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 June 30, 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.
                (Name of Small Business Issuer 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 22, 1997.

<PAGE>

HOLLY HOLDINGS, INC. AND SUBSIDIARIES
INDEX

Part I:  FINANCIAL INFORMATION

Item 1:  Financial Statements:

    Consolidated Balance Sheet as of June 30, 1997 (Unaudited)     1-2

    Consolidated Statements of Operations for the Three Months
    Ended June 30, 1997 and 1996 (Unaudited)                       3

    Consolidated Statements of Cash Flows for the Three Months
    Ended June 30, 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                           15


Signature Page                                                    16

<PAGE>

HOLLY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997 (UNAUDITED)

ASSETS:
Current Assets:
     Cash and Cash Equivalents                               $        6,935 
     Prepaid Expenses                                               115,587 

     Total Current Assets                                           122,522

Property and Equipment - [Net of Accumulated 
     Depreciation and Amortization of $52,937]                   10,462,889 

Deposits                                                                630 

Deferred Financing Costs                                             42,028 

     Total Assets                                               $10,628,069 


See Notes to Consolidated Financial Statements

                                       -1-
<PAGE>

HOLLY HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997 (UNAUDITED)

Liabilities and Stockholders' Deficit:
Current Liabilities:
     Accounts Payable                                            $  234,098 
     Payroll Taxes Payable                                           33,876 
     Accrued Expenses                                               189,896 
     Accrued Interest - Related Parties                             175,943 
     Notes Payable - Related Parties
      (Net of Deferred Financing Costs of $45,000)                  880,000 
     Current Portion of Long-Term Debt                              122,198 
     Net Liabilities of Discontinued Operations                   6,452,547 
     Current Portion of Capital Lease Obligations                     4,976 

     Total Current Liabilities                                    8,093,534 

Long-Term Liabilities:
     Note Payable                                                 2,905,000 
     Note Payable - Related Party                                 2,350,000 
     Other Liability                                                  4,199 

     Total Long-Term Liabilities                                  5,259,199 

Minority Interest                                                 2,247,023 

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, 384,639
          Shares Issued and Outstanding                           3,846,390 

          Series E: Convertible $10.00 Par Value, 137,500
          Shares Issued and Outstanding                           1,375,000 

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

     Additional Paid-in Capital (Preferred)                      (1,331,063)

     Common Stock - No Par Value, Authorized 150,000,000
      Shares, 8,519,427 Shares Issued and Outstanding            19,224,118 

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

     Accumulated [Deficit]                                      (28,255,582)

          Total Stockholders' Deficit                            (4,971,687)

          Total Liabilities and Stockholders' Deficit          $ 10,628,069 

See Notes to Consolidated Financial Statements

                                       -2-
<PAGE>

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

                                                      Three months ended
                                                             June 30,
                                                      1997           1996

Costs and Expenses:
     General and Administrative Expenses           $ 528,156      $ 758,694 
     Depreciation                                      5,629         34,441 
 
     Totals                                          533,785        793,135 

Other Income (Expense):
     Interest Income                                   1,464             --
     Interest Expense                               (130,579)       (36,908)
     Other Income                                     20,232          4,495 
     
     Totals                                         (108,883)       (32,413)

Minority Interest Share in Loss of Subsidiary         84,979         59,127 

(Loss)Income from Continuing Operations             (557,689)      (766,421)
Discontinued Operations:
     Income (Loss) from Operations of
      Woodworking Business and Electronic
      Components Manufacturing Business            (142,480)        (24,233)

     Net (Loss)                                  $ (700,169)     $ (790,654)

Per Share Data:
     (Loss) from Continuing Operations           $     (.09)     $     (.39)
Income [Loss] from Discontinued
      Operations                                 $     (.03)     $     (.01)

     Net [Loss] Per Common Share                 $     (.12)     $     (.40)


Weighted Average Number of Shares                 5,927,074       1,994,438

See Notes to Consolidated Financial Statements

                                       -3-
<PAGE>

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

                                                      Three months ended
                                                             June 30,
                                                      1997           1996

Operating Activities:
     (Loss) From Continuing Operations           $ (557,689)     $ (766,421)
          Adjustments to Reconcile Net (Loss) to
           Net Cash (Used for) Operating Activities:
          Depreciation and Amortization               5,629          34,441 
          Amortization of Deferred Financing
           Activities                                 3,856          18,933 
          Minority Interest                          84,979         (59,127)

     Changes in Assets and Liabilities:
          (Increase) Decrease in:
          Other Current Assets                           --          (1,716)
               Prepaid Expenses                      20,508        (144,034)
               Deposits                                (190)             --  
               Other Assets                          82,972              --
          Increase (Decrease) in:
     Accounts Payable and Accrued Expenses           47,829        (125,545)
               Payroll Taxes Payable                 18,710           4,426 
               Other Current Liabilities                 --         (14,182)
          Total Adjustments                         264,293        (286,804)

     Net Cash - Continuing Operations - Forward    (293,396)     (1,053,225)

Discontinued Operations:
     Changes in Net Assets, Liabilities and Losses (142,480)       (221,708)
          
     Net Cash - Discontinued Operations - Forward  (142,480)       (221,708)

Investing Activities - Continuing Operations:
     Payment of Casino Development Costs           (216,426)         (8,810)
 
Net Cash - Investing Activities - Continuing
      Operations - Forward                        $(216,426)      $  (8,810)

See Notes to Consolidated Financial Statements

                                       -4-
<PAGE>

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

                                                      Three months ended
                                                             June 30,
                                                      1997           1996

   Net Cash - Continuing Operations - Forwarded    $(293,396)   $(1,053,225)

   Net Cash - Discontinued Operations - Forwarded   (142,480)      (221,708)

Net Cash - Investing Activities - Continuing
  Operations - Forwarded                            (216,426)        (8,810) 

Financing Activities - Continuing Operations:
     Proceeds from Notes Payable-Other               289,250      3,940,980 
     Payment of Notes Payable - Other                (11,817)       150,000 
     Payment of Demand Note Payable - Stockholders
           and Related Parties                        60,000     (1,753,028)
     Proceeds from Issuance of Preferred Stock            --        172,000 
     Proceeds from Exercise of Warrants              465,000             -- 

     Net Cash - Financing Activities - Continuing
      Operations                                     682,433      2,210,012 

     Net Increase (Decrease) in Cash and Cash  
      Equivalents                                     30,131        926,269 

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

     Cash and Cash Equivalents - End of Periods     $  6,935    $ 1,860,731 
     
Supplemental Disclosures of Cash Flow Information:
     Interest paid during the three months ended June 30, 1997 and 1996 was
     $100,820 and $84,173 respectively, net of capitalized interest.  No
     income taxes were paid during The three months ended June 30, 1997 and
     1996. 

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.

                                       -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 months ended June 30, 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/A1.

[3]  INVENTORY

At June 30, 1997, the Company had no inventory.

[4]  EARNINGS PER SHARE

Earnings per share are based on 5,927,074 and 1,994,434 shares outstanding for 
the three months ended June 30, 1997 and 1996, 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 inclu
ded in the calculations, as their effect would be anti-dilutive.

[5]  EQUITY TRANSACTIONS

During the quarter, 200,000 shares of Series E Preferred Stock were converted 
pursuant to the terms thereof into 684,703 shares of Company common stock.  
During the quarter, the Company issued 147,500 shares of Series E Preferred 
Stock resulting in gross proceeds of $1,475,000.  During the quarter, the 
Company issued 800,000 shares of its Common Stock to Sparta Capital Ltd. for 
the exercise of warrants. During the quarter the Company sold Debentures 
totaling $350,000 of which $95,000 worth were converted to 470,689 shares of 
Common Stock.

                                       -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

     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. and Casino 
Research and Planning Corp., joint venture 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 a joint 
venture between Luciani & Associates, LLC and Casino Research and Planning 
Corp. 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
Three Months Ended June 30, 1997 Compared to Three Months Ended June 30, 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 attributable 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 three months ended June 30, 1997 and, 
retroactively, no revenue for the three months ended June 30, 1996.

     Total costs and expenses for the three months ended June 30, 1997 were 
$533,785 as compared to $793,694 for the three months ended June 30, 1996.  
This decrease were primarily attributed to the reduction in salaries for the 
parent company.

     Other income (expense) for the three months ended June 30, 1997 was a net 
expense of $108,883 as compared to a net expense of $32,413 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 $142,480 for the three months 
ended June 30, 1997 as compared to $24,233 for the three months ended June 30, 
1996 due to the cost of winding-down Navtech in the current period as compared 
to a small loss last year at Navtech and a loss of $8,603 for the Company's 
woodworking business which was discontinued in 1995.

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

                                       -9-
<PAGE>

HOLLY HOLDINGS, INC. AND SUBSIDIARIES

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

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 September 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.

     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.

                                       -10-
<PAGE>

HOLLY HOLDINGS, INC. AND SUBSIDIARIES

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

     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.

     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 the exchange of equity a subsidiary had in another 
company, terminating the legal action brought upon the default.

                                       -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 

                                       -13-
<PAGE>

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

                                       -14-
<PAGE>

HOLLY HOLDINGS, INC AND SUBSIDIARIES

PART II - OTHER INFORMATION

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.

                                       -15-
<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: December 22, 1997

                                       -16-
<PAGE>