Form 10-QSB/A-1

                    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, 1996
 
              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                   (I.R.S. Employer 
            of incorporation)                        I.D. Number)

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

                  Registrant's telephone number (610) 617-0400


                               HOLLY PRODUCTS, INC.
(Former name, former address and former fiscal year, if changed since last 
report.)

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 and Exchange 
Act of 1934 during the preceding 12 months (or for such shorter period that 
the registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.

                             Yes  X       No      

Indicate the number of shares outstanding of each of the issuer's classes of 
common stock, as  of December 31, 1996:  4,937,488.

<PAGE>

HOLLY HOLDINGS, INC. AND SUBSIDIARIES
INDEX



Part I:     FINANCIAL INFORMATION

Item 1:  Financial Statements

   Consolidated Balance Sheets as of December 31, 1996 [Unaudited]      1 - 2

   Consolidated Statements of Operations for the three and nine
   months ended December 31, 1996 and 1995 [Unaudited]                  3

   Consolidated Statement of Stockholders' Equity                       4 - 5

   Consolidated Statements of Cash Flows for the nine months ended 
   December 31, 1996 and 1995 [Unaudited]                               6 - 7

   Notes to Consolidated Financial Statements [Unaudited]               8 - 9

Item 2:  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                            10 - 15
  

Part II:     OTHER INFORMATION

Item 1:  Legal Proceedings                                             16 - 17

Item 2:  Changes In the Rights of the Company's Security Holders       17

Item 3:  Defaults by the Company on its Senior Securities              17

Item 4:  Results of Votes of Shareholders                              17 - 18

Item 5:  Other Information                                             18

Item 6:  Exhibits & Reports on Form 8-K                                18


Signature Page                                                         19    

<PAGE>

HOLLY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1996 (UNAUDITED)


Assets:
Current Assets:
   Cash and Cash Equivalents                                    $   579,963
   Accounts Receivable Trade - [Net of Allowance for Doubtful 
    Accounts of $178,695]                                         2,030,173
   Inventory                                                        572,694
   Prepaid Expenses                                                 330,480

   Total Current Assets                                           3,513,310

Property and Equipment - [Net of Accumulated 
 Depreciation and Amortization of $273,906]                      11,455,405

Deposits                                                             51,582

Intangible Assets - Net                                             533,328

Other Assets                                                         62,786

Deferred Financing Costs                                            312,500

   Total Assets                                                 $15,928,911


See Notes to Consolidated Financial Statements

                                       -1-    
<PAGE>

HOLLY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1996 (UNAUDITED)


Liabilities and Stockholders' Equity:
Current Liabilities:
     Notes Payable - Related Party                               $  925,000
     Demand Notes Payable - Bank                                  1,242,823
     Notes Payable - Others                                       5,400,000
     Accounts Payable                                             1,428,098
     Accrued Expenses                                               636,424    
     Payroll Taxes Payable                                            6,743
     Current Portion of Long-Term Debt                              139,557
     Current Portion of Capital Lease Obligations                    61,237

     Total Current Liabilities                                    9,839,882    

Long-Term Debt                                                      524,360

Long-Term Portion of Capital Lease Obligations                      523,537

Minority Interest                                                 2,012,360

Commitments and Contingencies                                            --

Stockholders' Equity:
    Preferred Stock - Authorized 2,000,000 Shares:

       Series D: Convertible $10.00 Par Value, $1.00 Per
         Share Per Annum Cumulative Dividends, 389,975 Shares
         Issued and Outstanding                                   3,899,750

       Series E: Convertible $10.00 Par Value, 30,000 Shares
         Issued and Outstanding                                     300,000

       Series Z: Convertible $0.25 Par Value, 1,013,628 Shares
         Issued and Outstanding                                     253,407

       Additional Paid-in Capital [Preferred]                    (1,163,601)

       Common Stock - No Par Value, Authorized 150,000,000
         Shares, 4,937,488 Shares Issued and Outstanding         17,777,799 

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

    Accumulated [Deficit]                                       (17,954,636)    

        Total Stockholders' Equity                                3,028,772    

        Total Liabilities and Stockholders' Equity             $ 15,928,911

See Notes to Consolidated Financial Statements

                                       -2-    
<PAGE>
<TABLE>
HOLLY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<CAPTION>

                                                 Three months ended               Nine months ended
                                                     December 31,                    December 31,  
                                                 1996           1995             1996          1995
<S>                                         <C>            <C>              <C>            <C>

Net Sales                                   $ 1,221,426    $   721,039      $ 4,259,659    $ 3,110,913 

Cost of Sales                                   664,686        651,878        2,665,255      3,268,390 

     Gross Profit [Loss]                        556,740         69,161        1,594,404       (157,477)

Operating Expenses:
     General, Selling and Administrative      1,474,312      2,246,103        4,245,921      3,842,764 
     
     Operating [Loss]                          (917,572)    (2,176,942)      (2,651,517)    (4,000,241)

Other [Expense]:
     Other Income                                11,163        (41,729)          54,601         11,137
     Interest Expense                          (165,472)      (146,988)        (387,256)      (297,638)

     Other [Expense] - Net                     (154,309)      (188,717)        (332,655)      (286,501)

Minority Interest Share in Loss of Subsidiary    96,090         31,764          202,161        102,699 

[Loss] Income from Continuing Operations       (975,791)    (2,333,895)      (2,782,011)   
(4,184,043)

Discontinued Operations:
     Income [Loss] from Operations of
          Woodworking Business                  158,999       (79,161)          486,663     (2,275,239)

Estimated [Loss] on disposal of
     Woodworking Business                            --    (1,201,633)               --     (2,043,056)

     Net [Loss]                                (816,792)   (3,614,689)       (2,295,348)    (8,502,338)

     Preferred Stock Dividends                        0       201,250                 0        301,875 

Net [Loss] Available to Common Stockholders  $ (816,792)  $(3,815,939)      $(2,295,348)  
$(8,804,213)



Loss Per Common Share:
     [Loss] from Continuing Operations       $    (0.22)  $    (3.36)       $     (0.89)   $     (7.06)
     Income [Loss] from Discontinued
          Operations                         $     0.04   $    (0.11)       $      0.15    $     (3.84)
     Estimated Loss on Disposal of
          Woodworking Business               $       --   $    (1.73)       $        --    $     (3.45)

     Net [Loss] Per Common Share             $    (0.18)  $    (5.49)       $     (0.74)   $    (14.86)


Weighted Average Number of
     Common Shares Outstanding                4,492,823      695,524          3,115,978        592,672

See Notes to Consolidated Financial Statements
</TABLE>

                                       -3-    
<PAGE>
   
<TABLE>
HOLLY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
                                                             Preferred Stock      
                          Series B         Series C          Series D           Series E            Series Z   
                                                                                                                       Additional
                          Number of        Number of         Number of          Number of           Number of          Paid-in
                          Shares  Amount   Shares   Amount   Shares   Amount    Shares     Amount   Shares   Amount    Capital
<S>                       <C>     <C>      <C>      <C>      <C>      <C>       <C>        <C>      <C>      <C>       <C>      

Balance - March 31, 1995  75,000 $ 7,500       --  $    --  402,500 $4,025,000      --  $      --       --  $    --  $(732,420)
Dividends Paid                --      --       --       --       --       --        --         --       --       --         --
Shares Issued in  Acquisition --      --       --       --       --       --        --         --       --       --         --
Shares Issued in Exchange
 for Existing Debt            --      --  180,000  180,000       --       --        --         --       --       --         --
Conversion to Preferred  (75,000) (7,500) 450,000    7,500       --       --        --         --       --       --         --
 Stock                                                                                                                         
Conversion to Common Stock    --      -- (450,000)  (7,500)      --       --        --         --       --       --   (442,500)
Shares Issued for Litigation  --      --       --       --       --       --        --         --       --       --         --
 Settlement                                                                                                                    
Shares Issued for Services    --      --       --       --       --       --        --         --       --       --         --
 Rendered                                                                                                                      
Shares Issued for Services    --      --       --       --       --       --        --         --       --       --         --
 Rendered                                                                                                                        
Conversion to Common Stock    --      -- (180,000)(180,000)      --       --        --         --       --       --         --
Shares Issued for Services    --      --       --       --       --       --        --         --       --       --         --
 Rendered
Shares Issued for Services    --      --       --       --       --       --        --         --       --       --         --
 Rendered
Shares Issued for Services    --      --       --       --       --       --        --         --       --       --         --
 Rendered
Shares Issued in Exchange     --      --       --       --       --       --        --         --       --       --         --
 for Existing Debt
Shares Issued for Services    --      --       --       --       --       --        --         --       --       --         --
 Rendered
Issuance of Series E          --      --       --       --       --       --   747,000  7,470,000       --       -- (1,020,401)
 Preferred Stock
Conversion to Common          --      --       --       --  (12,525) (125,250)(160,000)(1,600,000)      --       --    255,773
 Stock
Net [Loss] for the Period     --      --       --       --       --       --        --         --       --       --         --

Balance - March 31,  1996     --      --       --       --  389,975  3,899,750 587,000  5,870,000       --       -- (1,939,548)

Conversion to Common Stock    --      --       --       --       --       --  (497,000)(4,970,000)       --      --    680,888
Issuance of Series E          --      --       --       --       --       --    20,000    200,000       --       --    (28,000)
 Preferred Stock
Shares Issued for Services    --      --       --       --       --       --        --         --       --       --         --
 Rendered
Conversion to Common Stock    --      --       --       --       --       --  (110,000)(1,100,000)      --       --    150,700
Issuance of Series E          --      --       --       --       --       --   115,000  1,150,000       --       --   (182,682)
 Preferred Stock 
Shares Issued in Exchange     --      --       --       --       --       --        --         -- 1,013,628 253,407         --
 for Existing Debt
Shares Issued for Services    --      --       --       --       --       --        --         --       --       --         --
 Rendered
Shares Issued in Exchange     --      --       --       --       --       --        --         --       --       --         --
 for Existing Debt
Conversion to Common Stock    --      --       --       --       --       --  (167,500)(1,675,000)      --       --    251,250
Issuance of Series E          --      --       --       --       --       --    82,500    825,000       --       --    (96,209)
 Preferred Stock
Exercise of Warrants          --      --       --       --       --       --        --         --       --       --         --
Net [Loss] for the Period     --      --       --       --       --       --        --         --       --       --         --

Balance - December 31,
 1996 [Unaudited]             --   $  --       --   $  --  389,975 $3,899,750  30,000  $ 300,000  1,013,628 $253,407 $(1,163,601)


See Notes to Consolidated Financial Statements.

                                                    -4-

<PAGE>


</TABLE>
<TABLE>
HOLLY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
                                                        Common Stock
                                                         Additional                    Total
                                  Number of               Paid-in    Accumulated    Stockholders'
                                  Shares      Amount      Capital     [Deficit]        Equity
<S>                               <C>         <C>         <C>        <C>            <C>

Balance - March 31, 1995          410,960  $ 4,599,383  $ (83,947)  $ (4,104,695)   $ 3,710,821
Dividends Paid                         --           --         --       (137,604)      (137,604)
Shares Issued in Acquisition       74,459    2,187,733         --             --      2,187,733
Shares Issued in Exchange              --           --         --             --        180,000
 for Existing Debt
Conversion to Preferred Stock          --           --         --             --             --
Conversion to Common Stock        180,000      450,000         --             --             --
Shares Issued for Litigation        2,500       75,000         --             --         75,000
 Settlement
Shares Issued for Services            750       11,250         --             --         11,250
 Rendered
Shares Issued for Services          2,500       87,500         --             --         87,500
 Rendered
Conversion to Common Stock         72,000      180,000         --             --             --
Shares Issued for Services          3,000       78,750         --             --         78,750
 Rendered
Shares Issued for Services         30,000      862,500         --             --        862,500
 Rendered
Shares Issued for Services          5,000      128,100         --             --        128,100
 Rendered
Shares Issued in Exchange           2,793       38,756         --             --         38,756
 for Existing Debt
Shares Issued for Services          3,500       45,938         --             --         45,938
 Rendered
Issuance of Series E Preferred         --           --         --             --      6,449,599
 Stock
Conversion to Common Stock        247,584    1,469,477         --             --             --
Net [Loss] for the Period              --           --         --    (11,416,990)   (11,416,990)

Balance - March 31, 1996        1,035,046   10,214,387    (83,947)   (15,659,289)     2,301,353

Conversion to Common Stock      1,911,214    4,289,112         --             --             --
Issuance of Series E 200,000           --           --         --             --        172,000
 Preferred Stock
Shares Issued for Services        130,000      487,500         --             --        487,500
 Rendered
Conversion to Common Stock        950,885      949,300         --             --             --
Issuance of Series E                   --           --         --             --        967,318
 Preferred Stock 
Shares Issued in Exchange              --           --         --             --        253,407
 for Existing Debt
Shares Issued for Services         57,333      215,000         --             --        215,000
 Rendered
Shares Issued in Exchange          12,000       30,000         --             --         30,000
 for Existing Debt
Conversion to Common Stock        796,010    1,423,750         --             --             --
Issuance of Series E                   --           --         --             --        728,791
 Preferred Stock
Exercise of Warrants               45,000      168,750         --             --        168,750
Net [Loss] for the Period              --           --         --     (2,295,348)    (2,295,348)

Balance - December 31,
 1996 [Unaudited]               4,937,488  $17,777,799  $ (83,947)  $(17,954,637)  $ (3,028,771)


See Notes to Consolidated Financial Statements.


                                                    -5-

<PAGE>    

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


                                                     Nine months ended
                                                        December 31,
                                                  1996               1995
Operating Activities:
     [Loss] From Continuing Operations       $ (2,782,011)      $ (4,184,043)
          Adjustments to Reconcile Net [Loss]
           to Net Cash [Used for] Operating
           Activities:
          Depreciation and Amortization            88,367            140,318 
          Amortization of Deferred Financing
           Activities                             320,433            112,500 
          Minority Interest                       202,161                 --

     Changes in Assets and Liabilities:
          [Increase] Decrease in:
               Accounts Receivable              1,651,723           (277,607)
               Inventory                         (342,818)          (420,722)
          Other Current Assets                     (4,534)            21,685
               Due from Stockholders & Related
                Parties                                --             25,000
               Note Receivable                         --          1,050,000
               Deposits                          (194,880)                --
               Prepaid Expenses                  (116,500)                --
               Other Assets                      (546,726)                --

          Increase [Decrease] in:
               Accounts Payable and Accrued
                Expenses                         (897,390)         1,888,508 
               Payroll Taxes Payable              (75,080)            71,249
               Other Current Liabilities          (14,182)                --

          Total Adjustments                        70,574          2,610,931

   Net Cash - Continuing Operations - Forward  (2,711,437)        (1,573,112)

Discontinued Operations:
     Net [Loss] From Discontinued Operations      486,663         (2,275,239)
     Adjustments to Reconcile Net [Loss] to
      Net Cash Operations:
          Depreciation and Amortization                --             59,540
          Bad Debts                                    --                 --  
          Changes in Net Assets, Liabilities
           and Losses                            (575,007)         2,228,959
          Estimated Loss in Disposal of
           Woodworking Business                        --         (2,043,056)
  Net Cash - Discontinued Operations - Forward    (88,344)        (2,029,796)

Investing Activities - Continuing Operations:
     Acquisition of Assets                     (1,889,148)           (90,508)
     Purchase of Navtech - Net of Cash                 --                 -- 
     
Net Cash - Investing Activities - Continuing
 Operations - Forward                         $(1,889,148)        $  (90,508)


See Notes to Consolidated Financial Statements

                                       -6-    
<PAGE>

HOLLY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS [UNAUDITED]


                                                    Nine months ended
                                                        December 31,
                                                  1996               1995

     Net Cash - Continuing Operations -
      Forwarded                             $  (2,711,437)     $  (1,573,112)

     Net Cash - Discontinued Operations -
      Forwarded                                   (88,344)        (2,029,796)

     Net Cash - Investing Activities -
      Continuing Operations - Forwarded        (1,889,148)           (90,508) 

Financing Activities - Continuing Operations:
     Proceeds from Notes Payable-Other          5,223,714            500,000 
     Payment of Notes Payable - Other            (150,000)                --   
     Proceeds from Demand Notes Payable -
      Stockholders and Related Parties                 --            322,000 
     Payment of Demand Notes Payable -
      Stockholders and Related Parties         (2,971,504)          (262,427)
     Proceeds of Demand Note Payable - Banks      384,470          1,164,792 
     Proceeds from Issuance of Preferred Stock  1,679,000          2,400,000 
     Proceeds from Sale of Warrants               168,750                 --  
     Dividends Paid                                    --           (100,625)

     Net Cash - Financing Activities -
      Continuing Operations                     4,334,430          4,023,740 

Financing Activities - Discontinued Operations:
     Payment of Demand Note Payable                    --           (334,287)
     Proceeds from Demand Note Payable                 --                 --

     Net Cash - Financing Activities -
      Discontinued Operations                          --           (334,287)

     Net Increase (Decrease) in Cash and Cash
      Equivalents                                (354,499)            (3,963)

Cash and Cash Equivalents - Beginning of
      Periods                                  $  934,462            189,180 

     Cash and Cash Equivalents - End of
      Periods                                  $  579,963         $  185,217 
     
Supplemental Disclosures of Cash Flow Information:
     Cash paid during the periods for:
          Interest                             $  178,272         $  334,931 
          Income Taxes                         $       --         $       --   

Supplemental Schedule of Non-Cash Investing and Financing Activities:
     See notes to consolidated financial statements for details of certain 
non-cash investing and financing activities.

See Notes to Consolidated Financial Statements.

                                       -7-    
<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, 1996, 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.  Operating results for the three and nine 
months ended December 31, 1996 and 1995 are not necessarily indicative of the 
results that may be expected for the year ended March 31, 1997.  It is 
suggested that these financial statements be read in conjunction with the 
financial statements and notes for the period ended March 31, 1996, included 
in the Holly Holdings, Inc. Form 10-KSB.


[3]  INVENTORY

At December 31, 1996 inventory consisted of the following:

          Work-in-Process          $ 110,000      
          Raw Materials              800,694      
          Total                      910,694 
          Less Reserve              (338,000)

          Total                    $ 572,694 

Inventory is stated at the lower of cost [first-in, first-out method] or 
market.

    [4]  STOCKHOLDERS' EQUITY

At the Annual Meeting of shareholders, held on December 26, 1996, the
Stockhodlers approved a one-for-ten reverse stock split.

As of December 31, 1996 the company was authorized to issue 150,000,000 shares
of common stock and 2,000,000 of preferred stock.

The Series D and Series E Preferred Stock both have a par value of $10.00.
When these securities were sold, the fees and expenses associated with the
sales were charged to Additional Paid-in-Capital, thus reducing Equity.  At
December 31, 1996, the Preferred Stock, Additioanl Paid-in-Capital was
comprised of the following:

     1) Series D                                $(1,138,359)
     2) Series E                                    (25,242)
                                                 -----------
     Total                                      $(1,163,601)

                                       -8-
<PAGE>

During the quarter, 167,500 shares of Series E Preferred Stock were converted
pursuant to the terms thereof into 796,010 shares of the Company common stock.
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 by NASDAQ, of the Company's Common
Stock on the date of the closing of the subscription or 65% of the average bid
price for the five (5) trading days immediatley proceeding the date of
conversion.  Upon conversion, the net amount received from the original sale of
these securities,  in the amount of $1,423,750 was transferred to common stock.
In October, November, and December 1996, the Company issued 8,250 shares of
Series E Preferred Stock resulting in gross proceeds of $825,000.  In October
1996, the Company issued 45,000 shares of its Common Stock to Sparta Capital,
Ltd. for the excercise of 45,000 warrants.    

   [5]      EARINGS PER SHARE

Earnings per share are based on 4,492,823 and 695,524 shares outstanding for 
the three months ended December 31, 1996 and 1995, respectively, and 3,115,978 
and 592,672 for the nine months ended December 31, 1996 and 1995, 
respectively.  Such amounts of shares represent the weighted average number of 
shares outstanding for the periods.  Shares in escrow and the effect of 
outstanding warrants were not included in the calculations, as their effect 
would be anti-dilutive.  Effective December 26, 1996, the shareholders of the 
Company approved an amendment to reflect a one-for-ten reverse split of the 
Company's Common Stock.

                                       -9-    
<PAGE>

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

     The Company experienced a substantial loss for the year ended March 31, 
1996, such loss was attributable primarily to its woodworking business, which 
was conducted through its wholly owned subsidiary, HollyWood Manufacturing, 
Inc. ("HollyWood"). The Company explored ways to reduce losses in this 
business, including divesting itself of its woodworking business while 
continuing the sales operations.  The Company held discussions with potential 
purchasers of its woodworking business.  An offer was presented but, the 
potential buyer was unable or unwilling to consummate a transaction.  
Accordingly, the Company  was unsuccessful in its attempts to divest itself of 
its woodworking business and consequently, ceased ongoing operations of the 
woodworking business to reduce any further losses.  The Company dismissed the 
entire staff and management of its woodworking operation and liquidated its 
assets.  The lease for the facility housing HollyWood expired on December 31, 
1995 at which time the Company vacated the premises. The Company used the 
funds raised through the liquidation of assets and collection of outstanding 
receivables to satisfy a secured credit facility with Riviera Finance of 
Chicago, Illinois.

     In April 1996, the company moved its wholly owned subsidiary, Navtech 
Industries, Inc. ("Navtech"), from Blanding, Utah to Shiprock, New Mexico.  
The move allowed Navtech to operate from one facility totaling 54,000 square 
feet in lieu of three separate facilities totaling 20,000 square feet.  This 
enables the company to operate with greater efficiency and substantial less 
cost through consolidation of functions, elimination of transportation and 
reduction in management and supervisory staff.  In its new location in 
Shiprock, New Mexico, Navtech is located on the Navajo Reservation which 
allows for rebates in employing Native Americans, reduced energy costs and a 
forgiveness of rent payments on the new facility until such time as the move 
and refurbishing costs to the building are fully paid.  It is estimated that 
this process will take approximately 10 years.  It is anticipated that the new 
facility will allow Navtech to expand its revenues substantially.  
Additionally, during the Company's first quarter of 1996 (April - June) the 
Company changed the management of Navtech with a smaller and more qualified 
group of professionals to carry out Navtech's  plan and meet targeted budgets 
for the upcoming year.  The nine months results for this subsidiary show a 
significant turnaround to its income statement as compared to a $2 million 
loss last year.

                                       -10-
<PAGE>
    
Item 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

     The five million dollar financing package for the Company's majority 
owned subsidiary, Country World Casinos, Inc. ("Country World"), consummated 
in May 1996, should enable Country World to emerge from Bankruptcy proceedings
in the immediate future, therefore eliminating substantial legal, travel and
management expense associated with these proceedings.  Further, with the
simultaneous settlement of all outstanding State litigation (see Part II,
Item 1) as a part of the Chapter 11 proceedings, it is anticipated that Country
World will recover monetary damages and be able to move forward with its plans
to construct the Casino in Blackhawk, Colorado.  Additionally, Country World
has moved to smaller, less expensive quarters substantially reducing its
operating costs and plans to eliminate its office requirements in Denver during
this fiscal year.  As of December 31, 1996, Country World vacated its Denver
office.

     In late October 1995, Country World petitioned the U.S. Bankruptcy Court 
for the District of Colorado for protection under the rules of Chapter 11 of 
the Bankruptcy Code in order to stop the foreclosure on the property 
identified as Millsites 12, 13 and the Smith Mining Claim by Tommyknocker, a 
subsidiary of New Allied Development Corporation ("New Allied"). In May 1995, 
Country World filed suit against New Allied in State Court for amongst other 
things, failure to satisfy a first deed of trust obligation, overcharges in 
conjunction with an EPA remediation plan and action taken by a New Allied 
officer and related parties requiring Securities and Exchange Commission 
sanctions which in turn could jeopardize Country World's ability to obtain a 
gaming license. In June 1995, New Allied filed a counterclaim to this action.
     
     The Company, on behalf of Country World, has obtained a financing 
commitment for 5 million dollars ($5,000,000) which will enable Country World 
to repay all of its outstanding indebtedness and emerge from Bankruptcy.  This 
financing proposal has been approved by the Bankruptcy Court and the Company 
has acquired the funds and distribution will be made in accordance with the 
Court's order.  Final settlement hearings were held in late September 1996 and 
Country World received final rulings from the court.  The Court's order finds 
that Tommyknocker Casino Corporation/New Allied is not entitled to default 
interest at the rate of 18%, however Country World was ordered to pay 8% per 
annum on the unpaid balance due Tommyknocker.  Furthermore, Country World was 
not obligated to pay attorneys fees, as each party has been directed by the 
court to pay their own accordingly.

     The Court further finds that Country World 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.

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

     Both parties were ordered to confer and agree on a specific dollar amount 
by November 15, 1996.  The parties came to an agreement and approximately $1.3 
million was paid to Tommyknocker Casino Corp./New Allied with the Court's 
approval in December 1996.

     In December 1996, Country World petitioned the Court to pay the unsecured 
creditors.  All of the unsecured creditors have reached an agreement with 
Country World, however Tommyknocker Casino Corporation/New Allied objected to 
such payout asking the Court to hold these funds for future payments, possibly 
due to them or payment due to Kennedy Funding.

                                     -11-    
<PAGE>

Item 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS


     Country World anticipates that it will require an additional 
approximately $27,350,000 to construct an operational and licensed Casino.  At 
present, a letter of intent for the permanent financing is in place to fund 
the Casino after construction, however there can be no assurance that the 
closing of such financing will be obtained.


RESULTS OF OPERATIONS

Nine Months Ended December 31, 1996 Compared to Nine Months Ended
December 31, 1995

     Based on the following results of operations and the substantial losses 
attributable to HollyWood, the Company decided to cease ongoing operations of 
this segment of the Company's business.  Due to the plan of discontinuance for 
HollyWood, revenues and net losses have been eliminated from the statement of 
operations.  The following comparison, therefore, does not include the results 
attributable to HollyWood, but contains the costs of discontinued operations.

     Revenues for the nine months ended December 31, 1996 were $4,259,659 as 
compared to $3,110,913 for the nine months ended December 31, 1995.  The 
increase in revenues is a result of the ability of the Company to fund 
increased sales through funds raised earlier this year.
     
     Cost of sales for the nine months ended December 31, 1996 was $2,665,255 
, or about 63% of revenue,     as compared to $3,268,390   , or approximately
105% of revenue     for the nine months ended December 31, 1995.    This
improvement, solely from the Company's Navtech subsidiary, was primarily the
result of Navtech's cost of sales being higher in 1995 due to it selling
products with a higher cost of goods expense and having fixed overhead of labor
and other costs during a three month period when Navtech was moving its
headquarters and thus had very low sales shipments.

     Gross profit was $1,594,404 for the nine months ended December 31, 1996, 
as compared to a $157,477 gross loss for the nine months ended December 31, 
1995.  This increase of $1,751,881 in gross profit is attributable to 
increased sales for the period, as well as items not mentioned in the cost of
sales paragraph.    

     Total operating expenses for the nine months ended December 31, 1996 were 
$4,245,921 as compared to $3,842,764 for the comparable period ended December 
31, 1995.  The majority of these expenses are attributable to one time costs 
associated with the reorganization of Navtech, closing costs for the $5 
million funding associated with the Country World Chapter 11 Proceedings, 
increased legal and other professional fees, raising of working capital, 
consulting, stock expenses, as well as promotional fees   , which amounted to
about $375,000.    

     Discontinued operations showed a income of $486,663 for the nine months 
ended December 31, 1996 as compared to a loss of $2,275,239 for the nine 
months ended December 31, 1995.  The change was a result of the  close down of 
this aspect of operations during the prior year.  In the current period, 
income was primarily a result of the Company being able to settle past debt of 
the closed down operations at a substantial discount.

                                       -12-

<PAGE>

Item 2.

MANGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
    
     Operating losses totaled $2,651,518 for the nine months ended December 
31, 1996, as compared to an operating loss of $4,000,241 for the same period 
in 1995 for the reasons described above.

     Interest expense for the nine months ended December 31, 1996 was $387,256 
as compared to $297,638 for the nine months ended December 31, 1995.  This 
cost is primarily attributable to the Navtech revolving line of credit with a 
local lending institution in Farmington, New Mexico and notes payable for the 
Company's financing of Country World.

     Accounts Receivable for the Company's Navtech subsidiary increased from
over $378,000 at March 31, 1996 to about $2,030,000 at December 31, 1996.
This increase was due to large shipments of orders at the end of December 31,
1996, which are being collected in a timely manner.  The increase is also
attributable to the increase in sales at Navtech.

     Notes Payable - Other, increased from $1,535,888 at March 31, 1996, to
$5,400,000 at December 31, 1996.  $5,000,000, in the form of a new note, was
obtained to enable the Company's Country World Casino's, Inc. subsidiary to
emerge from bankruptcy.  Some reduction was obtained when other notes were
converted to common stock.    

THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED DECEMBER
31, 1995

     Revenues for the three months ended December 31, 1996 were $1,221,426 as 
compared to $721,039 for the three months ended December 31, 1995.  The
increase in revenues is a result of the Company to fund increased sales through
funds raised earlier this year and a better selection of product sales.

     Cost of sales for the three months ended December 31, 1996 was $664,686 
as compared to $651,876 for the three months ended December 31, 1995.  There 
was a decrease in the percentage to sales, primarily the result of selling 
items with a higher gross profit margin.

     Gross profit was $556,740 for the three months ended December 31, 1996, 
as compared to a $69,161 gross profit for the three months ended December 30, 
1995.  This increase in gross profit is attributable to increased gross profit 
percentage for the period due to a better selection of product sales.

     Total operating expenses for the three months ended December 31, 1996 was 
$1,473,313, as compared to $2,246,103 for the three months ended December 31, 
1995.  This decrease of $772,103 is attributable to the high costs incurred 
last year related to the operations of Navtech, the acquisition and 
development of Country World, resulting in high legal and other administrative 
costs.

     Operating losses totaled $917,572 for the three months ended December 31, 
1996 as compared to an operating  loss of $2,176,942 for the period ended 
December 31, 1995, a decrease of $1,259,370.

     Interest expense for the three months ended December 31, 1996 was 
$165,472 as compared to $146,988 for the comparable period in 1995.
 
     Discontinued operations showed a income of $158,999 for the three months 
ended December 31, 1996 as compared to a loss of $79,161 for the three months 
ended December 31, 1995.  The change was a result of the  close down of this 
aspect of operations during the prior year.  In the current period, income was 
primarily a result of the Company being able to settle past debt of the closed 
down operations at a substantial discount.

                                       -13-
<PAGE>    

LIQUIDITY AND CAPITAL RESOURCES

     To the extent the Company has ceased operations of its woodworking 
business, its cash requirements have diminished accordingly, and an extended 
line of credit has been secured to fund Navtech's operations with The First 
National Bank of Farmington in Farmington, New Mexico.  The terms of this 
facility are 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.  
As of December 31, 1996, Navtech was indebted to the bank in the amount of 
approximately $1.2 million.  This loan becomes due on March 15, 1997   , and
was extended to July 17, 1997, at which time the Company believes it will be
further extended, if needed, but it can not assure that this will occur.    

     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, transferred 370,000 shares of the Company's Common Stock owned by him
in exchange for an extension until August 9, 1996 at which time a balance
payment of $400,000 to be due.  The parties further agreed to extend the August
9th deadline until such time as Country World emerges from the Chapter 11
Proceedings.  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. The Company
plans to invest up to an additional $35 million to develop and construct the
casino and hotel complex in Black Hawk, Colorado.  At present, a letter of
intent for the permanent financing is in place to fund the Casino after
construction, however, there can be no assurance that the closing of such
financing will be obtained.

     The Company consummated a Private Placement of 767,000 shares of its 
Series E Convertible Preferred Stock in March of 1996, resulting in gross and 
net proceeds of $7,670,000 and $6,628,000, 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 by NASDAQ, 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.  In August through 
December 1996, the Company consummated a second placement of an aggregate 
197,500 shares of its Series E Convertible Preferred Stock under the same 
terms described above.
     
     In February 1996, the Company hired Martin Janis & Company to act as 
agent for the Company in providing additional public relations services for a 
three month period.  The Company issued 35,000 shares of its Common Stock for 
such services and in May 1996, paid an additional fee of approximately $24,000 
for such three month period.  Additionally, the Company will retain limited 
services from Martin Janis & Company for the next nine months at a fee of 
$3,000 per month.

     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.

                                       -14-
<PAGE>

Item 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
    
     In June 1996, the Company issued an aggregate of   130,000     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    57,333     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    12,000     shares of Common Stock.

     In October 1996, the Company issued    45,000     shares of Common Stock
to Sparta Capital Ltd. for the exercise of its warrants.

      Additionally, during this quarter, the Company raised $825,000 through
a private equity placement of the Company's Series E Preferred Stock.    

     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, if the need should arise.

     The Company is planning to raise additional working capital through the
sale of additional common stock, preferred convertible stock and convertible
debentures.  The funds derived from these sales will be sufficient to fund
operations for the next twelve months, although there is no assurance that it
will be successful in selling these securities.  The Company is forming a joint
Venture arrangement with Prescott Development Corp. to fund the construction of
the planned casino and hotel by its subsidiary Country World Casinos, Inc.  The
total amount of this project is almost $70,000,000, of which and estimated
$27,350,000 will be used to construct the casino, about $35,000,000 for the
hotel and $5,000,000 to liquidate the note currently due for this project to
fund the Chapter 11 proceedings which were completed on March 4, 1997.
Although the Company believes that it will be successful in arranging this
financing, there can be no asssurances that it will be successful.

     At March 31, 1996, the Company had owed $250,000 plus accrued interest and
legal fees as required under the default provisions of the note, to the Calvin
Black Trust.  During the Current period, the Company liquidated this note by
payments and by exchange of equity a subsidiary had in another company,
terminating the legal action upon the default.

                                    
    
   -15-    
<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, CWC submitted a plan of reorganization to the Court 
which is pending.  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 the Court 
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.

     Lastly, 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.

                                       -16-    
<PAGE>

HOLLY HOLDINGS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION


     Both parties were ordered to confer and agree on a specific dollar amount 
by November 15, 1996.  The parties came to an agreement and approximately $1.3 
million was paid to Tommyknocker/New Allied with the Court's approval in 
December 1996.

     On March 13, 1997, the Bankruptcy Court signed and order dismissing CWC
from Bankruptcy.  In connection wherewith, CWC paid all its creditors in full.

     The dismissal of the Bankruptcy casued the case described above (case
number 95CV2310) to be revised.  The Company and CWC are currently negotiating
a settlement of this case and management believes a settlement will be
forthcoming.    

     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 seeks repayment of a promissory note in the principal amount of 
$500,000.    In August 1996, this case was settled and the lowsuit was
eliminated.    

     The negative outcome of any of these actions will have a material impact 
on the operations of the Company and would result in a disruption of the 
Company's business.


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

     In December 1996, at the annual meeting of shareholders, the shareholders 
were asked to approve the following agenda:

1.   To elect a Board of Directors to serve until the next annual meeting of 
     shareholders and until their successors have been duly elected and
     qualified;

2.   To consider and act upon a proposal to amend the Company's Certificate of
     Incorporation to change the name of the Company to "Holly Holdings, Inc.";

3.   To consider and act upon a proposal to amend the Company's Certificate of
     Incorporation to reflect a one-for-ten reverse split of the Company's
     Common Stock;

4.   To consider and act upon a proposal to amend the Company's Certificate of
     Incorporation to increase the number of authorized shares of the Company's
     Common Stock from 50,000,000 to 150,000,000;

                                      -17-    
<PAGE>

HOLLY HOLDINGS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION

5.   To consider and act upon a proposal to approve the Company's 1996 Stock 
     Option Plan;

6.   To consider and act upon a proposal to issue five pre-split shares of the
     Company's Common Stock in exchange for one share of the Company's Series D
     Preferred Stock and to amend the Company's Certificate of Incorporation to
     delete any reference to, or any provision for, the class of authorized
     stock designated as Series D Preferred Stock;

7.   To ratify the selection of Moore Stephens CPA's to act as the Company's
     Independent Certified Public Accountants for the fiscal year ending March
     31, 1997;

     All of the above items were approved by the shareholders and were 
effective December 26, 1996.

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.

                                       -18-    
<PAGE>

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
                                         President, Chief Operating Officer,
                                         Treasurer (Principal Financial and
                                         Accounting Officer) and Director




Date:        April 22, 1997

                                       -19-    
<PAGE>


</TABLE>