  present fairly, in all material respects, the consolidated
financial  position of the Company as of September 30,  1995  and
the consolidated results of their operations and their cash flows
for  the  year ended September 30, 1995 and for the  period  from
December  8, 1993 (inception) to September 30, 1994 in conformity
with generally accepted accounting principles.

<PAGE>

Shareholders and Board of Directors
Page 2



The  accompanying  consolidated financial  statements  have  been
prepared  assuming the Company will continued as a going concern.
As  discussed in Note B to the consolidated financial statements,
the  Company has had recurring losses since its inception and has
a working capital deficit of $2,529,558 as of September 30, 1995.
As  a  result, the Company requires additional capital  and  cash
flow  from operations to meet their obligations when due.   These
conditions raise substantial doubt about the Company's ability to
continue  as  a going concern.  Management's plans in  regard  to
these  matters are discussed in Note B.  The financial statements
do not include any adjustments that might result from the outcome
of these uncertainties.



Mitchell   Finley and Company, P.C.
Certified Public Accountants

December 1, 1995
Denver, Colorado
<PAGE>

Consolidated Balance Sheet

September 30, 1995


ASSETS

<TABLE>
<CAPTION>

CURRENT ASSETS
<S>                                                    <C>
                                                             Cash
$         138,293
  Accounts receivable - trade, less allowance for doubtful
    accounts of $27,745                                  171,146
  Interest receivable                                      4,533
  Inventories                                            222,855
  Prepaid expenses                                        22,531
                                                         559,358

PROPERTY AND EQUIPMENT, AT COST
  Machinery and equipment                              1,924,447
  Furniture, fixtures and leasehold improvements         101,940
                                                       2,026,387
  Accumulated depreciation and amortization            (182,026)
                                                       1,844,361
  Equipment under construction                           550,758
                                                       2,395,119
OTHER ASSETS
  Investments                                          6,458,010
  Note receivable                                        150,000
  Patents and related technology,
    net of accumulated amortization of $709,022        10,206,633
  Prepaid royalties                                      104,494
  Other assets                                            60,972
                                                       16,980,109

TOTAL  ASSETS                                           $19,934,5
86

</TABLE>
<PAGE>

Consolidated Balance Sheet (Continued)

September 30, 1995


LIABILITIES AND SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
CURRENT LIABILITIES
<S>                                                    <C>
  Accounts payable - trade                             $1,015,788
  Accrued liabilities                                    177,334
  Notes payable - banks and other                      1,022,927
  Current portion - long-term debt                       697,775
  Notes payable - related party                          175,092
                                                       3,088,916

LONG-TERM DEBT, LESS CURRENT MATURITIES                  889,014

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
  Preferred stock   $1.00 par value; 5,000,000 shares authorized;
    1,000,000 Series A shares issued and outstanding;
    $6,000,000 liquidation preference                  1,000,000
  Common stock   $.02 par value; 200,000,000 shares authorized;
    99,830,306  shares  issued and 99,348,306 shares  outstanding
    1,996,607
  Additional paid-in capital                           35,798,195
   Unearned consulting fees                             (1,910,16
6)
   Accumulated deficit                                  (20,571,4
46)
  Cumulative translation adjustment                        4,966
                                                       16,318,156
  Treasury stock, 482,000 shares, at cost              (361,500)
                                                       15,956,656

TOTAL  LIABILITIES AND SHAREHOLDERS' EQUITY             $19,934,5
86

</TABLE>
<PAGE>
Consolidated Statements of Operations

For  the  Year Ended September 30, 1995 and for the  Period  from
December 8, 1993 (inception) to September 30, 1994

<TABLE>
<CAPTION>
                                                             1995
       1994
<S>                                           <C>      <C>
REVENUES
    Product  sales                                $       878,842
$

OPERATING EXPENSES
  Manufacturing                              841,275
  General and administrative               3,445,014   10,919,439
  Research and development                   108,599
  Marketing and selling                      345,849
  Depreciation and amortization              919,984      20,138
                                           5,660,721   10,939,577

LOSS  FROM OPERATIONS                      (4,781,879)  (10,939,5
77)

OTHER EXPENSE (INCOME)
  Interest expense                           223,592
  Interest and other income                 (31,599)    (30,849)
  Impairment of assets                       120,958   1,000,000
  Bad debt expense                           353,937     489,697
                                             666,888   1,458,848

LOSS  FROM CONTINUING OPERATIONS           (5,448,767)  (12,398,4
25)

LOSS FROM DISCOUNTED OPERATIONS
  Loss from discontinued operations           58,770
  Loss on disposal of discontinued operations          2,665,484
                                           2,724,254

NET  LOSS                                  $     (8,173,021)$ (12
,398,425)

LOSS PER SHARE OF COMMON STOCK
    Loss   from  continuing  operations          $          (.08)
$(.35)
    Net  loss                                          $    (.11)
$(.35)

WEIGHTED-AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING DURING
THE      PERIOD                                        72,049,156
35,606,661
</TABLE>
<PAGE>
Consolidated Statements of Shareholders' Equity

For  the Year Ended September 30, 1995 and for the Period from December 8,  1993
(inception) to September 30, 1994

<TABLE>
<CAPTION>
                                                                      Additional
Unearned                                Cumulative
                                 Preferred  Stock                         Common
Stock                            Paid-In        Consulting              Treasury
Accumulated                Translation
                              Shares         Amount    `    Shares      Amount    Capital     Fees
    Stock                     Deficit           Adjustment
<S>                    <C>       <C>    <C>     <C>     <C>       <C>      <C>     <C>       <C>
ISSUANCE OF COMMON STOCK
FOR CASH                         $             20,002     $    2,810          $      $       $
$

RECAPITALIZATION UPON
REVERSE ACQUISITION                     40,531,544       808,221   6,149,196

ISSUANCE OF SERIES A
PREFERRED            STOCK                 1,000,000                   1,000,000
(1,000,000)

ISSUANCE OF COMMON STOCK
FOR CASH
 Private offerings, net of stock
 issuance costs of $262,626              2,371,212        47,424  2,930,364

ISSUANCE OF COMMON STOCK
FOR SERVICES
 Bonus award                             2,350,000        47,000  4,579,562
 Consulting services                        400,000         8,000    454,520

FOREIGN CURRENCY TRANSLATION                                                                 $    6,9
93

NET LOSS                                                                             (12,398,425)
BALANCES, SEPTEMBER 30, 1994   1,000,000   $1,000,000   45,672,758     $ 913,455        $13,113,642
(12,398,425)          $    6,993
</TABLE>

"See accompanying notes to consolidated financial statements."
<PAGE>
Consolidated Statements of Shareholders' Equity

For  the Year Ended September 30, 1995 and for the Period from December 8,  1993
(inception) to September 30, 1994

<TABLE>
<CAPTION>
                                                                      Additional
Unearned                                Cumulative
                           Preferred Stock           Common Stock                    Paid-In Consulti
ng                       Treasury       Accumulated      Translation
                             Shares           Amount              Shares           Amount      Capital
    Fees                  Stock            Deficit       Adjustment
<S>                   <C>      <C>      <C>     <C>      <C>      <C>      <C>     <C>       <C>
ISSUANCE OF COMMON STOCK
FOR CASH
 Private offerings, net of stock
 issuance costs of $994,089             10,320,140       206,403  1,455,974

ISSUANCE OF COMMON STOCK
FOR SERVICES
 Bonus Award                              2,000,000        40,000 3,897,500
 Severance payment                        1,000,000        20,000    230,000
      Compensation                                      50,000             1,000
9,828
 Investment banking fees                  8,000,000      160,000  2,917,000          (1,910,166)

ISSUANCE OF COMMON STOCK
FOR ACQUISITION
 Stark Industries, Inc.                   4,000,000        80,000 2,895,000
 Novon International, Inc.              11,000,000       220,000  8,030,000                  (361,500)

ISSUANCE OF COMMON STOCK
IN EXCHANGE FOR
 Convertible debt, net of issuance
   costs of $225,000                    10,487,408       209,749  1,815,251
 Shareholder loans                        5,493,000      109,860     920,140
     Accounts    payable                               200,000             4,000
96,000

ISSUANCE OF COMMON STOCK
IN SETTLEMENT OF CONSULTING
CONTRACT                                  1,607,000        32,140    417,860

FOREIGN CURRENCY
TRANSLATION                                                                                   (2,027)

NET LOSS                                                                             (8,173,021)

BALANCES, SEPTEMBER 30, 19951,000,000    $  1,000,000    99,830,306
$  1,996,607                   $  35,798,195       $  (1,910,166)
$  (361,500)           $ (20,571,446)      $        4,966
</TABLE>
<PAGE>
Consolidated Statements of Cash Flows

For the Year Ended September 30, 1995 and for the Period from December 8,
1993 (inception) to September 30, 1994

<TABLE>
<CAPTION>
                                                1995        1994
<S>                                        <C>         <C>
OPERATING ACTIVITIES
    Net   loss                                           $    (8,173,021)
$(12,398,425)
  Adjustments to reconcile net loss to net cash used
  in continuing operations
    Loss from discontinued operations         58,770
    Loss on disposal of discontinued operations        2,665,484
    Depreciation and amortization            919,984      20,138
    Bad debt expense                         353,937     489,697
      Common  stock  issued  for  compensation  and  services   1,398,328
9,026,582
    Common stock issued for interest expense           30,000
    Write off of equipment                    34,748
    Impairment of assets                     120,958   1,000,000
    Other                                              14,985    6,851
  Changes in operating assets and liabilities, net effect of
  business combination:
    (Increase) in accounts receivable       (62,749)
    (Increase) in interest receivable        (4,360)    (24,276)
      (Increase)  decrease  in  advances  to  related  parties     24,772
(24,772)
    Decrease in prepaid expenses              12,766
    (Increase) in inventories                (2,013)
      Increase   (decrease)  in  accounts  payable              (364,617)
188,346
    Increase in accounts payable, related party                  27,460
    Increase in accrued liabilities           24,037      44,052

NET CASH USED IN OPERATING ACTIVITIES      (2,947,991) (1,644,347)
</TABLE>

"See   accompanying   notes   to  consolidated   financial   statements."
<PAGE>
Consolidated Statements of Cash Flows (Continued)

For the Year Ended September 30, 1995 and for the Period from December 8,
1993 (inception) to September 30, 1994


<TABLE>
<CAPTION>
INVESTING ACTIVITIES
<S>                                        <C>         <C>
  Additions to property and equipment      (102,819)   (197,066)
  Payments on notes receivable             (136,000)   (1,167,008)
  Acquisition of subsidiary                (315,000)
  Proceeds from sale of subsidiary           825,000
  Net cash of acquired company               287,905
  Advances to affiliates                   (2,100,000)
          Contributions        to        unconsolidated        subsidiary
(200,000)
  Increase in other assets                             (118,158)

NET CASH USED IN INVESTING ACTIVITIES      (1,540,914) (1,682,232)

FINANCING ACTIVITIES
    Proceeds   from   sale  of  common  stock,  net  of  offering   costs
2,257,259                                  2,980,597
    Proceeds  from  notes  payable  -  related  parties         3,523,980
400,000
  Repayment of notes payable - related parties         (3,062,369)
  Proceeds from convertible debentures, net of debt
    issue costs                            2,025,000
  Net proceeds from notes payable           (60,620)
  Repayment on long-term debt               (65,955)
  Repayment on capital lease obligations    (44,115)

NET CASH PROVIDED BY FINANCING ACTIVITIES  4,573,180   3,380,597

NET INCREASE IN CASH                          84,275      54,018

CASH, BEGINNING OF PERIOD                     54,018         -0-

CASH, END OF PERIOD                        $ 138,293   $  54,018

</TABLE>

"See accompanying notes to consolidated financial statements."
<PAGE>

Notes to Consolidated Financial Statements


NOTE A - ORGANIZATION

  Churchill Technology Inc. (the "Company") was organized under the  laws
  of  the  state of Colorado on March 16, 1983. From its inception  until
  fiscal  1994,  the  Company  was involved  in  a  variety  of  business
  activities.    In February 1994, the Company acquired a  company  which
  had  developed  a  proprietary technology in respect  of  biodegradable
  plastics.   In  February, 1995, the Company acquired a recently  merged
  company,  Novon  International,  Inc. ("Novon")  and  its  wholly-owned
  subsidiary,  Ecostar  AG,  which is in the  business  of  biodegradable
  additives  and compounds and accordingly, the Company is  no  longer  a
  development stage company as defined by SFASB No. 7.  See Note C.   The
  Company  is  principally engaged in the development, manufacturing  and
  marketing  of  additives,  compounds  and  resins  which  enhance   the
  degradation of plastic products.


NOTE B - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

  Basis  of  Presentation   The Company had a working capital deficit  of
  $2,529,558 as of September 30, 1995 and has recurring losses since  its
  inception.  As a result, the Company's continued existence is dependent
  upon obtaining additional capital and cash flow from operations to meet
  its obligations when due.  The accompanying financial statements do not
  include  any  adjustments that might result from the outcome  of  these
  uncertainties.

  Management's plans with regard to the Company's ability to continue  as
  a going concern include on going negotiations to raise a mix of medium-
  term  mezzanine  debt and equity financing, as well as working  capital
  and  trade  finance  lines of credit to support  revenue  growth.   The
  Company  is also negotiating to establish license agreements and  joint
  development  partnerships for its technologies in certain  geographical
  and product specific areas.

  Principles  of  Consolidation   The consolidated  financial  statements
  include  the accounts of the Company and its wholly-owned subsidiaries.
  All  significant  intercompany  accounts  and  transactions  have  been
  eliminated in consolidation.

  Translation  of  Foreign Currencies and Foreign  Currency  Transactions
  Assets and liabilities of the Company's foreign subsidiary, Ecostar AG,
  are  translated at the rate of exchange in effect on the balance  sheet
  date;  income and expenses, in general, are translated at  the  average
  rates  of  exchange prevailing during the year.  Transaction gains  and
  losses as a result of exchange rate changes on transactions denominated
  in  currencies  other  than  the functional currency  are  included  in
  determining net income for the period incurred.
<PAGE>

Notes to Consolidated Financial Statements (Continued)


NOTE B - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)

  Statements  of  Cash  Flows   For purposes of the  statements  of  cash
  flows,  the  Company  considers  all  highly  liquid  debt  instruments
  purchased with an original maturity of three months or less to be  cash
  equivalents.

  Reclassifications   Certain reclassifications have  been  made  to  the
  1994  financial statements in order for them to conform with  the  1995
  presentation.   Such reclassifications have no impact on the  statement
  of operations.

  Inventories   Inventories primarily consist of raw materials which  are
  stated  at  the lower of cost or market.  Cost is determined using  the
  first-in, first-out method.

  Property  and  Equipment   Depreciation is calculated on the  straight-
  line  method over the estimated useful lives of the assets which  range
  from  five to ten years.  Leasehold improvements are amortized  on  the
  straight-line  method over the shorter of the lease term  or  estimated
  useful  life  of  the asset.  Maintenance and repair  are  expensed  as
  incurred.   Major repairs and improvements are capitalized  and  assets
  replaced  are  retired.   When property and equipment  are  retired  or
  otherwise  disposed  of,  the  asset and  accumulated  depreciation  or
  amortization are removed from the accounts and the resulting profit  or
  loss is reflected in the statement of operations.

  Patents  and  Related Technology   Patents and related  technology  are
  amortized on the straight-line method over the estimated economic  life
  of  the  patents of ten years.  These capitalized costs are carried  at
  the  lower  of  amortized  cost  or net  realizable  value.   Permanent
  impairments  are  evaluated  periodically based  upon  expected  future
  discounted cash flows.

  Unearned  Consulting  Fees    The  Company's  policy  is  to  recognize
  unearned consulting fees in the period that the services are provided.

  Advertising    The Company expenses the production costs of advertising
  the first time the advertising takes place.

  Research  and Development   Research and development costs are expensed
  as  incurred.    Research and development costs for the  periods  ended
  September 30, 1995 and 1994 was $108,599 and $-0-, respectively.

<PAGE>

Notes to Consolidated Financial Statements (Continued)


NOTE B - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)

  Investments    Investments are accounted for under the cost  method  of
  accounting.  The investments are evaluted periodically and  carried  at
  the lower of cost or estimated net realizable value.

  Net Income (Loss) Per Share of Common Stock   The net income (loss) per
  common share is computed based on the weighted-average number of shares
  outstanding  during  each  period. Common stock  equivalents,  such  as
  common  stock  options, are not considered in the  earnings  per  share
  calculation to the extent their inclusion would be antidilutive.


NOTE C - ACQUISITIONS AND DISPOSITIONS

  Churchill  Technology (Isle of Man) Limited   On December 8, 1993,  the
  Company  exchanged  2.5  million shares of its  common  stock  for  ten
  percent  of the issued share capital of Churchill Technology  (Isle  of
  Man)  Limited  ("CTI-IOM"), an Isle of Man company which  owns  certain
  intellectual  property  rights related to a  process  of  manufacturing
  composite  polymeric  articles referred to as "biodegradable"  plastic.
  On  February 22, 1994, the Company exchanged 28,750,000 shares  of  its
  common  stock  to  acquire the remaining 90 percent  of  CTI-IOM.   The
  Company  accounted for the transaction as a recapitalization of CTI-IOM
  with   CTI-IOM   as  the  accounting  acquiror  (reverse  acquisition).
  Accordingly,  the  financial  statements reflect  the  net  assets  and
  shareholders'   equity   of   CTI-IOM   at   their   historical   cost.
  Additionally, upon application of the appropriate accounting  treatment
  for a reverse acquisition, the historical financial statements prior to
  the acquisition date of February 22, 1994 are those of CTI-IOM.

  CTI-IOM was incorporated subsequent to September 30, 1993 and therefore
  there  are  no historical comparative financial statements  of  CTI-IOM
  prior  to  its  inception.   Similarly,  as  there  are  no  historical
  comparative  financial  statements  to  be  presented,  no  pro   forma
  information for this acquisition is presented.


<PAGE>
Notes to Consolidated Financial Statements (Continued)

NOTE C - ACQUISITIONS AND DISPOSITIONS (Continued)

  On  February 22, 1995, the Company assigned and transferred all of  the
  issued and outstanding capital stock of CTI-IOM to a former officer  of
  CTI-IOM.   In  exchange,  Novon was assigned all  of  the  intellectual
  property rights relating to "biodegradable" plastics.  This transaction
  reflects   management's  intent  to  consolidate  and  streamline   its
  biodegradable  business.  CTI-IOM was a development  stage  company  as
  defined  by SFASB No. 7.  The Company recorded a $2,958 loss  from  the
  sale of CTI-IOM.

  As  a  condition precedent to the acquisition of CTI-IOM,  the  Company
  transferred  all  of  the assets, property, subsidiaries,  investments,
  equity  interests,  cash,  contract right, royalty  rights,  and  other
  rights  owned or held by the Company immediately prior to  the  closing
  date (the "Churchill Properties"), excluding the ten percent of CTI-IOM
  acquired in December 1993, to a wholly-owned subsidiary of the Company,
  Churchill  USA,  Inc.,  a newly-formed Colorado  corporation  ("CUSA").
  CUSA  also  assumed  all  liabilities  associated  with  the  Churchill
  Properties.   Concurrent with the acquisition of CTI-IOM,  the  Company
  assigned  100  percent of the CUSA common stock to a trust  (the  "CUSA
  Trust").   The  CUSA  Trust will hold the CUSA shares  until  February,
  2001.   A  former president of the Company is the trustee of  the  CUSA
  Trust.

  Additionally, the Company issued, assigned and deposited with the  CUSA
  Trust  1,000,000 Series A Convertible Preferred Shares for the  benefit
  of the Churchill shareholders of record as of February 22, 1994.

  As  a result of the provisions of the CUSA Trust Agreement, the Company
  presently  lacks  significant  influence  or  control  over  CUSA  and,
  accordingly,  its investment in CUSA is accounted for  using  the  cost
  method.   The  original  cost  investment  of  CUSA  was  recorded   as
  $7,158,010, representing the historical basis net book value  of  CUSA.
  Subsequently, a portion of CUSA's assets were impaired, and the Company
  reduced  the  carrying value of its investment in CUSA  by  $1  million
  during  the  period  ended September 30, 1994 to  reflect  management's
  estimate of net realizable value

  Stark Industries, Inc.   On December 1, 1994, the Company entered  into
  an agreement to negotiate and acquire all of the issued and outstanding
  shares  of  Stark  Industries, Inc. ("Stark"), a Michigan  corporation,
  whose sole asset is a 54 percent equity interest in Consolidated Health
  Corporation  of  Mississippi, Inc. ("CHC"), a  Mississippi  corporation
  that  operates  and manages three hospitals located in Mississippi,  in
  exchange  for four million newly issued shares of common stock  of  the
  Company and $300,000 in cash.  The acquisition was accounted for  using
  the purchase method.  Accordingly, the purchase price was allocated  to
  assets  acquired based on their estimated fair values.  This  treatment
  resulted in $4,110,310 of cost in excess of net assets acquired  as  of
  December  1,  1994.  Such excess will be amortized on  a  straight-line
  basis over an estimated life of seven years.
<PAGE>
Notes to Consolidated Financial Statements (Continued)

NOTE C - ACQUISITIONS AND DISPOSITIONS (Continued)

  Stark Industries, Inc. (Continued)   On July 13, 1995, the Company sold
  its  54 percent ownership interest in CHC for $825,000 cash and 600,270
  shares  of preferred convertible stock of the purchaser with a carrying
  value of $300,000 (Note I).

  Novon   International,   Inc.    In  December  1994,   Novon   acquired
  biodegradable technology from Warner-Lambert Company for $1,950,000  in
  cash.   This  technology included patents, trademarks,  copyrights  and
  contract rights.  In January 1995, Ecostar International L.P. ("Ecostar
  L.P"), a limited partnership in the business of biodegradable additives
  and  compounds,  merged into Novon, with each of the  limited  partners
  receiving a proportionate number of shares of Novon for their  interest
  in  Ecostar,  L.P.   On  February 10, 1995, the Company  completed  the
  acquisition  of 100 percent of the outstanding capital stock  of  Novon
  International, Inc., a privately-held Delaware corporation incorporated
  in  February  1994.   The  shareholders of  Novon  received  10,518,000
  restricted  shares  of the Company's common stock.   Additionally,  the
  Company  contributed 482,000 restricted shares to Novon.   Pursuant  to
  the  Agreement  and Plan of Merger dated February 10,  1995  among  the
  Company,   Novon   and  Novon  Acquisition  Corp.   (the   "Acquisition
  Agreement"), the Company has agreed to adjust the purchase price in the
  event  that  the  sixty  (60) day average  closing  bid  price  of  the
  Company's  common  stock as reported by Nasdaq for  the  60-day  period
  preceding  the one-year anniversary of the closing is less  than  $1.00
  per  share.   If  such event should occur, the Company  has  agreed  to
  issue,  within  30  days of the one-year anniversary,  that  number  of
  additional shares of the Company's common stock as is necessary so that
  the  aggregate value of all shares of common stock issued  pursuant  to
  the  Acquisition Agreement is equal to $11,000,000 up to  an  aggregate
  maximum  of  11,000,000  additional  shares  of  common  stock.   Novon
  manufacturers  and  markets biodegradable additives and  compounds  and
  related products. The acquisition was accounted for  as a purchase and,
  accordingly, the acquired assets and liabilities have been recorded and
  consolidated at their estimated fair market values at the date  of  the
  acquisition as follows:

<TABLE>
      
      <S>                           <C>
      Current assets and current liabilities, net     $  (1,924,296)
      Property and equipment        2,458,131
      Patents and related technology10,751,898
      Other assets                    467,944
      Long-term debt, less current maturities   (1,197,437)
      Notes payable, related party   (2,306,240)
                                     $8,250,000
</TABLE>
<PAGE>

Notes to Consolidated Financial Statements (Continued)


NOTE C - ACQUISITIONS AND DISPOSITIONS (Continued)

  The   results  of  operations  of  Novon  have  been  included  in  the
  consolidated statement of operations from the date of acquisition.

  The  following  table  presents  the unaudited  pro  forma  results  of
  operations as if the acquisition of Novon had occurred at the beginning
  of   fiscal  1995  and 1994.  The pro forma results of  Stark  are  not
  included  due  to the sale of CHC.  These pro forma results  have  been
  prepared  for  comparative  purposes only and  do  not  purport  to  be
  indicative of what would have occurred had the acquisition been made as
  of those dates or of results which may occur in the future.

<TABLE>
<CAPTION>
                                              1995               1994
<S>                                     <C>            <C>
            Operating  revenues                  $   1,127,195          $
902,279
          Net loss                      $ (8,944,394)       $(14,905,208)
           Net  loss  per  share                  $       (.12)         $
(.32)
</TABLE>

NOTE D - NOTES RECEIVABLE

  The  note  receivable of $150,000 is collateralized by a  building  and
  represents  consideration  for the sale of a  building,  furniture  and
  equipment of the former offices of Churchill.  This note bears interest
  at  8  percent per annum with interest payable quarterly.  The note  is
  due and payable in May, 1997.


NOTE E - INVESTMENTS

  Investments at September 30, 1995 consist of the following:

     Investment in unconsolidated subsidiary (Note C)    $  6,158,010
     Investment in preferred convertible stock (Note C)     300,000
                                                  $6,458,010

  For  the  periods  ended  September 30, 1995 and  1994,  there  are  no
  unrealized holding gains or losses related to the above investments.

<PAGE>
Notes to Consolidated Financial Statements (Continued)

NOTE F - NOTES PAYABLE, BANKS AND OTHER

  The  Company's notes payable to banks and other at September  30,  1995
  consist of the following:

<TABLE>
          <S>                                <C>
          Secured note payable (a)           $397,100
          Unsecured revolving loan account (b)         462,927
          Note payable - Warner Lambert (c)   162,900
                                             $1,022,927
</TABLE>

  (a)   This  note  is  under an agreement which provides for  a  maximum
      borrowing  amount of $450,000. As of September 30, 1995, borrowings
      are  restricted to $397,100.  Borrowings bear interest at the prime
      rate  plus  1-1/2  percent (10.25 percent) at September  30,  1995.
      Borrowings  are  collateralized  by  accounts  receivable   and   a
      subordinated interest in machinery and equipment.  The note is  due
      on demand.

  (b)   The  revolving loan account represents funds drawn  on  a  demand
      basis (limit of approximately $463,000 at September 30, 1995), with
      interest  at  8.5  percent at September  30,  1995.   The  loan  is
      reviewed  annually by the Lender and the Company for renewal.   The
      next renewal date is on October 20, 1996.

  (c)   This  note  is  under an agreement which provides  for  quarterly
      installments of $54,300 through December 31, 1995.  As of September
      30,  1995,  $108,600  is past due.  This note is collateralized  by
      machinery and equipment.

NOTE G - LONG-TERM DEBT

  Long-term debt at September 30, 1995 consists of the following:
<TABLE>
<CAPTION>
                                                        1995
          <S>                                      <C>
            New   York   State  Job  Development  Authority   (a)       $
1,024,650
          Regional Development Corporation (b)       489,485
          Capital lease obligations (Note H)          72,654
          Total long-term debt                     1,586,789
          Less current installments                  697,775
          Long-term debt, excluding
            current installments                   $ 889,014
</TABLE>
<PAGE>

Notes to Consolidated Financial Statements (Continued)


NOTE G - LONG-TERM DEBT (Continued)

  (a)   On December 1, 1995, the Company entered into a loan modification
      agreement  with  the  lender.   The  lender  deferred  the  accrued
      interest  due under the loan until November 1999, the  maturity  of
      the  loan.  Monthly  principal payments of  $17,985  plus  interest
      commence  January  1, 1996.  Interest is at the  prime  rate  (8.75
      percent at September 30, 1995).

  (b)   The  loan  bears interest at 8 percent and is payable in  monthly
      installments  of  $10,416, plus interest through  June  1996.   The
      Company's  loan obligation requires that the Company pay  principal
      and  interest as due.  The Company is required, among other things,
      to  comply  with certain reporting requirements.  At September  30,
      1995, the Company was either in compliance with these provisions or
      obtained applicable waivers. As of September 30, 1995, the  Company
      is  not  current  with  $145,824 of principal and,  therefore,  the
      Company has classified the loan as current.  Currently, the Company
      is in the process of renegotiating the terms of this loan.

  Substantially,  all of the Company's assets are pledged  as  collateral
  for borrowings.  In addition, the President of the Company has personal
  assets collateralizing loans totalling $450,000 and personal guarantees
  on loans totalling $2,446,816.

  The  aggregate maturities of long-term debt for each of the five  years
  subsequent  to September 30, 1995 are as follows:  1996 $697,775,  1997
  $232,708, 1998 $225,158, 1999 $431,148, 2000 $-0-, and thereafter $-0-.


NOTE H - LEASED ASSETS AND LEASE COMMITMENTS

  A summary of the Company's assets under capital leases follows:

<TABLE>
<CAPTION>
                                                1995
<S>                                        <C>
      Equipment                            $ 205,999
      Less accumulated amortization           17,914

      Net assets under capital leases      $ 188,085

  Amortization expense was $17,914 for 1995.
</TABLE>
<PAGE>

Notes to Consolidated Financial Statements (Continued)


NOTE H - LEASED ASSETS AND LEASE COMMITMENTS (Continued)

  At  September  30,  1995,  minimum payments dues  under  the  Company's
  noncancellable capital and operating leases are as follows:

<TABLE>
<CAPTION>
                                                                  Capital
Operating
              Year                                                 Leases
   Lease
<S>                                        <C>         <C>
    1996                                           $   52,311  $ 105,468
    1997                                               19,245
    1998                                               9,885

    Total minimum lease payments              81,441   $ 105,468

    Less interest inputed from 6% to 21%       8,787

    Present value of net minimum lease payments    $   72,654

</TABLE>

  Interest expense related to capital leases amounted to $8,124 in 1995.

  The  Company has the option to renew the noncancellable operating lease
  for  an  additional five-year term.  Rent expense under  all  operating
  leases was $74,567 and $20,151 in 1995 and 1994, respectively.


NOTE I - DISCONTINUED OPERATIONS

  As  discussed  in Note C, the Company sold its 54 percent  interest  in
  CHC.   This transaction reflects management's intent to exit the health
  care  management industry.  The Company has recorded a loss on disposal
  of  the  segment  of $2,665, 484.  The following is a  summary  of  the
  operations  of  the discontinued business segment for the  period  from
  December 1, 1994 (acquisition date) to July 13, 1995 (disposal date).

     <PAGE>
     <TABLE>
     <S>                                     <C>
          Revenues                           $2,079,441
          Operating expenses                 2,058,461
          Other expenses                      129,311
          Loss from operations               (108,331)
          Minority interest                    49,561
          Net loss                           $(58,770)
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements (Continued)


NOTE J - SUPPLEMENTAL DATA TO CONSOLIDATED STATEMENTS OF CASH FLOW

  Excluded  from the consolidated statements of cash flows for  1995  and
  1994  were  the  effects  of certain noncash  investing  and  financing
  activities as follows:

<TABLE>
<CAPTION>
                                                    1995            1994
<S>                                          <C>        <C>
     Issuance of common stock for acquisition
       of Stark Industries, Inc.             $2,975,000

     Issuance of common stock for acquisition
       of Novon International, Inc           $8,250,000

     Conversion of convertible debentures to
       equity                                $2,250,000

     Conversion of shareholders' loan to equity     $   1,000,000

     Conversion of accounts payable to equity       $   100,000

     Issuance of common stock for accrued
       bonus                                 $3,937,500

     Issuance of common stock for unearned
       consulting fees                       $1,910,166

     Issuance of common stock for offering costs    $   479,334

     Sale of office building, related furniture
       and equipment for note receivable     $150,000

     Increase in accounts payable in connection with
                                                additions to patents    $
                                             163,757

     Equipment acquired through a capital lease obligation     $ 16,890

     Issuance of common stock for investment
       in unconsolidated subsidiary                     $6,957,417
</TABLE>
  <PAGE>
  
  Cash paid for interest in the periods ended September 30, 1995 and 1994
  was $112,380 and
  $-0-, respectively.


Notes to Consolidated Financial Statements (Continued)


NOTE K - INCOME TAXES

  The  Company had no income tax provision and no income taxes were  paid
  for  the  period ending September 30, 1995 and 1994.  Net deferred  tax
  assets  applicable  to temporary differences, net  operating  loss  and
  capital loss carryforwards are:

<TABLE>
<CAPTION>
                                                                     1995
1994
<S>                                          <C>        <C>
     Investment in CTI-IOM                   $          $100,000
     Investments and notes receivable         200,000    300,000
     Basis in common stock issued for services          800,000  800,000
     Capital loss carryforwards               100,000
     Net operating loss carryforwards        2,500,000  1,100,000
     Basis in patents and technology         (1,560,000)
     Total deferred tax assets               2,040,000  2,300,000
           Valuation       allowance                          (2,040,000)
(2,300,000)

     Net deferred tax assets                 $    -0-   $    -0-
</TABLE>

  During  the  year  ended  September 30, 1995, the  Company's  valuation
  allowance for net deferred tax assets decreased by $260,000.

  As   of  September  30,  1995,  the  Company  had  net  operating  loss
  carryforwards   and   capital   loss  carryforward   of   approximately
  $12,400,000  and $400,000, respectively.  These loss carryforwards  are
  available  for deduction from future taxable income, subject  to  rules
  and  regulations  of the Internal Revenue Service that  may  reduce  or
  eliminate  their  utilization.  If not used,  the  net  operating  loss
  carryforwards  will expire in 2010, and the capital  loss  carryforward
  will expire in 2000.


<PAGE>

Notes to Consolidated Financial Statements (Continued)

NOTE L - PREFERRED STOCK, COMMON STOCK, COMMON STOCK OPTIONS

 Preferred  Stock    During  fiscal 1994, the  Company  issued  1,000,000
 Series  A Convertible Preferred Shares ("Series A Shares").  The  Series
 A  Shares were issued to the CUSA Trustee in accordance with the Amended
 CUSA  Trust Agreement dated December 30, 1994.  The Series A Shares  are
 non-voting  shares, are redeemable at the option of the  Company  up  to
 $5.00 per share and have a liquidation preference of $6.0 million.   The
 Trustee  shall hold the Series A Shares in trust for a period  of  seven
 calendar  years  until  the expiration of the term  of  the  CUSA  Trust
 Agreement,  at which time the Series A Shares are entitled to conversion
 into common stock of the Company.

 The  conversion of the Series A Shares will be based on a  formula  that
 divides the Series A Designated Value, as defined, by the Average  Daily
 Common  Share  Value,  as defined.  The Series  A  Designated  Value  is
 computed  as  the  difference between $25,000,000 and  the  fair  market
 value of the Company's assets less the cost basis of such assets at  the
 expiration  of  the  term  of the CUSA Trust.   However,  the  Series  A
 Designated  Value  cannot be less than $2,823,000.   The  Average  Daily
 Common  Share  Value is the average closing bid price of  the  Company's
 common  stock  for a period of one year prior to the expiration  of  the
 term  of  the CUSA Trust.  In no event  shall the conversion  shares  as
 computed  exceed 20 percent of the issued and outstanding common  shares
 of the Company on the date of conversion.

  Common  Stock Issued for Services   During fiscal 1994, 400,000  shares
  of  the  Company's  common stock were issued in exchange  for  services
  valued at $462,520.  During fiscal 1995, the Company settled a ten-year
  consulting contract through the issuance of 1,607,000 shares valued  at
  $450,000.   During  fiscal  1995, the Company issued  1,000,000  shares
  valued  at  $250,000 as severance pay to the former  president  of  the
  Company and 50,000 shares valued at $10,828 as compensation to a former
  employee  of  the  Company.   In April 1994,  the  Board  of  Directors
  approved  the  issuance of 4,350,000 shares of common stock,  of  which
  2,350,000  shares  were  issued  as  of  April  30,  1994,   as   bonus
  compensation  to  the former Chairman of the Board and Chief  Executive
  Officer.  The remaining 2 million shares were issued in October 1994.

  During  fiscal  1995,  the Company issued 2,000,000  shares  valued  at
  $687,500 to an investment banking firm as payment of services rendered.
  In  addition,  on  July  5, 1995, the Company issued  6,200,000  shares
  valued  at  $2,489,500  pursuant  to  an  agreement  with  a  financial
  consulting group to act as its financial advisor.  As of September  30,
  1995,  the Company has recorded $479,334 in stock issuance costs  which
  have  been offset against proceeds from sale of common stock in private
  offerings  in  the  accompanying  statement  of  shareholders'   equity
  pursuant  to this agreement, and it has recorded $1,910,166 as unearned
  consulting fees.

<PAGE>

Notes to Consolidated Financial Statements (Continued)


NOTE L - PREFERRED STOCK, COMMON STOCK, COMMON STOCK OPTIONS (Continued)

  Common  Stock  for  Convertible Debt   In  January  1995,  the  Company
  completed the offering of $2.25 million in convertible debentures.  The
  convertible  debentures bore interest at six percent and  were  due  on
  December  31, 1995.  The debentures were convertible at the  option  of
  the  holder  into  common shares of the Company at  a  discount  of  25
  percent  to  the closing bid price on the date of conversion.   In  the
  twelve months ended September 30, 1995 holders of the $2.25 million  of
  convertible  debentures gave notice to the Company of their  demand  to
  convert  the  debentures.  The Company issued  10,487,408  shares  upon
  conversion of the debentures.
  
  Common  Stock  for  Shareholder Loans   In May  1995,  one  shareholder
  agreed  to  convert loans including accrued interest, in the amount  of
  $1,030,000 into 5,493,000 common shares of the Company.  The  loan  was
  converted  at  a  discount of 25 percent to the  market  price  of  the
  Company's common stock on the date of conversion.

  Common Stock for Accounts Payable   In July 1995, the Company converted
  $100,000 in accounts payable into 200,000 common shares of the Company.

  Common  Stock  Options    During fiscal 1988, the  Company's  Board  of
  Directors and shareholders approved an Incentive Stock Option Plan  and
  a  Nonstatutory  Stock Option Plan.  The stock subject to  the  options
  granted  under  both  plans shall be either  shares  of  the  Company's
  authorized  but  unissued shares of common stock, $.02  par  value,  or
  shares  of  common stock reacquired by the Company.   The  Company  has
  reserved  1,600,000  and  200,000  shares  for  the  Nonstatutory   and
  Incentive  Stock  Option Plans, respectively,  the  maximum  number  of
  shares, subject to any provisions for stock splits or dividends, or any
  other provisions outlined in each plan.

<PAGE>
  
Notes to Consolidated Financial Statements (Continued)


NOTE L - PREFERRED STOCK, COMMON STOCK, COMMON STOCK OPTIONS (Continued)

  Information with respect to stock options under these two plans are  as
  follows:

<TABLE>
<CAPTION>
                                      Incentive
Nonstatutory
                                 Exercise            Stock       Exercise
Stock
                                 Price         Option Plan       Price
Option Plan

<S>                         <C>       <C>      <C>       <C>
      Balances,  September  30,  1993   $.40-$.94    140,000    $.89-$.94
120,000

     Granted, 1994          $.3125    50,000$.3125-$1.00  620,000

     Expired, 1994

      Exercised,  1994                 $.34       (50,000)           $.59
(212,500)

      Balances,  September  30,  1994$40-$.94       140,000  $  .89-$1.00
527,500

            Expired                                                  $.94
(17,500)

      Balanced,  September  30,  1995$40-$.94       140,000  $  .89-$1.00
510,000
</TABLE>


  Nonstatutory  Stock  Option  Plan    During  fiscal  1994,  options  to
 purchase  120,000 and 500,000 shares were granted under the Nonstatutory
 Stock  Option  Plan, at exercise prices of $.3125 and $1.00  per  share,
 respectively.   The  option to purchase 120,000  shares  at  $.3125  was
 converted  to  a  stock  award  resulting  in  compensation  expense  of
 $97,500.   The  option  to purchase 500,000 shares  expires  in  January
 2004.  Also, during fiscal 1994, options to purchase 92,500 shares  were
 converted to stock awards resulting in compensation expense of  $75,156.
 Of  the options granted prior to fiscal 1994, options to purchase 17,500
 shares  expired in May 1995 and options to purchase 10,000 shares expire
 in January 1998.
  
  Incentive Stock Option Plan    During fiscal 1994, options to  purchase
  50,000  shares  under the Incentive Stock Option Plan were  granted  at
  exercise  prices of $.3125 per share.  These options were converted  to
  stock  award  resulting  in  compensation  expense  of  $40,625.    The
  remaining options expire between May 1998 and May 2000.
<PAGE>

  Notes to Consolidated Financial Statements (Continued)
  
  
  Other  Stock Options   During fiscal 1995, the Company granted  options
  to its president and a shareholder each to purchase 2,000,000 shares of
  the  Company's  common stock at an exercise price of  $.35  per  share.
  These options expire April, 1997.


NOTE M - COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS

  Employment Agreements   In previous years, the Company had entered into
  employment  agreements  with  its former  presidents.   The  agreements
  provided,   among  other  things,  that  upon  termination   of   their
  employment,  the  Company would repurchase all of the Company's  common
  stock owned by the employee at a per share cost of the preceding 90-day
  average  bid  price.  As of September 30, 1995, the  Company  would  be
  obligated to purchase approximately 187,500 shares of common stock held
  by   its   former  presidents  under  the  terms  of  their  employment
  agreements.

  Commitment to CUSA   The Company, pursuant to the terms of an agreement
  between  the Company and CUSA, is committed to pay to CUSA $325,000  of
  proceeds  received  by  the  Company from options  exercised  under  an
  Employee  Option  Program registered pursuant to Form S-8  Registration
  Statement.   As of the date of this filing, no such options  have  been
  exercised.

  Licensing Agreements   The Company has entered into certain patent  and
  technology  licensing  agreements which  provide  for  the  payment  of
  royalty  fees.   The  Company will pay royalty fees  ranging  from  two
  percent to five percent on certain net sales through the later  of  the
  life of the related patents or December 31, 2000.
  
  Contingencies    The  Company's subsidiary Novon,  is  a  defendant  in
  actions involving the interpretation of license agreements.  Management
  and legal counsel for the Company are of the opinion the Plaintiffs  do
  not  have the legal capacity to commence the action, and filed a motion
  for  the dismissal of the action in 1993.  The actions commenced by two
  of  the three plaintiffs were  dismissed.  The remaining plaintiff must
  file an amended claim to continue the actions.  To date, there has  not
  been  an amended claim filed.  Accordingly, based upon the facts  known
  to  date,  management and legal counsel believe Novon has a meritorious
  defense  to  the  actions asserted against it and should  prevail.   No
  provision for any liability that may result from the actions  has  been
  recognized in the accompanying financial statements.

  The  Securities  and  Exchange Commission ("SEC") commenced  a  private
  investigation  of  the Company and others in August 1995  to  determine
  whether,  since  September 1993, there has been any violations  of  the
  provisions  of  the  Federal Securities law.   The  current  management
  <PAGE>
  
Notes to Consolidated Financial Statements (Continued)


  of  the  Company is cooperating fully with the SEC and cannot  at  this
  stage  form  any  opinion  with  respect  to  the  effect  of  such  an
  investigation.

  Notes  Payables  -  Related Party   The Company has  two  demand  notes
  payable  at  September  30, 1995 totaling $175,092.   Of  that  amount,
  $113,481 bears interest at 8 percent and $61,611 bears interest  at  12
  percent.  Neither notes have payments due in fiscal 1996.

  Consulting  Fees  and  Reimbursable  Expenses    Consulting  fees   and
  reimbursable  expenses  of  $130,608  and  $92,657  and  $180,234   and
  $261,532, respectively were paid by the Company to a stockholder of the
  Company    for  the  periods  ended  September  30,  1995   and   1994,
  respectively.   In  May,  1995  the  Company  settled  this  consulting
  contract  through  issuance of 1,607,000 shares  of  its  common  stock
  valued at $450,000.  The consulting agreement was with a shareholder of
  the  Company  whose services would no longer be necessary  due  to  the
  relocation  of  activities  related to the biodegradable  products  and
  patents of Novon.


NOTE N - SIGNIFICANT CUSTOMERS

  For  the year ended September 30, 1995, two customers accounted for  32
  percent  and  22  percent  of  total  revenues,  respectively.   As  of
  September  30,  1995  two customers accounted for  48  percent  and  10
  percent, respectively of total trade accounts receivable.  The  Company
  performs   ongoing  credit  evaluations  of  its  customers'  financial
  conditions  but  does  not  require  collateral  to  support   customer
  receivables.
NOTE O - FOURTH QUARTER DATA

  During  the  fourth  quarter  of fiscal  1995,  the  Company  made  the
  following  adjustments which are considered material to  the  financial
  statements taken as whole:

    Under valuation of unearned consulting fees        $1,910,166

    Over valuation of stock issued for services        $1,000,516


NOTE P - SUBSEQUENT EVENTS

  Subsequent to September 30, 1995, the Company entered into an agreement
  with  an investment banking firm for a $1,000,000 private placement  of
  equity  of up to 4,000,000 shares of restricted stock.  Each  share  of
  stock  purchased through this placement includes an option for a period
  of  three  years  from  the  date  of the  agreement  to  purchase  one
  additional share of common stock of the Company at an exercise price of
  $1.00         per         share.          To         date,          the
  <PAGE>
  
  Company  has  sold  2,180,000  shares for  net  proceeds  of  $517,750.
  Additionally,  the  Company is committed to pay the investment  banking
  firm  a  placement  fee  of ten percent of all capital  raised.   Fifty
  percent  of the placement fee is to be paid in shares of the  Company's
  restricted common stock.  This private placement terminates on December
  26, 1995, or earlier if determined by the investment banking firm.

  Effective  December  7, 1995, the Company's common stock  was  delisted
  from  The  Nasdaq  Smallcap Market and began trading in  the  Over  the
  Counter Market.
<PAGE>
                      AUDITED FINANCIAL STATEMENTS

                         CHURCHILL U.S.A., INC.

                      YEAR ENDED SEPTEMBER 30, 1995



<PAGE>

                      INDEPENDENT AUDITOR'S REPORT


Shareholder, Board of Directors and Trustee
Churchill U.S.A., Inc.
Lakewood, Colorado

We  have audited the accompanying consolidated balance sheet of Churchill
U.S.A., Inc., a wholly-owned subsidiary of Churchill Technology Inc., and
subsidiaries  as  of  September  30, 1995 and  the  related  consolidated
statements  of  operations, shareholders' equity and cash flows  for  the
years  ended  September 30, 1995 and 1994.  These consolidated  financial
statements  are  the  responsibility of the  Company's  management.   Our
responsibility  is to express an opinion on these consolidated  financial
statements based upon our audits.

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

In  our opinion, the consolidated financial statements referred to  above
present  fairly,  in  all material respects, the  financial  position  of
Churchill U.S.A., Inc. and subsidiaries as of September 30, 1995 and  the
results  of  their operations and their cash flows for  the  years  ended
September  30,  1995  and  1994  in conformity  with  generally  accepted
accounting principles.



Mitchell   Finley and Company, P.C.
Certified Public Accountants

November 16, 1995
Denver, Colorado
<PAGE>

Consolidated Balance Sheet

September 30, 1995


ASSETS

<TABLE>
<S>     <C>
CURRENT ASSETS
  Cash and cash equivalents                             $621,515
  Accounts receivable:
    Oil and gas sales                                     51,848
    Joint interest owners, net of allowance for doubtful
      accounts of $76,195                                  4,140
    Limited partners                                      15,193
    Related parties                                       48,458
                                                         741,154

PROPERTY AND EQUIPMENT, AT COST
  Oil and gas properties (full cost method used for
    oil and gas properties)                             4,836,954
  Office furniture and equipment                          25,684
                                                        4,862,638
  Less accumulated depletion and depreciation           (2,131,386)
                                                        2,731,252

OTHER ASSETS
  Investments                                            318,376
  Note receivable, related party                          24,465
  Deposits and other                                       7,473
                                                         350,314

TOTAL ASSETS                                            $3,822,720

</TABLE>

"See accompanying notes to consolidated financial statements."
<PAGE>

Consolidated Balance Sheet (Continued)

September 30, 1995


LIABILITIES AND SHAREHOLDERS' EQUITY

<TABLE>
<S>     <C>
CURRENT LIABILITIES
  Trade accounts payable                                $124,873
  Accounts payable, joint interest owners                154,675
  Accrued vacation payable                                20,973
  Accrued expenses                                        28,025
  Accounts payable to bankruptcy creditors                28,125
                                                         356,671

LONG-TERM DEBT                                            10,286

ACCOUNTS PAYABLE TO BANKRUPTCY
CREDITORS, NONCURRENT                                     36,458

MINORITY INTEREST                                         18,079

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
  Preferred stock _ $.02 par value; 10,000,000 shares
    authorized; no shares issued or outstanding            _
  Common stock _ $.001 par value; 20,000,000 shares
    authorized; 9,301,546 shares issued and outstanding    9,302
  Non-voting common stock _ $.001 par value; 10,000,000
    shares authorized; no shares issued or outstanding     _
  Additional paid-in capital                            10,009,673
  Accumulated deficit                                   (6,617,749)
                                                        3,401,226

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY              $3,822,720

</TABLE>
<PAGE>

Consolidated Statements of Operations

For the Years Ended September 30, 1995 and 1994


<TABLE>
<CAPTION>
                                                  1995      1994
<S>     <C>                                        <C>
REVENUE
  Oil and gas sales                          $ 317,915  $450,081
  Management fee income from related party     382,945   483,997
  Overhead income                               67,265   113,717
  Gain on extinguishment of debt                     _    60,038
  Gain on sale of trading securities                 _    52,500
  Unrealized holding gain on trading securities              _   28,050
  Interest income                               22,918    24,513
  Other                                                  10,293  23,391
                                               801,336  1,236,287
COSTS AND EXPENSES
  Lease operating expenses                     194,361   315,167
  Depletion, depreciation and amortization     117,663   130,284
  General and administrative                   638,397   750,928
  Direct cost of mergers and acquisitions            _   371,115
  Loss on investments                           42,046  3,629,230
  Bad debt expense, related party                    _   105,868
                                               992,467  5,302,592

NET LOSS BEFORE MINORITY INTERESTS           (191,131)  (4,066,305)

MINORITY INTERESTS IN LOSS OF SUBSIDIARIES      66,360    57,615

NET      LOSS                                          $        (124,771)
$(4,008,690)

PER SHARE DATA
   Net  loss  per  common share                   $          (.01)      $
(.43)

WEIGHTED-AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
DURING THE YEAR                              9,301,546  9,225,536

</TABLE>
<PAGE>

Consolidated Statements of Shareholders' Equity

For the Years Ended September 30, 1995 and 1994

<TABLE>
<CAPTION>
                                                          Additional
                                         Common Stock                      Paid-
In    Accumulated              Valuation
                               Shares                   Amount      Capital      Deficit
Allowance
<S>     <C>                    <C>        <C>           <C>         <C>
BALANCES, SEPTEMBER 30, 1993   8,980,999   $ 8,981      $9,545,595  $(2,484,288)  $ (7,911)

CAPITAL CONTRIBUTION            _           _           200,000       _           _

ISSUANCE OF COMMON STOCK
  For cash                                25,000        25          17,975       _             _
  For services                 315,488         315      246,084      _           _

COMMON SHARES CANCELLED AND
RETIRED AT NO COST             (19,941)       (19)           19       _          _

REDUCTION OF VALUATION ALLOWANCE          _             _              _          _            7,911

NET LOSS                                  _             _              _         (4,008,690)
_

BALANCES, SEPTEMBER 30, 1994   9,301,546     9,302      10,009,673  (6,492,978)  _

NET LOSS                                  _             _            _           (124,771)
_

BALANCES, SEPTEMBER 30, 1995   9,301,546  $  9,302      $10,009,673 $(6,617,749) $_
</TABLE>
<PAGE>
Consolidated Statements of Cash Flows

For the Years Ended September 30, 1995 and 1994

<TABLE>
<CAPTION>
                                              1995                1994
<S>     <C>                                        <C>
OPERATING ACTIVITIES
      Net     loss                                               $     (124,771)
$(4,008,690)
  Adjustments to reconcile net loss to
    net cash used in operating activities
      Gain on extinguishment of debt             _      (60,038)
      (Gain) loss on sale of trading securities         42,046   (52,500)
      Unrealized holding gain on trading securities     _        (28,050)
      Depreciation, depletion and amortization          117,636  130,284
      Issuance of common stock for services      _       246,399
      Minority interests in net loss of subsidiaries    (66,360)      (57,615)
      Loss on investments                        _      3,621,319
      Reduction of valuation allowance,
        investment in available-for-sale securities     _        7,911
    Changes in operating assets and liabilities
      Decrease in accounts receivable           23,745    58,665
      Decrease in note receivable, related party        _        185,343
      Decrease in other current assets           _         4,726
      Decrease in accounts payable            (19,843)  (207,145)
      Increase (decrease) in deferred revenue           (40,000)      40,000
      Increase (decrease) in accrued liabilities        (8,760)  5,010

NET CASH USED IN
OPERATING ACTIVITIES                          (76,307)  (114,381)

INVESTING ACTIVITIES
  Additions to property and equipment         (35,555)  (29,522)
  Proceeds from the sale of property and equipment      7,177    1,404
  Advance to related party                    (24,465)     _
  Decrease in restricted cash                    _        25,000
  Proceeds from sale of trading securities     107,683   155,821
  Acquisition of investment in affiliate         _      (207,694)
  Dispositions of investments                    _         1,286
  Decrease in deposits                           _        10,154

NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES                         $    54,840         $   (43,551)
</TABLE>
<PAGE>


"See accompanying notes to consolidated financial statements."
For the Years Ended September 30, 1995 and 1994

Consolidated Statements of Cash Flows (Continued)

<TABLE>
<CAPTION>
                                              1995      1994
<S>     <C>                                        <C>
FINANCING ACTIVITIES
  Capital contribution                           _       200,000
  Repayments of debenture obligations            _      (25,833)
  Repayments of accounts payable to bankruptcy
    creditors                                 (22,500)  (41,087)
  Proceeds from issuance of common stock         _        18,000


NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES                          (22,500)   151,080

DECREASE IN CASH AND
CASH EQUIVALENTS                              (43,967)   (6,852)

CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR                              665,482   672,334

CASH AND CASH EQUIVALENTS,
END OF YEAR                                  $ 621,515  $665,482

</TABLE>

"See    accompanying    notes    to    consolidated    financial    statements."
<PAGE>

Notes to Consolidated Financial Statements

NOTE A _ ORGANIZATION

  Churchill U.S.A., Inc. was incorporated on January 18, 1994 under the laws  of
  the  State of Colorado.  Churchill U.S.A., Inc. and subsidiaries (the Company)
  is  a  wholly-owned subsidiary of Churchill Technology Inc. (the Parent).   On
  February  16,  1994, the Parent transferred all its assets,  liabilities,  and
  operations  to  the  Company.   As a result, the  Company  assumed  the  prior
  activities of the Parent, which was principally engaged in the acquisition and
  operation  of  oil and gas properties.  The transfer was accounted  for  in  a
  manner  similar  to  a  pooling of interests and, accordingly,  the  Company's
  financial  statements  are presented using the Parent's historical  costs  and
  historical results of operations for periods prior to February 16, 1994.   All
  references  to the Company prior to February 16, 1994 relate to activities  of
  the Parent.

NOTE B _ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Principles  of  Consolidation _ The consolidated financial statements  include
  the  accounts of the Company and its majority-owned subsidiaries, KTP  Energy,
  Inc.,   Churchill  Energy,  Inc.  and  Trans  Energy,  Inc.   All  significant
  intercompany accounts and transactions have been eliminated in consolidation.

  The  equity  method of accounting is used for investments in  affiliates  over
  which  the Company exercises significant influence that are 20 percent  to  50
  percent   owned.    Significant  intercompany  transactions  with   affiliates
  accounted  for under the equity method, if any, have been eliminated  and  the
  Company's share of net earning (or losses) included as a separate item in  the
  consolidated statement of operations.

  Cash  and  Cash  Equivalents _ The Company considers all  highly  liquid  debt
  instruments purchased with an original maturity of three months or less to  be
  cash equivalents.
  
 Oil  and  Gas Properties and Depletion _ The Company accounts for oil  and  gas
 properties  using  the  "full  cost" method.   Under  this  method,  all  costs
 associated  with  property acquisition, exploration and development  activities
 are  capitalized.   Oil  and gas properties are depleted  using  the  units-of-
 production method based on the ratio of current period production to  estimated
 proved  oil  and  gas reserves expressed in physical units, with  oil  and  gas
 converted  to  a  common  unit  of measurement  based  upon  their  approximate
 relative energy content.  Gains or losses from the sale or abandonment  of  oil
 and  gas properties are charged or credited to the full cost pool, unless  such
 adjustments  from the sale of oil and gas properties would significantly  alter
 the relationship between capitalized costs and proved oil and gas reserves.

  <PAGE>
  
Notes to Consolidated Financial Statements (Continued)
  
  Capitalized costs less related accumulated depletion and deferred income taxes
  may  not  exceed the sum of (1) the present value of future net  revenue  from
  estimated production of
  proved  oil  and gas reserves; (2) the cost of properties not being amortized,
  if  any;  (3) the lower of cost or estimated fair value of unproved properties
  included in the costs being amortized, if any; and (4) any income tax  effects
  related to differences in the book and tax basis of oil and gas properties.

  Investments _ The Company uses the specific identification method to  identify
  the  cost  of  its  investments for purposes of computing  realized  gains  or
  losses.

  Office Furniture and Equipment _ The Company depreciates office furniture  and
  equipment  over  their estimated useful lives (five years)  using  accelerated
  methods.

 Net  Income (Loss) Per Share of Common Stock _ The net income (loss) per common
 share  is  computed based on the weighted-average number of shares  outstanding
 during  each  year.  Common stock equivalents, such as convertible subordinated
 debentures,  common  stock  options and warrants, are  not  considered  in  the
 earnings  per  share  calculation  to  the  extent  their  inclusion  would  be
 antidilutive.
NOTE C _ SUPPLEMENTAL DATA TO CONSOLIDATED STATEMENTS OF CASH
         FLOWS

  During  the years ended September 30, 1995 and 1994, the Company paid interest
  of $2,626 and $5,824, respectively.

  Excluded  from the consolidated statements of cash flows for the  years  ended
  September 30, 1995 and 1994 were the effects of certain noncash investing  and
  financing activities as follows:

     During the year ended September 30, 1995, the Company transferred $104,516
    in  certain oil and gas properties from its recorded basis in the full  cost
    pool to Investment in CSV Holdings, Inc.  (Note I).

NOTE D _ OIL AND GAS PROPERTIES (UNAUDITED)

  Aggregate  Capitalized Costs _ The following presents the Company's  aggregate
  capitalized  costs  and  the  aggregate  corresponding  accumulated  depletion
  relating to oil and gas properties as of September 30, 1995:

<PAGE>

Notes to Consolidated Financial Statements (Continued)

<TABLE>
<S>       <C>
      Unproved oil and gas properties$     -0-
      Proved oil and gas properties  4,836,954
                                     4,836,954
      Accumulated depletion          (2,106,410)

      Net capitalized costs          $2,730,544

</TABLE>


NOTE D _ OIL AND GAS PROPERTIES (UNAUDITED)(Continued)

      The Company's share of equity method
        investees' net capitalized costs    $  1,492,377

  Costs  Incurred  _  The  Company's costs incurred  in  oil  and  gas  property
  acquisition,  exploration and development activities, whether  capitalized  or
  expensed, for the years ended September 30, 1995 and 1994 are as follows:

<TABLE>
<CAPTION>
                                         1995   1994
<S>       <C>                             <C>
      Acquisition of properties
        Unproved                     $    -0-  $     -0-
        Proved                            -0-     10,000
      Exploration costs                   -0-        -0-
      Development costs                53,472     52,647
                                     $ 53,472  $  62,647
      Depletion, depreciation and amortization
        of oil and gas properties    $ 116,562 $ 124,728
      Depletion, depreciation and amortization
        of oil and gas properties per equivalent
        mcf of production            $          .53    $           .46
      The Company's share of equity method
        investees' costs incurred in oil and
        gas property development     $ 39,800  $ 185,358
</TABLE>
  <PAGE>
Notes to Consolidated Financial Statements (Continued)

  Oil  and  Gas Reserve Data _ The reserve information presented below is  based
  upon  reports  prepared  by  independent  petroleum  engineers.   The  Company
  emphasizes that reserve estimates are inherently imprecise and that  estimates
  of  new  discoveries are more imprecise than those of producing  oil  and  gas
  properties.   Accordingly, these estimates are expected to  change  as  future
  information becomes available.

  Proved oil and gas reserves are the estimated quantities of crude oil, natural
  gas and natural gas liquids, which geological and engineering data demonstrate
  with  reasonable  certainty  to be recoverable  in  future  years  from  known
  reservoirs under existing economic and operating conditions.  Proved developed
  oil and gas reserves are those expected to be recovered through existing wells
  with existing equipment and operating methods.

  Presented below is a summary of the changes in estimated net proved, developed
  and  undeveloped oil and gas reserves of the Company, all of which are located
  in the United States, for the years ended September 30, 1995 and 1994.

NOTE D _ OIL AND GAS PROPERTIES (UNAUDITED)(Continued)

<TABLE>
<CAPTION>
                              1995                1994
                              Oil (bbl) Gas (mcf) Oil (bbl)      Gas(mcf)
<S>                           <C>       <C>       <C>   <C>
Proved reserves, beginning of year      829,631   4,594,601 562,839    5,642,727
Purchase  of  minerals  in  place           -0-               -0-            -0-
-0-
Extensions, discoveries and
        other    additions                    2,681       177,225        170,131
545,596
Revisions   of  previous  estimates             5,069      237,706       110,545
(1,374,297)
Production                             (8,536)     (169,545)      (13,270)     (
194,134)
Sale  of minerals in place                  (463,602)        -0-           (614)
(    25,291)

Proved reserves, end of year            365,243   4,839,987 829,631    4,594,601

Proved undeveloped reserves,
     end of year                   134,391       92,233     134,391      279,900
Proved developed reserves,
     end of year                   230,852   4,747,754 695,240   4,314,701

Total proved reserves                   365,243   4,839,987 829,631   4,594,601

<PAGE>

The Company's proportional interest
  in reserves of investees accounted
  for by the equity method, end of
  year                             569,826   1,732,500 310,607   1,733,970

</TABLE>

  Standardized  Measure of Discounted Future Net Cash Flows and Changes  Therein
  Relating  to  Proved Oil and Gas Reserves _ Statement of Financial  Accounting
  Standards  No.  69,  "Disclosures  About Oil and  Gas  Producing  Activities,"
  prescribes guidelines for computing a standardized measure of future net  cash
  flows  and changes therein relating to estimated proved reserves.  The Company
  has followed these guidelines, which are briefly discussed herein.

  Future cash inflows and future production are determined by applying year  end
  prices and costs to the estimated quantities of proved oil and gas reserves in
  which  the Company has a mineral interest.  Estimated future income taxes  are
  computed  using  year-end statutory income tax rates, adjusted  for  permanent
  differences.  The resulting future net cash flows are reduced to present value
  amounts by applying an annual discount factor.

The assumptions used to compute the standardized measure are those prescribed by
the  Financial  Accounting  Standards Board and, as  such,  do  not  necessarily
reflect  the Company's expectations of actual revenues to be derived from  those
reserves nor their present worth.

NOTE D _ OIL AND GAS PROPERTIES (UNAUDITED)(Continued)

  The  limitations  inherent  in  the reserve quantity  estimation  process,  as
  discussed  previously,  are  equally applicable to  the  standardized  measure
  computations, since these estimates are the basis for the valuation process.

  Standardized Measure of Discounted Future Net Cash Flows for the  years  ended
  September 30, 1995 and 1994 are as follows:

<TABLE>
<CAPTION>
                                        1995       1994
<S>     <C>                                   <C>
    Future cash inflows                 $12,326,837        $     18,275,554
       Future    production    and    development    costs           (4,606,024)
(7,059,402)
    Future net cash flows               7,720,813  11,216,152
    Annual discount for estimated timing
      of cash flows                     (3,310,622)              (4,542,542)

<PAGE>

    Standardized measure of discounted
      future net cash flows             $4,410,191 $6,673,610

    The Company's share of equity method investees'
      standardized measure of discounted future
      net cash flows                    $2,193,639 $2,452,713

</TABLE>

  Standardized  Measure of Discounted Future Net Cash Flows and Changes  Therein
  Relating to Proved Oil and Gas Reserves (Continued) _ The principal sources of
  change in the standardized measure of discounted future net cash flows for the
  years ended September 30, 1995 and 1994 are as follows:

<TABLE>
<CAPTION>
                                        1995       1994
<S>     <C>                                   <C>
    Balances, beginning of year         $6,673,610 $6,029,311
    Purchase of minerals in place             -0-        -0-
    Sales of oil and gas produced, net of
      production costs                  (164,417)  (134,914)
    Net changes in prices and production costs     (3,699,367)        1,237,613
     Extensions  and  discoveries,  net  of  production  costs           266,838
1,479,970
    Sale of minerals in place           (1,855,284)              (32,270)
        Revisions    of    previous    quantity    estimates           3,246,260
(1,674,755)
    Accretion of discount               (261,110)   (76,588)
    Net changes in future development costs        203,661       (154,757)
    Net change in income taxes             _           _
</TABLE>

Notes to Consolidated Financial Statements (Continued)

NOTE D _ OIL AND GAS PROPERTIES (UNAUDITED) (Continued)

    Balances, end of year               $4,410,191 $6,673,610
NOTE E _ INCOME TAXES

  At   September  30,  1995,  the  Company  had  available  net  operating  loss
  carryforwards   of   approximately  $2,200,000,  depletion  carryforwards   of
  approximately   $976,000,   and  investment  tax   credit   carryforwards   of
  approximately  $70,000.   The net operating loss  and  investment  tax  credit
  carryforwards   expire   in   various   amounts   through   2010   and   2002,
  <PAGE>
  
  respectively.    The   depletion  carryforwards   may   be   carried   forward
  indefinitely.  These carryforwards are subject to various limitations  imposed
  by the rules and regulations of the Internal Revenue Service.

  As  of  September 30, 1995 and 1994, the components of deferred taxes  are  as
  follows:

<TABLE>
<CAPTION>
                                        1995       1994
<S>     <C>                                   <C>
      Oil and gas and other properties, net     $  (419,946)     $    (460,901)
      Net operating loss carryforwards    440,559    348,877
      Percentage depletion carryforward   195,266    183,725
      Investment tax credit carryforward           68,972        68,972
      Charitable contributions carryforward        631           631
                                          285,482    141,304
      Valuation allowance               (285,482)  (141,304)
      Net deferred taxes                $     -0-  $     -0-

</TABLE>

NOTE F _ ACCOUNTS PAYABLE TO BANKRUPTCY CREDITORS

  Accounts  payable, bankruptcy creditors as of September 30, 1995 is summarized
  as follows:

    Payable to taxing authorities in quarterly installments of
    $5,625, noninterest-bearing                  $64,583

    Less current portion                         28,125

    Accounts payable, bankruptcy creditors noncurrent $     36,458



<PAGE>

Notes to Consolidated Financial Statements (Continued)

NOTE G _ COMMON STOCK

  During fiscal 1994, 52,988 shares of the Company's common stock were issued in
  exchange for services valued at $33,118.  Also during fiscal 1994, options  to
  purchase  262,500 shares of common stock, granted under stock option plans  of
  the  Parent, were converted to stock awards resulting in compensation  expense
  of $213,281.

  During  fiscal 1994, the Company issued 25,000 shares of its common  stock  at
  $.72  per share, under the terms of the Form S-8 Registration Statement  filed
  by the Company dated March 3, 1993, as amended June 15, 1993.

NOTE H _ COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS
  
  Operating Leases _ The Company currently leases its office space under a five-
  year noncancellable lease, which includes monthly rent escalating to a maximum
  of  $5,413 prior to its December 31, 1996 termination.  Future minimum  rental
  payments  required  under operating leases, which have  initial  or  remaining
  noncancellable lease terms in excess of one year as of September 30, 1995, are
  as follows:

<TABLE>
<S>       <C>
          1996                  $ 64,191
          1997                    16,239

                                $ 80,430
</TABLE>

  Rent  expense for the years ended September 30, 1995 and 1994 was $78,929  and
  $52,793, respectively.
  
 Service and Operations Agreement _ Caspen Oil, Inc. (Caspen), an entity in
 which the Company has a 25 percent equity interest, entered into a Management
 and Operations Agreement (the Agreement) with the Parent which was terminated
 on March 31, 1994 and replaced by a Service and Operations Agreement (the
 Service Agreement) between Summit Overseas Exploration, Inc., a wholly-owned
 subsidiary of Caspen, and the Company, in effect through July 31, 1997.  Under
 the terms of the terminated Agreement, the Company provided financial and
 operational management to Caspen, general corporate legal services, personnel
 and office space necessary for the operations of Caspen for $45,000 per month.
 Under the Service Agreement, the Company provides the same services,
 management, personnel and office space for actual costs plus ten percent,
 revised to five percent effective June, 1995, (the Costs), up to the computed
 average of the preceding three months amount.
 <PAGE>

Notes to Consolidated Financial Statements (Continued)

  Any  costs  in  excess of the computed average of the preceding  three  months
  amount  are  borne by the Company.  Amounts charged under the  agreements  for
  fiscal 1995 and 1994 were $382,945 and $483,997, respectively.

NOTE H _ COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS (Continued)
  
  Note  receivable,  related party _ In connection with the  investment  in  CSV
  Holdings,  Inc. (CSV) (Note I), the Company advanced $24,465 to  CSV  under  a
  promissory  note dated December 1, 1994, with principal and interest,  at  six
  percent, due in full December 1, 1998.

NOTE I _ INVESTMENTS

  CSV  Holdings, Inc. _ Pursuant to an agreement dated September 20,  1994,  and
  finalized   on  December  1,  1994,  between  the  Company,  Summit   Overseas
  Exploration,  Inc.,  a related party, and the Villiers  Group  plc,  a  public
  limited  company  organized  under the laws of Northern  Ireland,  each  party
  agreed to capitalize a newly formed company, CSV, a Colorado corporation,  for
  the  purpose  of administering certain oil and gas lease holdings (the  Nukern
  lease)  of  each to maximize the value of the lease.  To this end, each  party
  transferred its respective working interest in the Nukern lease to CSV as  its
  share  of the capitalization, along with a pari-passu working capital loan  to
  cover  the  estimated projected maintenance costs of the Nukern lease  through
  fiscal 1995.  Of this, the Company transferred its 24.47% working interest for
  which  it received 28.3% of the common stock of CSV and a production  loan  of
  $1,116,477.   Principal  and  interest, at  six  percent  per  annum,  on  the
  production   note  are  payable  beginning  January  1,  1997,  in   quarterly
  installments  equal  to  25  percent of the net production  revenue  from  the
  Company's  working interest in the Nukern lease during each calendar  quarter.
  Due  to  the  contingent nature of the production note, the  Company  has  not
  recorded  this  amount and will recognize principal and interest  payments  as
  received.   Accordingly, the Company transferred $104,516  from  oil  and  gas
  property to investment status, and recorded a note receivable in the amount of
  $24,465.   CSV  has  had  minimal  operations  subsequent  to  acquiring   the
  properties,  accordingly,  the  Company  has  no  equity  adjustment  to   its
  investment through September 30, 1995.

  Villiers Group plc _ At September 30, 1993, the Company owned 1,600,000 shares
  of  Villiers  Group  plc  (Villiers), valued at  $225,000  and  classified  as
  available-for-sale  securities  under SFAS No.  115.   Villiers  is  a  public
  limited company organized under the laws of Northern Ireland and traded on the
  London  Stock Exchange.  During 1994, the Company sold 750,000 of its Villiers
  shares  for $155,821, recognizing a gain on the sale of $52,500.  As a  result
  of  the  sale,  the  classification of the Company's  investment  in  Villiers
  changed  to that of trading securities, a current asset.  During fiscal  1994,
  there was no gain
  <PAGE>
  
  Notes to Consolidated Financial Statements (Contined)
  
NOTE I _ INVESTMENTS (Continued)

  or  loss  included in earnings as a result of the transfer of securities  from
  the available-for-sale category into the trading category.  Included in fiscal
  1994  earnings  is  an  unrealized holding gain of $28,050  on  the  Company's
  investment in Villiers.  During fiscal 1995, the Company sold the remainder of
  its Villiers shares for $107,683, recognizing a loss on the sale of $42,046.

  Caspen  Oil, Inc. _ The Company owns 25 percent of the common stock of  Caspen
  Oil, Inc., through its wholly-owned subsidiary, Trans Energy, Inc., as well as
  300,000  shares of Caspen Oil, Inc. Series C preferred stock and rights  to  a
  royalty agreement between Caspen Oil, Inc. and a third party.  As a result  of
  recording its proportional share of Caspen Oil, Inc. losses, the Company has a
  zero  basis in Caspen Oil, Inc. and has suspended recording their proportional
  shares of earnings or losses under the equity method.

  The  Series  C  Preferred Shares are senior only to Caspen Oil, Inc.'s  common
  stock;  earn  dividends  equal  to those paid to  Caspen  Oil,  Inc.'s  common
  shareholders; are convertible to common stock at the option of the  holder  at
  the rate of one Series C Preferred Share to one common share between August 1,
  1997  and  August  1, 2002; and, on August 1, 2002, any outstanding  Series  C
  Preferred shares are terminated and converted to one common share.  Under  the
  royalty  agreement, the Company is entitled to 10 percent of net revenues,  as
  defined by the royalty agreement, generated by certain assets owned by  Caspen
  Oil, Inc.  As of September 30, 1995, no revenues have been generated under the
  royalty  agreement.   During  1994,  the  Company,  through  its  wholly-owned
  subsidiary,  Trans  Energy,  Inc., acquired a  35  percent  interest  (207,694
  shares)  in  the Series A preferred stock of Caspen Oil, Inc.,  for  $207,694.
  The  Series A preferred stock earns cumulative dividends at the rate of  $1.80
  per  share; is convertible into Caspen Oil, Inc. common stock at the  rate  of
  1.132  shares  of  common  stock for each share of  preferred  stock;  and  is
  redeemable at any time at the option of Caspen Oil, Inc. for $20 per share.

  Traiana,  Inc.  _ During January 1993, Churchill Italy, Inc.,  a  wholly-owned
  subsidiary  of  the  Company,  was  merged into  Traiana,  Inc.  (Traiana),  a
  corporation incorporated on January 19, 1993, with Traiana being the surviving
  corporation.   Traiana issued 2,936,330 shares of its $.0001 par value  common
  stock in exchange for all of the issued and outstanding shares of common stock
  of  Churchill Italy, Inc.  As part of a corporate spin-off of Traiana, Traiana
  distributed 1,761,798 of the Company's shares of Traiana on a pro  rata  basis
  to  its  shareholders.  The Company retained a 40 percent interest in Traiana.
  During July 1993, Photees, Inc., a public company, issued 5,872,460 shares  of
  its $.0001 par value common stock to acquire all of the issued and outstanding
  common  shares  of Traiana.  Thereafter, the separate corporate  existence  of
  Traiana  ceased.   As  a  result, the Company had a 36 percent  investment  in
  Photees, Inc. (Photees) at September 30, 1993.
<PAGE>

Notes to Consolidated Financial Statements (Continued)

NOTE I _ INVESTMENTS (Continued)

  Under  the  terms of a voting trust agreement, the Company vested  the  voting
  power  of  its common shares of Traiana through December 31, 2000 in a  voting
  trustee,  thereby relinquishing its ability to exercise significant  influence
  over  Traiana.  The voting trust provisions carried over to the Photees common
  shares  which  replaced  the Traiana common shares.  As  such,  the  Company's
  investment in Photees was accounted for under the cost method of accounting at
  September 30, 1993.

  On  June 2, 1994, the merger between Photees and Traiana was declared null and
  void.   As a result, the Company's investment reverted to the common stock  of
  Traiana  with voting power vested in the voting trustee.  The common stock  of
  Traiana  does  not  presently  trade on a  listed  exchange  and  due  to  the
  uncertainty  of  the time frame in which the Italian assets can  be  developed
  into  income producing properties, the costs involved therewith, and  disputed
  encumbrances,  the  Company fully impaired its investment  in  Traiana  during
  fiscal  1994.  Accordingly, the Company's investment in Traiana,  recorded  at
  zero, was reduced to net vrealizable value by the recording during fiscal 1994
  of a loss on investment of $3,621,319.

NOTE J _ EMPLOYEE BENEFIT PLAN

  During  fiscal  1994, the Company adopted a profit sharing  plan  (the  Plan),
  which is a defined contribution plan available for all employees who work over
  1,000 hours during any fiscal year ending September 30.

  Within the terms of the Plan, the Company has the option to contribute  up  to
  15  percent of qualified individuals' annual earned compensation.  An employee
  vests  according  to  the Plan's vesting schedule and  is  fully  vested  upon
  completing  five  years of service.  The Company's management  determines  the
  Plan contribution by year end and funds the contribution after the fiscal year
  end.  Management contributed $13,800 and $15,000 for the years ended September
  30, 1995 and 1994, respectively.