U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark 1)   X    Quarterly Report Under Section 13 or 15(d) of The Securities
          ---   Exchange Act of 1934   

               For the quarterly period ended    March 31, 1997
                                                ---------------

               Transition Report Under Section 13 or 15(d) of The Securities
               Exchange Act of 1934 (No Fee Required) for the Transition Period
               from ________ to ________

                              Commission file number 0-22450

                                COUNTRY WORLD CASINOS, INC.
                       --------------------------------------------
                      (Name of Small Business Issuer in its Charter)

              Nevada                                   13-3140389
     -------------------------------       -----------------------------------
     (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)

          13576 West Utah Avenue
          Lakewood, CO                                      80228
          ---------------------------------------          ---------
          (Address of principal executive offices)         (Zip Code)

       Registrant's telephone number, including area code: (303) 912-5776

            4155 E. Jewell Avenue, Suite 1000, Denver, Colorado 80222
            ---------------------------------------------------------
              (Former name, former address and formal fiscal year,
                         if changed since last report)

         Check whether the registrant  (1) has filed all reports  required to be
filed by Sections 13 or 15(d) of the Securities  Exchange Act during the past 12
months (or for such shorter  period as 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

                      APPLICABLE ONLY TO CORPORATE ISSUERS.
Indicate  the  number of shares  outstanding  of each of the  issuer's  class of
common stock, as of the latest practicable date.

The  Registrant  had  10,836,187  shares of its common stock  outstanding  as of
May 14, 1997.

Transitorial Small Business Disclosure Format (Check one):  Yes _____  No   X


<PAGE>



                           COUNTRY WORLD CASINOS, INC.




                                      Index


                                                                     Page

Part I - FINANCIAL INFORMATION

         Item 1.  Financial Statements                                 3

         Item 2.     Management's Discussion and Analysis of
                  Financial Condition and Plan of Operation
                                                                       3
Part II -   OTHER INFORMATION

         Item 1.  Legal Proceedings                                    6

         Item 3.  Defaults upon Senior Securities

         Item 6.  Exhibits and Reports on Form 8-K

SIGNATURES                                                             7


                                        2

<PAGE>



                          PART I. FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

     Financial Statements are attached commencing on page F-1.

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
          OPERATION.

     Country World  Casinos,  Inc.,  the  Registrant  (the "Company" or "Country
World") was incorporated on November 9, 1982 under the name,  Innovative Medical
Technology,  Inc. The Company was  organized to engage in the medical  industry.
The  Company  effected a public  offering in 1983.  The Company was  essentially
inactive until 1990 when it undertook the manufacturing of monolithic  composite
panels for use in the construction of semi-truck  trailers,  shipping containers
and industrial  buildings.  The Company  discontinued this business in September
1992.

     In 1993, the Company changed the focus of its planned  business  operations
to the construction of a casino in Black Hawk,  Colorado.  In August,  1993, the
Company  completed the acquisition from New Allied  Development  Corporation and
its subsidiary,  Tommyknocker Casino Corp. (collectively "NADC") of certain real
property located in Black Hawk,  Colorado known as Mill Sites 12 and 13, and the
Smith Lode Mining Claim, U.S. Survey No. 502 (the "Property").

     Since the Company's  purchase of the Property in August 1993, the Company's
activities  have  focused  on  obtaining  the  necessary  financing  and  making
preparations  for  construction  of the casino on the Property.  The Company has
been able to obtain  sufficient  financing to make  significant  preparation for
construction  of the casino,  but sufficient  financing has not been obtained to
commence  construction of this project.  The Company's efforts have included the
completion  of an  extensive  excavation  project  consisting  of the removal of
approximately  60,000  cubic  yards of rock and  dirt,  preparation  of  working
drawings for the  foundation of the project,  design of the interior  casino and
retail areas of the project, work with the Colorado Department of Transportation
for the redesign of Highway 119, the main access road to the Property,  and work
with the Black  Hawk-Central  City Sanitation  District for a sewer tap and with
the City of Black Hawk's Water  District to provide a water tap to the Property.
Although these efforts have not been  completed,  the Company  believes that, if
financing  were  obtainable,  it should be in a position  to  construct a gaming
facility on the Property.

     In the fiscal year ended June 30,  1995,  the Company  borrowed  $1,000,000
from Holly Holdings,  Inc., formerly known as Holly Products, Inc. ("Holly"). On
April 20, 1995, the Company issued 5,000,000 shares of its common stock to Holly
in exchange for the cancellation of the $1,000,000 indebtedness,  plus interest.
The Company also agreed to grant Holly the right to purchase up to an additional
20,000,000  shares of common stock at $.20 per share (a total of  $4,000,000) if
such funding was provided within a reasonable time and progress  continued to be
made concerning  financing for the casino project.  The Company and Holly agreed
that Holly would provide $250,000 to the Company by no later than June 30, 1995,
for which the Company would issue  1,250,000  shares of its common stock.  Holly
did not  provide  the  $250,000  to the  Company  by  June  30,  1995;  however,
subsequent to the  advancement  of the $1,000,000  referred to above,  Holly has
provided  financing of  approximately  $865,000 to the Company through March 31,
1997.  In  addition,  as noted  below,  Holly has agreed to  provide  additional
financing to the Company.

     The Company is in need of  substantial,  additional  financing  in order to
complete  construction and to commence operation of the casino.  There can be no
assurance  that the Company will be able to obtain the necessary  financing.  In
addition,  the  Company's  ability to operate the casino will be dependent  upon
substantial other conditions, including the obtaining of licenses and compliance
with governmental regulations, grading and construction of the casino, obtaining
the  necessary  permits  and  approvals  from the City of Black  Hawk and  other
regulatory  bodies,  procuring  gaming  equipment  on  satisfactory  terms,  and
accomplishing  these objectives in a timely manner.  The Company does not expect
to accomplish these objectives in the current fiscal year.



                                        3

<PAGE>



     During the fiscal year ended June 30,  1995,  the  Company's  disagreements
with New Allied  intensified.  As a result of NADC's  unwillingness to cooperate
with the Company,  NADC's failure to secure a release of the $475,000 first deed
of  trust  on  the  Property,  NADC's  misrepresentations  to  the  Company  and
subsequent  legal problems  involving  NADC, the Company  instituted  litigation
against NADC.

     In 1995 NADC commenced foreclosure  proceedings involving the Property. Due
to the pendency of these  proceedings,  on October 12, 1995, the Company filed a
Voluntary  Petition Under Chapter 11 of the Bankruptcy Code in the United States
Bankruptcy Court, District of Colorado (Case No. 95 20563 RJB). As a result, all
creditors of the Company were stayed from commencing or continuing any action or
enforcing  any  judgment or lien against the Company or property of the Company,
except as  otherwise  authorized  pursuant to Title 11 U.S.C.  362(b).  Upon the
Company's  motion,  the Bankruptcy Court dismissed the Company's Chapter 11 case
in March 1997.

     In March 1996 the Bankruptcy  Court granted the Company's motion to approve
$5 million in financing,  which  financing was obtained on May 31, 1996.  The $5
million  financing was obtained from a group of lenders led by Kennedy  Funding,
Inc.  and  Anglo-American  Financial  as agent  ("Kennedy").  The lending  group
included Norlar,  Inc. Norlar, Inc. is a closely-held  corporation  beneficially
owned by Larry Berman and his wife. Mr. Berman is a director of the Company, and
an  officer,  director  and  principal  shareholder  of  Holly.  Norlar,  Inc.'s
participation  or percentage of the $5 million  financing is 47% or  $2,350,000.
The other participants are unrelated to the Company or Holly.

     In  connection  with this  financing,  the Company made a  Promissory  Note
effective May 20, 1996 payable to Kennedy in the principal  amount of $5 million
with  interest  payable  at the rate of 15% per annum  until  May 19,  1997 (the
"First Year  Interest  Obligation")  and at a rate of 24% per annum  thereafter.
Payments of principal  and  interest are payable as follows:  (a) the First Year
Interest  Obligation was prepaid at closing;  (b) commencing on May 19, 1997 and
for each month  thereafter,  the Company is to make interest only  payments,  in
advance,  in the amount of 2% of the then existing  principal  balance due under
the Note; and (c) the entire outstanding  principal  balance,  together with all
accrued and unpaid  interest,  if not previously  paid, shall be finally due and
payable on May 19, 1999.  The holder of the Note may accelerate the due date for
the entire  balance of  principal,  interest and other sums due upon maturity in
the event of default under the Note.  The default rate of interest is 24% during
the first loan year and 36%  thereafter.  The Note is secured by a first deed of
trust on the Property,  and any buildings,  fixtures and any materials which are
now or may hereafter be located on the Property. The Note has been guaranteed by
Holly.  In addition,  Holly and the Company  have entered into an  environmental
indemnity  agreement  with  Kennedy  pursuant to which they will defend and hold
harmless the co-lenders from any environmental claims.

     Norlar has agreed  with the other  participants  in the $5 million  loan to
subordinate  Norlar's interest to the other  participants for the benefit of the
Company.  Norlar has agreed that all of Norlar's monthly payments which would be
due on its 47% interest in the $5 million loan be deferred until the Property is
refinanced,  sold,  foreclosed upon or otherwise  liquidated.  Accordingly,  the
Company will be required, commencing May 19, 1997, to make monthly interest-only
payments  on the  remaining  53% of the $5 million  loan owed to the non- Norlar
participants. Therefore, the Company's requirements will be $53,000 per month.

     Holly has  agreed to  provide $1  million  on a  phased-in  basis,  with an
initial  payment of $750,000 made in February 1997.  Holly has agreed to pay the
remaining  $250,000 to the Company on or before  November 19, 1997.  The Company
has agreed with Holly to reduce this  agreement for the cash infusion to written
documents. The Company used the net proceeds of the $5 million Kennedy financing
and the advances from Holly to pay unsecured creditors of the Company and to pay
the amounts deemed by the Bankruptcy Court to be owed to NADC in connection with
NADC's  deed of  trust on the  Property.  The Deed of Trust in favor of NADC has
been extinguished.  Both the Company and NADC have filed appeals of this ruling,
which appeals are pending.

     The Company will  continue to seek  construction  financing  and  permanent
"take-out"  financing,  or a  joint-venture  partner  in  order to  develop  the
Property by the construction of a gaming facility. If the Company


                                        4

<PAGE>



should  fail in its efforts to obtain  such  financing,  the Company may seek to
market the Property for sale in order to liquidate the Property.

     The  Company has made  several  unsuccessful  efforts to obtain  financing,
construction financing,  "take-out" financing, or joint venture agreements in an
attempt to develop the Property. The Company is currently engaged in discussions
with a development firm regarding development of Property,  but no assurance can
be given that  arrangements  will be made with this firm, or if arrangements are
made,  that  they  will be on  terms  favorable  to the  Company.  There  can no
assurance that the Company will be successful in its efforts to obtain financing
for development of the Property,  or in the development or any actual  operation
of the Property.

     The Company has incurred  substantial net losses, and had a working capital
deficiency of approximately $1,785,000 at March 31, 1997. Insofar as the Company
has not  completed  its  casino  facility,  it has  received  no  revenues  from
operations  from these planned  business  activities.  The  Company's  financial
statements  have been presented on the basis that it is a going  concern,  which
contemplates  the  realization of assets and the  satisfaction of liabilities in
the normal course of business. The Company's ability to continue in existence is
dependent upon its ability to obtain additional  long-term financing and achieve
profitable  operations.  The financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset or liability
amounts  which  might be  necessary  should the Company be unable to continue in
existence.

     During the nine months  ended  March 31,  1997,  the  Company had  interest
income of  $26,079,  interest  expense of  $3,931,  general  and  administrative
expenses of $410,530 and depreciation  expense of $4,672. The Company's loss was
$392,319,  or $.06 per share.  The Company remains in the development  stage and
had incurred a loss from  inception  through March 31, 1997 of  $3,653,007.  The
ability of the Company to achieve  revenues in the future will be dependent upon
realization of its plans to develop a gaming facility on the Property.


                                        5

<PAGE>



                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     I. The Company is the plaintiff and a  counterclaim  defendant in a lawsuit
pending in Denver, Colorado District Court, Case No. 95CV2310,  entitled Country
World Casinos,  Inc., a Nevada  corporation,  Plaintiff,  v. Tommyknocker Casino
Corp., a Colorado corporation and New Allied Development Corporation, a Colorado
corporation,  Defendants,  v. Country World Casinos, Inc., a Nevada Corporation,
Holly Products,  Inc., a New Jersey  corporation,  Ronald G. Nathan, Sal Lauria,
Roger  D.  Leclerc,   William  H.  Patrowicz  and  David  Singer,   Counterclaim
Defendants.  This action was stayed due to the filing of the Company's  Petition
in Bankruptcy in the United States Bankruptcy Court for the District of Colorado
on October 12, 1995, Case No.  95-20563RJB  which case was dismissed upon motion
of the Company in March 1997. The District  Court  litigation and the bankruptcy
petition arise as a result of disputes with New Allied  Development  Corporation
and its subsidiary,  Tommyknocker Casino Corp.  (collectively  "NADC"). A claims
hearing was held in  September  1996 to determine  the amount of NADC's  allowed
secured debt in the proceeds of the Company's  financing of the Property.  Prior
to the  hearing,  the  Company  had paid to NADC the  undisputed  portion of its
secured debt against the Property in the amount of $998,391.  In November  1996,
the Bankruptcy  Court issued its Memorandum  Opinion and Order  determining  the
method  and  amount of NADC's  secured  claim.  The  amount  of  $1,308,726,  as
authorized by the Bankruptcy  Court, has been paid by the Company to NADC, for a
total of $2,307,117.  In November  1996, the Bankruptcy  Court ordered that NADC
was paid in full. The payment was without  prejudice to the right of the Company
to seek a reconsideration and without prejudice to appeal the Order.

     In December  1996,  the Company filed a Motion for  Reconsideration  of the
Order of the  Bankruptcy  Court,  as well as a notice of appeal.  The Bankruptcy
Court  denied the  Motion for  Reconsideration.  In  December  1996 NADC filed a
cross-appeal of the Order of the Bankruptcy  Court. This appeal has been made to
the United  States  District  Court for the  District of  Colorado  and has been
assigned case number 96-AP- 2823.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

     The Company has not made payments on a $725,000 note due to NADC secured by
a deed  of  trust  on  land  near  the  Property.  The  Company  is  engaged  in
negotiations  with NADC regarding this matter and other matters  involving them.
No assurance can be given that an agreement will be concluded,  or if concluded,
that the terms will be favorable to the Company.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

     (b) In March  1997 the  Company  filed a Report  on Form 8-K  under  Item 3
reporting  the  dissal of the  Company's  Chapter  11 case and the  appeal of an
earlier ruling by the Bankruptcy Court related to the dispute with NADC.



                                        6

<PAGE>


                           COUNTRY WORLD CASINOS, INC.
                          Notes to Financial Statements


     The accompanying  financial statements of Country World Casinos,  Inc. (the
"Company") have been prepared in accordance  with the  instructions to quarterly
reports on Form 10-QSB.  In the opinion of Management,  all  adjustments  (which
include  only normal  recurring  adjustments)  necessary  to present  fairly the
financial  position,  results of operations and changes in financial position at
March  31,  1997,  and  for  all  periods  presented  have  been  made.  Certain
information  and footnote  data  necessary  for fair  presentation  of financial
position  and  results of  operations  in  conformity  with  generally  accepted
accounting  principles have been condensed or omitted. it is therefore suggested
that these  financial  statements  be read in  conjunction  with the  summary of
significant  accounting  policies and notes to financial  statements included in
the Company's  Annual Report on Form 10-KSB.  The results of operations  for the
period ended March 31, 1997 are not necessarily  indicative of operating results
for the full year.



























                                       F-1



<PAGE>



                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.

                           COUNTRY WORLD CASINOS, INC.
                          (A Development Stage Company)
                                  Balance Sheet
                                  -------------


                                     Assets
Current assets:
      Cash                                                         $     20,946


Property and Equipment (Notes 3 and 4)
      Land                                                            7,475,475
      Casino under development                                        5,084,167
      Furniture and equipment                                            48,068
                                                                   ------------
                                                                     12,607,710
            Less accumulated depreciation                               (18,807)
                                                                   ------------
                                                                     12,588,903
Other assets
      Prepaid interest (Note 4)                                         125,000
      Deposits                                                              440
                                                                   ------------
Total assets                                                       $ 12,735,289
                                                                   ============


                                      F-2




<PAGE>
<TABLE>
<CAPTION>

                           COUNTRY WORLD CASINOS, INC.
                          (A Development Stage Company)
                                  Balance Sheet


                      Liabilities and Stockholders' Equity


Current liabilities:
<S>                                                                    <C>         
      Current maturities of long-term debt (Notes 3 and 4)             $    727,763
      Accounts payable                                                       12,160
      Advances - stockholders                                               865,232
      Accrued interest                                                      123,250
      Other accrued expenses                                                 77,843
                                                                       ------------
                  Total current liabilities                               1,806,248


Long term liabilities
      Notes Payable (Notes 4 and 7)                                       5,006,412
                                                                       ------------
                  Total liabilities                                       6,812,660

Commitments and contingency (Notes 3 and 6)

Stockholders' equity (Notes 2 and 3)
      Preferred stock, $.001 par value, 25,000,000 shares authorized
      Convertible Preferred, 2,250,000 shares issued and outstanding
            (Liquidation preference $7,492,500)                               2,250
      Common stock, $.001 par value, 50,000,000 shares authorized,
        10,836,187 issued and outstanding                                    10,836
      Additional paid-in capital                                          9,562,550
      Deficit accumulated during the development stage                   (3,653,007)
                                                                       ------------
                        Total stockholders' equity                        5,922,629
                                                                       ------------

Total liabilities and stockholders' equity                             $ 12,735,289
                                                                       ============














                        See notes to financial statements
                                       F-3

</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                           COUNTRY WORLD CASINOS, INC.
                          (A Development Stage Company)

                             Statement of Operations
                                                                  
                                                                     For the Period
                                                                  From November 9, 1982
                                                                    (Date of Inception)
                                             For Nine Months Ended       Through
                                                  March 31, 1997     March 31, 1997
                                                  --------------     -----------------

Costs and expenses
<S>                                                 <C>                <C>        
  Research and development costs                    $      --          $   122,000
  Bad debt expense                                         --              175,000
  General and administrative expenses                   410,530          3,387,767
  Depreciation expense                                    4,672             18,807
                                                    -----------        -----------
           Total                                    $   415,202        $ 3,703,574

Other income (expense)
  Other income                                              735
                                                                            46,462
  Interest expense                                       (3,931)
                                                                            (5,895)
  Interest income                                        26,079             92,848
  Gain on forgiveness of debt                              --               17,152
  Forfeited deposit (Note 3)                               --             (100,000)
                                                    -----------        -----------
           Total                                         22,883        $    50,567
                                                                       -----------

Loss from continuing operations                        (392,319)        (3,653,007)

Discontinued operations 
  Gain on disposal of subsidiaries                         --              389,286
  (Loss) from discontinued operations                      --             (389,286)
                                                    -----------        -----------

Net (loss) income                                   $  (392,319)       $(3,653,007)

Net (loss) income per share                         $      (.06)       $      (.55)
                                                    ===========        ===========

Weighted average number of shares
                                                      6,694,097          6,694,097
                                                    ===========        ===========

                        See notes to financial statements
                                       F-4
</TABLE>



<PAGE>
<TABLE>
<CAPTION>
                                                COUNTRY WORLD CASINOS, INC.
                                               (A Development Stage Company)
                                                 Statements of Cash Flows
                                                                                                 For the Period From
                                                                                                 November 9, 1982
                                                                                                 (Date of Inception)
                                                                     For Nine Months Ended             Through
                                                                          March 31, 1997           March 31, 1997
                                                                         ---------------           --------------

Cash flows from operating activities:
  Continuing operations
<S>                                                                         <C>                     <C>         
     Net (loss)                                                             $ (392,319)             $(3,653,007)
     Adjustments to reconcile net (loss) to net cash from
     operating activities -
        Depreciation                                                             4,672                   41,554
        Common stock issued for interest                                          --                     14,451
        Common stock issued for services                                          --                    837,500
        Decrease in noncurrent assets                                             --                    237,000
        Decrease in accounts payable                                          (638,193)                  12,160
        Increase in accrued expenses                                          (461,062)                 201,093
        Increase in prepaid expenses                                           562,500                 (125,000)
  Discontinued operations
     Net (loss)                                                                   --                   (389,286)
     Adjustments to reconcile net loss to net cash (used in) provided by
     operating activities -
        Gain on disposal of assets                                                --                    389,286
        Changes in assets and liabilities                                         --                       --
                                                                           -----------              -----------
           Total cash (used in) provided by operating activities              (924,402)              (2,434,249)

Cash flows from investing activities:
  Purchase of land and casino development costs                               (346,966)              (5,884,642)
  Purchase of furniture, vehicle and equipment                                    --                    (70,815)
  Investment in non-marketable securities                                         --                    (85,000)
  Loans receivable                                                                --                    (90,000)
  Investment in patent                                                            --                    (62,000)
  Deposits and other                                                              --                       (440)
  Cash into escrow                                                           1,817,213                     --
                                                                           -----------              -----------
           Total cash used in investing activities:                          1,470,247               (6,192,897)

Cash flows from financing activities:
  Proceeds advances stockholders                                               580,164                  865,232
  Proceeds from long-term debt                                                    --                  6,010,690
  Repayments on long-term borrowings                                        (1,111,353)              (3,451,515)
  Proceeds from stock issuance                                                    --                  5,220,835
  Capital contribution                                                            --                      2,850
                                                                           -----------              -----------
           Total cash provided by (used in) financing activities:             (531,189)               8,648,092

Net (decrease) increase in cash                                                 14,655                   20,946

Cash - beginning of period                                                       6,291                     --
                                                                           -----------             -----------

Cash - end of period                                                       $    20,946              $    20,946
                                                                           ===========              ===========
                                                     F-5
</TABLE>


<PAGE>



Supplemental Disclosure of Non-Cash Investing and Financing Activities:

During  the year ended June 30,  1995,  the  Company  converted  a note  payable
($1,000,000)  plus accrued  interest  ($14,451)  totaling  $1,014,451  owed to a
shareholder, into 5,000,000 common shares. (Note 1)

During the year ended June 30, 1994 the Company  issued common stock of $250,000
and Convertible Preferred stock of $2,250,000 and incurred $4,175,000 of debt to
acquired land with a cost of $6,675,000 (Note 3).




                        See notes to financial statements
                                       F-6




<PAGE>
<TABLE>
<CAPTION>
                                                COUNTRY WORLD CASINOS, INC.
                                               (A Development Stage Company)

                                             Statement of Stockholders' Equity
                             From November 9, 1982 (Date of Inception) Through March 31, 1997

                                            
                                                       Common Stock 
                                            --------------------------------------                    Deficit               
                         Preferred Stock                             Subscribed       Additional     During the
                        -----------------                          ---------------     Paid-In      Development    Accumulated
                        Shares     Amount   Shares      Amount     Shares   Amount     Capital         Stage         Total
                        ------     ------   ------     -------     ------   ------    -----------   -----------    -----------
<S>                     <C>       <C>       <C>         <C>           <C>    <C>       <C>             <C>          <C>    
November 9, 1982
  (date of inception)       -   $  --            --      $      --      -   $  --     $      --      $      --      $      --

Issuance of shares
  for cash                  -      --         104,000            520    -      --           1,005           --            1,525

Issuance of common
  stock to the public       -      --          51,600            258    -      --         644,742           --          645,000

Deferred offering
  costs                     -      --            --             --      -      --        (115,690)          --         (115,690)

Cancellation of
  common stock              -      --         (28,000)          (140)   -      --             140           --             --

Issuance of shares
  for services              -      --       3,000,000         15,000    -      --            --             --           15,000

Issuance of common
  stock at a discount       -      --      46,872,400        234,362    -      --        (214,362)          --           20,000

Capital contribution        -      --            --             --      -      --           2,850           --            2,850

Net loss for the
  period from November 9,
  1982 (date of
  inception) through
  June 30, 1992             -      --            --             --      -      --            --         (221,169)      (221,169)
                         ------  -----    -----------       -------   ----- ------       --------       --------       --------

Balance - June 30, 1992     -      --      50,000,000        250,000    -      --         318,685       (221,169)       347,516

Issuance of common stock
  at a discount
  for services              -      --      25,000,000        125,000    -      --        (112,500)          --           12,500

Net loss for year
  ended June 30, 1993       -      --            --             --      -      --            --         (373,401)      (373,401)
                         ------  -----    -----------       -------   ----- ------       --------       --------       --------

Balance - June 30, 1993     -      --      75,000,000        375,000    -      --         206,185       (594,570)       (13,385)

Reverse stock split
  1:35                      -      --     (72,857,142)      (364,285)   -      --         364,285           --             --

Change in par value
  from $.005 to
  $.001                     -      --            --           (8,572)   -      --           8,572           --             --

Issuance of stock
  for cash                  -      --         600,000            600    -      --         599,400           --          600,000

Issuance of stock
  for cash                  -      --       1,500,000          1,500    -      --       1,498,500           --        1,500,000


Continued on next page.
                                            See Notes to financial statements.
                                                            F-7
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

                                                COUNTRY WORLD CASINOS, INC.
                                               (A Development Stage Company)

                                             Statement of Stockholders' Equity
                              From November 9, 1982 (Date of Inception) Through March 31, 1997

Continued from previous page.                                                                               
                                                               Common Stock 
                                                 --------------------------------------                    Deficit               
                              Preferred Stock                             Subscribed       Additional     During the
                             -----------------                          ---------------     Paid-In      Development    Accumulated
                             Shares     Amount   Shares      Amount     Shares   Amount     Capital         Stage         Total
                             ------     ------   ------     -------     ------   ------    -----------   -----------    -----------
<S>                        <C>          <C>      <C>         <C>         <C>     <C>        <C>            <C>           <C>
Issuance of Convertible
  Preferred Stock for
  acquisition of land
  valued at $1.00 per
  share  (Note 5)          2,250,000    2,250        --         --         --        --       2,247,750          --      2,250,000

Issuance of stock for
  cash and services
  pursuant to exercise
  of options (Note 5)           --       --       250,000        250       --        --         249,750          --        250,000

Purchase and cancellation
  of treasury stock
  (Note 5)                      --       --      (125,000)      (125)      --        --        (124,875)         --       (125,000)

Issuance of stock
  for cash (Note 5)             --       --       200,662        200       --        --         499,800          --        500,000

Issuance of common
  stock for acquisition
  of land valued at
  $1.00 per share
  (Note 5)                      --       --      250,0009        250       --        --         249,750          --        250,000

Issuance of common
  stock for cash and
  services pursuant
  to exercise of
  options (Note 5)              --       --        95,000         95       --        --         237,405          --        237,500

Issuance of common
  stock for services
  rendered valued at
  $2.50 per share
  (Note 5)                      --       --       200,000        200       --        --         499,800          --        500,000

Subscription of
  common stock pursuant
  to private placement
   offering (Note 5)            --       --          --         --      262,667       263       787,737          --        788,000

Net loss for year
  ended June 30, 1994           --       --          --         --         --        --            --      (1,490,785)  (1,490,785)
                          ----------   ------ -----------   --------   --------    ------   -----------   -----------  -----------

Balance - June 30, 1994    2,250,000   $2,250   5,113,520   $  5,113    262,667    $  263   $ 7,324,059   $(2,085,355)  $5,246,330

Subscription of common
  stock pursuant
  to private placement
  offering (Note 5)             --       --       460,000        460       --        --       1,229,040          --      1,229,040

Issuance of stock
  for outstanding note          --       --     5,000,000      5,000       --        --       1,009,451          --      1,014,451

Convert subscribed
  stock to common
  and record fees               --       --       262,667        263   (262,667)     (263)         --            --           --

Net loss for twelve
  months ended
 June 30, 1995                  --       --          --         --         --        --            --         (757,659)   (757,659)
                           --------   ------  -----------   --------   --------    ------   -----------    -----------

Balance - June 30, 1995    2,250,000   $2,250  10,836,187   $ 10,836          0    $    0   $ 9,562,550    $(2,843,014) $6,732,622

                                            See notes to financial statements.
</TABLE>
                                                            F-8


<PAGE>
<TABLE>
<CAPTION>

                                                COUNTRY WORLD CASINOS, INC.
                                               (A Development Stage Company)

                                             Statement of Stockholders' Equity
                             From November 9, 1982 (Date of Inception) Through March 31, 1997


Continued from previous page.                                                   
                                                               Common Stock 
                                                 --------------------------------------                 Deficit               
                              Preferred Stock                             Subscribed    Additional     During the
                             -----------------                          ---------------  Paid-In      Development    Accumulated
                             Shares  Amount        Shares      Amount   Shares   Amount  Capital         Stage         Total
                             ------  ------        ------     -------   ------   ------ -----------   -----------    -----------
<S>                        <C>       <C>          <C>         <C>       <C>     <C>       <C>         <C>              <C>  



Net loss for twelve months
 ended June 30, 1996               -        -             -          -      -         -           -      (417,673)       (417,673)


Balance - June 30, 1996    2,250,000   $2,250    10,836,187    $10,836      0    $    0  $9,562,550   $(3,260,687)      $6,314,949
                           ---------   ------    ----------    -------  -----    ------  ----------   ------------      ----------


Net Loss for nine months
 ended March 31, 1997              -        -             -          -      -         -           -     (392,319)       (392,319)
                                                                                                       ---------       ---------


Balance March 31, 1997     2,250,000   $2,250    10,836,187    $10,836      0    $    0  $9,562,550   $(3,653,007)      $5,922,629
                           =========   ======    ==========    =======  =====    ======  ==========   ============      ==========







                                             See notes to financial statements
                                                            F-9

</TABLE>


<PAGE>



                           COUNTRY WORLD CASINOS, INC.
                          (A Development Stage Company)

                          Notes to Financial Statements

Note 1 - Summary of Significant Accounting Policies and Business Activity
-------------------------------------------------------------------------

Organization and Business
-------------------------

Country World Casinos,  Inc. (formerly Monolite  Industries) (the "Company"),  a
Nevada  corporation,  was  incorporated  on  November  9,  1982,  and  is in the
development  stage.  The original  planned  operation of the Company was for the
purpose of development, licensing and production of products on a subcontracting
basis,  and the sale of products and devices in or related to the medical and/or
biotechnical  fields.  In May of 1990,  the  Company  acquired  another  company
through the issuance of 40,000,000  shares of its common stock. This acquisition
was accounted for using the pooling of interests method. The newly merged entity
formed a subsidiary on November 29, 1990,  called  Trail-Lite,  Inc. The planned
operation  through  the new  subsidiary  was for the  purpose  of  manufacturing
monolithic  composite  panels.  In September  1992, the Company  disposed of its
subsidiary, Trail-Lite, Inc.

In fiscal year 1994, the Company changed its focus of business operations and in
two separate transactions, acquired approximately 79,000 and 375,000 square feet
of vacant land located in the city of Black Hawk, Gilpin County, Colorado. As of
December  31,  1996,  the Company has not  realized any revenue from its planned
operations and, accordingly, is considered to be in the development stage.

The Company is a majority-owned subsidiary of Holly Holdings, Inc.

Concentration of Credit Risk
----------------------------

The Company maintains cash balances in bank deposit  accounts,  which, at times,
exceed federally  insured limits.  The Company has not experienced any losses in
such accounts.

Hotel and Casino Under Development
----------------------------------

The Company has purchased land and has begun construction of a hotel and casino.
The land and development  costs are recorded at cost and no depreciation will be
taken until such time as the Company places the casino into operation.

Furniture and Equipment
-----------------------

Furniture  and  equipment  is  stated  at  cost  and  will be  depreciated  on a
straight-line basis over their estimated useful lives.




                                       F-10



<PAGE>
                           COUNTRY WORLD CASINOS, INC.
                          (A Development Stage Company)

                          Notes to Financial Statements

Note 1 - Summary of Significant Accounting Policies and Business Activity
(cont.)
--------------------------------------------------------------------------------

Loss Per Share
--------------

Loss per share of common stock was computed based on the weighted average number
of common shares outstanding during the period. Common stock equivalents are not
included as their effect would be antidilutive.

Statement of Cash Flows
-----------------------

The Company  considers  all highly  liquid  debt  instruments  purchased  with a
maturity  of  three  months  or less  to be cash  equivalents  for  purposes  of
statement of cash flows.

Note 2 - Continued Operations and Realization of Assets
-------------------------------------------------------

The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company incurred net losses
of  approximately  $3,653,000  for the  period  from  November  9, 1982 (date of
inception)  through  March 31,  1997.  The Company  filed for  bankruptcy  under
Chapter 11 on October 12, 1995. Upon motion by the Company, the Bankruptcy Court
dismissed  the  bankruptcy  case on March 11,  1997.  The  Company is  currently
looking for the required  funding to complete the construction of the casino and
hotel described in (Note 3). These factors, among others, indicate the Company's
ability  to  continue  in  existence  is  dependent  upon its  ability to obtain
additional  long-term  debt  and/or  equity  financing  and  achieve  profitable
operations.  The financial statements do not include any adjustments relating to
the  recoverability  and  classification  of recorded asset or liability amounts
which might be necessary should the Company be unable to continue in existence.

Note 3 - Casino Under Development
---------------------------------

On August 6, 1993, the Company closed on an acquisition of approximately  79,000
square feet of vacant land located within the city of Black Hawk, Gilpin County,
Colorado.  The Company paid $550,000  cash,  delivered a promissory  note in the
amount  of  $3,450,000,  and  delivered  2,250,000  shares  of  its  Convertible
Preferred  stock which is  convertible  to common stock on a 1 for 1 basis.  The
Company is obligated to file a registration  statement to cover the distribution
of the Convertible  Preferred  stock to the  shareholders of the selling entity,
which is a publicly-held corporation based in Denver, Colorado.

On June 28, 1994, the Company closed on an acquisition to an additional  375,000
square feet of vacant  land  located in close  proximity  to the  original  land
purchased.  The Company paid $200,000 cash,  delivered a promissory  note in the
amount of $725,000, and delivered 250,000 shares of its common stock.


                                      F-11


<PAGE>

                           COUNTRY WORLD CASINOS, INC.
                          (A Development Stage Company)

                          Notes to Financial Statements

Note 3 - Casino Under Development (continued)
---------------------------------------------

The Company intends to construct a casino on the land and intends to construct a
hotel subsequent to the completion of the casino.  On July 11, 1994, the Company
entered into a contract to construct the casino. The Company has capitalized the
following costs related to the casino construction through December 31, 1996:

    Interest on long-term debt                              $2,052,156
    Architectural fees and fees for construction
      and design services                                    3,032,011
                                                             ---------
                                                            $5,084,167
                                                            ==========


Note 4 - Long-Term Debt
-----------------------

$725,000 note payable -  stockholder,  interest at
8%, payable in monthly  installments over ten (10)
years  starting 15 months  after the June 28, 1994
closing.  The note is collaterized by a first deed
of trust on real  property  with a net book  value
ofapproximately $1,175,000                                       725,000

$5,000,000  note  payable - interest  at 15% until
May 19, 1997 and at 24%  thereafter.  Interest for
the first year was paid in advance at closing. The
principal  is  due  May  19,  1999.  The  note  is
collaterized  by a  first  deed of  trust  on real
property with a net book value of $6,250,000.  The
financing  was  obtained  from a group of  lenders
which included  Norlar,  Inc, a related party. The
Norlar,  Inc. portion of the financing amounted to
$2,350,000.                                                    5,000,000








                                      F-12



<PAGE>

                           COUNTRY WORLD CASINOS, INC.
                          (A Development Stage Company)

                          Notes to Financial Statements

$10,445  note payable - interest at 15% payable in
equal  monthly  installments  over four (4) years.
The note is collaterized by a copy machine                       9,175
                                                             ---------

5,734,175
Less current portion                                           727,763
                                                             ---------
                                                             5,006,412
                                                             =========

The first payment on the $725,000 note due September 28, 1995 was not made,  and
accordingly, the entire amount is considered current.



Note 5 - Income Taxes
---------------------

Effective July 1, 1993, the Company adopted SFAS No. 109, "Accounting for Income
Taxes," which requires  recognition of deferred tax  liabilities  and assets for
the expected  future tax  consequences  of events that have been included in the
financial statements or tax returns. Under this method, deferred tax liabilities
and  assets  are  determined  based  on the  difference  between  the  financial
statement and tax basis of assets and  liabilities  using  expected tax rates in
effect  for the year in which the  differences  are  expected  to  reverse.  The
measurement  of deferred tax assets is reduced,  if necessary,  by the amount of
any tax  benefits  that,  based on  available  evidence,  are not expected to be
realized.

The Company has not generated taxable income since its inception, and therefore,
no provision for income taxes has been made.

At June 30, 1996,  the Company had net operating  loss carry forwards for income
tax purposes of  approximately  $3,261,000  which expire  through 2012.  The net
operating  losses are  limited due to a more than 50% change in  ownership.  The
Company has approximately  $1,110,000  deferred tax asset as a result of the net
operating  losses  which has been fully  impaired due to  uncertainty  as to its
utilization


                                      F-13


<PAGE>
                           COUNTRY WORLD CASINOS, INC.
                          (A Development Stage Company)

                          Notes to Financial Statements

Note 6 - Related Party
----------------------

The Company  agreed with a majority  stockholder  that the majority  stockholder
will  receive the right to purchase up to  20,000,000  shares of common stock at
$.20 per share if specified funding is provided.

Note 7 - Note Default
---------------------

In July 1995, the note holder on the  $3,450,000  note payable (Note 4) declared
the note in  default  and began  foreclosure  proceedings  on the real  property
collateralizing  the note.  In addition,  the payments due on the $725,000  note
have not been  made and  accordingly  the note is  considered  in  default.  The
Company  filed a lawsuit  against  New Allied  Development  Corporation  and its
wholly owned subsidiary,  Tommyknocker Casino Corp. ("NADC"). In 1993, NADC sold
to the Company the land in Black Hawk,  Colorado upon which the Company plans to
construct a gaming facility.  The Company believes that NADC committed  wrongful
acts in connection  with the land purchase.  In addition to cash,  NADC received
preferred stock and a promissory note (the "Note") from the Company. The Note is
secured by a second deed of trust on the Black Hawk property. It was provided in
the Note that when certain  payments had been made by the Company to NADC,  NADC
would obtain the release of the first deed of trust which secures a pre-existing
indebtedness  of NADC in the original  principal  amount of $475,000.  The first
deed of trust had not been released. NADC declared the Company in default on the
Note. In the lawsuit,  the Company  requested a declaration  that the Company is
not obligated to make any additional  payments to NADC under the Note until NADC
has secured the release of the first deed of trust. The Company also seeks other
relief against NADC.

In March 1996 the  Bankruptcy  Court  approved  $5 million in  financing,  which
financing was obtained on May 31, 1996.

The Company received net proceeds of  approximately  $2,850,500 after payment of
loan commitment fees, loan servicing fees and points to Kennedy Funding, Inc. of
approximately  $812,000,  the First Year  Interest  Obligation  of $750,000  and
$610,000  for  release  of the prior  first deed of trust on the  Property.  The
holder of that deed of trust was the holder of a note which had not been paid by
NADC.


                                      F-14



<PAGE>
                           COUNTRY WORLD CASINOS, INC.
                          (A Development Stage Company)

                          Notes to Financial Statements


Note 7 - Note Default (continued)
---------------------------------

Pursuant to the Order of the Bankruptcy Court, the Company received a credit for
the amount paid to the holder of the note from NADC as a direct  offset  against
the Note made by the  Company  to NADC.  The note from the  Company  to NADC was
secured  by a second  deed of  trust  against  the  Property.  The net  proceeds
received by the Company from the loan closing were paid into an interest bearing
account pending further order of the Bankruptcy  Court. The Company and NADC had
a dispute as to the payoff  balance on the note due to NADC by the  Company.  In
November 1996, the Company  received final rulings from the court  regarding the
NADC dispute. The Company, in November 1996, tendered an amount of approximately
$1,309,000  to NADC and the  second  deed of trust  was  extinguished.  Both the
Company and NADC have filed appeals, which appeals are pending.














                                      F-15

<PAGE>

                                   SIGNATURES

In accordance  with the  requirements  of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, as amended,  the  Registrant  has caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.

                                            COUNTRY WORLD CASINOS, INC.


Dated:  May 15, 1997                        By: /S/  ROGER D. LECLERC
                                               ---------------------------------
                                               Roger D. Leclerc, President
                                               and Chief Financial Officer