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

                                  FORM 10-KSB

           [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                    For the fiscal year ended June 30, 1997

                                      OR

         [  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                        Commission file number 0-14189

                            CELTIC INVESTMENT, INC.
          (Name of Small Business Issuer as specified in its charter)

                     Delaware                           36-3729989
          (State or other jurisdiction of            (I.R.S. employer
           incorporation or organization              identification
                                                           No.)
                          17W220 22 nd St., Suite 420
                        Oakbrook Terrace, Il  60181
                   (Address of principal executive offices)

        Issuer's telephone number, including area code:  (630) 993-9010

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

     Securities  registered pursuant to Section 12(g) of the Exchange Act: $.001
Par Value Common Stock

      Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange  Act 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 there is no disclosure  of delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained, to the best of Issuer's knowledge, in definitive proxy or information
statements  incorporated  by  reference  in Part III of this Form 10- KSB or any
amendment to this Form 10-KSB. x/

     The  Issuer's  revenues  for the  fiscal  year  ended  June 30,  1997  were
$2,023,929

      As of September 10, 1997,  3,906,471  shares of the Issuer's  common stock
were issued and outstanding of which 2,293,587 were held by  non-affiliates.  As
of September 10, 1996, the aggregate market value shares held by  non-affiliates
(based upon the closing price reported by the NASDAQ Small Cap Market of $1.375)
was approximately $5,371,397.

                  DOCUMENTS INCORPORATED BY REFERENCE:  NONE



                                      1

<PAGE>



                                    PART I

ITEM 1. DESCRIPTION OF BUSINESS

General

     Celtic Investment, Inc. ("the Company") is a diversified financial services
holding  company.  The  Company  has  three  wholly-owned  subsidiary  operating
companies.  The three companies are U.S.  Commercial  Funding Corp (USCF),  Salt
Lake Mortgage  Corporation  (SLM), and Advantage Realty,  Inc. (ADR). USCF is in
the  business  of  purchasing  accounts  receivable  from small to medium  sized
businesses.  The  purchase of  accounts  receivable  is commonly  referred to as
"factoring".  USCF purchase of accounts  receivable have  historically been true
purchases  of assets and not loan  transactions.  SLM is a mortgage  broker with
operations in Utah and Nevada.  SLM  originates  residential  mortgage loans for
clients seeking home ownership,  "rate-terms" refinances,  cash-out refinancing,
and second mortgages.  ADR is a real estate brokerage firm licensed in the State
of Utah and utilizes  independent sales persons to list and sell residential and
commercial real estate. These three subsidiaries have their own respective Board
of  Directors  and  management   teams.   Although  the   subsidiaries   operate
independently from one another,  the Company requires that each subsidiary adopt
a month by month operating plan for each fiscal year. The Company  oversees each
operation and monitors the respective monthly results. Any major cost or changes
in business  direction of the  subsidiaries  operation is approved in advance by
the Company's Board of Directors.

      The Company's  mission statement is two fold. First, to improve and expand
the existing three business subsidiaries' operations.  Second, attempt to expand
the Company through merger and/or acquisitions that meet the Company's criteria.
There can be no assurance  that the company will be  successful in acquiring any
future businesses.


History of the Company

      The  Company,  was formed under the laws of the State of Delaware on March
22,  1989,  for  the  purpose  of  investing  in any and all  types  of  assets,
properties,  and  businesses.  In June 1992,  the Company  completed  an initial
public  offering  of shares  and  warrants.  From June  1992 to June  1994,  the
Company's  activities  were limited to searching for suitable  acquisitions  and
investments.

      In July 1994, the Company acquired US Commercial  Funding  corporation,  a
Florida  corporation  (USCF -  Florida)  which had been  formed in April 1994 to
engage in the factoring  business.  In connection  with the acquisition of USCF,
the  Company  effected a 1-for 20 reverse  stock  split  reducing  the number of
shares issued and outstanding  from 9,000,000 to 450,000 and reducing the number
of outstanding  warrants and increasing the warrant exercise price respectively.
In connection with the acquisition of USCF-Florida, the Company issued 1,550,775
post split shares to the USCF-Florida  shareholders in exchange for their shares
of USCF-Florida and converted

                                      2

<PAGE>



options to purchase  shares of USCF-Florida  into options to purchase  2,516,668
shares of the Company's common stock.

     The Company  commenced  operations in the  factoring  business in July 1994
when it acquired  USCF-Florida.  Prior to the time  USCF-Florida was acquired by
the  Company,  its  activities  were limited to  developing a business  plan and
raising  $1,000,000  from the sale of  securities.  USCF-  Florida's  first full
quarter of operation as a factoring  company was the quarter ending December 31,
1994. In February  1995,  the Company  raised an additional  $3,000,000 in gross
proceeds from the sale of securities.  In March 1995, the Company formed another
subsidiary  corporation  under the laws of the State of Illinois  under the name
U.S.  Commercial Funding  Corporation  ("USCF"),  in anticipation of its plan to
purchase receivables on a recourse basis as opposed to the nonrecourse purchases
made by USCF-  Florida,  and in  anticipation  of the  relocation of the company
operations to Illinois.

      On January 31, 1997 the Company finalized a merger with Salt Lake Mortgage
Corporation  (SLM),  a Salt Lake city based mortgage  broker,  and a real estate
marketing  company,  Advantage  Realty,  Inc. (ADR).  The merger was a stock for
stock  transaction.  The Company  issued  1,100,000  shares of its stock for the
shares of SLM.  Five  Hundred  Thousand of such  shares are held in escrow.  The
release  of such  shares  is based a Celtic  equity or debt  contribution  and a
formula of future pre-tax earnings.

      SLM was founded in 1993. SLM  specializes  primarily in conforming  agency
and  government  loan  products,  such as FHA/VA.  SLM has changed its  strategy
shifting the majority of its  originations  from refinance to purchase loans. In
addition,  the company is  beginning  to originate  more non  -conforming  loans
including B and C credit mortgages.

      ADR was founded in 1993. ADR is a real estate  brokerage  operation  which
lists real estate  properties for sale.  ADR has  independent  contractors  that
perform this listing service as well as represent  buyers of properties  under a
broker/agent relationship.
















                                      3

<PAGE>






USCF

General


      USCF  provides  working  capital  financing  for its clients by purchasing
their  accounts  receivables  (sometimes  hereafter  referred to as  "invoices")
generally  at face value less a factors  fee.  USCF  provides  financing  to its
clients based  principally  on the financial  condition of the client's  account
debtors (which may be better than that of the client), rather than the financial
condition of the client itself.  This allows USCF's clients to maintain  regular
and  predictable  cash flow from  receivables  without (or as a  supplement  to)
conventional  borrowing.  The sale by the client of its accounts  receivables to
USCF  may be  accounted  for by the  client  as a true  sale  (as  opposed  to a
financing),  so that the client's  balance sheet  reflects less leverage than it
would if the client financed its receivables with a traditional secured loan.

      A client's  receivables  typically  permit  assignment to the USCF without
notice to or the consent of the account debtors. In addition, in most instances,
USCF and its client notify the account debtor that the invoice has been assigned
to USCF and instructs the account  debtor to make all payments on the invoice to
the USCF's Bank  lockbox.  The Company  perfects  its  ownership in the accounts
receivable by making the appropriate  filing under the applicable  state Uniform
Commercial Codes.

      Most of the accounts receivables purchased by USCF are short term invoices
that have payment terms within  thirty days or less from the invoice date.  USCF
typically  purchases accounts  receivables from its clients at face value less a
factors  fee.  USCF will  typically  advance 60% to 80% of the face value of the
account  receivables  to its  customer  depending  upon the size,  age,  type of
accounts being purchased,  the quality of client documentation,  USCF's judgment
as to the payment history,  and the credit worthiness of the account debtors. In
a continuing relationship with its client USCF will generally maintain a portion
of the payment in a reserve  account which may be used to fund a credit  reserve
to offset defaults of other invoices sold by the client to USCF. The factors fee
varies but are  generally  negotiated  on a individual  client basis on the face
value of the  receivables.  USCF  supplies a client with  information  as to the
credit  worthiness of and potential  payment  problems with its account debtors.
USCF also provides the client with a monthly  portfolio  analysis which includes
an aging schedule of all open receivables, by account debtor.

Business to Date

      The Company  acquired USCF- Florida on July 22,1994.  As of June 30, 1995,
USCF-  Florida had been in business for less than one year.  During this period,
USCF  hired a staff,  opened an office,  developed  marketing  plans,  developed
account  receivable  analysis and  servicing  procedures,  raised  capital,  and
commenced marketing. From July 22, 1994 to June 30, 1995, the Company had

                                      4

<PAGE>



factored $5,244,019 in invoices  purchased.  Most of the invoices purchased were
payable  by the debtor  within 30 days of receipt by the debtor of the  invoice.
The Company's  total revenues from factoring  invoices from July 1, 1994 to June
30, 1995 was $418,270.  Most of these  revenues  were earned after  December 31,
1995.  The  Company's  loss during the fiscal year ending June 30, 1995  totaled
$1,135,827 which is directly attributed to the startup expenses of operation and
lack of initial factoring volume.

      In the fiscal year ending  June 30,  1996,  USCF  relocated  the  company,
liquidated the Florida portfolio of non-recourse  factored invoices,  obtained a
bank line of credit, and improved profitability by both increasing the volume of
factored invoices and reducing costs.  USCF  successfully  achieved all of these
objectives as factored  invoice volume increased  sharply to $22,261,965,  which
generated factored revenue of $1,141,802 and reduced the net loss to $170,002.

      USCF purchases invoices from clients involved in various  industries.  For
the year ending June 30, 1997, USCF purchased  invoices  totaling  $38,375,760 a
72% increase over the year ending June 30, 1996. In addition,  USCF  diversified
the  overall   mixture  of  the  receivable   portfolio  which  improved  client
concentration  issues.  The  following  table  indicates  the amount of invoices
purchased by USCF for the year ended June 30, 1996 as compared to the year ended
June 30, 1997 on a industry basis:

                                                  Factored
                                             Invoices Purchased

                                            For the year ended June
Business of Client                            1997        1996
------------------                            ----        ----

Audio Text                             $     902,286    $  2,104,775
Professional Services                      4,358,272       2,315,254
Service Related                            4,058,059         924,885
Custom Manufacturing                      16,565,620       5,398,254
Temporary Help                             4,753,416       1,872,973
Distribution/Trucking                      6,799,010       1,597,553
Waste Disposal                               939,097       8,047,931
                                        ------------     -----------

TOTAL                                  $  38,375,760    $ 22,261,965
                                       =============    ============

      For the year ended June 30, 1997 the Company had  purchased  invoices from
approximately  56  different  clients.  During this period 8% of all of the face
value of invoices purchased were from a single client,  Blue Star Foods, and 26%
were from the Company's largest five clients.  No other client totaled more than
8% of the  purchased  receivables  during the year.  The  Company's  clients are
located in various states including California, Michigan, Florida, Illinois, and
New York.



                                      5

<PAGE>







Competition

      USCF   encounters   significant   competition   in   purchasing   accounts
receivables,  both  from  factoring  companies,   commercial  banks,  and  other
financial institutions engaged in secured lending.  Additionally,  the Company's
client's will likely seek  alternate  sources of financing  from many  different
sources,  including  finance  companies,  investment  partnerships and entities,
small business  investment  companies,  suppliers and individuals.  As a result,
USCF  competes  with a large number of local and regional  sources of financing,
and a smaller number of large national  competitors.  Many of USCF's competitors
have  significantly  greater  financial and other resources than the Company and
access to capital markets at a lower cost than the Company. The Company believes
that the principal  competitive  factors in its business are price,  flexibility
and  service.  There  can be no  assurance  that  the  Company  will  be able to
effectively compete in the market place.

Governmental Regulation

      Usury laws  generally  limit the amount of  interest  that a creditor  may
contract for, charge or receive in connection with a loan of money.  The Company
believes that its purchases of accounts receivables should not be subject to the
usury laws because the purchases do not constitute loans of money. The Company's
position is based upon the following:  (I) the modified  recourse  nature of the
purchases of accounts receivable; (ii) the intention of the parties as expressed
in the documents evidencing the purchases;  (iii) the absence of a clients right
to repurchase or redeem the purchased  accounts  receivable at face value;  (iv)
the arms-length  nature of the purchases and of the negotiations  resulting in a
purchase  price;  (v) the control that the Company has over the  collection  and
administration  of the purchased  accounts  receivable;  and (vi) the accounting
treatment of the transactions as purchases.  If, despite these facts, a court or
jury were to conclude that the Company's purchases of accounts receivable should
be  re-characterized  as loans of money,  the fees contracted  for,  charged and
received  by the Company in  connection  with the  purchases  could be viewed as
interest.  To the extent that the rate of interest  contracted  for,  charged or
received by the Company exceeds the usury ceiling,  the Company could be subject
to usury penalties under applicable law.


SLM and ADR

General

     On  January  31,  1997,  the  Company  acquired  SLM  and  ADR in a  merger
transaction. (See "Certain Relationship and Related Party Transactions."

      SLM is a mortgage  broker  operating  in Utah and Nevada.  SLM  originates
residential  mortgage  loans for clients  seeking  home  ownership,  "rate-term"
refinances,  "cash-out" refinances,  and second mortgages.  SLM originates these
mortgages through real estate industry  referrals,  relationships with builders,
and direct  customer  solicitations.  SLM uses a sales force  comprised  of loan
officers.  The  loan  officers  develop  sales  leads  by  implementing  various
advertising/marketing

                                      6

<PAGE>



campaigns.  These campaigns utilize radio,  direct mail, and telemarketing in an
attempt to initiate  contact with  potential  customers  in need of  residential
mortgage loan products.

      Although SLM has historically focused on the "Prime" mortgage market which
is  dominated  by Fannie  Mae,  Freddie  Mac,  and  Government  loans  including
traditional  VA and FHA,  an  increase  in the demand for  "Sub-Prime"  mortgage
products  has created a need for SLM to increase the number and type of products
offered.  To  increase  SLM  proficiency  in these  types of  products,  several
employees of Red Rock Financial (RRF), a Sub-Prime  mortgage broker,  joined SLM
on May 15, 1997.

      Once a mortgage  application is originated,  SLM processes the application
in accordance with the guidelines  which have been established for the different
types  of loan  products  it  offers.  The  majority  of SLM loan  products  are
currently  conventional,  or government  loans and are  therefore,  processed in
accordance with Fannie Mae, Freddie Mac, VA, or FHA guidelines. The underwritten
application  is submitted to the  wholesale  mortgage  lender which SLM has been
awarded  delegated  underwriting  authority.   "Non-conforming"  or  "Sub-Prime"
products are forwarded to the respective  lenders who will make the underwriting
decision. An approved loan is generally closed at a Title Company. A majority of
SLM loans are funded using "Table  Funding"  where the lender funds  directly to
the Title  Company who then make the  required  disbursements.  In the event SLM
does fund directly,  its is reimbursed within several days by the final investor
after review of the closing documents.

      ADR is a real estate brokerage firm licensed in the State of Utah and is a
wholly  owned  subsidiary  of SLM.  ADR  utilizes a sales  force of  independent
contractors who primarily list and sell residential real estate in the Salt Lake
area and are compensated on varying  commission  splits. In addition the company
is a listing broker on several large tracts of vacant land.

Competition

      SLM's competition in the mortgage industry is significant.  There are many
mortgage  brokers who have created a competitive  environment.  Other  financial
institutions  also  compete on several  levels of  residential  lending as well.
Pricing is a key issue for the consumer as well as the mortgage  brokers.  While
mortgage loans are themselves a commodity,  the personalized service provided by
the mortgage broker creates a value added feature that  differentiates  mortgage
companies.  SLM believe's it offers clients more personalized services that , in
fact, set them apart from the competition.

      ADR  also  faces  a  competitive   real  estate   brokerage   environment.
Competition is two fold.  First,  the real estate brokers  compete  between each
other for top  producing  agents.  Since a very small  percentage  of the agents
produce a majority of the transactions,  competition for these agents is fierce.
Second,  competition for real estate buy and sell  transactions  between brokers
and agents is competitive  which ultimately  effects the amount of gross revenue
the real estate broker will earn.



                                      7

<PAGE>






Government Regulation

      Although SLM is not directly  supervised by any specific local, state , or
federal  government  agency it must  adhere to  certain  laws,  and  regulations
pertaining to the mortgage  industry.  The Real Estate Settlement and Procedures
Act  (RESPA)  has been  established  to  guarantee  borrowers  receive  adequate
disclosure upon initial loan application,  and dictates certain procedures which
must be followed at closing,  specifically the disclosure of all fees charged in
conjunction  with the loan.  In addition  SLM must  comply  with the  guidelines
established by the Department of Housing and Urban  Development (HUD) pertaining
to a Non-supervised lender.

      ADR must adhere to the laws and regulations of the Real Estate Division of
the  Department  of  Commerce of the State of Utah.  There is annual  reporting
documents which must be filed with the Real Estate Division to ensure compliance
with  Utah  law.  ADR  believes  it is  currently  in  compliance  with all Utah
regulations.

Other Business Operations

      The Company, USCF, and SLM and ADR have made several attempts to expand in
the financial  services  industry  through the  acquisition  of other  operating
companies or through starting operations  internally.  The Company is evaluating
several  potential  acquisitions,   including  several  non  financial  services
industries;  however;  there can be no  assurance  that the Company will able to
acquire these or any other opportunities.

Employees

     The Company and its subsidiaries currently have 17 full time employees.  As
the Company's  business grows, it will hire such additional  employees as may be
reasonably necessary to conduct its business.

ITEM 2.   PROPERTIES

      The  Company  leases  500  square  feet  of  space  at  330 E.  Main  St.,
Barrington, Illinois 60010. The lease is $250 per month, and expires in December
1997.

      USCF  currently  leases office  facilities at 17W220 22nd St.,  Suite 420,
Oakbrook  Terrace,  Illinois  60181.  The lease expires in November 1999.  These
facilities  currently  consists of 2,500 square feet and requires a monthly rent
of approximately $4,600.

      SLM currently leases office  facilities at 102 West 500 South,  Suite 300,
Salt Lake City, Utah 84101.  These  facilities  consists of 5400 square feet and
requires a monthly rent of  approximately  $5,800.  This lease  expires in April
2001. SLM also leases a office at 2889 East 3300 South; Salt

                                      8

<PAGE>



Lake City,  Utah  84109.  These  facilities  consists  of 1200  square  feet and
requires a monthly  rent of $1,000.  This lease  expires  April  2000.  SLM also
leases office  facilities at 340 Main Street,  Suite 202, Park City, Utah 84060.
These  facilities  consists of 1000 square  feet,  and a monthly rent of $ 1,148
that expires in December 1999.

      In August 1997,  ADR leased  offices  facilities in Salt Lake City,  Utah.
This  facilities  consists of 2300 square  feet and  requires a monthly  rent of
$2,425. This lease expires in August 2000.


ITEM 3.   LEGAL PROCEEDINGS

      USCF is involved in various  legal  proceedings  arising out of the normal
course of business which they are the plaintiff.  None of the legal  proceedings
which USCF is  currently  involved  with is expected to have a adverse  material
effect on USCF business or its financial condition.


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

      No matters were submitted to the Company's  shareholders for a vote during
the year ended June 30, 1997.

ITEM 5.   MARKET FOR THE REGISTRANTS COMMON STOCK AND  RELATED SECURITY
          HOLDER MATTERS

      Since May 20,  1996 the  Company's  common  stock has traded on the NASDAQ
Small Cap market listing under the "CELT" symbol. The information with regard to
NASDAQ Small Cap quotes  contained in the following  table was obtained from the
NASDAQ and shows the range of representative bid prices for the Company's common
stock for the periods indicated. The prices represent quotations between dealers
and do not include retail mark ups and mark-downs or broker  commissions  and do
not necessarily represent actual transactions:

Bid Price                                 1996                  1997
                                      High     Low         High      Low

First Quarter                         $3.00   $3.00       $1.906    $1.875
Second Quarter                        $3.50   $3.00       $1.875    $1.00
Third Quarter                         $3.50   $2.25       $1.375    $1.00*
Fourth Quarter                        $2.50  $1.875

      * Through September 20, 1997

     Holders The number of record  holders of the  Company's  common stock as of
September 1, 1997 was 156. The Company anticipates that the number of beneficial
owners of its common stock is more than 450.

                                      9

<PAGE>







Dividends

      The  Company  has not  paid  any  cash  dividends  to date  and  does  not
anticipate or contemplate paying dividends in the foreseeable  future. It is the
present  intention  of  management  to  utilize  all  available  funds  for  the
development of the Company's business.

THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK

                                      10

<PAGE>



ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

Overview

      The Company is a diversified  financial  services  company  engaged in the
business  of  the  purchase  of  accounts   receivables,   residential  mortgage
origination,  and  residential  real estate sales.  USCF, the factoring  entity,
commenced   operations  in  July,  1994.  SLM,  the  residential  mortgage  loan
originator,  and ADR, the real estate  brokerage  operation were acquired by the
Company in January 1997 in a merger transaction.


Results of Operations

      The  following  discussion  and  analysis in the table below  presents the
significant changes in financial conditions and results of continuing operations
of the Company and is  catagorize by the  Company's  subsidiaries  for the years
ended  June 30,  1997 and 1996.  The  results of  operations  of SLM and ADR are
included in the  consolidated  financial  statement from the date of acquisition
only.  The  discussion  below of SLM and ADR results of operations do not make a
comparison to the same period for the year ending June 30, 1996.  First, SLM and
ADR were accounted for as one business entity for the year ending June 30, 1996.
Second,  expense  were  handled on more of a monthly  cash basis rather than the
current accrual method.  Both of these reasons tend to distort the analysis of a
comparative  five month period.  This  discussion  should be read in conjunction
with the consolidated financial statement and notes thereto (in thousand).

Revenues                                              1997            1996
                                                     -------      ----------
      USCF                                            1,551           1,163
      SLM                                               204               0
      ADR                                               269               0
      Interest                                            0              83
                                                     -------      ----------
      Total Revenue                                   2,024           1,246

Operating Expense
      USCF and Interest                               1,330           1,199
      SLM                                               342               0
      ADR                                               219               0
      Corporate (Celtic)                                121             217
                                                      -------       ---------
      Total Operating Expense                         2,012           1,416
                                                        
Operating Profit (Loss)
      USCF                                              221             (36)
      SLM                                              (138)              0
      ADR                                                50               0
      Corporate                                        (121)           (134)
                                                      -------         --------
      Total Operating Profit (Loss)                     12             (170)
                                                      -------         --------
Income Tax Expense                                       0                0
                                                                              
Net Income                                               12            (170)
                                                     ========         ========

<PAGE>

Revenues

      USCF  revenues  increased  by $388,000 in Fiscal Year 1997, a 33% increase
from Fiscal Year June 30,  1996.  The major reason for the increase is the total
volume  of  purchased   accounts   receivable   increased  from  $22,261,965  to
$38,375,760, a 72% increase. The disproportional ratio of total revenue increase
of 33% compared to the total accounts  receivable volume increase of 72% results
from overall  lower  factor fees earned.  The lower fees earned is a result of a
more competitive  general market and also USCF single factor amount increased in
size for the year ending June 30, 1997. The increased sized of the  transactions
usually yields a lower factor fee.

      SLM earned revenues of $204,000 for the five month period between February
1st, and June 30, 1997. This is a reduction from the comparable prior period due
to a decrease in the overall mortgage loan origination volume.

      ADR earned revenue of $269,000 for the five month between February 1st and
June 30, 1997.  This is a increase from the  comparable  prior period  operating
years'. Future revenue may significantly fluctuate in any given period depending
on real estate buy and sell  activity on the broker  listed  properties  and the
independent contractor agents overall closing volume.

      The Table on page 11 shows a interest revenue for the year ending June 30,
1996 of  $83,000,  compared  to $0 for the  year  ending  June  30,  1997.  USCF
significant  volume of total receivables  purchased,  resulted in the use of all
the Company's cash for the year ending June 30, 1997.


Operating Expense

      Interest expense totaled $258,000 for the year ending June 30, 1997 versus
$35,000 for the year ending June 30, 1996. In April of 1996,  USCF closed a Line
of Credit.  For the year  ending  June 30,  1997 this Line of Credit was used to
finance the significant growth in accounts  receivable  purchases which resulted
in the increase in interest expense.

     USCF operating expense,  not including  interest,  for the year ending June
30, 1997  totaled  $1,072,000  or a  reduction  of $92,000 or 7.9% from the year
ending June 30, 1996. The reasons for this reduction are as follows:  first,  in
the year ended June 30,  1996,  USCF  utilized  an  outside  service  agency for
processing accounts receivable and as well as two contract accounting  services.
For the year ended June 30, 1997,  USCF  performed all these  functions in house
saving approximately $95,000; second, USCF reduced legal expenses by $50,000 for
the year ending June 30,1997.  Lower collection  related expense and more direct
expense  charges to customers  comprise a majority of the reduction.  Offsetting
these reductions were a increase in commissions paid to independent broker

                                      12

<PAGE>



referral sources of $53,000 for the year ending June 30, 1997 and an increase in
a provision of credit losses for $16,000.  Both of these  expense  increases are
related to the 72% increase in factored  receivable  volume. All other operating
expenses were constant for the year ending June 30, 1997.

      SLM operating  expenses  were  $367,000 for the five month period  between
February 1, 1997 and June 30, 1997.  This expense total  includes:  Salaries and
employee  benefits -  $170,000,  Occupancy - $73,000,  and direct  loan  expense
including origination commissions amounted to $75,000.

      ADR operating  expenses  were  $216,000 for the five month period  between
February 1, 1997 June 30, 1997.  These  expenses  include:  commissions  paid to
independent  real  estate  agents -  $135,000,  and  sales  promotion  including
advertising expense - $26,000.

      The  Company's  corporate  expense  decreased  from  $148,000 for the year
ending June 30, 1996 to $121,000 for the year ending June 30, 1997 or a decrease
of 27,000 or 18%.


Operating Profit (Loss)

      USCF had a profit of $221,000  for the year ending June 30, 1997  compared
to a operating  loss of ($33,000) for the year ending June 30,1996.  This profit
turn around of $254,000  is the result of a strong  increase of factored  volume
purchased receivables and a reduction in operating expense.

      SLM and ADR had a combined net loss of ($80,000) for the five month period
ending  June 30,  1997.  There  are  several  reasons  for this  loss.  Mortgage
originations  decreased  month by  month.  The  addition  of Red Rock  Financial
personal  resulted  in  additional  overhead  costs.  In order to  correct  this
downward  trend,  management  has  hired  a new  Vice  President  of  Sales  and
Marketing.  Subsequent to year end, mortgage  origination has increased from the
June  30,  1997  levels,  and SLM and ADR  have  been  segregated  and  stronger
management accountability is in place.

     The  consolidated  net  income for the year  ending  June  30,1997  totaled
$12,000.This  is a  turnaround  from a loss of $170,000 for year ending June 30,
1996  and a loss of  $1,135,000  for the  year  ending  June  30,  1995  and was
attributed to the positive increase in profitability of USCF.

Liquidity and Capital Resources

      The  Company's  capital  requirements  will most  likely  increase  as the
Company's mission statement is achieved.  The requirement may include additional
resources to increase volume of purchased receivables, expansion of the mortgage
brokerage operation, and financing any acquisition/merger  activity. Inasmuch as
the  Company's  operations  in the past were  limited  to USCF  operations,  the
existing equity capital and line of credit was sufficient.  However, in order to
expand  USCF's  ability  to  purchase  receivables  on a  meaningful  basis  and
implement the Company's overall plan, the Company will need to access additional
equity and debt capital.

                                      13

<PAGE>



      USCF entered into a agreement with Capital  Business  Credit a division of
Capital Factors Inc. of Los Angeles, California for a $6,000,000 line of credit.
The  Company is a  guarantor  of this  agreement  and has agreed to  subordinate
certain  interests  with regard to the  agreement.  The agreement has a two year
term with an option.

     At June  30,1997  the  Company  had total  assets of  $7,924,483  and total
liabilities of  $4,192,177.  This compares to the total assets of $4,425,678 and
total liabilities of $1,585,663 at June 30, 1996. The increase in net assets and
liabilities  is the  direct  result  of the use of the  line of  credit  and the
increased level of factoring business  activity,  and the acquisition of SLM and
ADR.  Cash at June 30, 1997 totaled  $941,789  compared to $ 450,864 at June 30,
1996. The Company used this cash to fund additional  receivable  purchases,  and
fund it's  ongoing  operations.  The  Company  intends to  continue  to purchase
receivables  through  existing cash and through the use of the line of credit as
well as expand its mortgage  origination  operation by entering  into  selective
funding projects.

      The Company anticipates that its monthly general and administrative costs,
exclusive of depreciation and marketing  expenses,  commissions and professional
fees,  will be  approximately  $95,000 for each of the next six months  based on
current operations. However, if operations increase, the Company may be required
to increase its staff which will increase its monthly general and administrative
expenses.  The Company anticipates that existing working capital and the line of
credit may not be adequate to fund its  projected  factoring  volume  during the
next six months. The company is reviewing several  alternatives with a number of
financial  institutions  that may provide the capital  requirements for the next
several years.


Inflation

      In the opinion of management,  inflation has not had a material  effect on
the operations of the Company.  Given current  inflationary  trends, the Company
does not believe inflation will have any future adverse effect.

Forward-looking Statements

     The  foregoing  discussion  in  "Management's  Discussion  and  Analysis of
Financial  Condition  and  Results  of  Operations"   contains   forward-looking
statements,  within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act, which reflect  Management's  current
views with  respect to future  events and  financial  performance.  Such forward
looking  statements  may be deemed to include,  among other  things,  statements
relating to  anticipated  growth,  and  increased  profitability,  as well as to
statements relating to the Company's strategic plan,  including plans to develop
and increase loan originations and to selectively acquire other companies. These
forward-looking  statements  are  subject  to certain  risks and  uncertainties,
including,  but not limited to, future financial  performance and future events,
competitive  pricing  for  services,  costs  of  obtaining  capital  as  well as
national,  regional and local economic  conditions.  Actual results could differ
materially from those addressed in the forward looking  statements.  Due to such
uncertainties  and risks,  readers are cautioned not to place undue  reliance on
such forward-looking statement, which speak only as of the date whereof.





                                      14

<PAGE>




ITEM 7.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

            Celtic Investment Financial Statements

                        Independent Auditor's Report(s)                     16

                        Consolidated Balance Sheet as of
                        June 30, 1997 and 1996                              17

                        Consolidated Statements of Operations               19
                        For the Years ended June 30, 1997 and 1996

                        Consolidated Statements of Stockholders' Equity     21
                        For the years ended June 30, 1997 and 1996

                        Consolidated Statements of Cash Flows for the years 22 
                        ended June 30, 1997 and 1996

                        Notes to Consolidated Financial Statements          25

                                      15


<PAGE>







                         INDEPENDENT AUDITOR'S REPORT


To the Board of Directors and Stockholders
Celtic Investment, Inc.
Lisle, Illinois

We  have  audited  the  accompanying   consolidated  balance  sheets  of  Celtic
Investment,  Inc. and subsidiaries as of June 30, 1997 and 1996, and the related
consolidated  statements of operations,  stockholders' equity and cash flows for
the years then ended.  These financial  statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on 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 Celtic Investment,
Inc.  and  subsidiaries  as of June 30, 1997 and 1996,  and the results of their
operations  and their cash flows for the years  then  ended in  conformity  with
generally accepted accounting principles.


                                       MCGLADREY & PULLEN, LLP


Chicago, Illinois
August 13, 1997




                                   - 16 -

<PAGE>


CELTIC INVESTMENT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

June 30, 1997 and 1996


ASSETS                                                        1997    1996
----------------------------------------------           ----------- ----------

Cash and cash equivalents                                  $941,789   $450,864
Mortgage loans held for sale                                113,786          -
Receivables                                               5,209,907  3,676,862
Notes receivable                                            426,037     69,485
Loans receivable                                            140,578
Prepaid expenses and other assets                           158,824      7,713
                                                         ----------- ----------

            Total current assets                          6,990,921  4,204,924
                                                         ----------- ----------

Furniture, fixtures and equipment, net of accumulated
  depreciation 1997 $127,912; 1996 $32,205                 145,218      61,803
Deferred finance fees, net of accumulated amortization
  1997 $90,157; 1996 $12,880                               111,674    1 58,951
Goodwill, net of accumulated amortization in 1997 of       676,670           -
  $19,333
                                                         ----------- ----------
                                                           933,562     220,754
                                                         ----------- ----------

            Total assets                                   7,924,483 $4,425,678
                                                         =========== ==========




                                   - 17 -

<PAGE>


CELTIC INVESTMENT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - Continued

June 30, 1997 and 1996



                                                          1997          1996
----------------------------------------------        -----------    ----------
LIABILITIES AND STOCKHOLDERS' EQUITY

Notes payable                                         $2,448,060    $         -
Due to factoring clients                               1,404,072      1,321,829
Current portion of long-term debt                         22,016              -
Accounts payable and accrued expenses                    293,772        263,804
                                                      -----------    ----------
            Total current liabilities                  4,167,920      1,585,633
                                                      -----------    ----------

Long-Term Debt, less current portion                      40,257              -
                                                      -----------    ----------

Stockholders' Equity
  Common stock, $.001 par value; authorized 25,000,000
shares;
    issued and outstanding 1997 3,906,471; 
    1996 3,306,471 shares                                  3,906          3,306
  Additional paid-in capital                           5,076,054      4,232,904
  Accumulated deficit                                 (1,299,762)    (1,324.889)
                                                      -----------    ----------
                                                       3,780,198      2,911,321
  Less notes receivable and interest receivable from
    stockholders                                         (63,892)       (71,276)
                                                      -----------    ----------
                                                       3,716,306      2,840,045
                                                      -----------    ----------

                                                       7,924,483     $4,425,678
                                                      ===========    ==========

See Notes to Consolidated Financial Statements.



                                   - 18 -

<PAGE>


CELTIC INVESTMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended June 30, 1997 and 1996


                                                    1997         1996
---------------------------------------------- ------------- -----------
Revenues:
  Factoring income                                $1,424,363   1,141,802
  Commission income                                  268,600           -
  Mortgage fee income                                245,555           -
  Interest                                           102,548      82,898
  Other                                                     -     21,063
                                               ------------- -----------
          Total revenue                            2,041,066   1,245,763

Interest expense                                     258,781      35,026
                                               ------------- -----------

          Revenue after interest expense           1,782,285   1,210,737

Provision for credit losses                           18,460           -
                                               ------------- -----------

          Revenue after interest expense and 
            provision for credit losses            1,763,825   1,210,737
                                               ------------- -----------

Operating Expenses:
  Salaries and employee benefits                     766,770     464,002
  Occupancy                                          159,577     105,498
  Servicing costs                                     81,217     265,655
  Commissions and other costs                        205,999           -
  Professional fees                                  233,504     204,855
  Amortization of goodwill                            19,333           -
  Other                                              272,298     340,729
                                               ------------- -----------
          Total operating expenses                 1,738,698   1,380,739
                                               ------------- -----------

          Income (loss) before income taxes           25,127   (170,002)

Income taxes                                               -           -
                                               ------------- -----------

          Net income (loss)                          $25,127   (170,002)
                                               ============= ===========

Net income (loss) per common share                     $0.01      $(.05)
                                               ============= ===========

Weighted average number of common shares
  and common stock equivalents outstanding         3,559,166   3,441,551
                                               ============= ===========

               See Notes to Consolidated Financial Statements.












                                   - 19 and 20 -

<PAGE>


CELTIC INVESTMENT, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders' Equity
Years ended June 30, 1997 and 1996



<TABLE>
<CAPTION>
                                                                                  Note
                                                     Additional               Receivable          Total
                                  Common Stock        Paid-in     Accumulated     from         Stockholders'
                                Shares    Amount      Capital       Deficit    Stockholders       Equity
--------------------------------------------------------------------------------------------------------------
<S>                           <C>         <C>       <C>           <C>             <C>            <C>

Balance, June 30, 1995        3,328,271   $3,328    $4,281,932    $(1,154,887)    $   -          $3,130,373

Common stock repurchased       (21,800)     (22)     (49,028)            -            -             (49,050)
  and canceled

Advances on note receivable        -          -           -              -      (20,000)            (20,000)
  from director-stockholder

Advances on notes                  -          -           -              -      (51,276)            (51,276)
  receivable from officer-
  stockholders

Net (loss)                         -          -           -          (170,002)        -             (170,002)
---------------------------------------------------------------------------------------------------------------
Balance, June 30, 1996      3,306,471      3,306   4,232,904       (1,324,889)  (71,276)           2,840,045

Repayment on notes                 -          -           -              -        7,384                7,384
  receivable from director-
  stockholders

Common stock issued in       600,000        600     843,150              -            -              843,750
  acquisition

Net Income                        -          -           -            25,127          -               25,127
----------------------------------------------------------------------------------------------------------------
Balance, June 30, 1997     3,906,471     $3,906  $5,076,054      $(1,299,762)   $(63,892)         $3,716,306
================================================================================================================
</TABLE>


See Notes to Consolidated Financial Statements.



                                      - 21 -

<PAGE>




CELTIC INVESTMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended June 30, 1997 and 1996


                                                      1997             1996 
---------------------------------------------- ----------------- ---------------
Cash Flows From Operating Activities
   Net Income (loss)                                     $25,127     $(170,002)
Adjustments to reconcile net income (loss) to net cash
(used in) operating activities:
Provision for credit losses                               18,460              -
Depreciation                                              42,241         17,775
Amortization of deferred finance fees                     77,277         12,880
Amortization of goodwill                                  19,333              -
Loss on disposal of furniture, fixtures and equipment          -          6,013
Change in assets and  liabilities, net of effects
  from  purchase  of Salt Lake Mortgage Company:
(Increase) in receivables                             (1,528,242)    (2,217,284)
(Increase) in loans receivable                          (140,578)             -
(Increase) in mortgage loans held for sale              (113,786)             -
(Increase) decrease in prepaid expenses and other asset (119,997)        14,011
(Decrease) increase in accounts payable and accrued     (116,623)        37,670
expenses
Increase in due to factoring clients                      82,243        999,653
                                               ----------------- --------------
Net cast (used in) operating activities              (1,754,545)    (1,299,284)
                                               ----------------- --------------

Cash Flows From Investing Activities
Cash acquired on purchase of Salt Lake Mortgage          253,905              -
   Corporation
Acquisition costs paid on purchase of Salt Lake          (69,985)             -
   Mortgage Corporation
Advances on notes receivable                           (672,838)       (69,485)
Payments received on notes receivable                    316,286              -
Purchase of furniture, fixtures and equipment            (3,690)        (5,031)
Advances on notes receivable from stockholders                 -       (71,276)
Payment received on notes receivable from stockholders     7,384              -
                                               ----------------- --------------
Net cash (used in) investing activities                (168,938)      (146,592)
                                               ----------------- --------------

Cash Flows From Financing Activities
Payments on long-term debt                               (3,652)              -
Repurchase and cancellation of common stock                    -       (49,050)
Payment of deferred finance fees                        (30,000)      (171,831)
Proceeds from private debt placement                           -       500,000
Repayment of private placement debt                            -      (500,000)
Net proceeds from notes payable                        2,448,060             -
                                               ----------------- --------------
Net cash provided by (used in) financing activities    2,414,408      (220,881)
                                               ----------------- --------------
Net increase (decrease) in cash and cash equivalents     490,925      (166,757)
Cash and cash equivalents:
Beginning                                                450,864      2,117,621
                                               ----------------- --------------
Ending                                                  $941,789       $450,864
                                               ================= ==============




                                      - 22 and 23 -

<PAGE>

CELTIC INVESTMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

Years Ended June 30, 1997 and 1996


                                                        1997            1996 
----------------------------------------------      -------------   -----------

Supplemental Disclosure of Cash Flow Information
Cash paid for interest                                $258,781         $22,146
Supplemental Disclosure of Noncash Financing and
Investing Activities
Debt incurred for the purchase of furniture, fixtures,  43,485               -
  and equipment and prepaid expenses
Acquisition of Salt Lake Mortgage Corporation:
Cash acquired                                         $253,905
Other current assets acquired                           23,263
Long-term assets acquired                              106,595
Goodwill                                               696,004
Current liabilities assumed                           (152,530)
Long-term liabilities assumed                          (13,502)
Acquisition costs incurred                             (69,985)
                                               ----------------
Common stock issued                                     843,750
                                               ================






See accompanying notes to financial statements.



                                      - 24 -

<PAGE>


CELTIC INVESTMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 1.   Nature of Business and Significant Accounting Policies

     Nature of business:  Celtic  Investment,  Inc.  (Celtic) was formed to seek
business  acquisitions  and  combinations  in the United  States  which,  in the
opinion of management, would be in the best interest of the Company.

     US  Commercial  Funding  Corp.,  US  Commercial   Funding  Corp.   Illinois
(collectively  "USCF"),  and Salt Lake  Mortgage  Company  are the wholly  owned
subsidiaries of Celtic Investment, Inc. US Commercial Funding Corp. Illinois was
formed in 1995,  and the  operations  were moved from Florida to Illinois.  USCF
purchases accounts receivable, with recourse, from clients located in major U.S.
cities.  Clients  are  found  by the  Company  and by  independent  commissioned
representatives.  The Company pays for a portion of the accounts receivable when
purchased  and the  balance,  net of  fees  and  interest,  after  the  accounts
receivable have been collected.  The Company requires a security interest in all
of the client's assets as part of the factoring arrangement.  Salt Lake Mortgage
Corporation  is engaged in the  mortgage  brokerage  and real  estate  brokerage
business with offices in Utah and Nevada.

     Significant accounting policies are as follows.

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

     Accounting estimates: The preparation of financial statements in conformity
with  generally  accepted  accounting  principles  requires  management  to make
estimates  and  assumptions  that affect the amounts  reported in the  financial
statements  and  accompanying  notes.  Actual  results  could  differ from those
estimates.

     Concentration  of business and credit risk: The Company  maintains its cash
in bank accounts with highly rated financial  institutions  which may, at times,
exceed federally  insured limits.  Approximately 62 percent of factored invoices
at June 30, 1997,  consist of amounts due from three clients.  Approximately  10
percent of  factored  invoices at June 30,  1996,  consist of amounts due from a
different single client. Revenue of approximately $393,000 was received from one
client in the year ended June 30, 1996.

     Financial  instruments:  The Company has no financial instruments for which
the carrying value differs materially from fair value.





                                      - 25 -

<PAGE>


CELTIC INVESTMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.  Nature of Business and Significant Accounting Policies  (Continued)

     Cash and cash  equivalents:  For  purposes of  reporting  cash  flows,  the
Company  considers all highly liquid debt instruments  purchased with a maturity
of three months or less to be cash equivalents.

     Mortgage loans held for sale:  Mortgage loans held for sale,  consisting of
mortgage loans made to individuals that are  collateralized  by residential one-
to four-family dwellings, are carried at the lower of aggregate cost or market.

     Fees received for the funding of mortgage  loans held for sale to investors
are recognized  when the mortgages are sold to the investors.  Loans are usually
sold,  along with the  servicing  rights to  investors,  within two weeks of the
initial closing.

     Furniture,  fixtures and equipment:  Furniture,  fixtures and equipment are
stated  at  cost.   Depreciation   and   amortization  are  computed  using  the
straight-line method over the estimated useful lives of the assets.

     Deferred  finance fees:  Deferred finance fees consist of costs incurred in
the acquisition of an operating line of credit and are being amortized  straight
line over the term of the line of credit.

     Goodwill: The Company has classified as goodwill the cost in excess of fair
value of the net assets of the  business  acquired  in a  purchase  transaction.
Goodwill is being amortized on a straight-line  method over 15 years  commencing
with the purchase of the business.

     Impairment  of  long-lived  assets:  Long-lived  assets are  evaluated  for
impairment  based on a periodic  analysis  of future  cash flow at an  operating
level.

     Factoring  operations:  Income from factored invoices is recorded as earned
in accordance with the related  agreements  with clients.  Income is earned when
receivables  are purchased and over the time that a receivable  remains  unpaid.
The  terms are  normally  1% at the time of  purchases  and 1% every 10 days the
invoice remains uncollected.  A provision for credit losses on factored invoices
is charged to income in an amount  sufficient to provide for anticipated  losses
on such invoices.  The Company  determines those invoices that are uncollectible
based upon a detailed  review.  Any  write-offs are charged to the allowance for
credit  losses on such  invoices.  The  Company  has a right to  amounts  due to
factoring clients if a factored invoice becomes  uncollectible.  Upon collection
of the purchased  invoices,  amounts collected in excess of factoring income and
the  initial  payment  are  remitted  to  clients.  Such  amounts  may,  in some
instances, be applied to offset uncollected factored invoices.

     Commission  and  mortgage  fee income:  Commission  and mortgage fee income
consists of loan brokerage  fees,  application  fees and commissions on sales of
residential real estate. Revenue from loan



                                      - 26 -

<PAGE>


CELTIC INVESTMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.   Nature of Business and Significant Accounting Policies  (Continued)

     origination  fees is  recognized  at the time of closing or, for loans held
for sale,  when loan is sold.  Loan  origination  fees are comprised of the fees
paid to the Company by lenders of the various residential  mortgage  placements.
The loan  origination  fees vary based upon current market rates for residential
mortgages.  During the period,  the Company originated the majority of its loans
for a single investor. Real estate commissions are recognized at closing.

     Income taxes:  Deferred  taxes are provided on a liability  method  whereby
deferred tax assets are  recognized  for deductible  temporary  differences  and
operating  loss and tax credit carry forwards and deferred tax  liabilities  are
recognized for taxable  temporary  differences.  Temporary  differences  are the
differences between the reported amounts of assets and liabilities and their tax
bases.  Deferred tax assets are reduced by a valuation  allowance  when,  in the
opinion of  management,  it is more likely than not that some  portion or all of
the  deferred  tax  assets  will  not  be  realized.  Deferred  tax  assets  and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment.

     Per share  data:  Net income  (loss) per common  share data is based on the
weighted  average  number of common  shares  outstanding  during each year after
considering  exercise of stock  options.  In computing  the 1996 loss per share,
stock  options and warrants are not included  because they have an  antidilutive
effect.  The stock  options and warrants are included in the 1997 net income per
share calculation.

     Reclassifications: Certain items in the 1996 financial statements have been
reclassified to conform to the 1997 presentation.

Note 2.    Business Combination

     On January  31,  1997,  the  Company  completed  its merger  with Salt Lake
Mortgage Corporation, whereby Salt Lake Mortgage Corporation became a subsidiary
of Celtic  Investment,  Inc.  through the issuance of 1,100,000 shares of common
stock  of  which  500,000  shares  are  being  held  in  escrow  subject  to the
satisfaction of certain  conditions,  for all of the outstanding common stock of
Salt Lake Mortgage Corporation.

     In the transaction  accounted for as a purchase,  the  consideration  given
totaled  $843,750 for the issuance of the 600,000 shares  including  $69,985 for
acquisition  costs.  The excess of cost over the net assets acquired of $696,004
was recorded as goodwill and is being amortized using the  straight-line  method
over 15 years.  The  additional  500,000  shares  may be issued  subject  to the
satisfaction of certain  conditions.  The value of any of the shares issued will
be recognized as an increase in goodwill.




                                      - 27 -

<PAGE>


CELTIC INVESTMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The following  unaudited pro forma  consolidated  results of operations for
the years ended June 30, 1997 and 1996,  as though Salt Lake  Mortgage  had been
acquired as of July 1, 1995, are as follows:



                                                 -------------- ------------
                                                      1997          1996
                                                 -------------- ------------
Revenue                                               2,774,000    2,446,000
Net income                                              203,000      130,000
Net income per share                                       0.05         0.03

     The above  amounts  represent  the effect of  combining  actual  results of
operations  and recording the effect of  amortization  of goodwill.  The Company
believes  no other  adjustments  are  necessary.  The pro forma  results  do not
necessarily  represent  results  which  would  have  occurred  if  the  business
combination had taken place at the date on the basis assumed above.

Note 2.       Business Combination (Continued)

     The Company acquired the following assets and liabilities in the merger:


    Cash                                                           $253,905
    Accounts receivable                                              23,263
      Goodwill                                                      696,004
    Other assets                                                    106,595
                                                          -----------------
                                                                  1,079,767


    Accounts payable and accrued expenses                           132,195
    Other liabilities                                                33,837
      Acquisition costs paid                                         69,985
                                                          -----------------
      Total consideration                                          $843,750
                                                          =================
                                      -28-

<PAGE>

         Note 3.  Receivables and Notes and Loans Receivable

     Receivables at June 30, 1997 and 1996, are summarized as follows:

                                                      1997         1996
                                                  ------------- -----------
Factored invoices on a recourse basis                $5,309,306  $3,679,326
Factored invoices on a nonrecourse basis                      -      72,269
                                                  ------------- -----------
                                                      5,309,306   3,751,595

Less allowance for credit losses                       (99,399)    (74,733)
                                                  ------------- -----------
                                                      5,209,907   3,676,862

                                                  ============= ===========


     Beginning in 1996, the Company no longer factors  invoices on a nonrecourse
basis.

     Notes   receivable   consist  of  additional   advances  made  to  clients.
Approximately  $32,000 of the notes  receivable  at June 30, 1997,  are due from
current  clients and are unsecured.  The notes bear interest at 18 percent.  The
remaining  balances are also due from current clients and are  collateralized by
accounts receivable,  real estate and equipment. The notes bear interest between
18 percent and 30 percent.  Notes receivable  totaled $426,037 and $69,485 as of
June 30, 1997 and 1996.

     Loans  receivable  totaled $123,441 as of June 30, 1997, and consist of the
following:

  Construction  line of credit with an $80,000 limit bearing  interest at a rate
  of prime (8.5% at June 30,  1997) plus 2%. The loan is  collateralized  by the
  property under construction. The outstanding balance is due along with accrued
  interest on October 31,  1997.  Advances on this line of credit were $7,204 at
  June 30,  1997.  Construction  line of credit with an $122,800  limit  bearing
  interest  at a rate of  prime  plus  3%.  The  loan is  collateralized  by the
  property under construction. The outstanding balance is due along with accrued
  interest on September  30, 1997.  Advances on this line of credit were $40,432
  at June 30, 1997.





                                      - 29 -

<PAGE>


CELTIC INVESTMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3.  Receivables and Notes Receivable (continued)

   Construction line of credit for the development of a residential subdivision.
   The  Company  has agreed to lend the  borrower  up to  $575,000.  The loan is
   collateralized  by land. The line of credit bears interest at a rate of prime
   plus 3%, and the  outstanding  balance is due along with accrued  interest on
   March 31, 1998. Salt Lake Mortgage Corporation collects an origination fee in
   an amount  equal to 3% of the entire loan amount.  In addition,  the borrower
   will pay an additional  amount of $5,000 per lot  developed.  Advances on the
   line of credit were $75,805 at June 30, 1997. Additional advances on the line
   of credit of $240,000 have been approved as of June 30, 1997.

     All loans and notes receivable have been evaluated for  collectibility on a
note-by-note  basis.  The Company had no  investments  in impaired loans for the
years ended June 30, 1997 and 1996.  The Company does not recognize  interest on
loans and notes  receivable once they have been deemed to be impaired unless the
interest is collected.

     The  following is an analysis of the activity in the  allowance  for credit
losses:



                                                      1997         1996
                                                 ----------- --------------

  Balance at beginning of year                        74,733         74,733
   Provision for credit losses                        18,460              -
       Recoveries                                     10,255              -
   Charge-offs                                       (4,049)              -
                                                 ----------- --------------
  Balance at end of year                              99,399         74,733
                                                 =========== ==============




Note 4. Related Party Transactions

     The  Company  incurred  expenses  related  to  promotion  and  professional
services for the years ended June 30, 1997 and 1996,  of  approximately  $11,000
and $2,000, respectively,  which were provided by a corporation owned by a major
stockholder of the Company.



                                      - 30 -

<PAGE>


CELTIC INVESTMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 5.     Bank Line of Credit and Long-Term Debt

     The Company has a $6,000,000  line of credit from a financial  institution,
collateralized  by substantially all of the Company's assets and due April 1999.
The Company can borrow in aggregate  the lesser of  $6,000,000  or its borrowing
base,  essentially 80% of factored  accounts  receivable.  At June 30, 1997, the
outstanding balance was $2,448,060.  The revolving line of credit bears interest
at 4% plus the prime rate of interest if the average  monthly  borrowing  exceed
$3,000,000  and 4.5% plus the prime  rate of  interest  if the  average  monthly
borrowing are less than $3,000,000. The prime rate was 8.5% at June 30, 1997.

     The Company has debt obligations for the purchase of certain equipment. The
notes are payable in monthly installments totaling $2,389 and are collateralized
by the equipment purchased. The notes bear interest at a rate of 10% and 15% per
annum. Aggregate maturities required at June 30, 1997, are as follows:


  Year ending June 30:
   1998                                                     $           22,016
   1999                                                                 24,297
   2000                                                                 15,960
                                                            ------------------
                                                            $           62,273
                                                            ==================




Note 6.     Income Taxes

     The deferred tax assets and liabilities consist of the following components
as of June 30, 1997 and 1996:

                                                     1997              1996

                                              -----------------   -------------
Deferred tax assets:
  Allowance for doubtful accounts             $       38,300    $     27800)00
  Loss carryforwards                                 477,900           482,800
  Other                                                    -            23,000
                                              -----------------   -------------


                                     - 31 -

<PAGE>
                                                     516,200           533,600

  Less valuation allowance                           516,200           533,600
                                              -----------------   -------------
                                              $            -    $            -
                                              =================   =============

     Reconciliations  of income taxes  computed at the statutory  federal income
tax rate to the Company's income tax for the years ended June 30, 1997 and 1996,
are as follows:

                                                      1997           1996

                                                 -------------- -------------
Computed "expected" tax (credits)                $    8,500    $     (57,800)

Increase (decrease) resulting from:
  State income taxes, net of federal tax benefit      1,500           (8,160)

  Nondeductible expenses                             10,500             3,950

  Valuation allowance                               (17,400)            84,400
  Other                                              (3,100)          (22,390)
                                                 --------------  -------------
                                                 $        -    $            -
                                                 ==============  =============



     At June 30,  1997,  the  Company had  available  net  operating  loss carry
forwards  of  approximately  $1,200,000  for income tax  purposes  which  expire
beginning in years 2005 through 2010.

Note 7.    Notes Receivable and Interest Receivable from Stockholders

     During   1996,    the   Company    issued   notes    receivable    to   two
officer-stockholders,  for  the  purchase  of  Company  stock  from  a  minority
stockholder,  totaling $51,000.  The principal and interest,  at 5.5% per annum,
are due in June 1999.  Interest  accrued on these notes was $2,616 and $276, for
the years ended June 30, 1997 and 1996,  respectively.  Since these notes result
from the  purchase  of the  Company's  common  stock they are  presented  in the
financial statements as a reduction in stockholders' equity.



                                      - 32 -

<PAGE>


CELTIC INVESTMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


     During 1996, the Company issued a note receivable and advanced $20,000 to a
director-stockholder.  This item has been presented in the financial  statements
as a  reduction  in  stockholders'  equity  since  the  amount  is  due  from  a
stockholder. During 1997, the Company received payments of $10,000 on this note.

     Notes receivable and interest receivable from stockholders were $63,892 and
$71,276 for the years ended June 30, 1997 and 1996, respectively.

Note 8.     Common Stock Options and Warrants

     There are currently  outstanding  various  warrants and options  which,  if
exercised,  will result in the issuance of  additional  shares of the  Company's
common  stock.  The  following  table sets forth  information  about options and
warrants:

                                                                    Exercise
                                                     Shares         Price Per
Outstanding Options and Warrants                    Issuable          Share
                                                  -------------   -------------
June 30, 1997:
    Management Options                                  300,000    $       1.00
    Private Placement Debt Options                       25,000    3.50 or 3.00
    Management Options                                   75,000            1.00
    Ferguson Warrants                                   100,000            3.00
    Glick Morganstern Options                            60,000            3.00
    USCF Management Options                              25,000            3.13
    USCF Management Options                              12,500            3.00
    USCF Management Options                             537,500            1.00
    Salt Lake Mortgage Corporation Options              500,000            1.00
    Salt Lake Mortgage Corporation Options               45,000            3.00

                                     - 33 -

<PAGE>


Options and Warrants Canceled/Expired
Year ended June 30, 1997:
    Class A Warrants                                    30,0000            4.00
    Class B Warrants  11                                300,000            8.00
    USCF Options                                        716,667            4.00
    Private Placement Options                         1,357,134            4.00
    Underwriter Warrants                                130,000            2.50
    USCF Management Options  8                          537,500            3.00
    Salt Lake Mortgage Corporation Options  9           500,000            3.00
Year ended June 30, 1996:
    Management Options 1                              1,500,000            1.00


                                                                           
    (1)The Company  management had been granted  options to purchase  1,800,000
shares  of the  Company's  common  stock at a price of $1.00  per  share.  These
options are exercisable only upon fulfillment of certain  conditions and are not
currently exercisable.  During 1996, the Company and management agreed to reduce
the number of options to 300,000.  The options are exercisable through April 26,
1999.


                                     - 34 -

<PAGE>


CELTIC INVESTMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     (2)These  options  were  issued as part of the units sold in the  Company's
private debt  placement in December 1995.  11,625  options  contain an option to
purchase one share of the Company's  common stock at a price of $3.50 per share.
The  remaining  13,375  options  contain an option top purchase one share of the
Company's  common  stock  at a price of  $3.00  per  share.  These  options  are
exercisable through December 31, 1999.

     (3)These options were originally granted April 26, 1994. Each unit contains
an option to  purchase  one share of the  Company's  common  stock at a price of
$1.00 per share.  The options may only be exercised if the Company meets certain
financial  conditions  relating to net worth.  The  option  are  exercisable
through April 26, 1999.

     (4)These  warrants  were  issued in  consideration  of the  execution  of a
financial consulting agreement which entitles the individual to purchase 100,000
shares of the  Company's  common  stock at any time prior to June 1, 1999,  to a
purchase price of $3.00 per share.

     (5)These  options  were  issued  to  Glick  Morganstern  as part  of  their
compensation  in obtaining  the line of credit in April 1996.  The options carry
certain  registration  rights.  These options are exercisable  through April 30,
1999.

     (6)Under  employment  agreements,  management  has been granted  options to
purchase  25,000  shares of the  Company's  common stock at a price of $3.13 per
share through July 22, 1999.

     (7)Under  employment  agreements,  management  has been granted  options to
purchase  12,500  shares of the  Company's  common stock at a price of $3.00 per
share through September 18, 2000.

     (8)Under  employment  agreements,  management  has been granted  options to
purchase  750,000  shares of the Company's  common stock at a price of $3.00 per
share.  700,000 of the options are  exercisable  as to 25 percent as of June 28,
1995,  and an additional 25 percent on each June 30, 1996,  1997,  and 1998. The
remaining  50,000  of these  options  are  exercisable  as to 25  percent  as of
September 26, 1995,  and an  additional  25 percent on each  September 30, 1996,
1997, and 1998. The Company  granted  options to purchase an additional  325,000
shares to certain  officers  and  employees on July 1, 1996.  During  1997,  the
Company and management  agreed to reduce the number of options to 537,500 shares
in  exchange  for a  reduction  in the option  price to $1.00 per  share.  These
options expire through July 1, 2003.

                                     - 35 -

<PAGE>



CELTIC INVESTMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

     (9)Under  the merger  agreement  dated  January  31,  1997,  with Salt Lake
Mortgage  Corporation,  the Company  granted  the option to  purchase  1,000,000
shares of the Company's common stock at a price of $3.00 per share. During 1997,
the  Company  and  management  of Salt Lake  Mortgage  have agreed to reduce the
number of shares to 500,000 in exchange  for  reduction  of the option  price to
$1.00 per share. These options expire through June 30, 2007.
   
     (10)Under  the merger  agreement  dated  January 31,  1997,  with Salt Lake
Mortgage  Corporation,  the Company granted the option to purchase 45,000 shares
of the  Company's  common  stock at a price of $3.00 per  share.  These  options
expire through July 1, 2004.

     (11)These  warrants  were  issued  as part of the  units  sold in  Celtic's
initial public offering.  As a result of the 1 for 20 reverse split effective in
June,  1994,  the  exercisable  price of the  Class A and Class B  warrants  was
adjusted to $6.00 and $12.00,  respectively.  The  Company's  Board of Directors
subsequently  adopted resolutions reducing the exercise price of the Class A and
B warrants  following  the reverse  split to $4.00 and $8.00,  respectively.  In
December 1995, the Company's Board of Directors  extended the exercise period of
the Class A and B warrants to December 31, 1996. In December 1996, the Company's
Board of Directors  extended the exercise period of the Class A warrants to June
30, 1997. The Class A warrants expired on June 30, 1997.

     (12)These  options  were issued to USCF  stockholders  as part of the units
sold by USCF in a private  placement  effected  prior to the merger.  The shares
underlying these options carry certain  registration rights. The options expired
on June 30, 1997.

     (13)These  options  were issued as part of the units sold in the  Company's
private placement  effective September 27, 1994. Each unit consists of an option
to  purchase  one share of the  Company's  common  stock at a price of $4.00 per
share. The options expired on June 30, 1997.

     (14)These  warrants,  which  expired on October  21,  1996,  were issued as
underwriter  compensation to ACAP, Inc. the underwriter of the Company's initial
public  offering.  The  Company  has  agreed  to file,  not more  than  once,  a
Registration  Statement under the 1933 Act, registering the shares acquired upon
the exercise of the  underwriter's  warrants at the request of the holders of at
least a majority of such shares.






                                      - 36 -

<PAGE>


CELTIC INVESTMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


Note 8. Common Stock Warrants and Options (Continued)

     Employee  stock option  agreements  are accounted for following APB Opinion
No. 25 and related interpretations.  Accordingly, no expense has been recognized
for grants under the stock option agreements.  Had compensation costs for all of
the stock option  agreements been determined based on the grant date fair values
of awards (the method described in FASB Statement No. 123),  reported net income
and earnings  per common share would have been reduced to the pro forma  amounts
shown below.

                                                   1997               1996

                                               -------------    ---------------
  Net income (loss):
   As reported                               $    (170,002)    $      (170,002)
   Pro forma                                      (110,287)           (170,002)

Net income (loss) per share:
   As reported                                        0.01                (.05)
   Pro forma                                          (.05)               (.05)


     The per share  weighted  average fair value of stock options  granted under
employee  stock option  agreements  granted  during 1997 was $.44 on the date of
grant.

     The option values were  determined  using the Black Scholes  option-pricing
model with the  following  assumptions:  expected  dividend  yield 0%,  expected
volatility 42%, risk-free interest rate of 5.34% to 6.30%, and expected lives of
3 to 8 years.

     A summary of the status of the  Company's  stock options and warrants as of
June 30,  1997 and 1996,  and changes  during the years then ended is  presented
below:




                                      - 37 -

<PAGE>


CELTIC INVESTMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                 1997                           1996

                      ---------------------------    --------------------------
                                        Weighted                      Weighted
                                        Average                       Average
                                        Exercise                      Exercise
                         Shares          Price          Shares         Price
                      ---------------  -----------  -------------  ------------
  Options outstanding,

   beginning of year      4,013,801  $       3.77       4,678,801  $       3.96

  Options granted         1,507,500          3.00         835,000          3.01

  Options exercised                        -                             -

  Options expired       (3,841,301)          3.99     (1,500,000)          1.00

                      ---------------  -----------  -------------  ------------
                          1,680,000  $       1.32       4,013,801  $       3.77
                      ===============  ===========  =============  ============





                                      - 38 -

<PAGE>


CELTIC INVESTMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Note 8.  Common Stock Warrants and Options (Continued)

     The following table  summarizes the stock options and warrants  outstanding
at June 30, 1997:


   Options and Warrants         Options and Warrants Exercisable
       Outstanding
---------------------------     --------------------------------
                                  Average
                                 Remaining
     Exercise      Number         Contractual        Number
      Price      Outstanding        Life           Exercisable

    --------    -------------- --------------- ------------------
$     3.50           25,000         2.5              25,000
      3.13           25,000         2.1              25,000
      3.00          217,500         2.9             187,500
      1.00        1,412,500         4.6             356,250
                -------------  --------------- ------------------
                  1,680,000         4.1             593,750
                =============  =============== ==================






Note 9.   Commitments and Related Expenses

     The Company has entered into employment  agreements  with certain  officers
that expire at various times from June 1998 to January 2002.  Under the terms of
the  agreements,  the  Company  has  agreed  to pay  approximately  $820,000  in
compensation for the remainder of the agreements' terms.



                                      - 39 -

<PAGE>


CELTIC INVESTMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

     The Company leases office space under operating lease  agreements  expiring
through April 2001.  The Company also leases office  equipment  under  operating
leases expiring through May 2000.

Total lease commitments are:

Years ending June 30:
1998                                                        $         155,372
1999                                                                  151,101
2000                                                                  118,487
2001                                                                   69,279
                                                            -----------------
                                                            $         494,239
                                                            =================


     Rent expense under all operating leases including insurance and real estate
taxes for the years  ended June 30,  1997 and 1996,  amounted  to  approximately
$151,126 and $57,000, respectively.

     The Company has a servicing  agreement with a factoring  company to process
factored invoices.  The agreement requires the Company to pay fees of .6% of the
face value of the invoice  once it is factored  and .1% of the face value of the
invoice  every five days the invoice  remains  uncollected.  This  agreement was
terminated  in  October  1996.  Fees paid  under  this  agreement  were none and
$115,926 for the years ended June 30, 1997 and 1996, respectively.



                                      - 40 -

<PAGE>


CELTIC INVESTMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


Note 9.       Commitments and Related Expenses (Continued)

     The Company has a servicing  agreement with a second  factoring  company to
process factored invoices.  The agreement can be terminated by either party with
30 days written notice. The agreement requires the Company to pay fees that vary
from .6% of the face value of invoices  collected  to 1.45% of the face value of
invoices  collected plus 20% of fees  collected.  Fees paid under this agreement
were  $81,216  and  $20,714  for  the  years  ended  June  30,  1997  and  1996,
respectively.

     In 1997,  the Company  entered into a servicing  agreement with a factoring
company to process factored invoices.  the agreement can be terminated by either
party within 45 days written notice. The agreement requires the Company to share
35% of any revenues  earned on  purchased  invoices.  Revenues  earned under the
agreement  were  approximately  $86,000 of which  $56,000  was  retained  by the
Company.

Note 10.    Retirement Plan

     The Company sponsors a 401(k) retirement plan covering substantially all of
its employees.  Plan  contributions  are at the discretion of management.  There
were no contributions for the years ended June 30, 1997 and 1996.

Note 11.    New Accounting Pronouncements

     The  Financial  Accounting  Standards  Board has issued  Statement No. 128,
Earnings  per Share,  which  superseded  APB Opinion No. 15.  Statement  No. 128
requires the presentation of earnings per share by all entities that have common
stock or potential  common  stock,  such as options,  warrants  and  convertible
securities,  outstanding that trade in a public market. Those entities that have
only common stock  outstanding  are required to present basic earnings per share
amounts.  All other entities are required to present basic and diluted per share
amounts.  Diluted per share amounts assume the conversion,  exercise or issuance
of all potential common stock instruments  unless the effect is to reduce a loss
or increase the income per common share from continuing operations. All entities
required to present per share amounts must initially apply Statement No. 128 for
annual and interim periods ending after December 15, 1997.  Earlier  application
is not permitted.

     Because the Company has potential common stock outstanding,  stock purchase
warrants,  and stock options to  employees,  as discussed in Note 7, the Company
will be required to present basic and diluted  earnings per share (EPS).  If the
Company had applied Statement No. 128 in the accompanying  financial statements,
the following per share information would have been reported.




                                      - 41 -

<PAGE>


CELTIC INVESTMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

     Basic earnings per share is based on the weighted  average number of common
shares  outstanding.  Stock options are only considered for the diluted earnings
per share  calculation.  In  computing  the 1996 loss per  common  share,  stock
options  and  warrants  are not  considered  because  they have an  antidilutive
effect.  The stock  options and warrants  are part of the dilutive  earnings per
share calculation in 1997.

Note 11.       New Accounting Pronouncements (Continued)


                                     Years Ended June 30,
                    -------------------------------------------------------
                               1997                         1996
                    -------------------------------------------------------
                      Basic EPS     Diluted        Basic EPS     Diluted
                                      EPS                          EPS
                    -------------------------------------------- ----------
                          .01        .01             (.05)      (.05)
                    =======================================================


     In June  1997,  the FASB  issued  Statement  130,  Reporting  Comprehensive
Income.  The  Statement  establishes  standards for the reporting and display of
comprehensive  income  and  its  components  in a full  set of  general  purpose
financial  statements.  The  Statement  does not address when  transactions  are
recorded,  how they are measured in the  financial  statements,  or whether they
should be included in net income or other comprehensive income. The Statement is
effective  for fiscal years  beginning  after  December  15, 1997,  with earlier
application  permitted.  Management  has  not  assessed  the  effect  that  this
statement will have on its financial statement presentation.

     Also in June 1997,  the FASB issued  Statement No. 131,  Disclosures  About
Segments of an Enterprise  and Related  Information.  The Statement  established
standards for the way that public companies report  information  about operating
segments in annual  financial  statements  and requires  that those  enterprises
report  selected  financial  information  about  operating  segments  in interim
financial  reports issued to  stockholders.  It also  establishes  standards for
related  disclosures  about products and services,  geographic  areas, and major
customers.  Statement No. 131 is effective for financial  statements  for fiscal
years  beginning  after  December 15, 1997. In the initial year of  application,
comparative information for earlier years is required to be restated. Management
has not  assessed  the effect  that this  statement  will have on its  financial
reporting practices.




                                      - 42 -

<PAGE>





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

         Does not apply.

                                      PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL

         PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
            A.
         Identification  of  Directors  and  Executive  Officers.   The  current
directors  and  officers  of the  Company  who will serve  until the next annual
meeting of shareholders  or until their  successors are elected or appointed and
qualified, are set forth below:

Name                             Age       Position

Douglas P. Morris                42        Director of Celtic, USCF, SLM, ADR,
                                           Chairman and President of Celtic

Larry D. Meek                    45        Director of Celtic and USCF,
                                           President and CEO of USCF

Howard D. Talks                  43        Director of Celtic

Reese Howell Jr.                 29        Director and Senior Vice President 
                                           of Celtic, Director, President, and
                                           CEO of SLM, Director of ADR

Pamela Davis                     33        Director of Celtic

Frank Lucchese                   47        CFO, Secretary/Treasurer of Celtic;
                                           Director, Secretary /Treasurer, and
                                           CFO of USCF, Director of SLM and ADR

         There are no family  relationships  among the  Company's  officers  and
directors.   Background   information  concerning  the  Company's  officers  and
directors is as follows:



                                      - 43 -

<PAGE>




     Douglas P.  Morris.  Mr.  Morris has been an officer  and  director  of the
Company since July, 1994. Mr. Morris is, and has been since 1988, the owner of H
& M Capital Investments,  Inc., a privately-held business consulting firm, H & M
Capital  Investments,  Inc. is engaged in  consulting  with  privately-held  and
publicly-held  companies  relating  to  management,  debt  financing  and equity
financing.  From 1984 to 1988, Mr. Morris was  self-employed in managing his own
investments.  Mr. Morris received his Masters Degree in Public Administration at
the University of Southern California in 1982 and his Bachelor of Arts Degree in
Judicial  Administration  from Brigham Young University in 1978. Mr. Morris is a
director of Emerald Capital  Investments,  Inc., a publicly held company with no
current  operations.  Mr.  Morris is Vice  President  of Capital  Markets  and a
director of Millennium Electronics,  Inc., a publicly-held  computer/electronics
company. Mr. Morris is a director of Dauphin Technology, Inc., a publicly traded
electronic manufacturing and computer company.

     Howard D. Talks. Mr. Talks has been a director of the Company since July 1,
1994.  Mr. Talks has been  involved in the real estate  industry for the past 19
years. Mr. Talks has developed and/or purchased  commercial and residential real
estate  properties in Florida.  He has lectured at Dale Carnegie  seminars.  Mr.
Talks attended Queensboro Community College in New York.

     Larry D. Meek.  Mr. Meek became a director of the Company and  President of
USCF in August 1995. He has over twenty years  experience  in sales,  marketing,
general management, and business development. From 1992 to 1995, he was the Vice
President of Sales and Marketing for Oxford Capital Corporation. Mr. Meek served
in a number of positions with Budget Rent A Car and Hertz  Corporation  prior to
Oxford Capital Corporation.  Mr. Meek earned his B.A. in Business Administration
from the University of Mississippi.

     Frank  Lucchese.  Mr. Lucchese was appointed CFO of the Company and USCF in
August 1995.  Mr.  Lucchese is also a director of SLM and ADR. Mr.  Lucchese has
over twenty years  experience in financial  management  with  companies  such as
Budget Rent A Car and Continental  Grain.  Mr.  Lucchese earned his M.B.A.  from
Northern  Illinois  University and his B.S. in Accounting from Southern Illinois
University.

     Reese  Howell Jr. Mr.  Howell was  appointed  Senior  Vice-President  and a
director of the Company in January  1997. He also serves as President and CEO of
SLM and is a director of ADR. Mr.  Howell was the founder of SLM and has been in
the mortgage industry since 1990. Prior to entering the mortgage industry he was
involved in the federal  procurement process for IBM's Federal Systems Division.
Mr Howell  obtained his B.S. in Finance and his M.B.A.  from the  University  of
Utah.

                                     - 44 -


<PAGE>


     Pamela Davis.  Ms. Davis was appointed a director of the Company in January
1997.  She is currently  employed by Westin  Technology,  a subsidiary of Westin
Hotels.  Ms. Davis has over 10 years experience in information  technology,  and
related area.  Ms. Davis  attended both Utah State  university  and  Westminster
College.


Compliance With Section 16(a) of the Exchange Act

         Section 16(a) of the Exchange Act requires the  Company's  officers and
directors,  and persons who beneficially own more than 10% of a registered class
of the  Company's  securities,  to file  reports  of  ownership  and  changes in
ownership with the Securities and Exchange Commission.  Officers,  directors and
greater than 10%  shareholders  are required by the Exchange Act  regulations to
furnish to the Company copies of all Section 16(a) forms they file with the SEC.
Based  solely on its  review  of the  copies of such  forms  received  by it, or
written  representations  from certain reporting  persons,  the Company believes
that  during  the  fiscal  year ended  June 30,  1997,  all filing  requirements
applicable to its officers,  directors  and greater than 10%  beneficial  owners
were complied with.


ITEM 10.  EXECUTIVE COMPENSATION

Summary Compensation Table

         The following table sets forth the aggregate  compensation  paid by the
Company  for  services  rendered  during  the last three  calendar  years to the
Company's  President  and to the  Company's  most highly  compensated  executive
officers whose annual salary and bonus exceeded $100,000:





                                      - 45 -

<PAGE>



<TABLE>
                             SUMMARY COMPENSATION TABLE
<CAPTION>
                                                                                     Long Term Compensation
                       Annual Compensation(1)                                 Awards                      Payouts
                                                                    Restricted     Securities
Name and              Fiscal                        Other Annual    Stock          Underlying  LTIP      All Other
Principal Position     Year      Salary     Bonus   Compensation    Award(s)       Option(s)   Payouts   Compensation
----------------------------------------------------------------------------------------------------------------------
<S>                   <C>      <C>          <C>         <C>           <C>         <C>           <C>        <C>  

Douglas P. Morris     1997      $26,000     $-0-        $-0-          $-0-           #-0-       $-0-        -0-

                      1996      $26,000     $-0-        $-0-          $-0-           #-0-       $-0-

                      1995      $24,000     $-0-        $-0-          $-0-           #-0-       $-0-       $-0-
----------------------------------------------------------------------------------------------------------------------
Larry Meek            1997     $133,337     $-0-        $-0-         $-0-         #150,000(3)   $-0-       $-0-

                      1996     $125,000     $-0-        $-0-         $-0-         #560,000(2)   $-0-       $-0-

                      1995       $4,800     $50,000     $-0-         $-0-            #-0-       $-0-       $-0-
----------------------------------------------------------------------------------------------------------------------
Frank Lucchese        1997      $91,062     $-0-        $-0-         $-0-         #150,000(3)   $-0-       $-0-

                      1996      $85,000     $-0-        $-0-         $-0-         #140,000(2)   $-0-       $-0-

                      1995      $4,904      $-0-        $-0-         $-0-         #-0-          $-0-       $-0-
----------------------------------------------------------------------------------------------------------------------
Reese Howell, Jr.     1997      $37,500     $-0-        $-0-         $-0-         #500,000(2)   $-0-       $-0-

                      1996         $-0-     $-0-        $-0-         $-0-         #-0-          $-0-       $-0-

                      1995         $-0-     $-0-        $-0-         $-0-         #-0-          $-0-       $-0-
----------------------------------------------------------------------------------------------------------------------
</TABLE>


     (1) See  the  discussions  under  the  caption  "EXECUTIVE  COMPENSATION  -
Employment Contracts" regarding certain other compensation the named officer may
be entitled to upon certain specified events.

     (2) These  options were granted  pursuant to Employment  Agreements  and/or
Merger Agreements.

     (3) These  Options were granted as  performance  bonus for fiscal year 1996
pursuant to Employment Agreements.







                                      - 46 -

<PAGE>




Stock Options Granted in Last Fiscal Year

     The  following  table set forth  grants of stock  options  made  during the
fiscal  year ended June 30, 1997 to the  employees  of the  Company.  

                                    Individual Grants


                                       % of Total
                                       Options/SARs
               Number of Securities    Granted to    Exercise or
               Underlying Options/     Employees in  Base Price
Name           SARs Granted (#)        Fiscal Year   ($/Share)  Expiration Date


Douglas P. Morris          -0-             N/A         N/A         N/A

Reese Howell Jr. (1,4)   500,000          35.8%       $3.00        (1)

Roger Davis (1,4)        500,000          35.8%       $3.00        (1)

Larry Meek (2,4)         150,000          10.8%       $3.00        (2)

Frank Lucchese (2,4)     150,000          10.8%       $3.00        (2)

Other Employees (3)       45,000           3.2%       $3.00        (3)

     (1) These  Options are  granted as part of the Stock for Stock  Exchange in
the acquisition of SLM and ADR and related employment  agreements.  They have an
expiration date of January 31, 2001 and January 31, 2007. 150,000 of the options
are  time  based  and  350,000  of  the  options  are  performance  based  on  a
profitability formula relating to SLM and ADR operations.

     (2) These Options are granted pursuant to certain employment agreements and
have a July 17, 2003 expiration date.

     (3) These Options are granted pursuant to certain employment agreements and
have expiration dates of May 15, 2000 through May 15, 2003.

     (4) On June 29, 1997 the Company  offered and various  employees  agreed to
cancel one half of their  outstanding  options in  consideration of reducing the
Exercise  Price from $3.00 to $1.00.  Mr.  Howell  and Mr.  Davis each  canceled
250,000 share options.  Mr. Meek canceled  355,000 options shares.  Mr. Lucchese
canceled 145,000 options shares.

                                                                            \
Aggregate Option Exercises and Number/Value of Unexercised Options

     The following table provides information concerning the exercise of options
during the last fiscal year by persons named in the Summary  Compensation Table,
the number of unexercised options



                                      - 47 -

<PAGE>




held by such persons at the end of the last fiscal  year,  and the value of such
unexercised options as of such date:

<TABLE>
<CAPTION>
                                                      Total Number of              Value of Unexercised
               Shares Acquired        Values        Unexercised Options           In-the Money Options
Name           on Exercise (1)     Realized ($)      at 6/30/97 (1.2)               at 6/30/97 (1.2)
-----------------------------------------------------------------------------------------------------------
                                                 Exercisable  Unexercisable     Exercisable   Unexercisable
<S>                  <C>               <C>        <C>            <C>             <C>           <C>
Douglas P. Morris    -0-               -0-        100,000              0         $   0         $     0
Larry Meek           -0-               -0-        217,500        137,500         $   0         $     0
Frank Lucchese       -0-               -0-         57,500         87,000         $   0         $     0
Reese Howell, Jr.    -0-               -0-              0        250,000         $   0         $     0

</TABLE>


         1 An  "In-the-Money"  stock  option is an option  for which the  market
         price of the company's  Common Stock  underlying the option on June 30,
         1997 exceeded the option exercise price.  The value shown is calculated
         by  multiplying  the number of  unexercised  options by the  difference
         between (i) the  average of the bid and ask price for the Common  Stock
         on the NASDAQ  Small Cap Market on June 30,  1997 of $1.00 and (ii) the
         exercise price of the stock options of $1.00.

         The Company has not granted any stock appreciation rights.

         2 On June 29, 1997 the Company offered and various  employees agreed to
         cancel  one half of  their  outstanding  options  in  consideration  of
         reducing  the  Exercise  Price from $3.00 to $1.00.  Mr. Meek  canceled
         355,000 options shares.  Mr. Lucchese  canceled 145,000 options shares.
         Mr. Howell canceled 250,000 option shares.

Compensation of Directors

         During the year ended June 30, 1997 the Company paid no compensation to
directors  except  under  employment  agreements  set forth above in the Summary
Compensation Table and below in "Employment Agreements."

Employment Agreements

         The  Company  is  currently  a  party  to  the   following   Employment
Agreements:

     Douglas P. Morris. In July 1994, the Company and Mr. Morris entered into an
Employment  Agreement for a five year term.  The agreement  provides for a first
year salary of $24,000  which will  increase by ten percent per year.  Under his
Employment  Agreement  Mr.  Morris is required to devote only  part-time  to the
service of the Company.  Mr. Morris has been granted options to purchase 100,000
shares of the Company's common stock. (See "Present Shareholders.")




                                      - 48 -

<PAGE>




         Larry D. Meek. On June 28, 1995,  the Company and Mr. Meek entered into
a three year Employment Agreement. The agreement provides for a signing bonus of
$50,000 and a salary of $125,000  with  annual  cost of living  adjustments  not
greater than 10%. Mr Meek is eligible for bonuses in subsequent years subject to
the  discretion of the Board of Directors.  Mr Meek has been granted  options to
purchase  560,000  shares at $3.00 of the Company's  common stock.  Mr. Meek was
granted  150,000  share  options at $3.00 in July 1996.  In June 1997,  Mr. Meek
canceled  355,000  options  shares  in  consideration  of the  reduction  in the
Exercise  Price  from  $3.00 to $1.00.  The  Company  has agreed to use its best
effort to register the option shares on Form S-8.

     Frank Lucchese. On June 28, 1995, the Company and Mr. Lucchese entered into
a three  year  Employment  Agreement.  The  agreement  provides  for a salary of
$85,000  with  annual  cost of living  adjustments  not  greater  than 10%.  Mr.
Lucchese is eligible for bonuses in subsequent  years subject to the  discretion
of the Board of  Directors.  Mr.  Lucchese has been granted  options to purchase
140,000 shares at $3.00 of the Company's  common stock. Mr. Lucchese was granted
150,000  options on the Company's  shares at $3.00 in July,  1996. In June 1997,
Mr. Lucchese canceled 145,000 option shares in consideration of the reduction in
the Exercise  Price from $3.00 to $1.00.  The Company has agreed to use its best
effort to register the option shares on Form S-8.

     Martha  Marroquin.  On September  26, 1995,  the Company and Ms.  Marroquin
entered into a three year  Employment  Agreement.  The agreement  provides for a
salary of $45,000 with annual cost of living  adjustments  not greater than 10%.
Ms.  Marroquin  is  eligible  for  bonuses in  subsequent  years  subject to the
discretion of the Board of Directors.  Ms. Marroquin has been granted options to
purchase 50,000 shares at $3.00 of the Company's common stock. In June 1997, Ms.
Marroquin canceled 25,000 option shares in consideration of the reduction of the
Exercise  Price  from  $3.00 to $1.00.  The  Company  has agreed to use its best
effort to register the option shares on Form S-8.

     Reese Howell Jr. On January 31, 1997,  the Company and Mr.  Howell  entered
into a five year Employment  Agreement.  The agreement  provides for a salary of
$90,000 with annual cost of living  adjustments not greater than 10%. Mr. Howell
is entitled to a bonus of 7.5% of pre-tax profits of SLM and ADR until such time
as his annual  compensation  reaches $150,000.  After the $150,000  threshold is
met,  Mr.  Howell is  entitled  to an  additional  bonus of 1.5% of the  pre-tax
profits of SLM and ADR. Mr.  Howell has been granted time based and  performance
based options to purchase  500,000  shares of the  Company's  stock at $3.00 per
share. The performance  based options are contingent on the profitability of SLM
and ADR. In June 1997,  Mr. Howell agreed to cancel  250,000  options  shares in
consideration of the reduction in the Exercise Price from $3.00 to $1.00.

     Roger Davis.  On January 31, 1997, the Company and Mr. Davis entered into a
five year Employment  Agreement.  The agreement provides for a salary of $90,000
with  annual  cost of living  adjustments  not greater  than 10%.  Mr.  Davis is
entitled to a bonus of 7.5% of pre-tax profits of SLM and ADR until such time as
his annual compensation reaches $150,000. After the $150,000 threshold is met,



                                      - 49 -

<PAGE>




Mr. Davis is entitled to an additional bonus of 1.5% of the pre-tax profits
of SLM and ADR.  Mr. Davis has been  granted  time based and  performance  based
options to purchase  500,000  shares of the Company's  stock at $3.00 per share.
The  performance  based options are contingent on the  profitability  of SLM and
ADR.  In June  1997,  Mr.  Davis  agreed  to  cancel  250,000  option  shares in
consideration of the reduction in the Exercise Price from $3.00 to $1.00.


Future Incentive Plans

     The Company will likely adopt additional incentive compensation plans which
might include incentive stock options,  pension plans, or a profit sharing plan.
The Company offers to employees a 401K plan. The Company made no contribution to
the plan for the year ending June 30,1997.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

Security Ownership of Certain Beneficial Owners

     The  following  table  sets  forth  information  regarding  shares  of  the
Company's common stock  beneficially owned as of September 20, 1997 by: (i) each
officer and director of the Company;  (including  the officers and  directors of
USCF,  SLM, and ADR) (ii) all officers and directors as a group  (including  the
officers and  directors of USCF,  SLM, and ADR);  and (iii) each person known by
the Company to beneficially  own 5 percent or more of the outstanding  shares of
the Company's common stock.

Douglas P. Morris(1)(2)                      448,765                  7.9%
515 Red Cypress Road
Cary, IL 60013

Howard D. Talks(1)(3)                        451,384                  7.9%
P.O. Box 250
Palm Beach, FL 33480

Larry D. Meek (1)(4)                         375,401                  6.6%
17W220 22nd St.. #420
Oakbrook Terrace, IL  60181

Frank Lucchese(1)(5)                         161,028                  2.8%
17W220 22nd St.. #420
Oakbrook Terrace, IL 60181

Reese Howell Jr. (1)(6)                      805,500                 14.1%
102 West 500 South #300
Salt Lake City, Utah    84101



                                     - 50 -

<PAGE>

Roger Davis    (1)(6)                        794,500                 13.9%
102 West 500 South #300
Salt Lake City, Utah    84101

Laurence J. Pino                             308,257                  5.4%
c/o Open University
Orlando, FL  33480

All Officers and Directors                   2,875,550               50.4%
as a group (5 people)

-----------

         (1) Except as otherwise  noted,  each  stockholder  has sole voting and
investment  power with  respect to the shares  beneficially  owned.  Each of the
above-listed  persons is an officer and/or  director of the Company and/or USCF,
SLM, and ADR.

         (2) A total of 208,527 of these  shares  are owned by Mr.  Morris.  The
remaining 140,239 shares are owned by Hyacinth Resources.  Inc., an affiliate of
Mr.  Morris.  The number of shares listed  includes  100,000 shares which may be
issued upon the exercise of an option exercisable at a price of $1.00 per share.
(See "Management Employment Agreement).

         (3) Mr. Talks and his wife Carol Hall are joint owners of these shares.
The total  includes  100,000  shares which may be issued upon the exercise of an
option exercisable at a price of $1.00 per share.

         (4) The total  includes up to 355,000  shares  which may be issued upon
the exercise of stock options granted in connection  with Mr. Meek's  employment
at an exercise price of $1.00 per share (See Management Employment Agreement).

         (5) The total  includes up to 145,000  shares  which may be issued upon
the  exercise  of stock  options  granted  in  connection  with  Mr.  Lucchese's
employment at an exercise price of $1.00 per share (See  "Management  Employment
Agreement).

     (6) The total includes shares issued in the stock for stock exchange of SLM
and  ADR,  304,500  shares  to Mr.  Howell  and  295,500  shares  to Mr.  Davis,
respectively.  In addition, 250,000 shares are being held in escrow for both Mr.
Howell and Mr. Davis based on a profitability  operation formula of SLM and ADR.
The total also includes  250,000  shares for both Mr. Howell and Mr. Davis which
may be issued upon the  exercise of an option at $1.00 per share.  These  shares
relate to certain employment agreements between Mr. Howell and Mr. Davis, 75,000
shares are time based option  shares and 175,000 are  performance  option shares
based on a  profitability  formula of SLM and ADR. (See  "Management  Employment
Agreement")

     (7) The company has  4,406,471  shares  outstanding  on September 15, 1996.
Options held by directors, officers, and others totaled 1,680,000 shares.


                                      - 51 -

<PAGE>


Warrants and Options

     There are currently  outstanding  various  warrants and options  which,  if
exercised,  will result in the issuance of  additional  shares of the  Company's
common stock.  There are outstanding  warrants and options entitling the holders
to purchase  1,680,000  shares of the Company's  common stock at prices  ranging
from $1.00 to $3.50. (See "Footnote 8 to Financial Statements.")



Security Ownership of Management

         See Item 4(a) above.

Changes in Control

         No changes in control of the Company are currently contemplated.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS


Parents of Company

     On January 31, 1997, the Company acquired Salt Lake Mortgage Corp.  ("SLC")
and Advantage Realty Corp.  ("ADR").  The Company issued 1,100,000 shares of its
common stock in connection  with the  acquisition  of SLM and ADR. Reese Howell,
Jr. who is now an officer and director of the Company,  was issued shares of the
Company's  common  stock,  granted  stock  options  and hired as an  employee in
connection  with such  acquisition.  Roger D.  Davis,  whose  daughter  is now a
director  of the  Company,  was issued  shares of the  Company's  common  stock,
granted  stock  options  and  hired  as an  employee  in  connection  with  such
acquisition.   A  Form  8-K  was  previously   filed  in  connection  with  such
acquisition.  Neither Mr. Howell nor Mr. Davis were  affiliated with the Company
prior to such acquisition.

         The only  parents  of the  Company,  as  defined  in Rule  12b-2 of the
Exchange  Act, are the officers and  directors of the Company.  For  information
regarding the share holdings of the Company's  officers and directors,  see Item
11.



ITEM 13. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON
FORM 8-K

         A. The  Exhibits  which  are  filed  with  this  Report  or  which  are
incorporated  herein be  reference  are set forth in the  Exhibits  Index  which
appears on page 54.

         B. The Company filed a Form 8-K on January 31, 1997 reporting the stock
for stock exchange in the SLM and ADR acquisition.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK





                                      - 53 -
<PAGE>

                               INDEX TO EXHIBITS

      The following  designated  exhibits are, as indicated below,  either filed
herewith  or have  heretofore  been  filed  with  the  Securities  and  Exchange
Commission  under the Securities  Act of 1933 or the Securities  Exchange Act of
1934 and are referred to and incorporated herein by reference.
                                                               Location on
Exhibit                                                         SEC Document
Number                  Exhibit                                 Reference

   3.1      Certificate of                                   S-18 Registration
            Incorporation                                 Statement 33-37436-C

   3.2      Bylaws                                           S-18 Registration
                                                         Statement 33-374336-C

   3.3      Amendment to Certificate of                      Form 10-KSB, 1995
            Incorporation

 10.1       Agreement and Plan of Merger - USCF            Form 8-K July, 1994

 10.2       Stock Option - Laurence J. Pino                  Form 10-KSB, 1994

 10.3       Stock Option - Douglas P. Morris                 Form 10-KSB, 1994

 10.4       Stock Option - Howard D. Talks                   Form 10-KSB, 1994

 10.5       Form Indemnification Agreement                   Form 10-KSB, 1994
              (Identical Agreement for all officers
               and directors)

10.6        Employment Agreement-Larry Meek                  Form 10-KSB, 1995

10.7        Employment Agreement-Frank Lucchese              Form 10-KSB, 1995

10.8        Loan and Security Agreement                      Form 10-KSB, 1996

10.9        Agreement and Plan of Merger      Form 8-K filed February 18, 1997

10.10.      Escrow Agreement                  Form 8-K filed February 18, 1997

10.11       Employment Agreement - Reese Howell, Jr.            Form 8-K filed
                                                             February 18, 1997

10.12.      Employment Agreement - Roger Davis Form 8-K filed February 18, 1997

10.13.      Stock Option Agreement - Reese Howell, Jr.  Form 8-K filed February
                                                                       18, 1997

10.14       Stock Option Agreement - Roger Davis    Form 8-K filed February 18, 
                                                                          1997

 21.1       Subsidiaries of Registrant                       Form 10-KSB, 1996


                                     - 54 -

<PAGE>


                                      SIGNATURES

         In accordance with Section 13 or I 5(d) of the Securities  Exchange Act
of 1934,  the  Registrant  caused  this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                       CELTIC INVESTMENT, INC.



                                        /s/ Douglas P. Morris
Date: September 29, 1997               By:  Douglas P. Morris
                                            President




                                        /s/ Frank Lucchese
Date: September 29, 1997                By: Frank Lucchese
                                            C.F.O.

         In  accordance  with the  Securities  Exchange Act this report has been
signed  below by the  following  persons  on  behalf of the  Company  and in the
capacities and on the dates indicated.

                                  Capacity                 Date


                                  Douglas P. Morris
                                  Director                 September 29, 1997

                                  Larry D. Meek
                                  Director                 September 29, 1997

                                  Frank Lucchese           September 29, 1997
                                  Director





                                      - 55 -