Form 10-QSB

                     SECURITIES AND EXCHANGE COMMISSION

                           Washington, D.C. 20549

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

               For the quarterly period ended December 31, 1997
          
               Commission file number 1-12668

                                   OR

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

               For the transition period from                    to     

               For Quarter Ended                Commission File Number        


                             HOLLY HOLDINGS, INC.
          (Exact name of registrant as specified in its charter)
     
          New Jersey                                    22-3172149
(State of  jurisdiction of incorporation)            (I.R.S. Employer 
                                                        I.D. Number)

         200 Monument Road, Suite 10, Bala Cynwyd, Pennsylvania  19004
                   (Address of principal executive offices)               

                Registrant's telephone number (610) 617-0400


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

                         Yes            No  X  

Indicate the number of shares outstanding of each of the issuer's classes of 
common stock. The Registrant had 23,106,492 shares of its common stock 
outstanding as of December 31, 1997.

<PAGE>

HOLLY HOLDINGS, INC. AND SUBSIDIARIES
INDEX


Part I:     FINANCIAL INFORMATION

Item 1:     Financial Statements:

   Consolidated Balance Sheet as of December 31, 1997 (Unaudited)       1-2

   Consolidated Statements of Operations for the Three and
     Nine Months Ended December 31, 1997 and 1996 (Unaudited)           3

   Consolidated Statements of Cash Flows for the Nine Months Ended
     December 31, 1997 and 1996 (Unaudited)                             4-5

   Notes to Consolidated Financial Statements (Unaudited)               6

Item 2:   Management's Discussion and Analysis of Financial
   Condition and Results of Operations                                  7-11


Part II:     OTHER INFORMATION

Item 1:     Legal Proceedings                                          12-14

Item 2:     Changes In the Rights of the Company's Security Holders    14

Item 3:     Defaults by the Company on its Senior Securities           14

Item 4:     Results of Votes of Shareholders                           14

Item 5:     Other Information                                          14

Item 6:     Exhibits & Reports on Form 8-K                             14


Signature Page                                                         15


<PAGE>

HOLLY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1997 (UNAUDITED)

Assets:
Current Assets:
     Cash and Cash Equivalents                                    $   1,115
     Prepaid Interest                                                63,333
     Prepaid Expenses                                                29,110

     Total Current Assets                                            93,558     
Property and Equipment - (Net of Accumulated 
     Depreciation and Amortization of $57,992)                   13,471,540
   
Deposits                                                                630

     Total Assets                                               $13,565,728


See Notes to Consolidated Financial Statements

                                       1
<PAGE>

HOLLY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1997 (UNAUDITED)


Liabilities and Stockholders' Deficit:
Current Liabilities:     
   Accounts Payable                                              $1,649,717
     Payroll Taxes Payable                                          152,089
     Accrued Expenses                                               137,550
     Accrued Interest - Related Parties                             221,544
     Notes Payable - Related Party (Net of Deferred
      Financing Cost of $15,000)                                  2,515,900
     Current Portion of Long-Term Debt      
     Net Liabilities of Discontinued Operations                   6,265,126
     Other Current Liabilities                                      632,440


     Total Current Liabilities                                   11,574,366

Long-Term Liabilities:
     Notes Payable                                                2,650,000
     Notes Payable - Related Party                                2,350,000
     Other Liability                                                     --

     Total Long-Term Liabilities                                  5,000,000

Minority Interest                                                 2,338,867

Commitments and Contingencies                                            --

Stockholders' Deficit:
     Preferred Stock - Authorized 2,000,000 Shares:
          Series D: Convertible $10.00 Par Value,
          $1.00 Per Share Per Annum Cumulative Dividends,
          384,639 Shares Issued and Outstanding                   3,846,390

          Series E: Convertible $10.00 Par Value, 87,500
          Shares Issued and Outstanding                             875,000

          Additional Paid-in Capital (Preferred)                 (1,252,510)

     Common Stock - No Par Value, Authorized 150,000,000
       Shares, 
          21,745,015 Shares Issued and Outstanding               20,115,705

     Additional Paid-in Capital (Common)                            (83,947)

     Accumulated (Deficit)                                      (28,848,143)

          Total Stockholders' Deficit                            (5,347,505)

          Total Liabilities and Stockholders' Deficit          $ 13,565,728

See Notes to Consolidated Financial Statements

                                       2
<PAGE>

HOLLY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>

                                                    Three months ended            Nine months ended
                                                       December 31,                  December 31,  
                                                    1997         1996             1997         1996  
<S>                                                 <C>          <C>              <C>          <C>
Costs and Expenses:
     General and Administrative Expenses         $411,587      665,794        1,366,906    2,563,150
     Professional Fees - Due to Bankruptcy             --           --           23,083           --
     Depreciation Expense                           4,551       18,017           15,195       88,367

     Totals                                       416,138      683,811        1,405,184    2,651,517

Other Income (Expense):
     Interest Income                               14,667       10,985           16,142       33,120
     Interest Expense                            (106,380)    (288,489)        (205,147)    (387,256)
      Other Income                                     --       19,433           20,232       21,481

     Other (Expense) - Net                        (91,713)    (258,071)        (168,773)    (332,655)

Minority Interest Share in Loss of Subsidiary     133,093      131,226          332,577      202,161

(Loss) from Continuing Operations                (374,758)    (810,656)      (1,241,380)  (2,782,011)

Discontinued Operations:
     Income (Loss) from Operations of
     Woodworking Business and Electronic
     Components Manufacturing Business              8,226       (6,136)        (134,382)     486,663

     Net (Loss)                                 $(366,532)   $(816,792)     $(1,375,762) $(2,295,348)


Per Share Data:
     (Loss) from Continuing Operations          $    (.02)   $   (0.22)     $      (.07) $     (0.89)
     Income (Loss) from Discontinued
          Operations                            $     .00    $    0.04      $      (.01) $      0.15
     
     Net (Loss) Per Common Share                $    (.02)   $   (0.18)     $      (.08) $     (0.74)


Weighted Average Number of
     Common Shares Outstanding                 21,745,015    4,492,823       16,946,148    3,115,878
</TABLE>

See Notes to Consolidated Financial Statements

                                       3
<PAGE>

HOLLY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


                                                          Nine months ended
                                                             December 31,
                                                          1997         1996
Operating Activities:
     (Loss) From Continuing Operations              $(1,241,380)  $(2,782,011)
          Adjustments to Reconcile Net [Loss]
            to Net Cash 
          (Used for) Operating Activities:
          Depreciation and Amortization                  15,195        88,367
          Amortization of Deferred Financing
           Activities                                     3,856       320,433
          Minority Interest                             332,577       202,161

     Changes in Assets and Liabilities:
          (Increase) Decrease in:
          Other Current Assets                               --        (4,534)
               Prepaid Expenses                          (5,303)     (116,500)
               Deposits                                    (190)     (194,880)
               Other Assets                                  --      (546,726)
          Increase (Decrease) in:
     Accounts Payable and Accrued Expenses              388,829      (897,390)
               Payroll Taxes Payable                    136,923       (75,080)
               Other Current Liabilities                626,137       (14,182)  
          Total Adjustments                           1,498,024       413,392

     Net Cash - Continuing Operations - Forward         256,644    (2,368,619)

Discontinued Operations:
     Changes in Net Assets, Liabilities and Losses     (134,382)     (575,007)

     Net Cash - Discontinued Operations - Forward      (134,382)      (88,344)

Investing Activities - Continuing Operations:
     Acquisition of Assets                           (1,221,810)   (1,889,148)
     
Net Cash - Investing Activities - Continuing
      Operations - Forward                          $(1,221,810)  $(1,889,148)


See Notes to Consolidated Financial Statements

                                       4
<PAGE>

HOLLY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

                                                          Nine months ended
                                                             December 31,
                                                          1997         1996

     Net Cash - Continuing Operations - Forwarded    $  256,644   $(2,368,619)

     Net Cash - Discontinued Operations - Forwarded    (134,382)      (88,344)

Net Cash - Investing Activities - Continuing
  Operations - Forwarded                             (1,221,210)   (1,889,148)

Financing Activities - Continuing Operations:
     Proceeds from Notes Payable-Other                  730,076     4,880,896
     Payment of Notes Payable - Other                   (11,817)     (150,000)
     Payment of Demand Notes Payable - Stockholders
          and Related Parties                           (60,000)     (150,000)
     Proceeds from Issuance of Preferred Stock               --     1,679,000
     Proceeds from Exercise of Warrants                 465,000       168,750

     Net Cash - Financing Activities - Continuing
      Operations                                      1,123,259     3,991,612

     Net Increase (Decrease) in Cash and Cash
      Equivalents                                        24,311      (354,499)

Cash and Cash Equivalents - Beginning of Periods        (23,196)      934,462

     Cash and Cash Equivalents - End of Periods      $    1,115    $  579,963


Supplemental Disclosure of Cash Flow Information:
     Interest paid during the nine months ended December 31, 1997 and 1996
was $186,680 and $178,272 respectively, net of capitalized interest.

Supplemental Schedule of Non-Cash Investing and Financing Activities:


See Notes to Consolidated Financial Statements.

                                       5
<PAGE>

HOLLY HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

[1] Summary of Significant Accounting Policies

Significant accounting policies of Holly Holdings, Inc. are set forth in the 
Company's Form 10-KSB for the period ended March 31, 1997, as filed with the 
Securities and Exchange Commission.

[2] Business of Reporting

The accompanying unaudited condensed financial statements have been prepared 
in accordance with generally accepted accounting principles for interim 
financial information and with the instructions to Form 10-QSB and Item 310(b) 
of Regulation S-B.  Accordingly, they do not include all the information and 
footnotes required by generally accepted accounting principles for complete 
financial statements.  In the opinion of management, such statements include 
all adjustments (consisting of normal recurring items) which are considered 
necessary for a fair presentation.

As of March 31, 1997, the Company determined to discontinue its electronic 
components manufacturing business.  Accordingly, the financial statements for 
prior periods have been restated to reflect this change retroactively.

Operating results for the three and nine months ended December 31, 1997 and 
1996 are not necessarily indicative of the results that may be expected for 
the year ended March 31, 1998.  It is suggested that these financial 
statements be read in conjunction with the financial statements and notes for 
the period ended March 31, 1997, included in the Holly Holdings, Inc. Form 
10-KSB/A-1.

[3] Inventory

At December 31, 1997, the Company had no inventory.

                                       6
<PAGE>

HOLLY HOLDINGS, INC. AND SUBSIDIARIES

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS


CERTAIN STATEMENTS INCLUDED HEREIN OR INCORPORATED BY REFERENCE CONSTITUTE 
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES 
LITIGATION REFORM ACT OF 1995 (THE "REFORM ACT").  THE COMPANY DESIRES TO TAKE 
ADVANTAGE OF CERTAIN "SAFE HARBOR" PROVISIONS OF THE REFORM ACT AND IS 
INCLUDING THIS SPECIAL NOTE TO ENABLE THE COMPANY TO DO SO.  FORWARD-LOOKING 
STATEMENTS INCLUDED OR INCORPORATED BY REFERENCE IN THIS PART INVOLVE KNOWN 
AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH WOULD CAUSE THE 
COMPANY'S ACTUAL RESULTS, PERFORMANCE (FINANCIAL OR OPERATING) OR ACHIEVEMENTS 
TO DIFFER MATERIALLY FROM THE FUTURE RESULTS, PERFORMANCE (FINANCIAL OR 
OPERATING) OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD LOOKING 
STATEMENTS.

General

     On December 31, 1997, Larry Berman resigned as Chairman of the Board, 
Chief Executive Officer and Secretary of the Company, leaving William H. 
Patrowicz as the sole officer and director.
     
     The Company is focusing all its attention in assisting its majority owned 
subsidiary, Country World Casinos, Inc., ("Country World") in completing its 
plan to build the largest casino and hotel complex in the state of Colorado, 
as well as completing its financials and settling outstanding indebtedness so 
that it can plan for new acquisitions in the future.

     In order to begin the process of timely completing the goals, Country 
World has contracted with Colorado Gaming Development Company, Inc., Semple 
Brown Roberts, P.C. and PCL Construction Services, Inc., all of Denver, 
Colorado to design and construct the planned casino and hotel complex.  In 
addition, Country World has signed a management agreement with Signature 
Hospitality Resources, Inc. of Denver, Colorado to manage the Radisson Black 
Hawk Hotel, a separate agreement to use the national flag of Radisson on the 
hotel and a management agreement with Luciani & Associates, LLC. of Atlantic 
City, New Jersey, to manage the casino operations.  All parties will assist 
the architect in design of their respective operations.

     The casino level of the project, at approximately 75,000 square feet, 
will be the largest in Colorado and will be capable of accommodating 1,800 
slot machines and 32 gaming tables.  Country World will open the facility with 
1,000 slot machines, 20 blackjack tables and 12 poker tables, and may add up 
to 800 additional slot machines if management determines that the additional 
gaming devices will produce equal per square foot revenue and will not create 
excess capacity.  Country World expects that slot machines will be the 
greatest source of its gaming revenues.  Slot machines are less labor 
intensive and require less square footage than table games, and also generate 
higher profit margins. 

     The Casino's atmosphere will feature a country western music theme 
similar to the rock and roll music theme successfully employed by the Hard 
Rock Cafe.  The Casino decor will include memorabilia from the great country 
singers, both past and present, with a star walk of their own.  The country 
western music theme has not been established in the Black Hawk/Central City, 
Colorado gaming market, and therefore will give the Country World Casino its 
own unique identity.  Management believes that as

                                       7
<PAGE>
HOLLY HOLDINGS, INC. AND SUBSIDIARIES

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS

casinos have become more numerous, the gaming industry has begun to recognize 
that popular themes and amenities such as quality dining and hotel 
accommodations play an important role in attracting customers to casinos.  The 
theme is intended to appeal to the Hotel Casino's target customer base, which 
consists primarily of residents of the Denver metropolitan area as well as 
other Colorado communities located within driving distance of Black Hawk.

     The Radisson Black Hawk Hotel will provide overnight accommodations with 
290 standard rooms and 35 suites, making it the first destination resort of 
its kind in Black Hawk.  Complimenting both the casino and hotel will be a 
three story underground parking facility for 865 cars featuring both valet and 
self parking options, and the only covered on-site bus turnaround currently 
available in Black Hawk for the convenience of day trip customers.

     Black Hawk is a picturesque mountain town approximately 40 miles west of 
Denver.  In the past year, Black Hawk hosted approximately 3 million visitors 
and generated almost 60% of the state's gaming revenues.  The 112,000 square 
foot Hotel Casino site on the northern most end of the Black Hawk gaming 
district is in a most highly visible location as it is in a direct line of 
site to all visitors approaching Black Hawk's main intersection on State 
Highway 119.  The seven story structure will tower high above all existing 
facilities.  The Black Hawk and nearby Central City casino market includes 
many small, privately held gaming facilities that Country World believes offer 
limited amenities and are characterized by a shortage of convenient on-site 
parking.  There are a few large facilities currently operating with varying 
levels of services and amenities, as well as new facilities planned.  The 
Casino's country western music theme, country hospitality, ample parking, 
modern hotel accommodations and a full line of amenities, will set it apart 
from, and should give it a competitive advantage over, the other casinos in 
the Black Hawk/Central City market.

     The Hotel Casino complex will be designed and constructed pursuant to a 
guaranteed maximum price agreement which is to be finalized prior to 
construction.  The design and construction team consists of Semple Brown Roberts
, P.C., a Denver based architectural firm (the "Architect") and PCL 
Construction Services, Inc., a multi-billion dollar North American 
construction firm with U.S. headquarters located in Denver.  The Architect is 
the designer of Fitzgerald's Casino in Black Hawk, while the Contractor's 
gaming credits include the MGM Grand Hotel Casino and Stratosphere Tower in 
Las Vegas, Nevada, as well as the Chinook Winds Gaming and Convention Center 
in Lincoln City, Oregon.

     Gaming operations at the Casino will be under the management of Luciani & 
Associates, LLC of Atlantic City, New Jersey (the "Casino Manager"), who are 
leaders in casino design, management and security services.  

     Hotel operations will be under the management of Signature Hospitality 
Resources, Inc. of Denver, Colorado (the "Hotel Manager"), which provides a 
full range of hotel and resort support services including operations, sales, 
marketing, food, beverage, human resources, MIS and technical services.

                                       8
<PAGE>

HOLLY HOLDINGS, INC. AND SUBSIDIARIES

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Nine Months Ended December 31, 1997 Compared to Nine Months Ended December 31, 
1996

     Based upon the results of operations, and the substantial losses 
attributed to Navtech Industries, Inc., the Company decided to cease ongoing 
operations of this segment of the Company's business as of March 31, 1997.  
Due to the plan of discontinuance for Navtech, revenues and net losses have 
been eliminated from the statement of operations.  The following comparisons, 
therefore, does not include the results attributed to Navtech, but contains 
the costs of discontinued operations.

     Due to the discontinuance of Navtech, the Company had no revenue, cost of 
sales or gross profit, for the nine months ended December 31, 1997 and, 
retroactively, no revenue for the three months ended December 31, 1997.

     Total costs and expenses for the nine months ended December 31, 1997 were 
$1,405,184 as compared to $2,651,517 for the nine months ended December 31, 
1996.  This decrease was primarily attributed to the reduction in salaries and 
operating costs for the parent company and significantly lower legal costs for 
the current period.

     Other income (expense) for the nine months ended December 31, 1997 was a 
net expense of $(168,773) as compared to a net expense of $332,655 for the 
comparable period in 1996.  This increase was primarily due to higher interest 
costs in 1997, resulting from the increase in notes payable as compared to 
1996.

     The loss from discontinued operations was $134,382 for the nine months 
ended December 31, 1997 as compared to $486,663 in income for the nine months 
ended December 31, 1996.  The expense in 1997 was due to the cost of 
winding-down Navtech in the current period.  In 1996 the Company's profit was 
due to the settlement of debt for its woodworking business which was 
discontinued in 1995.

Three Months Ended December 31, 1997 Compared to Three Months Ended December 
31, 1996

     Total costs and expenses for the three months ended December 31, 1997 
were $416,138 as compared to $683,811 during the three months ended December 
31, 1996.  This decrease was primarily attributed to the reduction in salaries 
and operating costs for the parent company and significantly lower legal costs 
for the current period.

     Other income (expense) for the three months ended December 31, 1997 was a 
net expense of $(91,713) as compared to a net expense of $258,071 for the 
comparable period in 1996. This decrease was primarily due to lower interest 
costs in 1997, resulting from the decrease in notes payable as compared to 
1996.

     The loss (income) from discontinued operations was $(8,226) for the three 
months ended December 31, 1997 as compared to $(6,136) in income for the three 
months ended December 31, 1996.  The gain in 1997 was due to insurance 
settlement in the current period.  In 1996 the Company's loss was due to the 
settlement of debt for its woodworking business which was discontinued in 
1995.

                                       9
<PAGE>

HOLLY HOLDINGS, INC. AND SUBSIDIARIES

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS

Liquidity and Capital Resources

     To the extent the Company has ceased operations of its woodworking 
business, its cash requirements  diminished accordingly.   Navtech had a line 
of credit with The First National Bank of Farmington in Farmington, New 
Mexico.  The terms of this facility were for a receivable and inventory line 
of credit in an amount not to exceed $1,500,000 with a monthly floating 
interest rate of 1.5% over prime.  Navtech pledged all of its assets as 
security for this loan.  As of June 30, 1997, Navtech was indebted to the bank 
in the amount of approximately $1.2 million.  This loan became due on March 
15, 1997, and was extended to June 1997.  In June 1997, the bank informed 
Navtech that it would not renew the loan.  Navtech was unable to replace First 
National Bank of Farmington and the bank subsequently forced Navtech to cease 
ongoing operations.

     In January 1995, the Company borrowed, on an unsecured basis, an 
aggregate of $1,000,000 from three individuals and entities at 15% annual 
interest. In lieu of such interest, the Company issued to such note holders an 
aggregate of 150,000 shares of Common Stock. The principal amount of such 
notes was due and payable on January 13, 1996, and in March 1996, the Company 
entered into an extension agreement with the three individuals whereas the 
Company made a partial payment of $500,000 and Mr. Larry Berman, the Company's 
Chairman, gave 370,000 shares of his personal stock for an extension until 
August 9, 1996 at which time a balance payment of $400,000 was due. The 
Company made a partial payment for interest, as well as an extension fee in 
the amount of $200,000. The Noteholders agreed to extend the final payment due 
date until after funding of the Country World Casino project.  The Company 
utilized the $1,000,000 to make a loan to Country World, which indebtedness 
was canceled in exchange for the issuance of 5,000,000 shares of Country World 
common stock to the Company. Country World Casinos, Inc. plans to invest up to 
an additional $70 to $80 million to develop and construct the casino and hotel 
complex in Black Hawk, Colorado.

     During 1996 and early 1997, the Company consummated a series of Private 
Placements of an aggregate of 1,162,000 shares of its Series E Convertible 
Preferred Stock, resulting in gross and net proceeds of $11,620,000 and 
$9,751,000, respectively.  The proceeds of this offering were utilized for 
repayment of debt, settlement of litigation fees associated with securing 
financing for Country World Casinos, Inc. and working capital for the Company 
and Navtech.  Each share of Series E Preferred Stock is convertible into 
shares of the Company's Common Stock at the rate determined by dividing $10.00 
by the lesser of 75% of the closing bid price as reported, of the Company's 
Common Stock on the date of the closing of the subscription or 65% of the 
average closing bid price for the five (5) trading days immediately preceding 
the date of conversion.  As of December 1997, 87,500 shares are yet to be 
converted.
     
     In April 1996, the State of New Jersey approved the issuance of 555,000 
shares of Series Z Preferred Stock in accordance with the Company's 
Certificate of Designation.  In September 1996, such authorization was 
increased to 1,050,000 shares and issued in exchange for debt.  In July 1997, 
the shares of Series Z preferred stock were converted into 5,068,140 shares of 
common Stock.

                                       10
<PAGE>

HOLLY HOLDINGS, INC. AND SUBSIDIARIES

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS

     In June 1996, the Company issued an aggregate of 1,300,000 shares of its 
common stock to Messrs. Irwin Schneider, Eugene Lombardo and Scott Schneider 
in return for certain services performed by these individuals on behalf of the 
Company.

     In September 1996, the Company issued 573,333 shares of common stock to N 
& A Promotions in return for certain services performed for the Company.

     In September 1996, a debt of $30,000 owed to Sunrise, Inc. was converted 
into 30,000 shares of Series C Preferred Stock and pursuant to the terms 
thereof, into 120,000 shares of common stock.

     In October 1996, the Company issued 450,000 shares of common stock to 
Sparta Capital Ltd. for the exercise of its warrants.

     In March 1997, the Company issued 100,000 shares of common stock to 
Sparta Capital Ltd. for the exercise of its warrants.

     In April 1997, the Company issued 250,000 shares of common stock to 
Sparta Capital Ltd. for the exercise of its warrants.

     In April 1997, the Company issued 555,000 shares of common stock to 
Sparta Capital Ltd. for the exercise of its warrants.

     Unless and until the Company improves its financial results sufficiently 
and maintains such improved results, the Company may have to borrow or raise 
additional capital to fund any cash shortage, in the need should arise.

                                       11
<PAGE>

HOLLY HOLDINGS, INC. AND SUBSIDIARIES

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

          On May 26, 1995, the Company's majority owned subsidiary Country 
World Casinos, Inc. ("CWC") commenced a lawsuit against Tommyknocker Casino 
Corp. ("Tommyknocker") and New Allied Development Corporation ("New Allied") 
in the District Court of Denver, County of Denver, Colorado, case number 95CV 
2310. This action is primarily for breach of contract in connection with the 
acquisition of certain real property by CWC from the defendants. CWC is 
seeking monetary damages and declaratory relief.

     On August 15, 1995, Tommyknocker and New Allied filed a counterclaim in 
the aforementioned action against CWC, the Company, Ronald Nathan, Sal Lauria 
and David Singer who are former board members of CWC, Roger LeClerc, President 
of CWC and William Patrowicz director of CWC. The counterclaim alleges that 
CWC is in default under the Promissory Note issued by CWC to Tommyknocker in 
connection with the acquisition of the real property, CWC failed to register 
stock on behalf of Tommyknocker and that the Company has acquired control of 
CWC to the detriment of Tommyknocker and New Allied.

     In a related action on June 28, 1995, Tommyknocker filed a Rule 120 
Motion in the District Court, City and County of Denver, Colorado, case number 
95CV 2799. This motion sought foreclosure of the real property discussed 
above. On October 4, 1995, the magistrate in this case granted Tommyknocker's 
motion and authorized the sale of the property pursuant to the foreclosure on 
October 12, 1995.

     On October 12, 1995, CWC filed a bankruptcy petition under Chapter 11 of 
Title 11 of the United States Code. The case was filed in the United States 
Bankruptcy Court, District of Colorado, case number 95-20563rjb. Pursuant to 
the filing of the Bankruptcy, an automatic stay went into effect pursuant to 
11 U.S.C. Section 362 prohibiting the foreclosure sale. Tommyknocker filed a 
Motion for Relief from the stay and a hearing on this matter was held on 
December 22, 1995.  On January 3, 1996, the Court ruled that CWC should be 
given an opportunity to proceed with its Bankruptcy proceedings in a diligent 
and timely fashion.  The Court conditioned continuation of the stay pending 
the approval or denial as the case may be of CWC's financing proposal and 
certain other conditions.  In March 1996, the Court approved CWC's financing 
proposal and in May 1996, Country World closed on such financing.  In 
September 1996, the Court heard testimony in a claims hearing between the 
parties.  In early November 1996, the Company received final rulings from the 
Court.

     The Court's order found that Tommyknocker Casino Corporation/New Allied  
was not entitled to default interest at the rate of 18%, however Country World 
is ordered to pay 8% per annum on the unpaid balance due Tommyknocker.  
Additionally, the Court ordered that both parties were obligated to pay their 
own expenses related to this matter.

     The Court further found that Country World Casinos, Inc. was not in 
default of its Agreement with Tommyknocker/New Allied with regard to filing a 
registration statement for its preferred stock and until Tommyknocker/New 
Allied files such registration statement and Country World fails to pay for 
its cost, Country World is not in breach of the agreement.

                                       12
<PAGE>

HOLLY HOLDINGS, INC. AND SUBSIDIARIES

PART II - OTHER INFORMATION

     The Court upheld Tommyknocker's/New Allied's claim that Country World was 
not entitled to an offset on the environmental clean up as the work had been 
completed and Country World paid all clean up costs without objection prior to 
the Company's acquisition of a majority ownership in Country World.

     The Company, on behalf of Country World, obtained a 5 million dollars 
($5,000,000) financing package, which  enabled Country World to repay all of 
its outstanding indebtedness and emerge from Bankruptcy.  This financing 
package had been approved by the Bankruptcy Court and the Company utilized the 
funds in accordance with the Court's order.  With all issues completed in 
March 1997, the U.S. Bankruptcy Court ruled that Country World Casinos, Inc. 
be dismissed from Chapter 11.

     On October 10, 1995, Phil B. Acton, Trustee of the Calvin Black Trust 
commenced a lawsuit against the Company in the United States District Court 
for the District of Utah, Central Division, case number 95CV 09305. This 
action sought repayment of a promissory note in the principal amount of 
$500,000.  As discussed in the Company's earlier filings in August 1996, this 
action was settled.

     The Company is the defendant in a lawsuit pending in United States 
District Court, District of Arizona, Case No. CIV97-212PHXROS entitled Holly 
Products, Inc. and Navtech Industries, Inc., Defendants v. Semisystems, Inc., 
Plaintiff. This lawsuit was commenced by Semisystems, Inc. on January 30, 
1997.  The complaint asserted six claims against Navtech for among other 
things, misrepresentation, breach of contract, breach of warranty, fraud, etc. 
and as the owner of 100% of the outstanding stock of Navtech, the Company 
should be held jointly and severally liable for all acts and obligations of 
its subsidiary Navtech.

     Navtech has ceased operations and is without resources, accordingly it 
was unable to defend itself in this matter and the Court awarded a judgement 
against Navtech in the amount of $3,280,630 in October of 1997.

     The Company was not served in this action until August 1997.  The Company 
immediately filed an order to show cause which vacated any possible default 
judgement and filed its answer to the allegations made by Semisystems in 
September 1997.  In an accompanying motion, the Company filed a motion to 
dismiss on the grounds that there is no personal jurisdiction over the Company 
in this District of Arizona.  Oral argument on the Motion is set for February 
20, 1998.

     The Company was a defendant in a lawsuit in the Fifth Judicial District 
Court, in Iron County, Utah, Case No. 970500004 entitled Lloyd & Myra 
Kartchner, Plaintiffs v. Holly Products, Inc. and Navtech Industries, Inc., 
Defendants.  This lawsuit was commenced in January 1997.  The complaint, 
alleges that both companies failed to live up to the terms of a resignation 
agreement dated February 28, 1996 between the Company, Navtech and the 
Plaintiff.  In August 1997, the Court found the resignation agreement valid 
and enforceable and issued an order granting Plaintiffs' Motion for summary 
judgement in the amount of $52,955.91.

     The Company is a defendant in a lawsuit pending in the Eleventh Judicial 
District Court, County of San Juan, State of New Mexico, Case No. CV-97-443-6 
entitled First National Bank of Farmington, 

Plaintiffs v. Navtech of New Mexico, Inc., Navtech Industries, Inc., Holly 
Products, Inc., n/k/a, Holly 

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HOLLY HOLDINGS, INC. AND SUBSIDIARIES

PART II - OTHER INFORMATION

Holdings, Inc., Defendants.  This lawsuit was commenced on June 9, 1997 and 
amended on August 9, 1997.  The complaint alleges four claims against Navtech 
for debt and money due, one claim for personal property foreclosure against 
Navtech and two claims based on the guaranty of the Company.

     Navtech has ceased operations and is without resource, based on the 
foregoing it was unable to defend itself in this matter and in June 1997, the 
Court appointed a receiver to Marshall the inventory, assemble the orders, 
collect the receivables and contract for the completion of work in process to 
maximize return.  As of this date, that process has not been completed and 
accordingly, there is no way to determine the balance due to the bank and the 
case remains open.

     In 1996, the Company was a Defendant in a lawsuit in Superior Court of 
New Jersey, Burlington County, Case No. BUR-L-3467-95 entitled Pennsylvania 
Manufacturers Association Insurance Company, Plaintiff v. Holly Products, 
Inc., Defendant.  This lawsuit resulted in a summary judgement being issued 
against the Company in the amount of $63, 897.00 on November 8, 1996.

     In February 1997, the Company reached an agreement with Pennsylvania 
Manufacturers Association Insurance Company and filed a stipulation of 
settlement with the Court at which time the Company began making payments in 
accordance with a payout schedule over a 20 month period.  The Company made 
payments totaling $13,000 through April 1997 at which time payments ceased due 
to a cash flow shortage.

     In September 1997, the Pennsylvania Manufacturers Association Insurance 
Company has re-instituted steps to enforce the outstanding judgement against 
the Company

Item 2 - Changes In the Rights of the Company's Security Holders

     None

Item 3 - Defaults by the Company on its Senior Securities

     None

Item 4 - Results of Votes of Shareholders

     None

Item 5 - Other Information

     None

Item 6- Exhibits & Reports on Form 8-K

     (A)There are no exhibits to be filed at this time.
     (B)No reports on Form 8-K were filed during the quarter for which this 
report is filed.

                                       14
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HOLLY HOLDINGS, INC. AND SUBSIDIARIES

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the 
Registrant has duly caused this report to be signed on its behalf by the 
undersigned thereunto duly authorized.



                               HOLLY HOLDINGS, INC.



                                      /s/ William H. Patrowicz
                                      By: William H. Patrowicz
                                      Sole Officer and Director




Date: February 17, 1998

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