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


                                   FORM 10-KSB


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


For year ended December 31, 1998                     Commission File No. 0-25022


                            CERX VENTURE CORPORATION
                            ------------------------
             (Exact name of registrant as specified in its charter)

            NEVADA                                       72-1148906
            ------                                       ----------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

       90 Madison Street, Suite 707
          Denver, Colorado 80206                           (303) 355-3350
          ----------------------                           --------------
(Address of Principal's Executive Offices)           (Registrant's Telephone No.
                                                           incl. area code)

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

Securities registered pursuant to
  Section 12(g) of the Act:                        Common stock, $.001 par value

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the preceding 12 months (or such shorter  period that the registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for at least the past 90 days.

     Yes   X     No

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

     Yes   X     No

     The registrant's revenues for its most recent year were nil.

     The aggregate  market value of the 1,822,985  shares of common stock of the
registrant held by non-affiliates on March 15, 1998 was $18,130.

     At March  15,  1999,  a total of  5,002,838  shares of  common  stock  were
outstanding.

<PAGE>


                                TABLE OF CONTENTS


                                     PART I

Item 1.  Description of Business ............................................ 2
Item 2.  Description of Property ............................................ 8
Item 3.  Legal Proceedings .................................................. 8
Item 4.  Submission of Matters to a Vote of Security Holders ................ 8

                                     PART II

Item 5.  Market for the Registrant's Common Equity and Related
           Stockholder Matters .............................................. 8
Item 6.  Management's Discussion and Analysis or Plan of Operation........... 9
Item 7.  Financial Statements ............................................... 9
Item 8.  Changes in and Disagreements with Accountants
           on Accounting and Financial Disclosure ........................... 10

                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
           Compliance with Section 16(a) of the Exchange Act ...............  10
Item 10. Executive Compensation ............................................  11
Item 11. Security Ownership of Certain Beneficial Owners and Management ....  12
Item 12. Certain Relationships and Related Transactions ....................  12

                                     PART IV

Item 13. Exhibits and Reports on Form 8-K ..................................  13

         Index to Financial Statements .....................................  14

         Financial Statements .............................................. F-1



                                                  PART I

Item 1. DESCRIPTION OF BUSINESS.

Background

     Cerx Venture  Corporation ("Cerx" or the "Company") was incorporated in the
State of Nevada on April 4, 1989, under the name Chelsea Atwater,  Inc. On March
19, 1997, the Company changed its name to Cerx Entertainment Corporation, and on
March 23, 1998,  changed its name again to Cerx Venture  Corporation.  Until the
fourth quarter of 1996,  when it  unsuccessfully  attempted to acquire a foreign
casino  management  company  for  stock  and cash,  Cerx had  extremely  limited
operations.  During the last quarter of 1996 and through  1997,  Cerx's  efforts
were  concentrated upon raising capital to execute a  now-discontinued  business
plan to become the premier operator of  entertainment  networks on the Internet,
including  networks for kids, news,  sports,  gaming and general  entertainment.
During  1998,  the  Company's  efforts were  concentrated  upon its search for a
business to acquire.

     Cerx's principal executive offices are located at 90 Madison Street,  Suite
707, Denver,  Colorado 80206. Its telephone number there is (303) 355-3350,  and
its facsimile number is (303) 355-3063.

Forward-Looking Information

     This report  contains  certain  forward-looking  statements and information
relating to the Company that are based on the beliefs of its  management as well
as assumptions  made by and information  currently  available to its management.
When  used  in this  report,  the  words  "anticipate",  "believe",  "estimate",

                                       2
<PAGE>


"expect",  "intend",  "plan",  and  similar  expressions,  as they relate to the
Company or its management, are intended to identify forward-looking  statements.
These statements reflect  management's  current view of the Company with respect
to  future  events  and are  subject  to  certain  risks and  uncertainties.  In
particular, should the Company fail to raise funding to originate a business, or
should any such  business  originated  fail,  or should the Company  fail in the
alternative to acquire an operating  company which ultimately is successful,  it
is unlikely  that the  Company's  stock will have any value or that any benefits
will flow from ownership of the Company's stock. The common stock of the Company
should be viewed at this time as a high risk  investment,  and no person  should
invest in the Company's stock unless able to comfortably  afford the loss of the
entire sum invested. The Company does not intend to update these forward-looking
statements.

Current Business

     The  Company  has  no  significant  assets  or  liabilities  and  is in the
development  stage.  The Company  intends to either  raise funds to  originate a
business or,  alternatively,  enter into a business combination with one or more
as yet  unidentified  privately held  businesses.  Management  believes that the
Company will be attractive to privately  held  companies  interested in becoming
publicly  traded by means of a business  combination  with the Company,  without
offering  their own  securities  to the public.  The  Company  intends to pursue
negotiations with qualified candidates.

     The Company will not be restricted  in its search for business  combination
candidates to any particular  geographical  area,  industry or industry segment,
and may enter into a combination  with a private business engaged in any line of
business.  Management's  discretion is, as a practical matter,  unlimited in the
selection of a combination  candidate.  The Company's  search  generally will be
directed  toward small to  medium-sized  companies.  The Company has not entered
into any  agreement  or  understanding  of any kind with any person  regarding a
business combination.

     PRE-COMBINATION  ACTIVITIES.  The Company's common stock is publicly quoted
on the OTC Bulletin Board, and it has insignificant assets and liabilities. With
these  characteristics,  management believes that the Company will be attractive
to privately held companies interested in becoming publicly traded by means of a
business combination with the Company,  without offering their own securities to
the public.

     The term "business  combination" (or "combination") means the result of (i)
a statutory merger or  consolidation  involving the Company and a privately held
business,  (ii) the  exchange  of  securities  of the  Company for the assets or
outstanding equity securities of a privately held business,  (iii) the merger or
consolidation  of a  privately  held  business  into  or  with  a  wholly  owned
subsidiary of the Company  formed for that purpose,  (iv) the sale of securities
of the Company for cash or other value to a business  entity or individual,  and
similar transactions.

     A combination may be structured as a merger, consolidation, exchange of the
Company's  Common  Stock for  assets or the  outstanding  stock of the  business
acquired,  sale of Common Stock for cash, or any other form which will result in
the combined  entity being a publicly held  corporation.  A sale of Common Stock
for cash or an  exchange  of Common  Stock for assets or stock may be made to an
individual or a business entity. It is not likely that any proposed  combination
will  be  subject  to  the  approval  of  the  Company's  shareholders.  Pending
negotiation and consummation of a combination,  the Company  anticipates that it
will have no  business  activities  or  sources  of  revenues  and will incur no
significant  expenses or liabilities  other than expenses related to SEC filings
or to the negotiation of a combination.

     The Company will not be restricted  in its search for business  combination
candidates to any particular  geographical  area,  industry or industry segment,
and may enter into a combination  with a private business engaged in any line of
business,  including service, finance, mining,  manufacturing,  real estate, oil
and gas, distribution, transportation, medical, communications, high technology,
biotechnology or any other.  Management's  discretion is, as a practical matter,
unlimited in the selection of a  combination  candidate.  The  Company's  search
generally will be directed toward small to medium-sized companies. Management of
the Company  will seek  combination  candidates  in the United  States and other
countries, as available time permits,  through existing associations and by word
of mouth.  The Company also may employ the services of business brokers or other
intermediaries.

                                       3
<PAGE>


     The Company has not entered into any agreement or understanding of any kind
with any person regarding a business combination. There can be no assurance that
the Company will be successful in locating a suitable  combination  candidate or
in concluding a business  combination  on terms  acceptable to the Company.  The
Company's  Board of Directors has not  established a time limitation by which it
must  consummate a suitable  combination;  however,  if the Company is unable to
consummate a suitable  combination within a reasonable period, such period to be
determined at the discretion of the Company's  Board of Directors,  the Board of
Directors will probably recommend its liquidation and dissolution.

     The  Company  will  participate  in a business  combination  only after the
negotiation and execution of a written agreement. Although the terms of any such
agreement   cannot  be  predicted,   such  agreements   generally   provide  for
representations  and warranties by the various  parties  thereto,  conditions of
closing,  post-closing  covenants  and  restrictions,   reciprocal  indemnities,
remedies  upon  default  and  other  terms.  As  a  general  matter,  management
anticipates  that the  Company  will  enter  into a letter  of  intent  with the
management,  principals or owners of a prospective combination candidate. Such a
letter of intent will set forth the terms of the proposed  acquisition  but will
not bind the Company to consummate  it.  Execution of a letter of intent will by
no means indicate that  consummation  of a combination is probable.  The Company
will not be bound unless and until it executes a definitive agreement concerning
the  combination,  as described in this paragraph,  and then only if the Company
has no contractual right to terminate the agreement on specified grounds.

     COMBINATION SUITABILITY STANDARDS. The Company will generally seek to avoid
companies whose business  appears to be  fad-oriented or otherwise  incapable of
sustained  long-term  growth.  In  seeking  combination  candidates,  management
anticipates  that the most  desirable  combination  candidates  will possess the
following attributes:

     1.   Strong operating  revenues,  or in the process of launching a business
          where contracts,  purchase orders or other existing  relationships are
          expected to generate strong revenues.

     2.   Experienced management in place or ready to joint the management team.

     Management  also may consider any or all of the  following  factors,  among
other possible factors, no one of which will be determinative:

     3.   If the candidate is an operating company, its financial track record.

     4.   The candidate's economic prospects,  such as potential for significant
          growth in revenues and earnings,  proprietary  technology  and rights,
          strength of marketing concept and size of potential market.

     5.   The  candidate's  capital  requirements  in  light  of its  access  to
          expansion capital.

     6.   Special  risks  associated  with the  candidate  and its  industry  or
          industry segment.

     7.   Perceived  desirability  of the candidate (or its industry or industry
          segment) or its product(s) to investors and investment  bankers in the
          public capital markets.

     8.   Current and potential future competition.

     Prior to  consummation  of any  combination  (other than a mere sale by the
Company of  controlling  interest in its  outstanding  stock) the  Company  will
require that the  business to be combined  provide the Company at the least with
an audited balance sheet as of the most recent fiscal year end and statements of
operations,  cash  flows and  changes in  stockholders'  equity for the two most
recent fiscal years,  audited by certified public accountants  acceptable to the
Company's management.  Such financial statements must be adequate to satisfy the
Company's  reporting  obligations under Section 15(d) or 13 of the Exchange Act.
Following consummation of a combination,  the Company will file a current report
on Form 8-K with the Commission  which discloses among other things the date and
manner of the combination,  the assets and consideration  involved, the identity
of the person or persons from whom the assets or other  property  was  acquired,
changes  in  management  and  biographies  of the new  officers  and  directors,
principal shareholders following the combination, and will provide, if required,
the financial statements referenced above.

                                       4
<PAGE>


     POST-COMBINATION  ACTIVITIES.  Following consummation of a combination, the
Company  anticipates  that control of the Company will change as a result of the
issuance of  additional  Common Stock to the  shareholders  of the  business(es)
acquired in the  combination.  Once such control has been assumed,  it is likely
that the new  controlling  shareholders  will call a meeting  for the purpose of
replacing the incumbent  directors of the Company with  candidates of their own,
and that the new directors  will then replace the incumbent  officers with their
own nominees.  Current management will not object to such replacements when duly
made.

     POTENTIAL INSIDER SALES OF STOCK. No officer,  director or affiliate of the
Company  currently  has any  intention  of selling  shares  owned by them in the
Company to any person in connection  with any business  opportunity  acquired by
the  Company.  However,  no law,  rule or  regulation,  and no bylaw or  charter
provision   prevents  any  such  persons  from  thus  actively   negotiating  or
consummating  such a sale of  their  shares.  Company  shareholders  will not be
afforded  any  opportunity  to review or approve any buyout of shares held by an
officer,  director  or  other  affiliate,   should  such  a  buyout  occur,  and
shareholders generally will not be afforded a similar opportunity to sell shares
in connection with such a transaction.

     USE OF  CONSULTANTS.  The Company has had no  discussions,  and has entered
into no  agreements  or  understandings,  with  any  consultant.  The  Company's
officers and directors have not in the past used any particular consultant(s) on
a regular basis and have no plan to recommend that any particular  consultant(s)
be  engaged  by the  Company  on any basis.  No  particular  criteria  regarding
experience,  services,  term of  service,  or the like has  been  considered  or
developed regarding the engagement of consultant(s). While the Company currently
has no plan to hire or  engage  consultant(s)  and  management  believes  that a
desirable business opportunity can be located and acquired by management,  it is
possible that  management  will find it necessary to hire or pay  consultants on
some  basis  in  relation  to an  acquisition,  as  discussed  in the  following
paragraph.

     ACQUISITION-RELATED  COMPENSATION.  It is possible that compensation in the
form of common stock, options, warrants or other securities of the Company, cash
or any combination thereof, may be paid to various persons in connection with an
acquisition  by the Company.  Such persons may include  officers,  directors and
promoters  of the  Company  and any of  their  respective  affiliates,  finders,
consultants or other persons. Any payments of cash would be made by the business
acquired or persons  affiliated or associated  with it, since the Company has no
cash. It is possible that the payment of such  compensation  may become a factor
in any negotiations for the Company's acquisition of a business opportunity. Any
such negotiations and compensation may present conflicts of interest between the
interests  of  persons   seeking   compensation   and  those  of  the  Company's
shareholders, and there is no assurance that any such conflicts will be resolved
in favor of the Company's shareholders.

Possible Origination of a Business

     The Board of  Directors  has left open the  possibility  that,  instead  of
seeking a business  combination,  the Company may instead raise funding in order
to  originate  an  operating  business,  which may be in any industry or line of
business,  and could involve the Company's  origination of a start-up  business,
purchase and  development  of a business  already  originated by third  parties,
joint venture of a new or existing  business,  or take any other lawful form. It
is also  possible  that the Company may engage in one or more  combinations,  as
discussed  above, and originate a business in addition.  Potential  shareholders
should consider that management has the widest possible discretion in choosing a
business direction for the Company.

     Any funds needed to originate and develop a business would almost certainly
be raised from the sale of the Company's securities, since the Company lacks the
creditworthiness  to  obtain  a loan.  Management  does  not  believe  that  the
principal shareholders,  directors or executive officers of the Company would be
willing to guarantee  any debt taken on, and  obtaining a loan without  personal
guarantees is unlikely.  Capital could  possibly be raised from the sale of debt
instruments convertible into common stock upon the occurrence of certain defined
events,  but no such funding has been offered.  The Company has no current plans
to offer or sell  its  securities,  but  would  be  agreeable  do so if a worthy
business  opportunity  presents  itself and adequate  funding then appears to be
available.

                                       5
<PAGE>


State Securities Law Considerations

     Section 18 of the Securities Act of 1933, as amended in 1996, provides that
no law,  rule,  regulation,  order or  administrative  action  of any  state may
require  registration or qualification of securities or securities  transactions
with respect to a "covered  security." The term "covered security" is defined in
Section 18 to include,  among other things,  transactions  which are exempt from
registration  under the Securities  Act of 1933 pursuant to Section 4(1),  which
exempts transactions by "any person not an issuer, underwriter or dealer," (that
is,  secondary  resales,  such as  market  trades)  provided  the  issuer of the
security  files reports with the  Commission  pursuant to Section 13 or 15(d) of
the Exchange  Act and is timely in those  filings.  In other  words,  Section 18
defines a  covered  security  to  include  market  trades  and  other  secondary
transactions by shareholders in outstanding securities,  even if the issuer is a
"blank check" company, provided the issuer is a reporting company.

     While  subparagraph (c) of Section 18 as amended preserves the authority of
the states to require  certain  limited notice filings and to collect fees as to
certain  categories  of covered  securities  (including  Section 4(1)  secondary
transactions  in the  securities  of  reporting  companies),  a  state  may  not
"directly or  indirectly  prohibit,  limit,  or impose  conditions  based on the
merits of such  offering  or  issuer,  upon the  offer or sale of any  (covered)
security."  This  provision   prohibits  state   registration  or  qualification
requirements, other than requiring certain limited notice filings, of trading in
the securities of blank check companies which are SEC reporting  companies.  The
Company will comply with any such state limited notice filings as appropriate.

No Investment Company Act Regulation

     Prior to  completing  a  combination,  the  Company  will not engage in the
business  of  investing  or  reinvesting  in, or  owning,  holding or trading in
securities,  or  otherwise  engaging  in  activities  which would cause it to be
classified as an  "investment  company" under the 1940 Act. To avoid becoming an
investment  company,  not more  than 40% of the  value of the  Company's  assets
(excluding  government  securities and cash and cash equivalents) may consist of
"investment  securities,"  which is defined to include all securities other than
U.S.  government  securities  and  securities  of  majority-owned  subsidiaries.
Because the Company  will not own less than a majority of any assets or business
acquired,  it will not be regulated as an investment  company.  The Company will
not pursue any combination  unless it will result in the Company owning at least
a majority interest in the business acquired.

Competition

     The Company will be in direct competition with many entities in its efforts
to locate suitable business  opportunities.  Included in the competition will be
business development  companies,  venture capital partnerships and corporations,
small business  investment  companies,  venture capital affiliates of industrial
and financial companies,  broker-dealers and investment bankers,  management and
management  consultant  firms and private  individual  investors.  Most of these
entities  will possess  greater  financial  resources and will be able to assume
greater  risks than those which the  Company,  with its limited  capital,  could
consider.  Many of these  competing  entities  will also  possess  significantly
greater  experience and contacts than the Company's  management.  Moreover,  the
Company also will be competing  with numerous  small public shell  companies for
such opportunities.

Risk Factors

     At this time the shares of the Company are  speculative  and involve a high
degree of risk.  The Company is in the  development  stage with no operations or
revenues,  thus there are no  financial  results  upon which  anyone may base an
assessment of its potential.  No combination  candidate has been  identified for
acquisition  by  management,  nor  has  any  determination  been  made as to any
business  for the Company to enter,  and  shareholders  will have no  meaningful
voice in any such determinations. There is no assurance that the Company will be
successful in completing a combination or  originating a business,  nor that the
Company  will be  successful  or that its  shares  will have any value even if a
combination is completed or a business originated.

                                       6
<PAGE>


     The Company's officers and directors,  who serve only on a part-time basis,
have had limited  experience  in the  business  activities  contemplated  by the
Company, yet the Company will be solely dependent on them. The Company lacks the
funds or other incentive to hire full-time experienced  management.  Each of the
Company's management members has other employment or business interests to which
he devotes his primary  attention and will  continue to do so,  devoting time to
the Company only on an as-needed  basis.  Moreover,  members of  management  are
involved  in other  companies  also  seeking  to  engage in a  combination,  and
conflicts  of  interest  could  arise in the event they come  across a desirable
combination  candidate.  No assurance exists that all or any such conflicts will
be resolved in favor of the Company.

     After completion of a combination,  the current shareholders of the Company
may experience  severe dilution of their ownership due to the issuance of shares
in the  combination.  Any combination  effected by the Company almost  certainly
will  require  its  existing  management  and  board  members  to  resign,  thus
shareholders  have no way of knowing  what  persons  ultimately  will direct the
Company and may not have an effective voice in their selection.

Employees

     The only employees of the Company currently are its officers, none of which
provide full time  services to the Company.  It is not expected that the Company
will  have or need  additional  employees  except as a result  of  completing  a
combination.

Conflicts of Interest

     Certain  officers and  directors of the Company are  affiliated  with other
companies  having a similar  business  plan to that of the Company  ("affiliated
companies")  which may  compete  directly  or  indirectly  with the  Company for
combination candidates. The Company has not identified a specific business area,
industry or industry segment in which it will seek combination  candidates.  The
Company has made a  determination  that it will not  concentrate  its search for
combination candidates in any particular business, industry or industry segment,
since any such concentration is potentially limiting and confers no advantage to
the Company.  Certain specific conflicts of interest may include those discussed
below.

     1. The  interests  of any  affiliated  companies  from  time to time may be
inconsistent  in some respects with the interests of the Company.  The nature of
these  conflicts of interest may vary.  There may be  circumstances  in which an
affiliated  company may take advantage of an opportunity  that might be suitable
for the Company.  Although  there can be no assurance that conflicts of interest
will not  arise or that  resolutions  of any  such  conflicts  will be made in a
manner most  favorable  to the Company and its  shareholders,  the  officers and
directors of the Company have a fiduciary  responsibility to the Company and its
shareholders  and,  therefore,  must  adhere  to a  standard  of good  faith and
integrity in their dealings with and for the Company and its shareholders.

     2. The  officers  and  directors  of the Company  serve as officers  and/or
directors  of one or more  affiliated  companies  and may serve as officers  and
directors of other affiliated  companies in the future.  The Company's  officers
and directors are required to devote only so much of their time to the Company's
affairs  as they  deem  appropriate,  in  their  discretion.  As a  result,  the
Company's  officers and directors  may have  conflicts of interest in allocating
their management time, services, and functions among the Company and any current
and future  affiliated  companies  which  they may  serve,  as well as any other
business ventures in which they are or may become involved.

     3. The affiliated companies may compete directly or indirectly with that of
the Company for the acquisition of available,  desirable combination candidates.
Such conflicts are not expected to be resolved through arm's-length negotiation,
but rather in the discretion of management  members.  While any such  resolution
will be made with due regard to the  fiduciary  duty owed to the Company and its
shareholders,  there can be no assurance  that all  potential  conflicts  can be
resolved in a manner most  favorable to the Company as if no conflicts  existed.
Members  of the  Company's  management  who also are  members of  management  of
another  affiliated  company  will  also  owe  the  same  fiduciary  duty to the
shareholders  of each such  affiliated  company.  Absent  factors  unique to the
Company  or an  affiliated  company  which make it more or less  desirable  to a
potential  combination  candidate (such as age, name,  capitalization,  state of
domicile,  etc.), management expects that in the event of a direct conflict, any
combination  candidate  will be  presented  to the  Company  and any  applicable
affiliated companies in the order they were organized.

                                       7
<PAGE>


     As a practical matter, such potential conflicts could be alleviated only if
each previously or  contemporaneously  formed  affiliated  company either is not
seeking a combination candidate, has already identified a combination candidate,
is seeking a combination  candidate in a specifically  identified business area,
or is  seeking  a  combination  candidate  that  would  not  otherwise  meet the
Company's  selection  criteria.  In general,  the Company will be given priority
over  subsequently  formed  affiliated  companies  with  regard  to its  initial
acquisition  of a combination  candidate,  assuming that it meets the investment
criteria of the Company. It is likely, however, that the combination criteria of
the Company and any affiliated  companies are virtually identical as a practical
matter and that this will remain true.  In the final  analysis,  the Company and
its shareholders  ultimately must rely on the fiduciary  responsibility  owed to
them by the Company's officers and directors.

Item 2. DESCRIPTION OF PROPERTY.

     Cerx  neither owns nor leases any real estate or other  properties.  Cerx's
offices currently are located at 90 Madison Street, Suite 707, Denver,  Colorado
80206,  and are provided at no charge by its President.  This  arrangement  will
continue  until Cerx raises  funding to  originate a business  or  completes  an
acquisition of an operating  business,  in which latter event the offices of the
Company undoubtedly will be the same as those of the acquired company.

Item 3. LEGAL PROCEEDINGS.

     Cerx is not involved in any threatened or pending legal proceeding.

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

     No matters were submitted by management to a vote of Cerx security  holders
during the year ended  December 31, 1998.  However,  on March 20, 1998, a single
shareholder  (John D. Brasher Jr.) holding in the aggregate more than a majority
of the issued and  outstanding  shares  entitled to vote, took action by written
consent  in lieu of a meeting,  as  permitted  by  Section  78.320 of the Nevada
General  Corporation  Law. By means of that written  consent,  the  shareholders
approved a change of the Company's name to Cerx Venture Corporation.

                                     PART II

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

Market Information

     Commencing  in the  fourth  quarter of the year ended  December  31,  1995,
Cerx's  common  shares were quoted on the OTC Bulletin  Board  maintained by the
National Association of Securities Dealers, Inc. To Cerx's knowledge,  no market
transactions  have taken place in the common shares,  and there  currently is no
market for the common shares. At this time, the common stock is quoted $.01 bid,
no offer, on the OTC Bulletin Board under symbol CERX, with two market makers.

Holders

     Cerx had 554 shareholders of record as of March 15, 1999.

Dividends

     Cerx does not expect to pay a cash  dividend  upon its capital stock in the
near future.  Payment of dividends in the future will depend on Cerx's  earnings
(if any) and its cash requirements at that time.

                                       8
<PAGE>


Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

Liquidity and Capital Resources

     Cerx has funded its operations to date  exclusively  through cash loans and
advances  provided  by its  principal  shareholder  and from an advance of funds
against a securities  placement never  completed.  Cerx did not realize any cash
from equity  financing  activities  in 1998 and has no line of credit or similar
credit  facility  available to it.  However,  Cerx currently pays no salaries or
rent, has little in the way of general or administrative  overhead expenses, and
has no  material  capital  commitments  and will  have  none  unless  it  should
originate or participate  in a business.  Assets and cash available to Cerx from
its management and current shareholders are not sufficient for Cerx to originate
or participate  in a business,  although there is no impediment to engaging in a
combination.  President  and CEO John  Brasher  has  indicated  to the  Board of
Directors  that he will make cash  available  sufficient  for the Company to pay
expenses  related to making  required  filings with the  Securities and Exchange
Commission  under the  Securities  Exchange Act of 1934,  as amended  ("Exchange
Act").

Results of Operations - 1998

     During  the year  ended  December  31,  1998,  Cerx  incurred a net loss of
$18,410.  Cerx had $1,014 in cash but no other significant  assets.  Expenses in
1998 related  primarily to  miscellaneous  operating  costs,  filing costs,  and
accounting fees. Cerx paid no salaries or rent and incurred no legal fees during
1998.  Cerx was indebted to its principal  shareholder  and  President,  John D.
Brasher Jr., at December 31, 1998, for cash loans, accrued interest and expenses
advanced.  At year end,  Cerx owed Mr.  Brasher  an  aggregate  of  $159,372  in
principal  and $18,741 in interest on loans made to the  Company.  During  1998,
John D. Brasher Jr. loaned an additional  $61,850 to the Company,  most of which
the Company used to partially repay advances of $74,590 it received in 1997 on a
planned  offering  of the  Company's  stock to  non-U.S.  residents  pursuant to
Regulation S under the Securities Act of 1933, as amended  ("Act").  During 1998
the advance was paid down by Cerx to $14,590.  This amount must at some point be
repaid or converted into shares of Cerx common stock.

Results of Operations - 1997

     During  the year  ended  December  31,  1997,  Cerx  incurred a net loss of
$134,352.  Expenses in 1997 related primarily to miscellaneous  operating costs,
professional  fees,  expenditures  made  preparing for an offering of securities
never completed,  amounts spent attempting to launch a now-discontinued business
plan to launch an Internet-based  business, and expenses related to the business
acquisitions  attempted  in 1996 but never  completed.  Cerx paid no salaries or
rent during 1997 and incurred $40,585 in general and administrative  costs. Cerx
also incurred $38,885 in legal fees owed to Brasher & Company.

     As of December  31,  1997,  Cerx had  accumulated  a deficit  (net loss) of
$401,854  and had  $4,609  in cash but no  other  significant  assets.  Cerx was
indebted to its principal  shareholder  and  President,  John D. Brasher Jr., at
December 31, 1997, for cash loans,  accrued interest and expenses  advanced.  At
year end, Cerx owed Mr.  Brasher an aggregate of $97,522 in principal and $8,217
in interest.  Prior to year end, Brasher & Company, the Company's law firm owned
by President John D. Brasher Jr., forgave $53,343 owed for expenses advanced and
legal fees, which the Company treated as a capital contribution in that amount.

Plan of Operation

     Cerx's  plan of  operation  for the next  twelve  months is set forth above
under Item 1 (Description of Business).

Item 7. FINANCIAL STATEMENTS.

     See index to  financial  statements  at page 14. The  financial  statements
begin following that index. No supplementary financial data is required.

                                       9
<PAGE>


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

     Not applicable.

                                    PART III

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

     Directors are elected for one-year  terms or until the next annual  meeting
of  shareholders  and until their  successors  are duly  elected and  qualified.
Officers  continue  in office at the  pleasure  of the Board of  Directors.  The
following  table  sets  forth the name,  age,  position  held and tenure of each
director and executive officer:

      Name                Age      Position Held and Tenure
      ----                ---      ------------------------

John D. Brasher Jr.       47       President, Chief Executive Officer, Director,
                                   Chairman of the Board, Secretary, since 
                                   April 4, 1989

Johnny D. Brasher         72       Senior Vice-President, Director since 
                                   April 10, 1989.

     Johnny D. Brasher is the father of John D. Brasher Jr.  Otherwise there are
no  family  relationships  among  the  officers  and  directors.   There  is  no
arrangement  or  understanding  between the Company (or any of its  directors or
officers)  and any other  person  pursuant  to which such person was or is to be
selected as a director or officer.  The  directors  and officers are expected to
devote their time to the Company's  affairs on an "as needed" basis, but are not
required to make any specific portion of their time available to the Company.

Biographical Information

     JOHN D. BRASHER JR. Mr. Brasher is an attorney  engaged since February 1988
in the practice of law in Denver,  Colorado,  as proprietor of Brasher & Company
and  concentrates  in the fields of corporate and securities  law. From February
1987 to February 1988 he practiced law as a  profit-sharing  partner in the firm
of Pred and Miller, Denver, Colorado,  concentrating in corporate and securities
law. From August 1982 until February 1987, Mr. Brasher  practiced  corporate and
securities  law as an  associate  and later as a partner of  Broadhurst,  Brook,
Mangham and Hardy, of Lafayette,  Louisiana.  Mr. Brasher received a B.A. degree
in  English  in 1979,  and in 1982  received  a law  degree  (J.D.),  both  from
Louisiana State University. He is admitted to practice in the States of Colorado
and Louisiana and is a member of the bar of the United States Supreme Court. Mr.
Brasher  also is a director of Renegade  Venture  (Nev.)  Corporation,  a Nevada
corporation,  and director  and chief  executive  officer of Cerx  Entertainment
Corporation,  a  Nevada  corporation,  and  Champion  Ventures,  Inc.,  a Nevada
corporation, both companies with a business plan similar to that of the Company.
Mr.  Brasher is also a director  of Vacation  Emporium  International,  Inc.,  a
Colorado corporation that markets timeshare interests.

     JOHNNY D. BRASHER.  From 1962 to late 1988,  Mr. Brasher owned and operated
Central  Construction  Company,  a  sole  proprietorship  located  in  Ferriday,
Louisiana,  which engaged in the business of supplying services and equipment to
the oil drilling industry.  Since early 1989 he has been semi-retired,  engaging
in farming and other business activities in Louisiana.

General Conflicts of Interest

     Certain  conflicts of interest now exist and will continue to exist between
Cerx and its  officers  and  directors  due to the  fact  that  each  has  other
employment or business interests to which he devotes his attention. Each officer
and  director  is expected  to  continue  to do so. See Item 1  (Description  of
Business) under the caption  "Conflicts of Interest." The officers and directors
are  accountable  to Cerx as  fiduciaries,  which  means  that they are  legally
obligated  to exercise  good faith and  integrity  in handling  Cerx's  affairs.
Failure by them to conduct  Cerx's  business in its best interests may result in
liability to them.

                                       10
<PAGE>


Compliance with Section 16(a)

     Section 16(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"),  requires the  Company's  executive  officers,  directors and persons who
beneficially  own more than 10% of a class of the  Company's  equity  securities
registered  under the Exchange  Act to file reports of ownership  and changes in
ownership with the Securities and Exchange Commission.  Based solely on a review
of the forms it has  received  and on  representations  from  certain  reporting
persons, the Company believes to the best of its knowledge that, during the year
ended December 31, 1997, all Section 16(a) filing requirements applicable to its
officers,  directors  and  10%  beneficial  owners  were  complied  with by such
persons.

Significant Employees

     None, other than officers of Cerx listed above.

Item 10. EXECUTIVE COMPENSATION.

Cash Compensation

     For the year ended  December 31, 1998, no executive  officer  received cash
compensation.

Compensation Pursuant to Plans

     For the year  ended  December  31,  1998,  no  executive  officer  received
compensation pursuant to any plan.

Other Compensation

     None.

Compensation of Directors.

     No  compensation  currently  is paid or has  been  paid to any  person  for
serving as a director of the Company.

Employee Stock Compensation Plan

     The  Company  has adopted the 1994  Employee  Stock  Compensation  Plan for
employees,  officers,  directors of the Company and advisors to the Company (the
"ESC Plan"). The Company has reserved a maximum of 5,000,000 Common Shares to be
issued upon the grant of awards  under the ESC Plan.  Employees  will  recognize
taxable  income upon the grant of Common Stock equal to the fair market value of
the  Common  Stock on the date of the grant and the  Company  will  recognize  a
compensating  deduction at such time. The ESC Plan will be  administered  by the
Board of  Directors.  An aggregate of 2,012,853  common shares have been awarded
under the ESC Plan.

Compensatory Stock Option Plan

     The Company has adopted the  Compensatory  Stock Option Plan for  officers,
employees,  directors and advisors (the "CSO Plan").  The Company has reserved a
maximum of  5,000,000  Common  Shares to be issued upon the  exercise of options
granted under the CSO Plan. The CSO Plan will not qualify as an "incentive stock
option" plan under Section 422 of the Internal Revenue Code of 1986, as amended.
Options will be granted  under the CSO Plan at exercise  prices to be determined
by the Board of  Directors  or other CSO Plan  administrator.  With  respect  to
options granted pursuant to the CSO Plan,  optionees will not recognize  taxable
income upon the grant of options  granted at or in excess of fair market  value.
The Company will be entitled to a compensating deduction (which it must expense)
in an amount equal to any taxable income  realized by an optionee as a result of
exercising  the  option.  The CSO  Plan  will be  administered  by the  Board of
Directors or a committee of directors.

                                       11
<PAGE>


Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The following  table sets forth,  as of March 15, 1999, the stock ownership
of each officer and director of the  Company,  of all officers and  directors of
the  Company  as a  group,  and of each  person  known  by the  Company  to be a
beneficial  owner of 5% or more of its Common Stock,  $.001 par value per share.
Except as otherwise noted, each person listed below is the sole beneficial owner
of the shares and has sole investment and voting power as such shares. No person
listed  below has any  option,  warrant  or other  right to  acquire  additional
securities of the Company, except as may be otherwise noted.

                                                Amount
   Name and Address of                    Common Stock Owned   Percent of Common
   of Beneficial Owner                       Beneficially      Stock Outstanding
   -------------------                       ------------      -----------------

*John D. Brasher, Jr. ...................    2,929,853 (1)           57.9%
      90 Madison Street
      Suite 707
      Denver, Colorado 80206

*Johnny D. Brasher ......................      250,000                4.9%
      P.O. Box 1686
      Ferriday, Louisiana 71334

      *All directors and executive
      executive officers (2 persons) ....    3,179,853               62.9%

     (1)  Mr. Brasher disclaims beneficial ownership as to 85,000 shares held in
          the name of the Lisa K. Brasher  Children's  Trust, of which his wife,
          Lisa K. Brasher, is the trustee.

Changes in Control

     Management of the Company does not  anticipate any change of control in the
management of the Company  except as may occur in connection  with  completing a
combination or originating a business.

Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     Cerx was  indebted to its  principal  shareholder  and  President,  John D.
Brasher Jr., at December 31, 1998, for cash loans and accrued interest.  At year
end, Cerx owed Mr.  Brasher an aggregate of $159,372 in principal and $18,741 in
interest (at 8% simple interest per annum) pursuant to promissory notes.  During
1998, John D. Brasher Jr. loaned an additional $61,850 to the Company, which the
Company used to partially  repay  advances it received in 1997 on an offering of
the Company's stock under Regulation S which was never completed.

     Otherwise, there were no transactions,  or series of transactions,  for the
year ended December 31, 1998, nor are there any currently proposed transactions,
or series of transactions, to which Cerx is a party, in which the amount exceeds
$60,000, and in which to the knowledge of Cerx any director,  executive officer,
nominee,  five percent or greater  shareholder,  or any member of the  immediate
family of any of the foregoing persons, have or will have any direct or indirect
material interest.

                                       12
<PAGE>


                                     PART IV

Item 13. EXHIBITS AND REPORTS ON FORM 8-K.

     (a) Exhibits.

     The following exhibits are either filed with this report or have previously
been filed with the Securities and Exchange  Commission and are  incorporated by
reference  to  another  report,  registration  statement  or  form.  As  to  any
shareholder of record requesting a copy of this report, the Company will furnish
any exhibit  indicated  in the list below as filed with this report upon payment
to the Company of its expenses in furnishing the information.  References to the
"Company" mean Cerx Venture Corporation.


 3.1      Certificate of Incorporation  of the Company,  as filed
          with the  Nevada  Secretary  of State on April 4, 1989,
          incorporated   by   reference   to   Exhibit   3.1   to
          registration statement on Form 10-SB, file no. 0-25022..........     1

 3.2      Certificate of Amendment of the Company,  as filed with
          the Nevada Secretary of State of the State of Nevada on
          November 8, 1990,  incorporated by reference to Exhibit
          3.2 to registration  statement on Form 10-SB,  file no.
          0-25022.........................................................     1

 3.3      Certificate of Amendment of the Company,  as filed with
          the  Nevada  Secretary  of State on October  26,  1994,
          incorporated   by   reference   to   Exhibit   3.3   to
          registration statement on Form 10-SB, file no. 0-25022..........     1

 3.4      Bylaws of the  Company as  adopted  on March 22,  1989,
          incorporated   by   reference   to   Exhibit   3.4   to
          registration statement on Form 10-SB, file no. 0-25022..........     1

 3.5      Certificate of Increase in Number of Authorized  Shares
          of  Common  Stock of the  Company,  as  filed  with the
          Nevada   Secretary   of  State   on  July   15,   1996,
          incorporated  by  reference to Exhibit 3.5 to report on
          Form 8-K dated July 12, 1996 ...................................     1

 3.6      Certificate of Amendment of the Company  (changing name
          to Cerex  Entertainment  Corporation) as filed with the
          Nevada   Secretary   of  State  on  January  27,  1997,
          incorporated  by  reference to Exhibit 3.1 to report on
          Form 8-K dated January 27, 1997 ................................     1

 3.7      Certificate  of  Amendment  of  the  Company  (amending
          certificate of  incorporation in its entirety) as filed
          with the  Nevada  Secretary  of State on  February  28,
          1997,  incorporated  by  reference  to  Exhibit  3.2 to
          report on Form 8-K dated January 27, 1997.......................     1

 3.8      Certificate  of Amendment of the Company  (establishing
          and   designating   the  Series  A,  6.75%   Non-Voting
          Convertible  Preferred  Stock of the  Company) as filed
          with the Nevada  Secretary  of State on March 12, 1997,
          incorporated  by  reference to Exhibit 3.3 to report on
          Form 8-K dated January 27, 1997.................................     1

 3.9      Certificate of Amendment of the Company  (changing name
          to Cerx  Entertainment  Corporation)  as filed with the
          Nevada   Secretary   of  State  on  March   19,   1997,
          incorporated  by  reference to Exhibit 3.4 to report on
          Form 8-K dated January 27, 1997.................................     1

 3.10     Bylaws  of  the  Company  adopted  February  20,  1997,
          incorporated  by  reference to Exhibit 3.5 to report on
          Form 8-K dated January 27, 1997.................................     1

                                       13
<PAGE>


 3.11     Certificate of Amendment of the Company  (changing name
          to Cerx Venture  Corporation)  as filed with the Nevada
          Secretary of State on March 23, 1998............................     1

 3.12     Certificate  of Amendment  of the Company  (withdrawing
          authorization  creating and  designating  the Series A,
          6.75% Nonvoting  Convertible  Preferred Stock, as filed
          with the Nevada Secretary of State on March 23, 1998............     1

 4.1      Specimen  common  stock  certificate  of  the  Company,
          incorporated   by   reference   to   Exhibit   4.1   to
          registration statement on Form 10-SB, file No. 0-25022..........     1

10.1      1994  Compensatory  Stock Option Plan,  incorporated by
          reference to Exhibit 10.1 to registration  statement of
          Form 10-SB, file No. 0-25022....................................     1

10.2      1994 Employee Stock Compensation Plan,  incorporated by
          reference to Exhibit 10.2 to registration  statement of
          Form 10-SB, file No. 0-25022....................................     1

10.3      Amendment to 1994 Compensatory Stock Option Plan of the
          Company,  incorporated  by reference to Exhibit 10.1 to
          report on Form 8-K dated January 27, 1997.......................     1

          1    -    Incorporated    by   reference   to   another
               registration statement, report or document.

          2    - Filed herewith as an exhibit.

     (b) Reports on Form 8-K.

     None were filed by the  Company  during  the fourth  quarter
ended December 31, 1998.

     (c) Financial statements and supplementary data.

                          INDEX TO FINANCIAL STATEMENTS


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

Balance Sheet as of December 31, 1998 ..................................    F-3

Statements of Operations for years ended
 December 31, 1998 and 1997 and for the period
 April 4, 1989 (inception) through December 31, 1998 ...................    F-4

Statements of Cash Flows for years ended
 December 31, 1998 and 1997 and for the period
 April 4, 1989 (inception) through December 31, 1998 ...................    F-5

Statement of Stockholders' Deficit
 for the period April 4, 1989 (inception)
 through December 31, 1998 .............................................    F-6

Notes to Financial Statements ..........................................    F-8



                                       14
<PAGE>


                          INDEPENDENT AUDITOR'S REPORT




To the Board of Directors
Cerx Venture Corporation
Denver, Colorado


I have audited the  accompanying  balance sheet of Cerx Venture  Corporation  (a
development  stage company) as of December 31, 1998, and the related  statements
of operations, cash flows and changes in stockholders' deficit for the two years
then  ended and the  1998,  1997 and 1996  amounts  included  in the  cumulative
amounts  from  April 4,  1989  (inception)  through  December  31,  1998.  These
financial  statements are the  responsibility  of the management of Cerx Venture
Corporation.  My  responsibility  is to express  an  opinion on these  financial
statements  based  on  my  audit.  The  financial  statements  of  Cerx  Venture
Corporation  (a  development  stage  company)  for the period from April 4, 1989
(inception) to December 31, 1995,  were audited by other auditors whose opinion,
dated February 29, 1996, on those financial statements was unqualified.

I conducted my audit in accordance with generally  accepted auditing  standards.
Those standards  require that I plan and perform the audit to obtain  reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial 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.
I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all
material  respects,  the  financial  position  of Cerx  Venture  Corporation  (a
development  stage  company) as of  December  31,  1998,  and the results of its
operations  and cash flows for the two years  then ended and the 1998,  1997 and
1996 amounts  included in the cumulative  amounts from April 4, 1989 (inception)
through  December 31, 1998, in conformity  with  generally  accepted  accounting
principles.




                                       F-1
<PAGE>


To the Board of Directors
Cerx Venture Corporation
Page Two



The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note A to the
financial  statements,  the Company's recurring losses and stockholders' deficit
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern  unless  the  Company  obtains  future   profitable   operations  and/or
additional  financing.  Management's  plans  in  regard  to  these  matters  are
discussed in Note A. The  financial  statements  do not include any  adjustments
that might result from the outcome of this uncertainty.


                                             /s/  Stephen M. Siedow, P.C.


March 29, 1999
Aurora, Colorado





                                       F-2
<PAGE>

                            CERX VENTURE CORPORATION
                          (A Development Stage Company)
                                  Balance Sheet
                                December 31, 1998



                                     ASSETS
                                     ------


Current assets:
   Cash                                                               $   1,014
                                                                      ---------

                                                                      $   1,014
                                                                      =========



                     LIABILITIES AND STOCKHOLDERS' DEFICIT
                     -------------------------------------


Current liabilities:  (Notes A and F)
   Accounts payable                                                   $   2,580
   Advances                                                              14,590
   Accrued interest                                                      18,741
   Promissory notes to an officer/stockholder                           159,372
                                                                      ---------
                                                                        195,283
                                                                      ---------

Stockholders' deficit:  (Notes B, C and F)
   Preferred stock; $.001 par value; authorized -
      15,000,000 shares; issued - none                                     --
   Common stock; $.001 par value; authorized -
      50,000,000 shares; issued and outstanding -
      5,002,838 shares                                                    5,003
   Additional paid-in capital                                           220,992
   Deficit accumulated during the development stage                    (420,264)
                                                                      ---------
        Total stockholders' deficit                                    (194,269)
                                                                      ---------

                                                                      $   1,014
                                                                      =========



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

                                       F-3

<PAGE>
<TABLE>
<CAPTION>

                               CERX VENTURE CORPORATION
                             (A Development Stage Company)
                               Statements of Operations



                                                                           April 4, 1989
                                                                          (inception) to
                                               Year Ended December 31,     December 31,
                                                 1998           1997           1998
                                                 ----           ----           ----
<S>                                          <C>            <C>            <C>        
Costs and expenses:  (Notes C, D, E and F)
   Costs related to attempted
     business acquisitions                   $      --      $    37,593    $   192,020
   General and administrative                      7,885         40,585        143,038
   Interest                                       10,525          7,744         18,742
   Offering costs                                   --           48,430         66,464
                                             -----------    -----------    -----------

Net loss                                     $   (18,410)   $  (134,352)   $  (420,264)
                                             ===========    ===========    ===========

Loss per common share                        $     (.004)   $     (.027)
                                             ===========    ===========

Weighted average common shares outstanding     5,002,838      4,985,440
                                             ===========    ===========



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

                                          F-4

</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                  CERX VENTURE CORPORATION
                                (A Development Stage Company)
                                  Statements of Cash Flows


                                                                                  April 4, 1989
                                                                                 (inception) to
                                                         Year ended December 31,  December 31,
                                                            1998         1997         1998
                                                            ----         ----         ----

Cash flows from operating activities:
<S>                                                      <C>          <C>          <C>       
   Net loss                                              $ (18,410)   $(134,352)   $(420,264)
   Adjustments to reconcile net loss to net
     cash provided by operating activities:
     Capital contribution by an officer/
        stockholder                                           --         53,343       53,343
     Common stock issued for costs
        advanced and services                                 --           --        151,112
     Changes in operating assets and liabilities:
       Accounts payable                                      2,441          139        2,580
       Advances                                            (60,000)      74,590       14,590
       Accrued interest                                     10,524        7,744       18,741
       Due to an officer/stockholder                          --        (16,164)        --
                                                         ---------    ---------    ---------
       Net cash used in operating activities               (65,445)     (14,700)    (179,898)
                                                         ---------    ---------    ---------

Cash flows from financing activities:
   Proceeds from promissory notes                           61,850       14,500      159,372
   Proceeds from sale of common stock                         --          2,500       21,540
                                                         ---------    ---------    ---------
       Net cash provided by financing activities            61,850       17,000      180,912
                                                         ---------    ---------    ---------

Net increase (decrease) in cash                             (3,595)       2,300        1,014
Cash at beginning of year                                    4,609        2,309         --
                                                         ---------    ---------    ---------

Cash at end of year                                      $   1,014    $   4,609    $   1,014
                                                         =========    =========    =========


Supplemental disclosure of noncash
   investing and financing activities:
   Capital contribution by an officer/stockholder        $    --      $  53,343    $  53,343
                                                         =========    =========    =========
   Common stock issued for services and costs advanced   $    --      $    --      $ 151,112
                                                         =========    =========    =========
   Interest paid                                         $    --      $    --      $    --
                                                         =========    =========    =========
   Income taxes paid                                     $    --      $    --      $    --
                                                         =========    =========    =========



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

                                             F-5

</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                  CERX VENTURE CORPORATION
                                (A Development Stage Company)
                Statements of Changes in Stockholders' Deficit for the Period
                       April 4, 1989 (Inception) to December 31, 1998


                                                                                   Deficit
                                                                     Additional   Accumulated
                                                Common Stock          Paid-in       from
                                             Shares       Amount      Capital     Inception
                                             ------       ------      -------     ---------

<S>                                          <C>        <C>          <C>          <C>     
Balances, April 4, 1989 (inception)             --      $     --     $     --     $     --

   Common stock issued for cash,
     March 29, 1989, at $.006 per share      405,000           405        1,845         --

   Common stock issued for cash,
     March 29, 1989, at $.012 per share      911,010           911        9,839         --

   Common stock issued for cash,
     April 3, 1989, at $.012 per share       211,860           212        2,288         --

   Common stock issued for cash,
     April 7, 1989, at $.006 per share        90,000            90          410         --

   Common stock issued for cash,
     April 7, 1989, at $.012 per share       127,115           127        1,373         --

   Common stock issued for cash,
     May 23, 1989, at $.002 per share        175,000           175          175         --

   Common stock issued for cash,
     May 23, 1989, at $.004 per share        310,000           310          840         --

   Common stock issued for cash,
     May 31, 1989, at $.002 per share         20,000            20           20         --

   Net loss                                                                             (825)
                                          ----------    ----------   ----------   ----------
Balances, December 31, 1989                2,249,985         2,250       16,790         (825)

   Net loss                                                                          (18,014)
                                          ----------    ----------   ----------   ----------
Balances, December 31, 1990                2,249,985         2,250       16,790      (18,839)

   Net loss                                                                              (59)
                                          ----------    ----------   ----------   ----------
Balances, December 31, 1991                2,249,985         2,250       16,790      (18,898)

   Net loss                                                                             (142)
                                          ----------    ----------   ----------   ----------
Balances, December 31, 1992                2,249,985         2,250       16,790      (19,040)
 
  Net loss                                                                             --
                                          ----------    ----------   ----------   ----------
Balances, December 31, 1993                2,249,985    $    2,250   $   16,790   $  (19,040)
                                          ==========    ==========   ==========   ==========



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

                                             F-6

<PAGE>


                                  CERX VENTURE CORPORATION
                                (A Development Stage Company)
                Statements of Changes in Stockholders' Deficit for the Period
                 April 4, 1989 (Inception) to December 31, 1998 - continued


                                                                                       Deficit
                                                                         Additional  Accumulated
                                                 Common Stock             Paid-in        from
                                              Shares        Amount        Capital     Inception
                                              ------        ------        -------     ---------

Balances, Forward                            2,249,985    $    2,250    $   16,790   $  (19,040)

   Common stock issued for out of pocket
     expenses incurred, valued at
     $.002 per share                           740,000           740           740         --

   Net loss                                                                              (1,787)
                                            ----------    ----------    ----------   ----------
Balances, December 31, 1994                  2,989,985         2,990        17,530      (20,827)

   Net loss                                                                             (12,773)
                                            ----------    ----------    ----------   ----------
Balances, December 31, 1995                  2,989,985         2,990        17,530      (33,600)

   Common stock issued for out of pocket
     expenses incurred, valued at
     $.02 per share                            123,260           123         2,342         --

   Common stock issued pursuant to an
     asset purchase agreement, valued
     at $.001 per share                      1,195,035         1,195                       --

   Recission of common stock issued
     pursuant to an asset purchase
     agreement, valued at $.001 per share   (1,195,035)       (1,195)                      --

   Common stock issued for out of pocket
     expenses and legal fees incurred,
     valued at $.10 per share                1,839,593         1,840       145,327         --
   Net loss                                                                            (233,902)
                                            ----------    ----------    ----------   ----------
Balances, December 31, 1996                  4,952,838         4,953       165,199     (267,502)

   Common stock issued for cash,
     May 8, 1997, at $.05 per share             50,000            50         2,450         --

   Capital contribution                                                     53,343         --

   Net loss                                                                            (134,352)
                                            ----------    ----------    ----------   ----------
Balances, December 31, 1997                  5,002,838         5,003       220,992     (401,854)

   Net loss                                                                             (18,410)
                                            ----------    ----------    ----------   ----------
Balances, December 31, 1998                  5,002,838    $    5,003    $  220,992   $ (420,264)
                                            ==========    ==========    ==========   ==========



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

                                             F-7

</TABLE>

<PAGE>

                            CERX VENTURE CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements



Note A - Summary of Significant Accounting Policies

Description of Business
-----------------------

The  financial  statements  presented are those of Cerx Venture  Corporation,  a
development stage company (the "Company"). The Company was incorporated on April
4, 1989  under the laws of the State of  Nevada.  A  majority  of the  Company's
shareholders  have approved a change in the Company's name from Chelsea Atwater,
Inc. to Cerex  Entertainment  Corporation to Cerx  Entertainment  Corporation to
Cerx Venture Corporation.

The  Company's  activities to date,  have been  directed  towards the raising of
capital and two attempted business acquisitions (Note C).

As shown in the financial  statements,  as of December 31, 1998, the Company had
incurred an accumulated  deficit of $420,264 and has limited cash. The Company's
continued existence is dependent on its ability to generate sufficient cash flow
to meet its obligations on a timely basis. Accordingly, the financial statements
do not include any  adjustments  that might be  necessary  should the Company be
unable to continue in  existence.  The  Company  has been  exploring  sources to
obtain additional  equity or debt financing.  The Company has also indicated its
intention to participate in one or more as yet unidentified  business  ventures,
which  management  will select after  reviewing the business  opportunities  for
their profit or growth potential.

Income Taxes
------------

Deferred  tax  assets  and   liabilities  are  recognized  for  the  future  tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases.  Deferred tax assets and liabilities are measured using enacted tax rates
expected  to apply to  taxable  income  in the  years in which  those  temporary
differences  are  expected  to reverse.  The effect on  deferred  tax assets and
liabilities  of a  change  in  tax  rates  is  recognized  in the  statement  of
operations in the period that includes the enactment date.

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

Loss per common  share is  computed  by  dividing  the net loss by the  weighted
average shares outstanding during the period.

Use of Estimates in the Preparation of Financial Statements
-----------------------------------------------------------

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the  reporting  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported amounts of revenues and expenses during the period.  Actual results
could differ from those estimates.

                                      F-8
<PAGE>

                            CERX VENTURE CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements


Fair Value of Financial Instruments
-----------------------------------

The fair value of the Company's payables,  accrued interest and promissory notes
due to an  officer/stockholder is not practicable to estimate due to the related
party nature of the underlying transactions and the indefinite payment terms.

Comprehensive Income
--------------------

In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standard Number 130 (SFAS 130) "Reporting  Comprehensive
Income",  that establishes  standards for reporting and display of comprehensive
income and its components in a full set of general purpose financial statements.
There  were no items of  comprehensive  income as defined by SFAS 130 for any of
the periods presented.

Note B - Stockholders' Deficit

Common Stock Transactions
-------------------------

In 1989,  the Company sold 2,249,985  shares of common stock to fifteen  persons
for the aggregate sum of $19,040.  Of these shares,  805,000  common shares were
sold to officers and directors of the Company for $3,900.

On September 21, 1994, the Company issued 740,000 shares of common stock to John
D. Brasher Jr., the  Company's  principal  shareholder  and president for out of
pocket expenses paid on behalf of the Company. These shares were valued at $.002
per share or $1,480.

On January 25, 1996,  the Company  issued 123,260 shares of common stock to John
D. Brasher Jr., for out of pocket expenses paid on behalf of the Company.  These
shares were valued at $.02 per share or $2,465.

On July 12, 1996,  the Company's  Board of Directors  approved a 5 for 1 forward
stock split of the Company's  $.001 par value common  stock.  All shares and per
share amounts have been restated to reflect this forward stock split.

On December  28,  1996,  a majority  of the  Company's  shareholders  approved a
restructuring of the Company's  authorized  capital including (1) a reduction in
the authorized common shares from 250,000,000 to 50,000,000,  (2) an increase in
the authorized  preferred shares from 5,000,000 to 15,000,000,  and (3) a change
in par value to $.001 for both the common and  preferred  stock.  All shares and
per share  amounts  have been  restated  to reflect  this  restructuring  of the
Company.

On December 31, 1996,  the Company  issued  1,839,593  shares of common stock to
John D. Brasher Jr., for Company expenses  advanced and legal services  provided
by Brasher & Company. These shares were valued at $.08 per share or $147,167.

                                      F-9
<PAGE>


                            CERX VENTURE CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements


On May 8, 1997,  the Company sold 50,000 shares of common stock to a corporation
for cash. These shares were valued at $.05 per share or $2,500.

On December  30,  1997,  Brasher & Company,  of which John D. Brasher Jr. is the
sole  owner,  forgave  $53,343 of accrued  legal fees and  expenses  advanced on
behalf of the  Company.  The Company has  recorded  this debt  forgiveness  as a
capital contribution.

Dividends  may be paid  on  outstanding  shares  as  declared  by the  Board  of
Directors. Each share of common stock is entitled to one vote.

Preferred Stock
---------------

On February 10, 1997,  the  Company's  Board of Directors  designated  4,000,000
shares of the Company's authorized 15,000,000 shares, $.001 par value, preferred
stock as a Series A, 6.75% Non-Voting  Convertible Preferred Stock. The Series A
preferred  shares were  convertible  into 5,500,000 common shares of the Company
under certain circumstances. On March 31, 1998, the Company's Board of Directors
approved the  withdrawal of the  Company's  designation  of 4,000,000  shares of
preferred  stock as Series A,  6.75%  Non-Voting  Convertible  Preferred  Stock,
returning such shares to the status of undesignated preferred shares.

The Company has 15,000,000  preferred  shares,  $.001 par value,  authorized but
undesignated.  Dividends,  voting rights and other terms, rights and preferences
of these preferred  shares have not been designated but may be designated by the
Board of Directors  from time to time. As of December 31, 1998, no  undesignated
preferred shares have been issued or are outstanding.

1994 Compensatory Stock Option Plan
-----------------------------------

The Company has adopted a compensatory  stock option plan (the "CSO Plan") which
allows for the issuance of options to purchase up to  5,000,000  shares of stock
to employees,  officers,  directors and consultants of the Company. The CSO Plan
is not intended to qualify as an "incentive stock option plan" under Section 422
of the Internal  Revenue  Code.  Options  will be granted  under the CSO Plan at
exercise  prices to be  determined  by the Board of  Directors or other CSO Plan
administrator.  The Company will incur  compensation  expense to the extent that
the market value of the stock at date of grant exceeds the amount the grantee is
required to pay for the options. No options have been granted under the CSO Plan
to date.

1994 Employee Stock Compensation Plan
-------------------------------------

The Company has adopted an  employee  stock  compensation  plan (the "ESC Plan")
which allows for the issuance of up to 5,000,000  shares of stock to  employees,
officers,  directors  and  consultants  of the  Company.  The Company will incur
compensation  expense to the  extent  the  market  value of the stock at date of
grant exceeds the amount the employee is required to pay for the stock (if any).
The ESC Plan will be  administered  by the Board of  Directors or a committee of
directors.  As of December 31, 1998, the Company has awarded 2,012,853 shares of
common stock under the ESC Plan.

                                      F-10
<PAGE>

                            CERX VENTURE CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements


Note C - Attempted Business Acquisitions

The Company  charged  $154,427 to operations  during the year ended December 31,
1996 in connection with two attempted business acquisitions of companies engaged
in the gaming  business in the British West Indies.  The Company  cancelled  the
purchase   agreements   for  numerous   violations,   breaches  or  failures  of
representations and warranties contained in the agreements. Cash advances, legal
fees and travel costs were charged to operations  and the Company  cancelled all
of its common shares issued on the Company' stock transfer  books.  All attempts
to complete these acquisitions were terminated in 1996.

During the year ended December 31, 1997 the Company incurred additional costs of
$37,593 relating to these two attempted acquisitions.

Note D - Private Offering

The Company was unsuccessful in making a private offering of its Series A, 6.75%
Non-Voting  Convertible  Preferred Stock and,  therefore,  offering costs in the
amount of $48,430 were charged to operations  during the year ended December 31,
1997.

Note E - Income Taxes

There is no  provision  for income  taxes  since the Company  has  incurred  net
operating losses.

Income taxes at the federal statutory rate is reconciled to the Company's actual
income taxes as follows:


                                                               December 31,
                                                          ---------------------
                                                            1998         1997
                                                            ----         ----

Federal income tax benefit at statutory rate              $ (7,180)    $(35,647)
State income tax benefit net of federal tax effect            --           --
Non deductible expenses                                       --          7,086
Other                                                         --          1,018
Deferred income tax valuation allowance                      7,180       27,543
                                                          --------     --------
                                                          $   --       $   --
                                                          ========     ========


                                      F-11
<PAGE>

                            CERX VENTURE CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements


The Company's deferred tax assets are as follows:


                                                   December 31,
                                              --------------------
                                                 1998       1997
                                                 ----       ----

            Accrued expenses                  $  5,865    $  2,512
            Net operating loss carryforward     62,128      58,301
            Valuation allowance                (67,993)    (60,813)
                                              --------    --------

                                              $   --      $   --
                                              ========    ========

At December  31,  1998,  the Company has net  operating  loss  carryforwards  of
$198,547 which may be available to offset future taxable income through 2013.

Note F - Related Party Transactions

During  1998,  John D.  Brasher Jr., the  Company's  principal  shareholder  and
president,  loaned the Company $61,850 and these funds subsequently were used to
partially repay advances of $60,000.

On December  31,  1998,  the Company  owed John D.  Brasher Jr. an  aggregate of
$159,372 in demand  promissory  notes and $18,741 of accrued interest (8% simple
interest  per  annum)  for cash  loans and  expenses  advanced  on behalf of the
Company. The Company has recorded interest expense of $10,525 and $7,744 for the
years ended December 31, 1998 and 1997.

The law firm of Brasher &  Company,  of which  John D.  Brasher  Jr. is the sole
owner,  has  provided  legal  services  and  advanced  expenses on behalf of the
Company in the amounts of $0 and $38,885 for the years ended  December  31, 1998
and 1997.

On December 30, 1997,  Brasher & Company  forgave  $53,343 of accrued legal fees
and expenses  advanced on behalf of the Company.  The Company has recorded  this
debt forgiveness as a capital contribution.

The Company  utilized  office  space  provided by Brasher & Company at no charge
during the years ended December 31, 1998 and 1997.


                                      F-12

<PAGE>

                                   SIGNATURES


     In accordance  with section 13 or 15(d) of the  Securities  Exchange Act of
1934,  the  Registrant  caused  this  Report on Form  10-KSB to be signed on its
behalf by the undersigned, thereto duly authorized individual.

Date:   April 12, 1999
                                    CERX VENTURE CORPORATION





                                    By /s/ John D. Brasher Jr.
                                      ------------------------------------------
                                      John D. Brasher Jr., President, Chief
                                      Executive Officer, Chief Financial Officer

     In accordance  with the  Securities  Exchange Act of 1934,  this report has
been signed below by the following  persons on behalf of the  Registrant  and in
the capacities and on the dates indicated.

      Name                               Title                     Date
      ----                               -----                     ----


/s/ John D. Brasher Jr.
-----------------------          President, Chief Executive      04/12/99
John D. Brasher Jr.              Officer, Chief Financial
                                 Officer, Director


/s/ Johnny D. Brasher
---------------------            Vice President, Director        04/12/99
Johnny D. Brasher