<PAGE>
                           UNITED STATES
                 SECURITIES AND EXCHANGE COMMISSION
                      WASHINGTON, D.C. 20549

                            FORM 10-KSB/A

[X]Annual Report Under Section 13 or 15(d) of The Securities Exchange Act of
   1934

   For the Fiscal Year Ended September 30, 1998

[ ]Transition Report Under Section 13 or 15(d) of The Securities Exchange Act of
   1934 for the transition
    period from _____________ to ____________


                            Commission File Number 33-37809-NY

              Castle Holding Corp.
 (Name of Small Business Issuer in its Charter)


                Nevada                                 77-0121957
(State or Other Jurisdiction of Incorporation)
                                             (I.R.S.Employer Identification No.)

       45 Church Street, Suite 25,                           11520
              Freeport, NY                                (Zip Code)
  (Address of Principal Executive Offices)

  Issuer's Telephone Number: (516)868-2000



  Securities Registered under Section 12(b) of the Exchange Act: None

  Securities Registered under Section 12(g) of the Exchange Act: Common Stock,
  Par Value $.0025 per Share.


  Check whether the issuer (1) filed all reports required to be filed by section
  13 or 15(d) of the 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
  [X] No

  Check if there is no disclosure of delinquent filers in response to item 405
  of Regulation S-B contained  herein, and no disclosure will be contained,
  to the best of registrant's knowledge, in definitive proxy or information
  statements incorporated by reference in part iii of this form 10-KSB or any
  amendment to this form 10-KSB. [X ]

  State issuer's revenues for its most recent fiscal year. $1,899,699
  As of September 30, 1999, the aggregate market value of the registrant's
  common stock (based on its $.1875 reported last bid price on the OTC
  Bulletin Board)  held by non-affiliates of the registrant was $505,500.

  As of September 30, 1999, there were 6,640,500 common shares outstanding.

<PAGE>



                               PART I

  ITEM 1. DESCRIPTION OF BUSINESS

  Castle Holding Corp. (The "Company" or the "Registrant") is a holding Company
  incorporated   in Nevada on June 13, 1986.  The Company conducts substantially
  all of its business through two subsidiaries, Castle Securities Corp.
  ("Castle" or "CSC-1") and Citadel Securities Corp. ("Citadel" or CSC-2").
  Castle was incorporated in New York on December 7, 1984 and operates as a
  broker-dealer in securities.  Its business activities include the underwriting
  and brokerage of fixed income and equity securities.   Citadel was
  incorporated in New York on April 11, 1991 and also operates as a broker-
  dealer in securities.  Citadel   makes markets in Nasdaq, OTC  Bulletin
  Board and "Pink Sheet" securities, has no retail customers, and conducts
  business exclusively with other broker-dealers.

  Castle and Citadel are broker-dealers registered with the Securities and
  Exchange Commission ("SEC") and members of the National Association of
  Securities Dealers ("NASD"), the Municipal Securities Rule Making Board
  ("MSRB"), and the Securities Investor Protection Corporation ("SIPC").
  Castle is currently licensed to conduct its broker-dealer business in 35
  states and the District of Columbia.  Citadel is currently licensed to
  conduct its broker-dealer business only in New York.

  On December 28, 1998, the Company paid a 100% stock dividend and on June 25,
  1999, the Company paid a 300% stock dividend.  All references to shares and
  per share amounts herein have been restated to retroactively reflect these
  stock dividends.

<PAGE>





Revenues By Source
  For the years ended September 30, 1998 and 1997, revenues were derived as
  follows:
<TABLE>
                                           Years Ended September 30,
                                               1998       1997
<S>                                           <C>         <C>
  Commissions:
      Castle Online                           $1,017,136  $  337,693
      Active Account Program                     541,840   2,840,864
      Other stocks and bonds                      86,941     185,235
      Mutual funds                                13,527      16,127
      Total commissions                        1,659,444   3,379,919
  Principal transactions:
      Trading accounts                           257,701     303,878
      Investment account                         (21,931)     20,229
      Total principal transactions               235,770     324,107
  Investment banking:
      Equities underwriting and other fees             -      38,485
      Designated commissions-
          municipal bond offerings                     -       9,775
      Total investment banking                         -      48,260
  Investment management                                -           -
  Interest and dividends                           4,485      10,984
  Total revenues                              $1,899,699  $3,763,270
</TABLE>

<PAGE>

CASTLE ONLINE

  Castle Online ("Online") is a division of Castle started in July 1996 to allow
  customers to engage in securities transactions directly over the Internet.  In
  April 1997, Online installed a T-1 fiber optics data feed expandable into a
  T-3 data feed.  To date, only securities listed on the New York Stock
  Exchange, the American Stock Exchange and the Nasdaq Stock Market have been
  available to Online customers.

  Castle maintains a web site (www.Castleonline.com) where parties interested in
  online trading can both learn about the various features of this service and
  can register for trading.  This system offers customers the ability to
  execute day trades (the practice of buying and selling securities, usually
  exiting the position in the same day) using the Company's JavaTrader order
  entry software.

  With respect to the Nasdaq Stock Market (over 95% of Online transactions
  involve securities listed there), the system offers three execution methods.
  The first is SOES, a rapid execution method that allows an investor to buy
  on the offer and sell on the bid.  The second is SelectNet, whereby an
  investor can submit an order on the bid, offer or in between.  The third
  (and most used) is the ISLD Electronic Communications Network ("ECN").  By
  submitting an order on the ISLD ECN, an investor "posts" the order to buy
  or sell a security so that the entire market can see it and execute on it.
  The ISLD symbol, which appears like a market maker, will move to the price
  designated by an investor's order.

  Online software offers customers the ability to place unsolicited market and
  limit orders and view executions without the necessity of telephone calls to
  Castle registered representatives.  For $150 per month ($0 if customer
  monthly transactions exceed 100), customers are provided real time Nasdaq
  level II quotes and other quotes, news and charts.  Commissions start at
  $19.95 per trade.

  For the years ended September 30, 1997 and 1998, Online customer transactions
  totaled 18,986 and 57,610, respectively.  At September 30, 1997, September
  30, 1998 and June 30, 1999, Online had funded customer accounts numbering
  90, 168, and 364, respectively.

  Registrant expects Online to become its primary source of future growth,
  revenues and profitability.

  PRINCIPAL  TRANSACTIONS

  In April 1994, Castle resumed market-making activities in over-the-counter
  equity securities (Castle had ceased such activities on August 24, 1992).
  In April 1996, such activities were transferred to Citadel. At September
  30, 1999, Citadel employs 1 full-time trader making markets in a total of
  55 securities, 3 quoted on the Nasdaq Stock Market, 43 quoted on the OTC
  Bulletin Board, and 9 quoted on the "Pink Sheets."

  Trading profits or losses are dependent upon the skill of the firm's employees
  in market-making activities, the capital allocated to the firm's positions
  in various securities and the general trend of prices and level of activity
  in the securities markets. Trading as principal requires the commitment of
  capital and creates an opportunity for profits and losses due to market
  fluctuations.  Citadel takes both long and short positions in those
  securities in which it makes a market.

  Under its present restriction agreement with the NASD, Citadel is limited to
  making markets in 100 securities.

  ACTIVE ACCOUNT PROGRAM

  The Active Account Program ("AAP") is a division of Castle started in December
  1992 to afford active customers quick executions using automated order entry
  systems (such as SOES, SelectNet and the ISLD ECN) at relatively low
  commission rates.  Most AAP customers opened margin accounts and gave trading
  authorization to a Castle registered representative.

  From December 22, 1992 to September 30, 1997, substantially all of Castle's
  revenues were derived from the AAP. During that time, the number of day
  trading customers at other firms using automated order entry systems
  increased steadily.  The increased competition lowered AAP customer
  performance, which in turn resulted in departures of Castle AAP registered
  representatives and closings of Castle branch offices in Glendale,
  California ( in August 1997), Melville, New York ( in September 1997) and
  Garden City, New York (in April 1998).

  For the years ended September 30, 1997 and 1998, AAP customer transactions
  totaled 184,654 and 33,041, respectively.  At September 30, 1999, the AAP
  has only one remaining registered representative day trading a
  discretionary account on a full time basis.



  INVESTMENT BANKING

  Since inception, Castle has been the managing underwriter of completed "best
  efforts" public offerings of equity securities for 23 issuers (the last one
  was completed in 1991).  Additionally, Castle has participated in other
  equities and municipal bond offerings as a selected dealer or selling
  group member.

  In May 1999, Castle executed a letter of intent to act as managing underwriter
  of a "best efforts" public offering of equity securities of Exhaust
  Technologies, Inc.  The related registration statement has not been filed
  as of September 30, 1999 and accordingly the offering is not expected to
  commence until the year 2000.


  Castle is currently revising its website (www.Castlesecurities.com) to display
  prospectuses and offer new issues over the Internet.

  As an underwriter, Castle is subject to liability under the Securities Act of
  1933, as amended, and state and other laws in the event, among other matters,
  that the registration statement or prospectus contains a material
  misstatement or omission. Castle's potential liability as an underwriter is
  not generally covered by insurance.


  INVESTMENT MANAGEMENT

  On December 23, 1993, Castle Advisers Inc. ("CAI") was formed to operate as a
  general partner for limited partnerships in the business of securities
  investment. On March 29, 1994, CAI executed a limited partnership agreement
  with Castle Advisors Limited Partnership 94-1 ("CALP") to operate as its
  general partner. Under the agreement, CAI receives a performance incentive
  allocation equal to 1% of the profits (which exceed cumulative losses
  previously allocated to limited partners).

  At December 31, 1998, CALP had net assets of approximately $177,938, including
  its $160,000 investment in the Company.   Since inception, CAI has earned
  $525 in performance incentive fees.

  CLEARING BROKER

  In executing customers' orders to buy or sell listed securities and other
  securities in which it does not make a market, Castle generally acts as an
  agent and charges a commission.

  Castle and Citadel have clearing agreements with JB Oxford & Company. The
  clearing broker clears transactions on a fully disclosed basis for Citadel
  and for Castle's account and the accounts of its customers.
  The services provided by the clearing broker include billing and receipt, and
  custody and delivery of securities, for which Castle and Citadel pays the
  clearing broker certain transaction fees and miscellaneous charges.


  COMPETITION

  The Company, through Castle and Citadel, both registered broker/dealers and
  members of the NASD, is engaged in a highly competitive business. Its
  principal competition includes, with respect to one or more aspects of its
  business, all of the member organizations of the New York Stock Exchange
  ("NYSE") and other registered securities exchanges, all members of the NASD,
  and commercial banks and thrift institutions.  Many of these organizations
  are national firms and have substantially greater financial and human
  resources than Castle or Citadel.

  Discount brokerage firms seeking to expand their share of the retail market,
  including firms affiliated with commercial banks and thrift institutions,
  are devoting substantial funds to advertising and direct solicitation of
  customers. In many instances, Castle and Citadel are competing directly
  with such organizations. In addition, there is competition for investment
  funds from the real estate, insurance, banking and savings and loan
  industries. The Company believes that the principal factors affecting
  competition for the securities industry are the quality and ability of
  professional personnel and relative prices of services and products
  offered.

  REGULATION

  The securities industry in the United States is subject to extensive
  regulation under federal and state laws. The SEC is the federal agency
  charged with administration of the federal securities laws. Much of the
  regulation of broker-dealers, however, has been delegated to self-regulatory
  organizations, principally the NASD and the national securities exchanges,
  although the SEC maintains jurisdiction and is not necessarily bound by the
  actions or recommendations of the NASD. These self-regulatory organizations
  adopt rules (which are subject to approval by the SEC) that govern the
  industry and conduct periodic examinations of member broker-dealers.
  Securities firms are also subject to regulation by state securities
  commissions in the states in which they are registered.

  The regulations to which broker-dealers are subject cover all aspects of the
  securities business, including sales methods, trade practices among broker-
  dealers, capital structure of securities firms, record-keeping and conduct
  of directors, officers and employees. Additional legislation, changes in
  rules promulgated by the SEC and self-regulatory organizations, or changes
  in the interpretation or enforcement of existing laws and rules often
  directly affect the method of operation and profitability of broker-
  dealers.  The SEC, self-regulatory organizations and state security
  regulators may conduct administrative proceedings, which can result in
  censure, fine, suspension or expulsion of a broker-dealer, its officers or
  employees.  The principal purpose of regulation and discipline of broker-
  dealers is the protection of customers and the securities markets rather
  than protection of creditors and stockholders of broker-dealers.

  NET CAPITAL REQUIREMENTS

  As broker-dealers, Castle and Citadel are subject to the SEC's Net Capital
  Rule (the "Rule") which is designed to measure the general financial
  integrity and liquidity of a broker-dealer.  The Rule requires the maintenance
  of minimum net capital (at September 30, 1998, $5,000 for Castle and $100,000
  for Citadel) and requires that the ratio of aggregate indebtedness, as
  defined, to net capital, not exceed 15 to 1. In computing net capital,
  various adjustments to net worth are made with a view to excluding assets that
  are not readily convertible into cash and making a conservative statement of
  other assets, such as a firm's position in securities. Compliance with the
  rule limits those operations of securities firms that require the intensive
  use of their capital, such as underwriting commitments and principal
  trading activities, and limits the ability of securities firms to pay
  dividends.

  Both Castle and Citadel are required to file "Focus" reports with the NASD.
  The purpose of these reports is to provide the NASD with a current
  financial status for each Company and to evidence compliance with the
  net capital requirements.

  In addition to the above requirements, funds invested as equity capital may
  not be withdrawn, nor may any unsecured advances or loans be made to any
  stockholder of a registered broker-dealer, if, after giving effect to such
  withdrawal, advance or loan and to any other such withdrawal, advance
  or loan as well as to any scheduled payments of subordinated debt which are
  scheduled to occur within six months, the net capital of the broker-dealer
  would fail to equal 120% of the minimum dollar amount of net capital
  required or the ratio of aggregate indebtedness to net capital would exceed 10
  to 1.  Finally, any funds invested in the form of subordinated debt
  generally must be invested for a minimum term of one year and repayment of
  such debt may be suspended if the broker-dealer fails to maintain certain
  minimum net capital levels. For example, scheduled payments of
  subordinated debt are suspended in the event that the ratio of aggregate
  indebtedness to net capital of the broker-dealer would exceed 12 to 1 or if
  its net capital would be less than 120% of the minimum dollar amount of net
  capital required.

  At September 30, 1998, Castle had net capital of $43,395, which was $38,395 in
  excess of its required net capital, and its ratio of aggregate indebtedness to
  net capital was 1.58 to 1.  Citadel had net capital of $144,082, which was
  $44,082 in excess of its required net capital, and its ratio of aggregate
  indebtedness to net capital was .08 to 1.

  EMPLOYEES

  At September 24, 1999, the Company employed a total of 48 persons, including 2
  executive personnel, 33 other registered representatives (17 part-time), and
  13 other full-time administrative persons.

  Registered representatives are required to take examinations given by the NASD
  and approved by the NYSE and all principal exchanges as well as state
  securities authorities in order to be registered. There is intense
  competition among securities firms for registered representatives with proven
  sales production records.

  The Company considers its employee relations to be good and believes that its
  compensation and employee benefits are competitive with those offered by other
  securities firms. None of the Company's employees are covered by a
  collective bargaining agreement.


  ITEM 2. DESCRIPTION OF PROPERTY

  The Company, Castle, and Citadel maintain their business headquarters at 45
  Church Street, Freeport, New York 11520, where they occupy approximately
  13,000 square feet of office space.   The facilities are occupied under six
  lease agreements that provide for total monthly rentals of $6,500 and
  expire October, 2002. At the option of a wholly owned subsidiary of the
  Company, the leases are renewable for periods extending the terms to
  October 2007.  The facilities provide the Company with sufficient space in
  which to conduct its present activities and store required business records
  pursuant to rules and regulations of the SEC and the NASD.


  ITEM 3. LEGAL PROCEEDINGS

  Since inception Castle and certain of its principals have been the targets of
  various legal and administrative proceedings brought by the SEC, the NASD
  or other state securities commissions.  Additionally, in the normal
  course of its business, Castle, from time to time, is involved in claims,
  lawsuits and arbitrations brought by its customers.

  Material legal proceedings outstanding at September 30. 1999 follows:

     (1)  SEC V. U.S. ENVIRONMENTAL, INC., CASTLE, MICHAEL T. STUDER ET. AL.

     On September 13, 1994, the SEC filed a civil action against Castle, its
     president, a former registered representative, and eight other
     defendants.  The action alleges violations of Section 5(a) and (C), and
     17(a) of the Securities Act of 1933, Section 10(b) and 15c of the
     Securities Exchange Act of 1934 and Rules 10b-3, 10b-5, 10b-6, and
     15cl-2 thereunder.  The complaint seeks injunctive relief and
     disgorgement of profits in the approximate amount of $175,000.  An
     answer and amended answer has been filed on behalf of Castle and its
     president and discovery has commenced but no trial date has yet
     been set.


    (2)  NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. MARKET SURVEILLANCE
         COMMITTEE V. CASTLE, MICHAEL T. STUDER ET. AL.

     On October 6, 1994, the National Association of Securities Dealers, Inc.
     Market Surveillance Committee (the "MSC") commenced a disciplinary
     proceeding against Castle, its president, and two former registered
     representatives. The complaint alleges violations of Article III,
     Sections 1, 4, 18, and 27 of the Association's Rules of Fair Practice
     and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
     thereunder. After a hearing on June 20, 1995, in MSC's Decision dated
     February 7, 1996, Castle and its president were fined, jointly and
     severally, $25,000 and were ordered to make restitution to specified
     customers totaling approximately $10,000. Castle and its president
     appealed the decision to the National Business Conduct Committee (the
     "NBCC") of the NASD and a hearing of the appeal was held on June 7, 1996.
     In its Amended Decision dated October 21, 1996, the NBCC affirmed the
     fines and restitution order.  On November 15, 1996, Castle and its
     president appealed the NBCC Amended Decision to the SEC. On January 7,
     1998, the SEC affirmed the NBCC Amended Decision. On May 18, 1998, the
     SEC denied Castle's motion for reconsideration filed January 21, 1998.  On
     February 5, 1998 and June 15, 1998, Castle and its president filed
     petitions for review of the NASD and SEC actions to the Second Circuit
     of the United States Court of Appeals, which matters are still pending.


  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  No matters were submitted to Security holders during the two fiscal years
  ended September 30, 1998.



                            PART II

  ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

  The Company's common stock, $.0025 par value, is traded in the over-the-
  counter market under the OTC Bulletin Board symbol "CHOD". However, there
  is no established trading market as actual transactions are infrequent.
  The following table sets forth the range of high and low closing bid
  quotations by calendar quarters as reported by the National Quotation Bureau
  from October 1, 1996 through June 30, 1999, as adjusted for the 100% stock
  dividend paid December 28, 1998 and the 300% stock dividend paid June 25,
  1999.  Bid quotations represent prices between dealers, do not include
  retail mark-ups, mark-downs or other fees or commissions, and do not
  necessarily represent actual transactions.

  <TABLE>
  <S>
  QUARTER ENDED:    HIGH BID  LOW BID

                     <C>      <C>
  December 31, 1996  $0.047   $0.047

  March 31, 1997      0.047    0.016

  June 30, 1997       0.031    0.016

  September 30, 1997  0.031    0.031

  December 31, 1997   0.031    0.031

  March 31, 1998      0.031    0.031

  June 30, 1998       0.047    0.031

  September 30, 1998  0.063    0.047

  December 31, 1998   0.594    0.063

  March 31, 1999      1.000    0.281

  June 30, 1999       1.750    0.422
  </TABLE>


  As of September 30, 1999, the number of holders of record of the company's
  common stock was 139.  There were ten (10) market makers for the company's
  common stock, 6,640,500 shares outstanding and the closing bid price was
  $0.1875.

  Registrant has paid no cash dividends and has no present plan to pay cash
  dividends, intending instead to reinvest its earnings, if any.  However,
  payment of future cash dividends will be determined from time to time by
  its Board of Directors, based upon its future earnings, financial
  condition, capital requirements and other factors.

  RECENT SALES OF UNREGISTERED SECURITIES

  Equity securities of the Registrant sold by the Registrant during the three
  fiscal years ended September 30, 1998 that were not registered under the
  Securities Act were:
<TABLE>
<S>                 <C>       <C>        <C>              <C>
                    Title of  Number
Date of Sale        Security  Shares(1)  Purchaser(s)     Consideration

July 30, 1997       Common    400,000    CALP             $ 50,000 Cash
                    Stock

August 27, 1997     Common     80,000    Glenn            $ 10,000 Promissory
                    Stock                Perkins(2)                Note

August 27, 1997     Common     80,000    Frank            $ 10,000 Promissory
                    Stock                Ferraro(2)                Note

September 26, 1997  Common     80,000    Thomas           $  5,000 Cash Plus
                    Stock                Shaughnessy(2)      5,000 Promissory
                                                                   Note

September 26, 1997  Common    240,000    CALP             $ 30,000 Cash
                    Stock

September 26, 1997  Common    320,000    CHC Deferred     $ 40,000 Cash
                    Stock                Compensation Plan

November 15, 1997   Common     80,000    Ratan Halder      Lease Concession
                    Stock                                  Valued at $ 10,000

September 4, 1998   Common     56,000    Equities          Advertising
                    Stock                Magazine, LLC     Valued at $21,000

</TABLE>

    (1)  As adjusted for the 100% stock dividend paid December 28, 1998 and the
         300% stock dividend paid June 25, 1999.

    (2)  Castle registered principal and key employee.

  No underwriting discounts or commissions were paid in connection with any of
  the above sales.  For all of the above sales, the registrant claimed
  exemption from registration under Section 4(2) of the Securities Act of 1933.




  ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
  CONDITION AND RESULTS OF OPERATIONS

  Results of Operations

  General - Substantial positive and negative fluctuations can occur in the
  Registrant's business due to a variety of factors, including variations in
  the market value of Securities, the volatility and liquidity of trading
  markets, and the level of market activity. As a result, net income and
  revenues in any particular period may not be representative of full-year
  results and may vary significantly from year to year and from quarter to
  quarter. In addition, results of operations have been in the past and may
  in the future continue to be materially affected by many factors of a
  national and international nature, including economic and market conditions,
  currency values, inflation, the availability of capital, the level and
  volatility of interest rates, the valuation of Securities positions and
  investments, and legislative and regulatory developments, as well as the
  size, number and timing of transactions. The Registrant's results of
  operations also may be materially affected by competitive factors and its
  ability to attract and retain highly skilled individuals.

  Year ended September 30, 1998 compared to year ended September 30, 1997

  Net loss for the year ended September 30, 1998 was $(186,718), or $(.04) per
  share, compared to a net loss of $(233,837), or $(.06) per share, for the
  year ended September 30, 1997. Total  revenues decreased $1,863,571 (50%)
  and total expenses decreased $1,935,481 (48%).  Revenues less commissions
  and clearing costs were $1,450,545 in 1998 compared to $1,903,965 in 1997.
  In 1998, clearing and execution costs were reduced by $266,162 received from
  CSC-1's clearing agent in settlement of prior fee disputes.

  The decrease in total revenues was due to a $2,299,024 decrease in Active
  Account Program ("AAP") commissions, offset by a $679,443  increase in
  Castle Online commissions.   The total number of AAP transactions decreased
  82% from 184,654 transactions in 1997 to 33,041 transactions in 1998, which
  resulted from the reduction in the number of registered representatives
  involved in the AAP and Castle's closing of its Glendale branch office in
  August 1997, its Melville office in September 1997 and its Garden City
  office in April   1998.  Castle Online customer transactions increased from
  18,986 in 1997 to 57, 610 in 1998.   Castle Online funded customers
  increased from 90 at September 30, 1997 to 168 at September 30,   1998.

  Commissions expense as a percentage of total revenues less clearing costs was
  15% and 25% in 1998 and 1997, respectively. The decrease in the average
  commission payout percentage was due to a higher proportion of revenues
  derived from Castle Online in 1998 (where the payout percentages are lower).

  Excluding the $266,162 settlement in 1998 noted above (which reduced 1998
  clearing costs), clearing costs as a percentage of total revenues was 25%
  and 32% in 1998 and 1997, respectively. The lower percentage in 1998 is due to
  a higher proportion of revenues derived from Castle Online (where the
  average gross commission revenue per transaction is higher than with the
  AAP).

  Communications and selling expenses decreased $402,250  from $804,085 in 1997
  to $401,835 in 1998. This decrease was due to lower NASDAQ workstation and
  execution charges in 1998 as a result of the reduced number of AAP
  transactions and the three branch office closings noted above.

  Administrative compensation and employee benefits decreased $156,058 from
  $742,479 in 1997 to $586,421 in 1998. This decrease was due primarily to
  reduced administrative personnel resulting from the branch closings.


  Liquidity and Capital Resources

  The majority of the Registrant's assets are highly liquid and short-term in
  nature.   Cash and Securities owned at September 30, 1998 totaled $279,364,
  58% of the Registrant's assets.

  Cash decreased $222,071  from $475,314 at September 30, 1997 to $253,243 at
  September 30, 1998. This decrease was due to $93,890 net cash used for
  operating activities; $48,802 used for capital additions and $79,379 used
  for financing activities, including the $100,204 note payable repayment to
  Castle's clearing agent.

  Castle and Citadel, the Registrant's broker-dealer subsidiaries, are subject
  to "net capital" requirements of the SEC. Among other things, these
  requirements limit the number of markets which they may make and the value
  of Securities inventories which they may carry.  Presently, a  broker or
  dealer engaged in activities as a market maker must maintain net capital
  in an amount not less than $2,500 for each Security in which it makes a
  market (unless a Security in which it makes a market has a market value of
  $5.00 or less in which event the amount of net capital shall be not less
  than $1,000 for each such Security).

  At September 30, 1998, Castle had net capital of $43,395, which was $38,395 in
  excess of its required net capital of $5,000, and Citadel had net capital of
  $144,082, which was $44,082 in excess of its required net capital of $100,000.

  On December 31, 1997, Castle advised the NASD that it would no longer make
  markets and would conduct only activities requiring net capital of $5,000.











<PAGE>



  ITEM 7.  FINANCIAL STATEMENTS

  Index to Consolidated Financial Statements
  <TABLE>


  Description                                           Page No.
  <S>                                                      <C>
  Index to Consolidated Financial Statements               13

  Auditors' Opinions                                       14-15

  Consolidated Statements of Financial Condition,
  September 30, 1998 and 1997                              16

  Consolidated Statements of Operations,
  Years ended September 30, 1998 and 1997                  17

  Consolidated Statements of Changes in Stockholders'
  Equity,  Years ended September 30, 1998 and 1997         18

  Consolidated Statements of Cash Flows,
  Years ended September 30, 1998 and 1997                  19-20

  Notes to Consolidated Financial Statements,
  Years ended September 30, 1998 and 1997                  21-32
  </TABLE>






  <PAGE>  13









  INDEPENDENT AUDITORS' REPORT


  To the Board of Directors and Stockholders of
  Castle Holding Corp.

  We have audited the accompanying statement of consolidated financial condition
  of Castle Holding Corp. and Subsidiaries ("the Company") as of September 30,
  1998 and the related consolidated statements of operations changes in
  stockholder's equity, and cash flows for the year then ended.  These
  consolidated financial statements are the responsibility of the Company's
  management.  Our responsibility is to express an opinion on these consolidated
  financial statements based on our audit.

  We conducted our audit in accordance with generally accepted auditing
  standards.   Those standards require that we plan and perform the audit to
  obtain reasonable assurance about whether the consolidated financial
  statements are free of material misstatement.  An audit includes examining,
  on a test basis, evidence supporting the amounts and disclosures in the
  consolidated financial statements.  An audit also includes assessing the
  accounting principles used and significant estimates made by management, as
  well as evaluating the overall consolidated financial statement
  presentation.  We believe that our audit provides a reasonable basis for our
  opinion.

  In our opinion, the consolidated financial statements referred to above
  present fairly, in all material respects, the financial position of the
  Company as of September 30, 1998 and the results of its consolidated
  operations and cash flows for the year then ended in conformity with
  generally accepted accounting principles.





  Massella, Tomaro & Co., LLP
  Jericho, New York
  March 3, 1999, except for the third paragraph
  of Note 13E which is as of March 12, 1999, the
  fourth paragraph of Note 13E which is as of
  March 24, 1999, and Notes 1,2,and 7 and the fifth
  paragraph of Note 13E which is as of September 30, 1999.




<PAGE>  14







  SCARANO & TOMARO, P. C                          125 Michael Drive, Suite 101
   Certified Public Accountants & Consultants     Syosset, New York 11791
                                                                  516-364-0300
                                                              Fax:516-364-3003



                 INDEPENDENT AUDITORS' REPORT


  To the Board of Directors and Stockholders of
  Castle Holding Corp.

  We have audited the accompanying statements of consolidated financial
  condition of Castle Holding Corp. and Subsidiaries ("the Company") as of
  September 30, 1997 and 1996 and the related consolidated statements of
  operations changes in stockholder's equity, and cash flows for the years
  then ended. These consolidated financial statements are the responsibility
  of the Company's management. Our responsibility is to express an opinion on
  these consolidated financial statements based on our audits.

  We conducted our audits in accordance with generally accepted auditing
  standards.   Those standards require that we plan and perform the audits to
  obtain reasonable assurance about whether the consolidated financial
  statements are free of material misstatement.   An audit includes examining,
  on a test basis, evidence supporting the amounts and disclosures in the
  consolidated financial statements. An audit also includes assessing the
  accounting principles used and significant estimates made by management, as
  well as evaluating the overall consolidated financial statement
  presentation. We believe that our audits provide a reasonable basis for our
  opinion.

  In our opinion, based on our audits, the consolidated financial statements
  referred to above present fairly, in all material respects, the financial
  position of the Company as of September 30, 1997 and 1996 and the results
  of its consolidated operations and cash flows for the years then ended in
  conformity with generally accepted accounting principles.






  Scarano & Tomaro, P.C.
  Syosset, New York
  February 11, 1998



  <PAGE> 15









  <TABLE>
           CASTLE HOLDING CORP. AND SUBSIDIARIES
       Consolidated Statements of Financial Condition
                                               September 30,
     <S>                                       1998            1997
  Assets                                      <C>             <C>
  Cash in bank and with clearing broker       $   253,243     $    475,314
  Securities owned, at market value                26,121           49,986
  Equipment, less accumulated
      depreciation of $143,838 and $87,040,
      respectively                                 56,014           56,894
  Equipment under capital leases, less
      accumulated depreciation of $65,241
      and $35,997, respectively                    30,468           15,839
  Leasehold improvements, less
      accumulated amortization of
      $50,668 and $26,631, respectively            85,017           94,130
  Other assets                                     33,077           57,219
  Total assets                                $   483,940     $    749,382

  Liabilities and Stockholders' Equity

  Liabilities:
    Accounts payable and accrued expenses     $   152,911      $    214,365
    Commissions payable                            14,368            15,454
    Income taxes payable                            2,661             2,660
    Securities sold, not yet purchased,
     at market                                      2,983            14,662
    Obligations under capital leases               33,376            18,678
    Note payable - clearing agent                       -           100,204
    Notes payable - related parties               127,500            77,500
    Loan subordinated to claims of general
     creditors                                     50,000            50,000

      Total liabilities                           383,799           493,523

 Commitments and contingencies (Note 11)

 Stockholders' equity:
   Common stock, $.0025 par value; authorized
   10,000,000 shares, issued and outstanding
   5,034,400 and 4,898,400 shares, respectively    12,586            12,246
   Additional paid - in capital                   398,334           367,674
   Accumulated deficit                           (285,779)         ( 99,061)
     Total                                        125,141           280,859
   Less: stock subscriptions receivable           (25,000)          (25,000)

     Total stockholders' equity                   100,141           255,859

 Total liabilities and stockholders' equity    $  483,940        $  749,382

         See accompanying notes to consolidated financial statements.
 </TABLE>


<PAGE> 16





 <TABLE>
          CASTLE  HOLDING  CORP. AND SUBSIDIARIES
           Consolidated Statements of Operations


                                          Year Ended September 30,
                                          1998             1997
  <S>
  Revenues:                               <C>              <C>
    Commissions                           $1,659,444       $3,379,919
    Principal transactions                   235,770          324,107
    Investment banking                             -           48,260
    Interest and dividends                     4,485           10,984

      Total revenues                       1,899,699        3,763,270

  Expenses:
    Commissions                              247,985          636,896
    Clearing costs                           201,169        1,222,409
    Communications and selling               401,837          804,085
    Administrative compensation
     and employee benefits                   586,421          742,479
    Professional and consulting fees         195,624           94,207
    Registration and regulatory fees          31,827           57,790
    Occupancy                                 45,143          149,700
    Interest                                  27,276           27,864
    Other                                    345,812          283,145
      Total expenses                       2,083,094        4,018,575

  Loss before provision for income taxes    (183,395)        (255,305)
  Provision for (benefit from) income taxes    3,323          (21,468)

Net loss                                  $ (186,718)      $ (233,837)

Net loss per share:
  Basic and diluted                       $     (.04)      $     (.06)
  Weighted average number of common
    shares outstanding                     4,976,400        3,782,912


     See accompanying notes to consolidated financial statements.
  </TABLE>



<PAGE> 17





<TABLE>

             CASTLE HOLDING CORP. AND SUBSIDIARIES
  Consolidated Statements  of Changes in Stockholders' Equity
        For the Years Ended September 30, 1998 and 1997

                                                  (Accum-
                                                   ulated    Stock      Total
                       Common Stock     Additional Deficit)  Sub-       Stock-
                     $.0025 Par Value   Paid-in    Retained  scription  holders'
                    Shares      Amount  Par Value  Earnings  Receivable Equity

<S>
Balances,
September 30, 1996  <C>          <C>     <C>       <C>       <C>      <C>
                    3,664,000    $9,160  $216,460  $134,776  $     -  $360,396
Issuance of  common
 shares to employees
 in December 1996
 and charged to
 operations            34,400        86     4,214         -        -     4,300

Sales of common
  shares in July,
  August, and
  September 1997 at
  $ .125 per share  1,200,000     3,000   147,000         -  (25,000) 125,000
Net loss                    -         -         -  (233,837)       - (233,837)

Balances,
 September
 30, 1997           4,898,400    12,246   367,674   (99,061) (25,000) 255,859
Issuance of  common
 shares to lessor in
 November 1997 and
 charged to
 operations            80,000       200     9,800         -        -   10,000

Issuance of  common
 shares to advertiser
 in September 1998
 and charged to
 operations            56,000       140    20,860         -        -   21,000

Net loss                    -         -         -  (186,718)       - (186,718)

Balances,
September
30, 1998            5,034,400  $ 12,586  $398,334 $(285,779)$(25,000) $100,141

       See accompanying notes to consolidated financial statements.
</TABLE>


<PAGE> 18







<TABLE>
             CASTLE HOLDING CORP. AND SUBSIDIARIES
             Consolidated Statements of Cash Flows

                                                   Year  Ended  September  30,
                                                     1998           1997
<S>
Cash flows from operating activities:               <C>              <C>
  Net  loss                                         $ (186,718)      $ (233,837)
  Adjustments to reconcile net income (loss)
   to net cash provided by (used for) operating
   activities:
     Depreciation                                       88,039          107,337
     Issuance of common stock for services and rent     31,000            4,300
  Changes in assets and liabilities:
     Securities owned                                   23,865           20,881
     Other assets                                       24,142          (28,837)
     Accounts payable and accrued expenses             (61,454)         (21,173)
     Commissions payable                                (1,086)         (92,625)
     Income taxes payable                                    1          (28,417)
     Securities sold, not yet purchased                (11,679)          14,601
  Net cash used for operating activities               (93,890)        (257,770)

Cash flows from investing activities:
  Purchases of equipment and leasehold improvements    (48,802)         (76,386)

  Net cash used for investing activities               (48,802)         (76,386)
Cash flows from financing activities:
  Proceeds from issuance of notes payable               50,000           70,000
  Proceeds from sales of common stock                        -          125,000
  Repayment of notes payable                          (100,204)         (35,156)
  Repayment of obligations under capital leases        (29,175)         (17,359)

  Net cash (used for) provided by financing activities (79,379)         142,485

Net decrease in cash                                  (222,071)        (191,671)

 Cash, beginning of year                               475,314          666,985

 Cash, end of year                                  $  253,243       $  475,314

  See accompanying notes to consolidated financial statements.


</TABLE>

<PAGE> 19







<TABLE>
             CASTLE HOLDING CORP. AND SUBSIDIARIES
             Consolidated Statements of Cash Flows


                                                     Year Ended September 30,
                                                     1998            1997
<S>
 Supplemental disclosures of cash flow information:  <C>             <C>
   Interest paid                                     $ 20,163     $ 27,864

   Income taxes paid                                 $  3,207     $  6,949

Schedule of non-cash operating activities:
   Issuance of common stock for services and rent    $ 31,000     $  4,300

Schedule of non-cash investing activities:
  Acquisition of computer equipment in connection
   with capital lease obligations                    $ 43,873     $      -

Schedule of non-cash financing activities:
  Issuance of stock subscriptions receivable in
   connection with sale of common stock              $      -     $ 25,000

  See accompanying notes to consolidated financial statements.
</TABLE>


<PAGE> 20







             CASTLE HOLDING CORP. AND SUBSIDIARIES
           Notes to Consolidated Financial Statements
        For the Years Ended September 30, 1998 and 1997


1.GENERAL

  Castle Holding Corp. ("CHC") is a holding company which was incorporated in
  Nevada on June 13, 1986.  CHC conducts substantially all of its business
  through its subsidiaries.

  On December 28, 1998, CHC paid a 100% stock dividend to holders of record
  at the close of business on December 22, 1998, thereby increasing the
  number of issued and outstanding common shares from 652,800 to 1,305,600.
  On June 25, 1999, CHC paid a 300% stock dividend to holders of record at
  the close of business on June 18, 1999, thereby increasing the number of
  issued and outstanding common shares from 1,651,600 to 6,606,400. All
  references to shares and per share amounts in the accompanying consolidated
  financial statements have been restated to retroactively reflect these
  stock dividends.

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Basis of presentation - The consolidated financial statements include the
  accounts of CHC and its fifteen subsidiaries (collectively, the "Company").
  CHC's principal operating subsidiaries are Castle Securities Corp.
  ("CSC-1"),  incorporated in the state of New York on December 7, 1984 and a
  securities broker-dealer headquartered in Freeport, New York and Citadel
  Securities Corp. (" CSC-2 " ), incorporated in the state of New York on
  April 11, 1991 and also a securities broker-dealer and, since April 1996,
  market maker in NASDAQ, OTC Bulletin Board, and "Pink Sheets" securities
  from its office in Freeport, New York.

  The remaining thirteen  (13) subsidiaries of CHC are as follows:
  1. Citadel Capital Corp. (95.0 % owned) (incorporated in Delaware March 29,
     1988) - inactive at September 30, 1998.

  2. Beverage King, Ltd. (100 % owned) (incorporated in Delaware January 2,
     1990) - subleases automobiles and equipment to other CHC subsidiaries.

  3. Meroke Capital Corp. (100 % owned) (incorporated in New York October 7,
     1992) - inactive at September 30, 1998.

  4. Castle Trucking Corp. ( 100 % owned) (incorporated in New York May 4,
     1993) - subleases office space to other CHC subsidiaries and others.

  5. Castle Advisors Inc. (100 % owned) (incorporated in New York December
     23, 1993) - acts as general partner for a limited partnership in the
     business of securities investment.

  6. Sparta Holding Corp. (100 % owned) (incorporated in Nevada December 23,
     1993) - inactive at September 30, 1998.

  7. Wall Street Indians, Ltd. (100 % owned) (incorporated in New York May 27,
     1994) - subleases office space and provides communications and office
     services and supplies to other CHC subsidiaries and others.

  8. Chinamer International Corp. (100 % owned) (incorporated in Nevada
     October 18, 1994) - inactive at September 30, 1998.


<PAGE> 21


                     CASTLE HOLDING CORP. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                 For the Years Ended September 30, 1998 and 1997



  9. Galaxynet Inc. (87.7 % owned) (incorporated in New York December 15,
     1995) - provides marketing, programming, and communications services to
     other CHC subsidiaries.

 10. Rocketnet Inc. (87.7 % owned) (incorporated in Nevada December 20, 1995) -
     provides software, marketing, and communications services to other CHC
     subsidiaries.

 11. U Trade Inc. (100 % owned)  (incorporated in New York November 17, 1997) -
     inactive at September 30, 1998.

 12. Java Trader, Inc. (100%) owned (incorporated in Nevada March 10, 1999) -
     inactive at September 30, 1998.

 13. Long Island Web TV.com Corp. (100% owned) (incorporated in New York
     September 22, 1999( - inactive at September 30, 1998.

 All significant intercompany balances and transactions have been eliminated
 in consolidation.



 Revenue recognition - Securities transactions ( related revenue and expenses,
 including commissions and principal transactions revenue and commissions
 expense) are recorded on a settlement date basis, which is generally three
 business days after trade date. Revenues and expenses on a trade date basis
 are not materially different from revenues and expenses on a settlement date
 basis.

 Use of estimates - The preparation of the financial statements in conformity
 with generally accepted accounting principles requires management to make
 estimates and assumptions that affect the amounts reported in the financial
 statements and accompanying notes. Actual results could differ from those
 estimates.

 Fair value disclosures - The carrying value of cash, securities owned,
 accounts payable and accrued      expenses,  commissions payable, income
 taxes payable, and securities sold,  not yet purchased are a reasonable
 estimate of their fair value.   The carrying value of the Company's loan
 subordinated to claims of general creditors,  obligations under capital
 leases and notes payable at September 30, 1998 are a reasonable estimate of
 their fair value based upon currently available interest rates of similar
 instruments available with similar maturities.

 Cash in bank and with clearing broker - At September 30, 1998, CSC-1 had
 $28,352 cash held at its clearing agent not covered by SIPC insurance
 and CSC-2 had $37,625 cash held at its clearing agent not covered by SIPC
 insurance.  Management believes the clearing agent to be in sound financial
 condition and therefore the credit risk exposure is limited.

<PAGE> 22



                          CASTLE HOLDING CORP. AND SUBSIDIARIES
                        Notes to Consolidated Financial Statements
                     For the Years Ended September 30, 1998 and 1997


 Securities owned and securities sold, not yet purchased - Marketable securities
 are valued at market and unrealized gains and losses are reflected in income.
 Securities for which no ready market exists are valued at estimated fair value
 as determined by the Board of Directors.

 Equipment, equipment under capital leases, and leasehold improvements -
 Equipment, equipment under capital leases, and leasehold improvements are
 stated at cost. Equipment, and equipment under capital leases are depreciated
 using the straight-line method over the estimated useful lives of the
 respective assets, generally three to seven years. Leasehold improvements are
 amortized over the respective remaining lease terms on a straight-line basis.

 Income taxes - The Company accounts for income taxes in accordance with
 Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting For
 Income Taxes".  Deferred tax assets and liabilities are determined based on the
 difference between the financial statement and tax bases of assets and
 liabilities, using enacted tax rates in effect for the year in which the
 differences are expected to reverse. Current income taxes are based on the
 year's income taxable for Federal and State Income tax reporting purposes.
 Deferred income taxes, if any, reflect the net effects of temporary differences
 between the carrying amounts of assets and liabilities for financial reporting
 purposes and the amounts used for income tax purposes.

 Earnings per share - During 1997, the Financial Accounting Standards Board
 issued SFAS No. 128, "Earnings Per Share."  SFAS No. 128 replaced the
 previously required reporting of  primary and fully diluted earnings per share
 with basic and diluted earnings per share, respectively.  Unlike the
 previously reported primary earnings per share, basic earnings per share
 excludes the dilutive effects of stock options.  Diluted earnings  per share is
 similar to the previously reported fully diluted earnings per share.  Earnings
 per share amounts for all periods  presented have been calculated in accordance
 with the requirements of SFAS No. 128.

 Impact of recently issued accounting standards - The Company does not believe
 that any recently issued accounting standards, not yet adopted by the Company,
 will have a material impact on its consolidated financial position and results
 of operations when adopted.

<PAGE> 23








                CASTLE HOLDING CORP. AND SUBSIDIARIES
              Notes to Consolidated Financial Statements
            For the Years Ended September 30, 1998 and 1997




3. SECURITIES OWNED AT MARKET VALUE AND SECURITIES SOLD, NOT YET PURCHASED
 <TABLE>
                                                       September 30,
     <S>                                            1998           1997
 Securities owned at market value consist of:
   Trading accounts:                                <C>            <C>
     Corporate equities - listed on Nasdaq Stock
      Market                                        $  1,188       $  1,095
     Corporate equities - listed on OTC Bulletin
      Board                                           20,753         21,033

        Total trading accounts                        21,941         22,128

   Investment accounts                                 4,180         27,858

        Totals                                      $ 26,121       $ 49,986

 Securities sold, not yet purchased consist of:

   Trading accounts:
     Corporate equities - listed on Nasdaq Stock
      Market                                        $  2,983       $    995
     Corporate equities - listed on OTC Bulletin
      Board                                                -         13,667

   Totals                                           $  2,983       $ 14,662
 </TABLE>


4. NOTE PAYABLE - CLEARING AGENT

Pursuant to an agreement with its clearing broker, CHC borrowed a total of
$120,000 bearing interest at 9% per annum and payable in monthly installments
of $5,482 through April 1997, and $914 through August 1999.  In connection with
CSC-1 renewing its clearing agreement for a two year period, such note was paid
in full during November 1997.


<PAGE> 24








                      CASTLE HOLDING CORP. AND SUBSIDIARIES
                    Notes to Consolidated Financial Statements
                  For the Years Ended September 30, 1998 and 1997




5. NOTES  PAYABLE - RELATED PARTIES
 <TABLE>
                                                         September 30,
 <S>                                                1998           1997
 Notes payable consist of:

 Note payable to officer, interest at 12% paid      <C>            <C>
  annually, due on demand                           $  22,500      $  22,500
 Note payable to affiliate of officer, interest
  at 12% paid annually, due on demand                  50,000              -
 Note payable to The OTC Equity Fund, Inc. ("OEF"),
  interest at 12% paid annually, due on demand         55,000         55,000

 Totals                                              $127,500      $  77,500
 </TABLE>




6. OBLIGATIONS UNDER CAPITAL LEASES

In September 1995, a CHC subsidiary executed a lease agreement to lease certain
equipment valued at $51,836 for a term of three years requiring monthly payments
of $1,845.

During October 1997, a CHC subsidiary executed a lease agreement to lease
certain computer equipment valued at $43,873 for a term of three years
requiring monthly payments of $1,678, inclusive of principal and interest.
At September 30, 1998, equipment under capital leases is carried at a book
value of $30,468.



<PAGE> 25







        CASTLE HOLDING CORP. AND SUBSIDIARIES
           Notes to Consolidated Financial Statements
        For the Years Ended September 30, 1998 and 1997




 At September 30, 1998, the aggregate future minimum remaining lease payments
 under noncancellable capital lease agreements were as follows:
 <TABLE>
     Year Ended
     September 30,                                        Amount
     <C>                                                <C>
     1999                                               $ 20,136
     2000                                                 21,814

     Total                                                41,950

     Less amount representing interest                    (8,574)

     Net present value of capital lease obligations     $ 33,376
</TABLE>




7. LOAN  FROM  RELATED PARTY SUBORDINATED  TO  CLAIMS OF GENERAL CREDITORS

   On September 6, 1995, CSC-2 executed a loan agreement with OEF,  a
   corporation whose secretary is also the president of CHC, whereby OEF
   advanced $50,000 to CSC-2.  The $50,000 subordinated loan payable bears
   interest at 12% per annum payable annually each September 30 and is due on
   September 30, 2001.

   The loan is pursuant to an agreement filed with the NASD and is permitted
   in computing net capital under the Securities and Exchange Commission's
   Uniform Net Capital Rule (see note 8). To the extent that such borrowing
   is used by CSC-2 for continued compliance with minimum net capital rules,
   said loan will not be repaid.

8. INCOME TAXES

   CHC files a consolidated income tax return with its subsidiaries for federal
   reporting purposes. CHC and its subsidiaries file separate income tax returns
   for state reporting purposes.



<PAGE> 26






                 CASTLE HOLDING CORP. AND SUBSIDIARIES
               Notes to Consolidated Financial Statements
             For the Years Ended September 30, 1998 and 1997




 <TABLE>
 The provisions for income taxes consist of:
                                             Year Ended September 30,
                                             1998            1997
   <S>
   Current:                                    <C>             <C>
   Federal                                   $       -       $(18,197)
   State                                         3,323         (3,271)
   Total                                         3,323        (21,468)

 Deferred:
   Federal                                     (55,622)       (46,566)
   State                                       (16,894)       (14,143)
   Valuation allowance                          72,516         60,709
   Total                                             -              -

 Total provision for (benefit from) income
  taxes                                       $  3,323       $(21,468)
 </TABLE>

 A reconciliation of the computed expected income tax expense to the provision
  for income taxes follows:
 <TABLE>
   <S>                                        <C>            <C>
   Computed Federal income tax at 34%         $(61,366)      $(86,804)
   State income taxes (benefit) less Federal
    income tax benefit                         (11,150)       (15,772)
   Change in valuation allowance                72,516         60,709
   Utilization of lower income tax brackets          -         11,750
   Minimum state income tax                      3,323          3,339
   Other - net                                       -          5,310

 Total provision for (benefit from) income
  taxes                                       $  3,323       $(21,468)
 </TABLE>




Based on management's present assessment, the Company has not yet determined
it to be more likely than not that a deferred tax asset of $133,225 attributable
to the future utilization of $331,588 of net operating loss carryforwards as of
September 30, 1998 will be realized.  Accordingly, the Company has provided a
100 % allowance against the deferred tax asset in the financial statements at
September 30, 1998.  The Company will continue to review this valuation
allowance and make adjustments as appropriate.  The net operating loss
carryforwards will expire between the year 2012 and 2013.


<PAGE> 27







             CASTLE HOLDING CORP. AND SUBSIDIARIES
           Notes to Consolidated Financial Statements
        For the Years Ended September 30, 1998 and 1997




9. NET CAPITAL REQUIREMENTS

   As broker-dealers, CSC-1 and CSC-2 are subject to the Securities and
   Exchange Commission Uniform Net Capital Rule (the "Rule"). The Rule requires
   the maintenance of minimum net capital and requires that the ratio of
   aggregate indebtedness, as defined, to net capital, as defined, not exceed 15
   to 1.  At September 30, 1998, CSC-1 had net capital of $43,395, which was
   $38,395 in excess of its required net capital of $5,000 and its ratio of
   aggregate indebtedness to net capital  was 1.58 to 1. At September 30, 1998,
   CSC-2 had net capital of $144,082, which was $44,082 in excess of its
   required net capital of $100,000 and its ratio of aggregate indebtedness to
   net capital was .08 to 1.

   Pursuant to a restrictive agreement dated October 26, 1995 with the NASD,
   CSC-2 agreed to maintain minimum net capital of at least $120,000.
   Accordingly, at September 30, 1998, the Company had net capital in excess
   of the NASD minimum required amount of $24,082.

10.RELATED PARTY TRANSACTIONS

   Capital contributions - In July 1997 and September 1997, CHC sold 640,000
   shares of common stock to a limited partnership, which a CHC subsidiary
   acts as general partner for, at a price of $ .125 per share. In September
   1997, CHC sold 320,000 shares of common stock to CHC's deferred compensation
   plans for the benefit of CHC's president (160,000 shares) and CHC's treasurer
   (160,000 shares) at a price of $ .125 per share. In August 1997 and September
   1997, CHC sold 240,000 shares of common stock to three key CSC-1 employees
   (80,000 shares each) at a price of $ .125 per share; $5,000 was paid in cash
   and the remaining $25,000 of the purchase price was paid by delivery of
   subscription notes due CHC on March 31, 2000, as extended.

   Expense allowance - For the years ended September 30, 1998 and 1997, the
   Company paid $42,000 and $48,000, respectively, to its president and
   treasurer for accountable expenses pursuant to an agreement with the
   Company.

11.COMMITMENTS  AND  CONTINGENCIES

   Year 2000 - The Company has evaluated the potential impact of the year 2000
   on its business, including its information systems and those of its clearing
   agent, and does not expect this issue to have a significant effect on its
   results of operations.

   Operating leases - The Company leases its headquarters office space
   (approximately 7900 square feet) under five noncancellable operating lease
   agreements which expire between October 1999 and October 2002, with renewal
   options available to October 2007.  Such lease agreements require minimum
   monthly rental payments of $ 3,418.  The Company leases its autos and
   equipment under noncancellable operating lease agreements which expire
   between January 2000 and October 2001 and require minimum monthly rental
   payments of approximately $ 5400.



<PAGE> 28






             CASTLE HOLDING CORP. AND SUBSIDIARIES
           Notes to Consolidated Financial Statements
        For the Years Ended September 30, 1998 and 1997




Rent expense under all operating leases consisted of:
 <TABLE>                              Year Ended September 30,
                                       1998             1997
 <S>                                   <C>              <C>
Headquarters office space              $  45,143        $  38,700
Branches' office space                         -          111,000
Autos and equipment                       98,464           85,737
Totals                                 $ 143,607        $ 235,437
</TABLE>

At September 30, 1998, the aggregate future minimum lease payments under
noncancellable operating lease agreements are as follows:
<TABLE>

Year Ended          Headquarters   Autos and
September 30,       Office Space   Equipment       Totals
<C>                 <C>            <C>             <C>
1999                $  53,358      $  79,744       $ 133,102
2000                   29,840         49,611          79,451
2001                   27,600          7,022          34,622
2002                   27,600              -          27,600
2003                    2,300              -           2,300
Thereafter                  -              -               -

Totals              $ 140,698      $ 136,377       $ 277,075
</TABLE>




Clearing agreement - On November 5, 1997,  CSC-1 renewed its clearing agreement
for a two year period commencing October 1997 and released the clearing agent
from any prior clearing fee disputes.  In connection therewith, CSC-1 received
a $200,000 signing bonus from the clearing agent on November 12, 1997 and
received $66,162 free clearing charges in December 1997 and January 1998.
The $266,162  total is reflected in the consolidated statement of operations
for the year ended September 30, 1998 as a reduction in clearing costs.

Litigation - On September 13, 1994, the United States Securities and Exchange
Commission (the "SEC") filed a civil action against CSC-1, its president, a
former registered representative, and eight other defendants. The action
alleges violations of Sections 5(a) and (c), and 17(a) of the Securities Act
of 1933, Sections 10(b) and 15c of the  Securities Exchange Act of 1934 and
Rules l0b3, l0b-5, l0b-6, and 15cl-2 thereunder. The complaint seeks
injunctive relief and disgorgement of profits approximating $175,000.  CSC-1
answered the complaint and is vigorously defending the action.



<PAGE> 29






             CASTLE HOLDING CORP. AND SUBSIDIARIES
           Notes to Consolidated Financial Statements
        For the Years Ended September 30, 1998 and 1997




On October 6, 1994, the NASD Market Surveillance Committee (the "MSC")
commenced a disciplinary proceeding against CSC-1, its president, and two
former registered representatives. The Complaint alleges violations of Article
III, Sections 1, 4, 18, and 27 of the Association's Rules of Fair Practice and
Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5
thereunder. After a hearing on June 20, 1995, the MSC, in its Decision dated
February 7, 1996, fined CSC-1 and its president jointly and severally $25,000
and ordered them to make restitution to specified customers totaling
approximately $10,000. CSC-1 and its president appealed the Decision to the
National Business Conduct Committee (the "NBCC") of the NASD and a hearing of
the appeal was held on June 7, 1996. In its Amended Decision dated October
21, 1996, the NBCC affirmed the fines and restitution order. On November 15,
1996, CSC-1 and its president appealed the NBCC Amended Decision to the SEC.
On January 7, 1998, the SEC affirmed the NBCC Amended Decision.  On  May 18,
1998, the SEC denied CSC-1's Motion for Reconsideration filed January 21, 1998.
On February 5, 1998 and June 15, 1998, CSC-1 and its president filed petitions
for review of the SEC actions to the Second Circuit of the United States Court
of Appeals, which matters are pending.

CSC-1 has also been named as defendant in one arbitration case and other CHC
subsidiaries have also been named as defendants in civil cases arising in the
ordinary course of business.   With respet to the arbitration, the matter was
settled in November 1998 (see note 13B).  With respect to the civil cases,
the Company believes that it has meritorious defenses to these actions and
intends to vigorously contest them.

Management believes, based upon discussions with counsel, that the outcome of
the litigation described above will not have a material effect on the Company's
consolidated financial position.  The materiality of legal matters on the
Company's future operating results depends on the level of future results of
operations as well as the timing and ultimate outcome of such legal matters.

As of September 30, 1998, the Company accrued approximately $45,000 in
connection with the above litigations.  Such amount is included in accounts
payable and accrued expenses.

12. CONCENTRATION  OF  CREDIT  RISK

In the normal course of business, CSC-1 executes as agent transactions on
behalf of customers and CSC-2 executes principal transactions with other broker-
dealers. If the agency or principal transactions do not settle because of
failure to perform by either the customer or the counterparty, CSC-1 or CSC-2
may be obligated to discharge the obligation of the nonperforming party and,
as a result, may incur a loss if the market value of the securities are diffrent
from the contract amount of the transactions.



<PAGE> 30






             CASTLE HOLDING CORP. AND SUBSIDIARIES
           Notes to Consolidated Financial Statements
        For the Years Ended September 30, 1998 and 1997




CSC-l's clearing agent seeks to control the risks associated with CSC-l's
customer activities by requiring customers to maintain margin collateral in
compliance with various regulatory and internal guidelines.  CSC-l's clearing
agent monitors required margin levels daily, and pursuant to such guidelines,
requires the customers to deposit additional collateral, or to reduce positions,
when necessary.

Business concentration - For the year ended September 30, 1998, approximately
53% of the Company's revenues were derived from unsolicited customer
transactions ordered online over the internet.

13.  SUBSEQUENT  EVENTS

A.  Lease

On October 5, 1998, the Company executed an agreement to lease an additional
6000 square feet of office space from its present lessor.  The lease provides
for monthly rentals of $1,500 from November 1998 to October 2002 and is
renewable for an additional five years to October 2007 at monthly rentals
of $1,650.  In connection with such lease agreement, CHC issued the lessor
108,000 restricted shares of its common stock valued at $13,500.

B. Litigation

On November 18, 1998, CSC-1 paid $10,000 to two customers in settlement of an
arbitration proceeding brought by the customers.  Also as part of the
settlement, CHC issued the customers 80,000 restricted shares of common stock
valued at $10,000 and a 90 day option to acquire an additional 2000,000 shares
of CHC common stock at a price of $.25 per share (which option was not
exercised).

C. 1998  Incentive  Stock Option  Plan

On December 31, 1998, CHC granted stock options (for a total of 394,000 shares
of its common stock) to 40 employees of the Company.  The options provide the
respective employees the right to purchase CHC common stock at a price of $.75
per share and are exercisable and vest at a rate of 20% for each year commencing
December 31, 1999.

D. Line of Credit

On December 21, 1998, CHC obtained a $100,000 business revolving credit line
from a financial institution.  Such line of credit is personally guaranteed by
CHC's president and its treasurer and is available for one year and borrowings
thereunder bear interest at prime rate plus .5% and amortize over 36 equal
monthly installments.  In December 1998, CHC  borrowed $50,000 under the line
which was subsequently repaid.



<PAGE> 31






            CASTLE HOLDING CORP. AND SUBSIDIARIES
           Notes to Consolidated Financial Statements
        For the Years Ended September 30, 1998 and 1997




E. Private Placements of Common Stock

On February 10, 1999, CHC sold a private investor 40,000 shares of its common
stock at a price of $.25 per share in exchange for a non interest bearing
promissory note due CHC on March 31, 2000.

On February 17, 1999, CHC was advanced $250,000 from a private investor with
the agreement that the investor would convert such advance to 800,000 shares
of CHC common stock at a price of $.3125 per share under a CHC offering
pursuant to an exemption afforded by Rule 504 or Rule 506 of Regulation D of
the Securities Act of 1933.

On March 12, 1999, CHC sold a private investor 40,000 shares of CHC common
stock at a price of $.3125 per share for $12,500 cash.

On March 24, 1999, CHC sold the three CHC directors a total of 302,000 shares
and three key CSC-1 employees a total of 178,000 shares of common stock at a
price of $.3125 per share in exchange for non interest bearing promissory notes
due CHC on September 30, 2000.

On May 7, 1999, CHC issued an advertiser 24,000 shares of CHC common stock in
exchange for certain specified advertising (valued at $36,000) to be provided
the Company.




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

Effective October 20, 1998, the firm of Massella, Tomaro & Co., LLP was
engaged by Castle Holding Corp. (the "Registrant").  This change in accountants
was due to the cessation of the Registrant's former accounting firm (Scarano
& Tomaro, P.C.) and not due to any discrepancies or disagreements between the
Registrant and its former accounting firm on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure.

The reports of Scarano & Tomaro, P.C. on the financial statements of the
Registrant as of September 30, 1997 and for the years ended September 30, 1997
and 1996 did not contain an adverse opinion or disclaimer of opinion and were
not qualified or modified as to uncertainty, audit scope or accounting
principles.


<PAGE> 32







                           PART  III

Item 9.   DIRECTORS AND EXECUTIVE OFFICERS

(a)  The directors of the Registrant are:
<TABLE>
Director:
<S>                    <C>    <C>                   <C>
Name                   Age    Other Offices Held    Since

Daniel J. Priscu       77     Chairman              1987

George R. Hebert       55     President             1987

Michael T. Studer      49     Secretary, Treasurer  1987
</TABLE>
Each director will hold office until the next annual meeting of shareholders
(expected to be held in March 2000) and until their successors have been
elected and qualified.


    The executive officers of the Registrant are:

<TABLE>
Officer:
<S>                    <C>    <C>                   <C>
Name                   Age    Other Offices Held    Since

Daniel J. Priscu       77     Chairman              1987

George R. Hebert       55     President             1987

Michael T. Studer      49     Secretary, Treasurer  1987
</TABLE>

Officers of the Registrant are elected by the Board of Directors at the
annual meetings of the Registrant's shareholders, and hold office until their
death, or until they shall resign or have been removed from office.

The business experience during the last five years for each director and
executive officer of the Registrant follows:

Daniel J. Priscu has been Chairman and a director of the Registrant since
September 1987.  Mr. Priscu received a B.A. degree from De Pauw University in
1947.

George R. Hebert has been President and a director of the Registrant since
September 1987.  He also has been a registered representative and economist with
CSC-1 since September 1987 and CSC-2 since October 1995.  Mr. Hebert received a
B.S. degree from Stevens Academy, Pennsylvania Military College (now Widener
University) in 1967.

Michael T. Studer has been Secretary, Treasurer, and a Director of the
Registrant since September 1987.  He has also been President of Michael T.
Studer, CPA, P.C., a public accounting firm, since July 1987, President of
CSC-1 since its inception in December 1984, and President of CSC-2 since
October 1995.  Mr. Studer received a B.S.B.A. degree from Babson College in
1971.

(b) Another significant employee of the Registrant is Thomas Shaughnessy, age
45.  Mr. Shaughnessy has been general securities principal and chief compliance
officer of CSC-1 since July 1, 1993, general securities principal and chief
operating officer of CSC-2 since October 1995, and was Assistant to the
President of CSC-1 from December 1992 to June 1993.  Since May 1972, he has
served in the United States Marine Corps on both a full-time and part-time
basis.  Mr. Shaughnessy received a B.S.B.A. degree from State University of
New York at Brockport in 1978 and a M.B.A. degree from National University in
1988.

(c) There is no family relationship between any director, executive officer
or significant employee of the Registrant.



ITEM 10. EXECUTIVE COMPENSATION

The following table sets forth all cash compensation paid by the Company
during the years ended September 30, 1996, 1997 and 1998 to each executive
officer and director of the Company:

<TABLE>
<S>                          <C>    <C>        <C>             <C>
                                    Annual     Deferred Comp-  All Other
Name and Principal Position  Year   Salary     ensation Plan   Compensation

George R. Hebert, President  1998   $44,200(2) $        -      $ 21,000 (1)
                             1997    44,200(3)          -        24,000 (1)
                             1996    44,200        18,000        24,000 (1)

Michael T. Studer,           1998    44,200             -        21,000 (1)
Secretary/Treasurer          1997    44,200             -        24,000 (1)
                             1996    44,200        18,000        24,000 (1)

Daniel Priscu, Chairman      1998         -             -           400 (2)
of the Board                 1997         -             -           400 (2)
                             1996         -             -           400 (2)
</TABLE>
 (1)  Represents an allowance for accountable expenses.
 (2)  Represents directors fees.



ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT


The following table sets forth, at August 30, 1999, the stock ownership of
each person known by the Company to be the beneficial owner of five percent
or more of the Company's common stock, all executive officers and directors
individually, and all executive officers and directors of the Company as a
group:

<TABLE>
<S>                                  <C>                      <C>
Name and Address                     Amount and Nature        Percent of
of Beneficial Owner                  of Beneficial Owner (1)  Class

Daniel J. Priscu                     49,600                    0.7%
4555 Blackstone Drive
Indianapolis, Indiana 46237

George R. Hebert                  1,965,300                   29.6%
183 Gordon Place
Freeport, NY 11520

Michael T. Studer                 1,929,600                   29.1%
410 McDermott Road
Rockville Centre, NY 11570

Plymouth Partners, LP               533,500                    8.0%
10826 Omaha Trace
Union, KY 41091

All executive officers and
directors as a group (3 persons)  3,944,500                   59.4%
</TABLE>
_________________________________________________
  (1)    Unless otherwise indicated below, the Company has been advised
         that each person named above is the record owner of and exercises
         the sole voting and investment power over the shares shown
         opposite his name.

  (2)    Includes 164,500 shares held in trust for the benefit of Mr.
         Hebert's daughter, 114,800 shares owned by Mr. Hebert's wife, and
         50% of 40,000 shares owned by Sea Friends Incorporated, of which
         organization Mr. Hebert is president and a director, all of which
         Mr. Hebert disclaims beneficial ownership of. Includes 50% of
         640,000 shares owned by CALP (CHC Deferred Compensation Plan for
         benefit of George R. Hebert owns a 50% limited partnership interest
         therein) which Mr. Hebert doesn't exercise sole voting and investment
         power over.

  (3)    Includes 120,000 shares held in trust for Mr. Studer's children
         and 50% of 40,000 shares owned by Sea Friends Incorporated, of which
         organization Mr. Studer is treasurer and a director, which Mr. Studer
         disclaims beneficial ownership of.  Includes 50% of 640,000 shares
         owned by CALP (CHC Deferred Compensation Plan for benefit of Michael T.
         Studer owns a 50% limited partnership interest therein) which Mr.
         Studer does not exercise sole voting and investment power over.





ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


As of September 30, 1998, the Registrant had notes payable to The OTC Equity
Fund, Inc., a corporation whose secretary is also president of the Registrant,
and Michael T. Studer, Secretary and treasurer of the Registrant, in amounts of
$55,000 and $22,500, respectively.  Such notes bear interest at the rate of 12%
per annum and are due on demand.

As of September 30, 1998, Citadel had a loan payable subordinated to claims of
general creditors to The OTC Equity Fund, Inc. in the amount of $50,000. The
loan bears interest at the rate of 12% per annum and is due September 30, 2001.

In July 1997 and September 1997, the Registrant sold 640,000 common shares to
CALP at a price of $.125 per share. CAI is the general partner of CALP and
Castle Holding Corp. Deferred Compensation Plans for benefit of George R.
Hebert and Michael T. Studer, president and Secretary-treasurer of the
Registrant, respectively, each own a 50% limited partnership interest in CALP.

In September 1997, the Registrant sold 160,000 common shares to the Castle
Holding Corp. Deferred Compensation Plan for benefit of George R. Hebert,
president of the Registrant, at a price of $.125 per share.

In September 1997, the Registrant sold 160,000 common shares to the Castle
Holding Corp. Deferred Compensation Plan for benefit of Michael T. Studer,
Secretary and treasurer of the Registrant, at a price of $.125 per share.

In April 1998, the Registrant borrowed $50,000 from the wife of the president
of the Registrant.  The note, which was repaid in April 1999, beared interest
at the rate of 12% per annum and was due on demand.



Item 13.    EXHIBITS AND REPORTS ON FORM 8-K

     (a)   Exhibits

           See Exhibit Index.

     (b)   Reports on Form 8-K

           None.







<PAGE>
                           SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) 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.

CASTLE HOLDING CORP.


By   /s/  George R. Hebert
George R. Hebert, President
Dated October 4, 1999


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

<TABLE>
<S>                   <S>                      <S>
Signature             Title                    Date



                      Chairman of the Board    October 4, 1999
Daniel J. Priscu      of Directors



/s/ George R. Hebert  President, Director      October 4, 1999
George R. Hebert



/s/ Michael T. Studer Secretary, Treasurer,    October 4, 1999
Michael T. Studer     Principal Financial
                      and Accounting
                      Officer, Director
</TABLE>

<PAGE>

     EXHIBIT INDEX

<TABLE>
          <C>    <S>
          3.1*   Articles of Incorporation (Form S-18 Registration
                 No. 33-8395-LA, effective November 14, 1986)

          3.2*   Amendments to Articles of Incorporation (Form S-18 Registration
                 No. 33-37809-NY, effective February 11, 1991)

          3.3*   By-laws (Form S-18 Registration No. 33-8395-LA, effective
                 November 14, 1986)

          4.4*   Specimen Stock Certificate (Form S-18 Registration No.
                 33-37809-NY, effective February 11, 1991)

          10.1*  Fully Disclosed Correspondent Agreement dated May 4,1990
                 between Otra Clearing, Inc. and Castle Securities Corp. (Form
                 S-18 Registration No. 33-37809-NY, effective February 11,
                 1991)

          10.2*  Promissory Note dated December 10, 1992 issued to RKS Financial
                 Group, Inc. (Form 8-K dated December 10, 1992)

          10.3*  Amendment (dated December 15, 1992) to Promissory Note dated
                 December 10, 1992 (Form 8-K dated December 10, 1992)

          16.1*  Letter from John S. Gray, CPA, P.C. dated October 31, 1994
                 (Form 8-K dated October 31, 1994)

          16.2   Letter from Massella, Tomaro & Co., LLP dated October 20, 1998
                 (Filed herewith)

          22     Subsidiaries of the Registrant (Filed herewith)

          27     Financial Data Schedule (Filed herewith)

          99.1*  Complaint for Injunctive and Other Relief (dated September 13,
                 1994) - Securities and Exchange Commission, Plaintiff (Form 8-K
                 dated September 13, 1994)

          99.2   Financial Statements - Years Ended September 30, 1996 and 1995
                 (Filed herewith)

                 *  Previously filed
</TABLE>


<PAGE>

Exhibit No. 16.2

     MASSELLA, TOMARO & CO., LLP
     375 NORTH BROADWAY, SUITE 103
     JERICHO, NEW YORK  11753




     October 4, 1999




     Securities and Exchange Commission
     Washington, D.C.  20549

     Gentlemen:

     The accounting firm of Scarano & Tomaro, P.C. was the principal accountant
     for Castle Holding Corp. (The "Company"), and on February 11, 1998 it
     reported on the consolidated financial statements of the Company as of
     September 30, 1997 and for the two years then ended.  During June 1998,
     Scarano & Tomaro, P.C. ceased to operate as a firm and on October 20, 1998,
     the firm of Massella, Tomaro & Co., LLP was engaged.

     As a partner in the former firm of Scarano & Tomaro, P.C., I have read the
     Company's statements included under Item 8 of its Form 10-KSB dated
     October 4, 1999 and agree with such statements.


                       Very truly yours,

                       /S/ Anthony Tomaro

                       Anthony Tomaro, CPA
                       Partner

     AT:cmr




<PAGE>

Exhibit No. 22 - Subsidiaries of the Registrant
Castle Holding Corp.
Form 10-KSB  for  the  fiscal  year  ended  September 30, 1998

<TABLE>
<C>  <C>
 1.  Castle Securities Corp. (New York)
 2.  Citadel Capital Corp. (Delaware)
 3.  Beverage King, Ltd. (Delaware)
 4.  Citadel Securities Corp. (New York)
 5.  Meroke Capital Corp. (New York)
 6.  Castle Trucking Corp. (New York)
 7.  Castle Advisors Inc. (New York)
 8.  Sparta Holding Corp. (New York)
 9.  Wall Street Indians, Ltd (New York)
10.  Chinamer International Corp. (Nevada)
11.  Galaxynet Inc. (New York)
12.  Rocketnet Inc. (Nevada)
13.  U Trade Inc. (New York)
</TABLE>











<PAGE>

EXHIBIT 27
Financial Data Schedule for the year ended September 30, 1998 required
pursuant to Item 601(c) of Regulation S-B

     [NAME] CASTLE HOLDING CORP.
     [MULTIPLIER] 1
     [CURRENCY] 1
     [PERIOD-TYPE] 12-MOS
     [FISCAL-YEAR-END]SEP-30-1998
     [PERIOD-START]OCT-01-1997
     [PERIOD-END]SEP-30-1998
     [EXCHANGE-RATE] 1
     [CASH] 253,243
     [RECEIVABLES] 0
     [SECURITIES-RESALE] 0
     [SECURITIES-BORROWED] 0
     [INSTRUMENTS-OWNED] 26,121
     [PP&E] 171,499
     [TOTAL-ASSETS] 483,940
     [SHORT-TERM] 127,500
     [PAYABLES] 169,940
     [REPOS-SOLD] 0
     [SECURITIES-LOANED] 0
     [INSTRUMENTS-SOLD] 2,983
     <LONG TERM> 83,376
     [COMMON] 12,586
     [PREFERRED-MANDATORY] 0
     [PREFERRED] 0
     [OTHER-SE] 87,555
     [TOTAL-LIABILITY-AND-EQUITY] 483,940
     [TRADING-REVENUE] 235,770
     [INTEREST-DIVIDENDS] 4,485
     [COMMISSIONS] 1,659,444
     [INVESTMENT-BANKING-REVENUES] 0
     [FEE-REVENUE] 0
     [INTEREST-EXPENSE] 27,276
     [COMPENSATION] 834,406
     [INCOME-PRETAX] (183,395)
     [INCOME-PRE-EXTRAORDINARY] (183,395)
     [EXTRAORDINARY] 0
     [CHANGES] 0
     [NET-INCOME] (186,718)
     [EPS-BASIC] (.04)
     [EPS-DILUTED]  (.04)


<PAGE>

EXHIBIT 99.2

Index to Consolidated Financial Statements - Years Ended September 30, 1996
and 1995
<TABLE>
<S>                                                           <C>
Description                                                   Page No.

Index to Consolidated Financial Statements                    F-1

Auditors' Opinion                                             F-2

Consolidated Statements of Financial Condition,
September 30, 1996 and 1995                                   F-3

Consolidated Statements of Net Income,
Years Ended September 30, 1996 and 1995                       F-4

Consolidated Statements of Changes in Stockholders' Equity,
Years Ended September 30, 1996 and 1995                       F-5

Consolidated Statements of Cash Flows,
Years Ended September 30, 1996 and 1995                       F-6

Notes to Consolidated Financial Statements,
Years Ended September 30, 1996 and 1995                       F-7

</TABLE>



<PAGE> F-1








     SCARANO & TOMARO, P. C                                              125
Michael      Drive,Suite 101
                                     Certified Public Accountants &
Consultants                             Syosset, New York 11791
                                                516-364-0300
                                            Fax:516-364-3003



                  INDEPENDENT AUDITORS' REPORT


     To the Board of Directors and Stockholders of
     Castle Holding Corp.

     We have audited the accompanying statements of consolidated financial
     condition of Castle Holding Corp. and Subsidiaries ("the Company") as of
     September 30, 1996 and 1995 and the related consolidated statements of
     operations changes in stockholder's equity, and cash flows for the years
     then ended. These consolidated financial statements are the responsibility
     of the Company's management.  Our responsibility is to express an opinion
     on these consolidated financial statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
     standards.   Those standards require that we plan and perform the audits to
     obtain reasonable assurance about whether the consolidated financial
     statements are free of material misstatement. An audit includes
     examining, on a test basis, evidence supporting the amounts and disclosures
     in the consolidated financial statements. An audit also includes assessing
     the accounting principles used and significant estimates made by
     management, as well as evaluating the overall consolidated financial
     statement presentation.  We believe that our audits provide a reasonable
     basis for our opinion.

     In our opinion, based on our audits, the consolidated financial statements
     referred to above present fairly, in all material respects, the financial
     position of the Company as of September 30, 1996 and 1995 and the results
     of its consolidated operations and cash flows for the years then ended in
     conformity with generally accepted accounting principles.






     Scarano & Tomaro, P.C.
     Syosset, New York
     February 11, 1998



<PAGE> F-2



<TABLE>
             CASTLE HOLDING CORP. AND SUBSIDIARIES
         Consolidated Statements of Financial Condition

                                                              September  30,
<S>                                                 1996            1995
Assets                                              <C>             <C>

Cash in bank and with clearing broker               $666,985        $1,009,459
Securities owned                                      70,867            67,745
Equipment, less accumulated depreciation of
  $32,558 and $26,670, respectively                   96,685            85,470
Equipment under capital leases, less
  accumulated depreciation of $18,719
  and $1,440, respectively                            33,117            50,396
Leasehold improvements, less
  accumulated amortization of
  $13,094 and $2,300, respectively                    68,012            48,080
Other assets                                          28,382            18,002

Total assets                                        $964,048        $1,279,152

Liabilities and Stockholders' Equity

Liabilities:
  Notes payable                                     $142,860        $  158,119
  Accounts payable and accrued expenses
    including cash overdrafts of $0 and
    $19,134, respectively                            235,538           313,289
  Commissions payable                                108,079           394,983
  Income taxes payable                                31,077            19,970
  Securities sold not yet purchased                       61             5,625
  Obligations under capital leases                    36,037            50,720
  Loan subordinated to claims of general creditors    50,000            50,000
    Total liabilities                                603,652           992,706

  Commitments and contingencies (Note 9)                   -                 -

Stockholders' equity:
  Common stock, $.0025 par value; authorized
    10,000,000 shares, issued and outstanding
    458,000 and 458,000 shares, respectively           1,145             1,145
  Additional paid  in capital                        224,475           224,475
  Retained earnings                                  134,776            60,826

    Total stockholders' equity                       360,396           286,446

Total liabilities and stockholders' equity          $964,048        $1,279,152
  See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE> F-3









<TABLE>

               CASTLE  HOLDING  CORP. AND SUBSIDIARIES
                Consolidated Statements of Net Income

                                                 Year Ended September 30,
<S>                                              1996                1995
Revenues:                                        <C>                 <C>
  Commissions                                    $ 7,888,828         $ 9,151,580
  Principal transactions                             262,672              61,570
  Investment banking                                  36,426              73,750
  Interest and dividends                              22,117              14,852

   Total revenues                                  8,210,043           9,301,752

Expenses:
  Commissions                                      2,868,544           3,525,213
  Clearing costs                                   2,553,159           2,707,752
  Communications and selling                         896,589           1,079,129
  Administrative compensation
    and employee benefits                            925,068             746,753
  Professional and consulting fees                   150,256             111,904
  Registration and regulatory fees                    48,571              43,106
  Occupancy                                          205,708             331,293
  Interest                                            30,588              13,531
  Other                                              427,356             633,742

   Total expenses                                  8,105,839           9,192,423

Income before income taxes                           104,204             109,329

Provision for income taxes                            30,254              29,800

Net income                                        $   73,950          $   79,529

Net income per common share                       $      .16          $      .17

Weighted average number of common
  shares outstanding                                 458,000             456,750



         See accompanying notes to consolidated financial statements.

</TABLE>

<PAGE> F-4







<TABLE>

                  CASTLE HOLDING CORP. AND SUBSIDIARIES
       Consolidated Statements of Changes in Stockholders' Equity
             For the Years Ended September 30, 1996 and 1995


                                                            Retained
                     Common Stock        Additional  Earnings      Total
                     $.0025 Par Value    Paid in     (Accumulated  Stockholders'
                     Shares    Amount    Capital     Deficit)      Equity
<S>
Balances, September  <C>       <C>       <C>         <C>           <C>
 30, 1994            453,000   $1,133    $223,237    $(18,703)     $205,667

Value of 5,000
  common shares
  issued to
  employees and
  charged to
  operations           5,000       12       1,238           -         1,250

Net income                 -        -           -      79,529        79,529

Balances, September
 30, 1995            458,000    1,145     224,475      60,826       286,446

Net income                 -        -           -      73,950        73,950

Balances, September
 30, 1996            458,000   $1,145    $224,475    $134,776      $360,396

      See accompanying notes to consolidated financial statements.



</TABLE>

<PAGE> F-5







<TABLE>


                 CASTLE HOLDING CORP. AND SUBSIDIARIES
                  Consolidated Statements of Cash Flows

                                                    Year Ended September 30,
                                                    1996              1995
<S>
Cash flows from operating activities:               <C>               <C>
  Net income                                        $   73,950        $79,529
  Adjustments to reconcile net income to net cash
   provided by operating activities:
     Depreciation                                       49,892         42,728
     Value of 5,000 common shares issued to
      employees and charged to operations                    -          1,250
  Changes in assets and liabilities:
    Securities owned                                    (3,122)       (37,369)
    Other assets                                       (10,380)          (279)
    Accounts payable and accrued expenses              (72,246)       114,297
    Commissions payable                               (286,904)       245,215
    Income taxes payable                                11,107         13,734
    Securities sold not yet purchased                   (5,564)         4,334

  Net cash provided by operating activities           (243,267)       463,439
Cash flows from investing activities:
  Purchases of equipment, equipment under
   capital leases, and leasehold improvements          (69,265)      (107,521)

  Net cash used for investing activities               (69,265)      (107,521)
Cash flows from financing activities:
  Proceeds from issuance of notes payable               50,000        100,000
  Obligations under capital leases                           -         51,836
  Proceeds from issuance of loan subordinated
   to claims of general creditors                            -         50,000
  Repayment of notes  payable                          (65,259)       (19,381)
  Repayment of obligations under capital leases        (14,683)        (1,116)

  Net cash  provided by (used for) financing activities(29,942)       181,339
Net increase (decrease) in cash                       (342,474)       537,257
Cash, beginning of year                              1,009,459        472,202
Cash, end of year                                   $  666,985     $1,009,459
Supplemental disclosure of cash flow information:
  Interest paid                                     $   24,588     $   13,531
  Income taxes paid                                 $    6,302     $   11,066
Supplemental disclosures of noncash investing and
 financing activities:
  Retirement of fully depreciated assets and
   related accumulated depreciation                 $  (48,300)    $  (91,348)
  Loan subordinated to claims of general creditors
  repaid by return of secured demand note receivable$        -     $   50,000

              See accompanying notes to consolidated financial statements.
</TABLE>



<PAGE> F-6






          CASTLE HOLDING CORP. AND SUBSIDIARIES
         Notes to Consolidated Financial Statements
      For the Years Ended September 30, 1996 and 1995

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation - The consolidated financial statements include Castle
Holding Corp. ("CHC") and its twelve subsidiaries (collectively, the "Company").
CHC is a holding company which was incorporated in Nevada on June 13, 1986.
CHC's principal operating subsidiary, Castle Securities Corp. ("CSC"), is a
securities broker-dealer headquartered in Freeport, New York with three branch
offices in Garden City, New York, Melville, New York, and Glendale, California.
Another Subsidiary, Citadel Securities Corp. ("CSC-2"), is also a securities
broker-dealer and, since April 1996, has made markets in Nasdaq and OTC Bulletin
Board securities from its office in Freeport, New York.  All significant
intercompany balances and transactions have been eliminated in consolidation.

The other ten (10) subsidiaries of CHC are:
<TABLE>
  <S>     <S>
   1.     Citadel Capital Corp. (incorporated in Delaware March 29, 1988) -
          inactive at December 31, 1996.

   2.     Beverage King, Ltd. (incorporated in Delaware January 2, 1990) -
          subleases automobiles to other CHC subsidiaries.

   3.     Meroke Capital Corp. (incorporated in New York October 7, 1992) -
          subleased office space to CSC-1 and others to August 31, 1995;
          inactive at December 31, 1996.

   4.     Castle Trucking Corp. (incorporated in New York May 4, 1993) -
          provided transportation services to business customers to
          September 15, 1993; inactive at December 31, 1996.

   5.     Castle Advisors Inc. (incorporated in New York December 23, 1993) -
          acts as general partner for a limited partnership in the business of
          securities investment.

   6.     Sparta Holding Corp. (incorporated in Nevada December 23, 1993) -
          inactive at December 31, 1996.

   7.     Wall Street Indians, Ltd. (incorporated in New Yrok May 27, 1994) -
          since August 1995, has provided office services to CSC-1 and others.

   8.     Chinamer International Corp. (incorporated in Nevada October 18, 1994)
          - inactive at December 31, 1996.

   9.     Galaxynet Inc. (incorporated in Nevada December 15, 1995) - provides
          marketing and communications services to CSC-1.

  10.     Rocketnet Inc. (incorporated in Nevada December 20, 1995) - provides
          marketing and communications services to CSC-1.
</TABLE>

Business concentration - For the years ended September 30, 1996 and 1995,
approximately 91% and 94% respectively, of the Company's revenues were derived
from customer transactions in securities listed on the NASDAQ Stock Market
executed by Company registered representatives using NASDAQ's Small Order
Execution System ("SOES") and Select Net ("SNET") automated systems.



<PAGE> F-7







           CASTLE HOLDING CORP. AND SUBSIDIARIES
         Notes to Consolidated Financial Statements
      For the Years Ended September 30, 1996 and 1995




Revenue recognition - Securities transactions (and related revenue and
expense, including commissions revenue and commissions expense) are recorded
on a settlement date basis, which is generally three business days after trade
date.   Revenues and expenses on a trade date basis are not materially different
from revenues and expenses on a settlement date basis.  Investment banking
revenue is recorded when earned.

Use of estimates - The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts   reported in the financial
statements and accompanying notes.   Actual results could differ from those
estimates.

Financial instruments - Except for equipment, equipment under capital leases,
leasehold improvements, and other assets, which are carried at net cost on
the consolidated statements of financial condition, the estimated fair value
of all assets and liabilities approximate their carrying amounts.

Cash in bank and with clearing broker - At September 30, 1996, CSC-1 had
$202,055 cash in one bank in   excess of the federally insured amount and
$48,175 cash held at its clearing agent not covered by SIPC insurance and
CSC-2 had $33,531 cash in one bank in excess of the federally insured amount
and $25,956 cash held at its clearing agent not covered by SIPC insurance.

Securities owned and securities sold, not yet purchased - Marketable securities
are valued at market and unrealized gains and losses are reflected in income.
Securities for which no ready market exists are valued at estimated fair value
as determined by the Board of Directors.

Equipment, equipment under capital leases, and leasehold improvements -
Equipment, equipment under capital leases, and leasehold improvements are
stated at cost.  Equipment, and equipment under capital leases are depreciated
using the straight - line method over the estimated useful lives of the
respective assets, generally three to seven years.   Leasehold improvements
are amortized over the respective remaining lease terms on a straight - line
basis.

Income taxes - The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting
For Income Taxes".   Deferred tax assets and liabilities are determined based on
the difference between the financial statement and tax bases of assets and
liabilities, using enacted tax rates in effect for the year in which the
differences are expected to reverse.   Current income taxes are based on the
year's income taxable for Federal and State income reporting purposes.  Deferred
income taxes, if any, reflect the net effects of temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes.

Net income per common share - Net income per common share is computed using
the weighted average number of common shares outstanding during the period.





<PAGE> F-8






           CASTLE HOLDING CORP. AND SUBSIDIARIES
         Notes to Consolidated Financial Statements
      For the Years Ended September 30, 1996 and 1995




2.  SECURITIES OWNED AND SECURITIES SOLD, NOT YET PURCHASED
<TABLE>
<S>
Securities owned consist of:                           September 30,
                                                    1996           1995

Trading account:
  Corporate stocks and warrants -                   <C>            <C>
   listed on NASDAQ Stock Market                    $  4,900       $  3,830
  Corporate stocks and warrants-
   listed on OTC Bulletin Board                       42,545          7,573

  Total trading account                               47,445         11,403

  Investment accounts                                 23,422         56,342

  Total                                             $ 70,867       $ 67,745
</TABLE>


<TABLE>
<S>
Securities sold not yet purchased consist of:

Trading account:
  Corporate stocks and warrants -                   <C>            <C>
   listed on NASDAQ Stock Market                    $     61       $  5,625
  Corporate stocks and warrants -
   listed on OTC Bulletin Board                            -              -

  Totals                                            $     61       $  5,625
</TABLE>


3. NOTES PAYABLE
<TABLE>
  <S>
Notes payable consist of:                                September 30,
                                                     1996         1995
  Note payable to officer, interest at 12%           <C>          <C>
   paid annually, due on demand                      $ 22,500     $ 22,500
  Note payable to The OTC Equity Fund, Inc.
   ("OEF"), interest at 12% paid annually, due
   on demand                                           55,000       55,000
  Note payable to CSC-1 and CSC-2 clearing
   agent, interest at 9%, due in monthly
   installments of $4,568 through January 1998         65,360       80,619

  Totals                                              $142,860    $158,119
</TABLE>



<PAGE> F-9






           CASTLE HOLDING CORP. AND SUBSIDIARIES
         Notes to Consolidated Financial Statements
      For the Years Ended September 30, 1996 and 1995



4. OBLIGATIONS UNDER CAPITAL LEASES
   In September 1995, a CHC subsidiary executed a lease agreement to lease
   certain equipment valued at $51,836 for a term of three years at a monthly
   rental of $1,845.  The CHC subsidiary has an option to purchase the leased
   equipment at the end of the term for $1.  At September 30, 1996, the
   aggregate future minimum remaining lease payments under noncancellable
   capital lease agreements are:
<TABLE>
      Year Ended
      September 30,                     Amount
      <C>                               <C>
      1997                              $ 22,134
      1998                                20,290

      Total                               42,424

      Less amount representing interest   (6,387)

      Obligations under capital leases  $ 36,037
</TABLE>


5. LOAN FROM RELATED PARTY SUBORDINATED TO CLAIMS
   OF GENERAL CREDITORS

   On May 31, 1994, CSC-2 received a secured demand note receivable from The
   OTC  Equity Fund, Inc. ("OEF"), a corporation which owns the remaining 1%
   of CSC-2 and whose secretary is also the president of CHC.   Simultaneously
   with obtaining the note receivable, CSC-2 issued a promissory note to OEF
   which was subordinated to claims of any general creditors of CSC-2.   On
   September 6, 1995, CSC-2 and OEF terminated the May 31, 1994 agreement and,
   accordingly, CSC-2 returned the secured demand note receivable and underlying
   collateral to the lender.

   On September 6, 1995, CSC-2 executed a new loan agreement with OEF and OEF
   advanced $50,000 cash to CSC-2.  The $50,000 subordinated loan payable bears
   interest at 12% per annum and is due to OEF on September 30, 1999.   The
   initial interest accrual commenced October 1, 1995 and is payable on
   September 30, 1996 and annually thereafter.

   The loan is pursuant to an agreement filed with the NASD and is permitted
   in computing net capital under the Securities and Exchange Commission's
   Uniform Net Capital Rule (see note 7).   To the extent  that such borrowing
   is used by CSC-2 for continued compliance with minimum net capital rules,
   said loan will not be repaid.

6. INCOME TAXES

    CHC files a consolidated income tax return with its subsidiaries for
    federal reporting purposes.  CHC and its subsidiaries file separate income
    tax returns for state reporting purposes.

<PAGE> F-10






<TABLE>
           CASTLE HOLDING CORP. AND SUBSIDIARIES
         Notes to Consolidated Financial Statements
      For the Years Ended September 30, 1996 and 1995



The provisions for income taxes consist of:
                                              Year Ended
                                              September 30,
<S>                                           1996           1995
Current:                                      <C>            <C>
  Federal                                      $ 20,292       $ 18,911
  State                                           9,962         10,889
  Total                                          30,254         29,800

Deferred:
  Federal                                             -              -
  State                                               -              -
  Valuation allowance                                 -              -
  Total                                               -              -

Total provision for income taxes              $  30,254       $ 29,800
</TABLE>

A reconciliation of the computed expected income tax expense to the provision
for income taxes follows:
<TABLE>
<S>                                            <C>            <C>
Computed Federal income tax at 34%             $ 35,429       $ 37,172
Utilization of net operating loss carryforward        -         (4,652)
State income taxes - net of Federal income tax
 benefit                                          6,575          7,187
Utilization of lower federal income tax
 brackets                                       (11,750)       (11,750)
Other - net                                           -          1,843

Total provision for income taxes               $ 30,254       $ 29,800
</TABLE>


7. NET CAPITAL REQUIREMENTS

   As broker-dealers, CSC-1 and CSC-2 are subject to the Securities and Exchange
   Commission  Uniform Net Capital Rule (the "Rule").   The Rule requires the
   maintenance of minimum  net capital and requires that the ratio of aggregate
   indebtedness, as defined, to net capital, as defined, not exceed 15 to 1.
   At September 30, 1996, CSC-1 had net capital of $144,028, which was $44,028
   in excess of its required net capital of $100,000, and CSC-2 had net capital
   of $224,810, which was $124,810 in excess of its required net capital of
   $100,000.

8. RELATED PARTY TRANSACTIONS

   Office space - CSC-1 rents its executive office space from another CHC
   subsidiary.  In addition to furnished space, CSC-1 receives communications
   and other office services and supplies.   For the years ended September 30,
   1995 and 1996, CSC-1 paid this CHC subsidiary $547,000 and $570,000,
   respectively, for rent and office services under this agreement, which has
   been eliminated in consolidation.

   Selling expense - The Company provides financial and other support to a non-
   profit organization whose officers and directors are also officers and
   directors of CHC.   For the years ended September 30, 1995 and 1996, the
   Company paid this non-profit organization $69,000 and $18,000, respectively,
   for expenses relating to an anticipated bond offering.  Since such offering
   has not yet commenced, the Company has expensed all such costs.


<PAGE> F-11







          CASTLE HOLDING CORP. AND SUBSIDIARIES
         Notes to Consolidated Financial Statements
      For the Years Ended September 30, 1996 and 1995

Deferred compensation plan - CHC has adopted a nonqualified deferred
compensation plan for key employees.  In the year ended September 30, 1995,
CHC paid a total of $20,000 ($9,000 for CHC's president, $9,000 for CHC's
treasurer, and $2,000 for CSC-1's compliance officer) to separate CHC bank
accounts for the benefit of the respective employees.   In the year ended
September 30, 1996, CHC paid a total of $42,000 ($18,000 for CHC's president,
$18,000 for CHC's treasurer and $6,000 for CSC-1's compliance officer) to these
accounts.  These payments were expensed and included in other expenses in the
consolidated statements of net income.


COMMITMENTS AND CONTINGENCIES
Operating leases - The Company leases its autos and equipment under
noncancellable operating lease   agreements which expire between February 1997
and August 2000.   The leases covering the executive space   provide for renewal
options that extend to October 2002.   Pursuant to several verbal sublease
agreements,   CSC-1 rents office space for its three branches on a month to
month basis.

Rent expense under all operating leases consisted of :

                                     Year Ended September 30,
<TABLE>                              1996            1995
<S>                                  <C>             <C>
Executive office space               $  38,113       $  44,888
Branches' office space                 195,696         286,406
Autos and equipment                     75,380          57,754

Total                                $ 309,189       $ 389,048
</TOTAL>

At September 30, 1996, the aggregate future minimum remaining lease payments
under noncancellable operating lease agreements are:

</TABLE>
<TABLE>
Year Ended          Office              Autos and
September 30,       Space               Equipment       Total
<C>                 <C>                 <C>             <C>
1996                $ 34,463            $  71,914       $ 106,377
1997                  37,200               40,227          77,427
1998                   3,100               13,789          16,889
1999                       -                4,835           4,835
2000                       -                3,657           3,657

Total               $ 74,763            $ 134,422       $ 209,185
</TABLE>

Litigation - On September 13, 1994,the United States Securities and Exchange
Commission filed a civil action against CSC-1, its president, a former
registered representative, and eight other defendants.   The action alleges
violations of Sections 5(a) and (c), and 17(a) of the Securities Act of 1933,
Sections 10(b) and 15c of the Securities Exchange Act of 1934 and Rules 10b-3,
10b-5, 10b-6, and 15c1-2 thereunder.   The complaint seeks injunctive relief and
disgorgement of profits approximating $175,000.  CSC -1 answered the complaint
and is vigorously defending the action.



<PAGE> F-12







                      CASTLE HOLDING CORP. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                 For the Years Ended September 30, 1996 and 1995




On October 6, 1994, the NASD Market Surveillance Committee (the "MSC")
commenced a disciplinary proceeding against CSC-1, its president, and two
former registered representatives.   The  Complaint alleges violations of
Article III, Sections 1, 4, 18, and 27 of the Association's Rules of Fair
Practice and Section 10 (b) of the Securities Exchange Act of 1934 and SEC
Rule 10b-5 thereunder.   After a hearing on June 20, 1995, the MSC, in its
Decision dated February 7, 1996, fined CSC-1 and its president jointly and
severally $25,000 and ordered them to make restitution to specified customers
totaling approximately $10,000.   CSC-1 and its president appealed the Decision
to the National Business Conduct Committee (the "NBCC") of the NASD and a
hearing of the appeal was held on June 7, 1996.   In its Amended Decision dated
October 21, 1996, the NBCC affirmed the fines and restitution order.   On
November 15, 1996, CSC-1 and its president appealed the NBCC Amended Decision
to the United States Securities and Exchange Commission and are presently
waiting for a decision.

CHC and its subsidiaries have also been named as defendants in certain other
legal actions in the ordinary course of business.   The Company believes that
it has meritorious defenses to these actions and intends to vigorously contest
them.

It is the opinion of management and legal counsel that the legal proceedings
and actions described above may expose the Company in the aggregate to estimated
losses ranging from $67,000 to $117,000.   The Company recorded a loss accrual
of $92,000 for these contingencies during the year ended September 30, 1995,
which is included in the statement of financial condition in accounts payable
and accrued expenses.  The Company believes that after recording the loss
accrual, the ultimate resolution of the aforementioned legal matters will not
have a material adverse effect on the Company's consolidated financial position.

10. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

In the normal course of business, CSC-1 executes, as agent or principal,
transactions on behalf of customers and CSC-2 executes transactions with other
broker-dealers.   If the agency or principal transactions do not settle because
of failure to perform by either the customer or the counterparty, CSC-1 or CSC-2
may be obligated to discharge the obligation of the nonperforming party and, as
a result, may incur a loss if the market value of the securities are different
from the contract amount of the transactions.

CSC-1's clearing agent seeks to control the risks associated with CSC-1's
customer activities by requiring customers to maintain margin collateral in
compliance with various regulatory and internal guidelines.   CSC-1's clearing
agent monitors required margin levels daily, and pursuant to such guidelines,
requires the customers to deposit additional collateral, or to reduce positions,
when necessary.


<PAGE> F-13