UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q



[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
For the quarterly period ended:                           March 31, 1998
                                       OR



[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
For the transition period from                 to

Commission file number:                                          0-16749

                                  CERBCO, Inc.
             (Exact name of registrant as specified in its charter)

        Delaware                                            54-1448835
(State or other jurisdiction of                          (I.R.S. Employer
 incorporation or organization)                         Identification No.)

 3421 Pennsy Drive, Landover, Maryland                         20785
(Address of principal executive offices)                    (Zip Code)


          Registrant's telephone and fax numbers, including area code:
           301-773-1784 (tel)
           301-322-3041 (fax)
           301-773-4560 (24-hour public information FaxVault System)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or 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



As of May 6,  1998,  the  following  number of  shares  of each of the  issuer's
classes of common stock were outstanding:
                 Common Stock                       1,186,726
                 Class B Common Stock                 296,230
                   Total                            1,482,956



<PAGE>



                                TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION                                             Page

Item 1. Financial Statements..................................................3

        Condensed Consolidated Statements of Operations for the Three
        Months and the Nine Months Ended March 31, 1998 and
        March 31, 1997 (unaudited)............................................3

        Condensed Consolidated Balance Sheets as of March 31, 1998
        and June 30, 1997 (unaudited).......................................4-5

        Condensed Consolidated Statements of Cash Flows for the Nine Months
        Ended March 31, 1998 and March 31, 1997 (unaudited)...................6

        Notes to Condensed Consolidated Financial Statements (unaudited)...7-10

Item 2. Management's Discussion and Analysis of Financial Condition and
        Results of Operations.............................................10-12

PART II - OTHER INFORMATION

Item 1. Legal Proceedings....................................................13

Item 2. Changes in Securities................................................13

Item 3. Defaults upon Senior Securities......................................13

Item 4. Submission of Matters to a Vote of Security Holders..................13

Item 5. Other Information....................................................13

Item 6. Exhibits and Reports on Form 8-K.....................................13




<PAGE>


                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

<TABLE>
                                                   CERBCO, Inc.
                                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                    (unaudited)

<CAPTION>
                                              For the three months ended Mar. 31    For the nine months ended Mar. 31
                                                        1998           1997           1998            1997

<S>                                                   <C>             <C>           <C>            <C>        
Sales                                                 $4,147,345      $6,271,529    $18,783,253    $18,229,917
                                                      ----------      ----------    -----------    -----------

Costs and Expenses:
  Cost of sales                                        4,510,966       5,813,443     16,254,863     15,447,279
  Selling, general and administrative expenses         1,224,374       1,665,356      4,066,863      4,652,350
                                                      ----------     -----------    -----------    -----------
    Total Costs and Expenses                           5,735,340       7,478,799     20,321,726     20,099,629
                                                      ----------     -----------    -----------    -----------

Operating Profit (Loss)                               (1,587,995)     (1,207,270)    (1,538,473)    (1,869,712)
Investment Income                                        239,023          51,579        791,346        244,722
Interest Expense                                          (8,048)         (9,389)       (48,540)       (23,800)
Other Income - net                                       127,090           4,207        452,690         38,368
                                                      ----------     -----------    -----------    -----------
Earnings (Loss) Before Non-Owned Interests and
  Income Taxes                                        (1,229,930)     (1,160,873)      (342,977)    (1,610,422)
Non-Owned Interest in Pretax (Earnings) Loss of
  MIDSOUTH Partners                                      242,176         (36,479)       650,272       (113,075)
                                                      ----------     -----------    -----------    -----------
Earnings (Loss) Before Non-Owned Interests in
  Insituform East, Inc. and Income Taxes                (987,754)     (1,197,352)       307,295     (1,723,497)
Provision (Credit) for Income Taxes                     (420,000)       (321,000)        66,000       (468,000)
                                                      ----------     -----------    -----------    -----------
Earnings (Loss) Before Non-Owned Interests in
  Insituform East, Inc.                                 (567,754)       (876,352)       241,295     (1,255,497)
Non-Owned Interests in Loss of
  Insituform East, Inc.                                  459,067         336,743         78,668        395,062
                                                      ----------     -----------    -----------    -----------
Earnings (Loss) from Continuing Operations              (108,687)       (539,609)       319,963       (860,435)
Discontinued Operations:
Earnings from discontinued operations of copier
  machine products and services segment                        0         632,885              0      1,703,601
                                                      ----------     -----------    -----------    -----------
                              NET EARNINGS (LOSS)     $ (108,687)    $    93,276    $   319,963    $   843,166
                                                      ==========     ===========    ===========    ===========

Basic Earnings (Loss) per Share of Common Stock:
  Earnings (loss) from continuing operations          $     (.07)    $      (.37)   $       .21    $     (.59)
  Earnings from discontinued operations                        0             .43              0          1.16
                                                      ----------     -----------    -----------    ----------
    Basic Earnings (Loss) per Share                   $     (.07)    $       .06    $       .21    $      .57
                                                      ==========     ===========    ===========    ==========

Diluted Earnings (Loss) per Share of Common Stock:
  Earnings (loss) from continuing operations          $     (.07)    $      (.37)   $       .21    $     (.59)
  Earnings from discontinued operations                        0             .43              0          1.16
                                                      ----------     -----------    -----------    ----------
    Diluted Earnings (Loss) per Share                 $     (.07)    $       .06    $       .21    $      .57
                                                      ==========     ===========    ===========    ==========

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



<PAGE>


<TABLE>
                                                   CERBCO, Inc.
                                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                                    (unaudited)

<CAPTION>
                                                                                       As of
                                                                        Mar. 31, 1998         June 30, 1997
ASSETS

Current Assets:
<S>                                                                      <C>                   <C>        
  Cash and cash equivalents                                              $18,960,603           $27,081,412
  Accounts receivable                                                      5,701,230             6,691,313
  Inventories                                                              1,423,351             1,538,017
  Prepaid and refundable taxes                                             1,227,791               813,872
  Prepaid expenses and other                                                 409,894               251,572
                                                                         -----------           -----------
    Total Current Assets                                                  27,722,869            36,376,186
                                                                         -----------           -----------

Property, Plant and Equipment - at cost
  less accumulated depreciation of $14,167,409 at
  March 31, 1998 and $13,296,041 at June 30, 1997                         11,284,851            11,758,572
                                                                         -----------           -----------

Other Assets:
  Excess  of  acquisition  cost  over  value  of net
    assets  acquired  - net of accumulated amortization
    of $1,143,745 at March 31, 1998 and $1,077,844 at
    June 30, 1997                                                          2,342,607             2,408,508
  Cash surrender value of life insurance                                   1,131,462               779,041
  Deposits and other                                                         105,489               148,837
                                                                         -----------           -----------
    Total Other Assets                                                     3,579,558             3,336,386
                                                                         -----------           -----------
      Total Assets                                                       $42,587,278           $51,471,144
                                                                         ===========           ===========
See notes to condensed consolidated financial statements.
</TABLE>


<PAGE>


<TABLE>
                                                   CERBCO, Inc.
                                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                                    (unaudited)

<CAPTION>
                                                                                       As of
                                                                       Mar. 31, 1998         June 30, 1997
LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
<S>                                                                     <C>                   <C>         
  Accounts payable and accrued liabilities                              $  2,268,841          $  6,006,361
  Income taxes payable                                                       997,432             5,804,724
  Current portion of capital lease obligations                                32,997                28,508
                                                                         -----------           -----------
    Total Current Liabilities                                              3,299,270            11,839,593
                                                                         -----------           -----------

Long-Term Liabilities:
  Capital lease obligations (less current portion shown above)               114,138               139,480
  Deferred income taxes                                                    1,009,000             1,074,000
  Accrued SERP liability                                                     562,226               440,950
                                                                         -----------           -----------
    Total Long-term Liabilities                                            1,685,364             1,654,430
                                                                         -----------           -----------
      Total Liabilities                                                    4,984,634            13,494,023
                                                                         -----------           -----------

Commitments and Contingencies

Non-Owned Interests in Consolidated Subsidiaries                          12,313,177            13,042,117
                                                                         -----------           -----------

Stockholders' Equity:
  Common stock, $.10 par value
  Authorized:  3,500,000 shares
  Issued and outstanding:  1,186,726 shares (at Mar. 31, 1998)               118,672
  Issued and outstanding: 1,180,601 shares (at June 30, 1997)                                      118,060
  Class B Common stock (convertible), $.10 par value
  Authorized:  700,000 shares
  Issued and outstanding: 296,230 shares (at Mar. 31, 1998)                   29,623
  Issued and outstanding: 296,355 shares (at June 30, 1997)                                         29,635
  Additional paid-in capital                                               7,527,278             7,493,378
  Retained earnings                                                       17,613,894            17,293,931
                                                                         -----------           -----------
    Total Stockholders' Equity                                            25,289,467            24,935,004
                                                                         -----------           -----------
      Total Liabilities and Stockholders' Equity                         $42,587,278           $51,471,144
                                                                         ===========           ===========
See notes to condensed consolidated financial statements.
</TABLE>


<PAGE>


<TABLE>
                                                   CERBCO, Inc.
                                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                    (unaudited)

<CAPTION>
                                                                        For the nine months ended Mar. 31
                                                                              1998                  1997

Cash Flows from Operating Activities:
<S>                                                                     <C>                   <C>          
  Earnings (loss) from continuing operations                            $    319,963          $   (860,435)
  Earnings from discontinued operations                                            0             1,703,601
                                                                         -----------           -----------
    Net earnings                                                             319,963               843,166
  Adjustments to reconcile net earnings
    to net cash provided by (used in) operations:
    Depreciation and amortization                                          1,675,135             1,538,220
    Amounts attributable to non-owned interests                             (728,940)              569,813
    Deferred income taxes                                                    (65,000)              225,000
    Decrease in other assets                                                  18,348                    61
    Increase in long-term liabilities                                        121,276               225,230
    Changes in operating assets and liabilities:
      (Increase) decrease in accounts receivable                             990,083              (197,400)
      (Increase) decrease in inventories                                     114,666              (356,356)
      Increase in prepaid expenses and other current assets                 (572,241)             (898,128)
      Increase (decrease) in accounts payable and accrued expenses        (1,263,244)            1,416,591
      Decrease in income taxes payable                                    (4,807,292)             (488,658)
      Increase in deferred revenue                                                 0                25,707
                                                                         -----------           -----------
  Net Cash Provided by (Used in) Operating Activities                     (4,197,246)            2,903,246
                                                                         -----------           -----------

Cash Flows from Investing Activities:
  Capital expenditures, net                                               (1,110,513)           (2,190,313)
  Increase in cash surrender value of life insurance                        (352,421)             (182,234)
  Increase in investment in subsidiary                                             0               (85,938)
  Cash distribution from MIDSOUTH Partners to non-owned interests                  0              (101,200)
                                                                         -----------           -----------
Net Cash Used in Investing Activities                                     (1,462,934)           (2,559,685)
                                                                         -----------           -----------

Cash Flows from Financing Activities:
  Proceeds from revolving lines of credit                                  1,800,000                     0
  Principal payments on revolving lines of credit and
    capital lease obligations                                             (1,820,853)              (48,839)
  Dividends paid                                                          (2,474,276)             (227,644)
  Proceeds from exercise of stock options                                     34,500                21,000
                                                                         -----------           -----------
Net Cash Used in Financing Activities                                     (2,460,629)             (255,483)
                                                                         -----------           -----------

Net Increase (Decrease) in Cash and Cash Equivalents                      (8,120,809)               88,078
Cash and Cash Equivalents at Beginning of Period                          27,081,412            10,234,224
                                                                         -----------           -----------
Cash and Cash Equivalents at End of Period                               $18,960,603           $10,322,302
                                                                         ===========           ===========

Supplemental disclosure of cash flow information:
  Interest paid                                                          $    65,317           $    23,800
  Income taxes paid                                                      $ 5,352,211           $   404,642

Supplemental schedule of non-cash investing and financing activities:
  Capital equipment acquired under capital lease obligations             $         0           $    58,543

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

<PAGE>


                                  CERBCO, Inc.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

1.       Financial Information

         The  Condensed  Consolidated  Balance  Sheet as of March 31, 1998,  the
Condensed  Consolidated  Statements of Operations  for the three months and nine
months ended March 31, 1998 and 1997, and the Condensed Consolidated  Statements
of Cash  Flows  for the nine  months  ended  March  31,  1998 and 1997 have been
prepared by the Company without audit. The Condensed  Consolidated Balance Sheet
as of June 30, 1997  (unaudited)  has been derived from the  Company's  June 30,
1997 audited financial statements. In the opinion of management, all adjustments
(which include only normal  recurring  adjustments)  necessary to present fairly
the financial  position,  results of operations and cash flows at March 31, 1998
and for all periods presented have been made.

         The condensed consolidated financial statements include the accounts of
the parent holding company,  CERBCO, Inc. ("CERBCO") and its majority-controlled
subsidiary, Insituform East, Incorporated ("Insituform East"). Prior to June 30,
1997,  the  statements  also  include the  accounts  of CERBCO's  majority-owned
subsidiary,  Capitol  Office  Solutions,  Inc.  ("Capitol  Office  Solutions" or
"Capitol").  Effective  June 30,  1997,  CERBCO no  longer  has an  interest  in
Capitol,  and the  Condensed  Consolidated  Statement  of Earnings for the three
months and nine months  ended  March 31, 1997 have been  restated to reflect the
operating   results  of  Capitol  as   discontinued   operations  (see  Note  5:
Discontinued Operations). All significant intercompany accounts and transactions
have been eliminated.

         These statements have been prepared in accordance with the instructions
to Form 10-Q and  therefore  do not  necessarily  include  all  information  and
footnotes necessary to a presentation of the financial position,  the results of
operations and the cash flows, in conformity with generally accepted  accounting
principles.  Certain information and footnote  disclosures  normally included in
financial  statements  prepared in accordance with generally accepted accounting
principles have been condensed or omitted.  It is suggested that these condensed
financial   statements  be  read  in  conjunction  with  the  audited  financial
statements  and notes thereto  included in the CERBCO annual report on Form 10-K
for the fiscal year ended June 30, 1997.  Operating  results for interim periods
are not necessarily indicative of operating results for an entire fiscal year.

2.       Earnings Per Share

         Basic earnings  (loss) per share data have been computed based upon the
weighted average number of common shares outstanding during each period. Diluted
earnings  (loss) per share have been  computed  based upon the weighted  average
number of common shares  outstanding  during the period  including  common stock
equivalents  from dilutive stock options.  The following  numbers of shares have
been used in the computations:
<TABLE>

<CAPTION>
                   For the three months ended Mar. 31           For the nine months ended Mar. 31
                   ----------------------------------           ---------------------------------
                    1998                   1997                    1998                   1997
                    ----                   ----                    ----                   ----

<S>               <C>                    <C>                     <C>                    <C>      
Basic             1,482,956              1,473,956               1,482,759              1,470,255
                  =========              =========               =========              =========
Diluted           1,482,956              1,473,956               1,482,759              1,470,255
                  =========              =========               =========              =========
</TABLE>

3.       Accounts Receivable

         Accounts receivable consist of:
                                           Mar. 31, 1998         June 30, 1997

Due from customers                            $5,368,843            $6,479,230
Miscellaneous                                    332,387               212,083
                                              ----------            ----------
                                               5,701,230             6,691,313
Less: Allowance for doubtful accounts                  0                     0
                                              ----------            ----------
                                              $5,701,230            $6,691,313
                                              ==========            ==========

4.       Equity in Insituform East

         At March  31,  1998,  CERBCO  beneficially  held  1,127,500  shares  of
Insituform  East Common Stock and 296,141 shares of convertible  Insituform East
Class B Common Stock representing approximately 27.8% of the Common Stock, 99.5%
of the Class B Common  Stock,  32.7% of the total  equity and 58.1% of the total
voting power of all outstanding classes of Insituform East common stock. Holders
of Class B Common Stock,  voting  separately as a class, have the right to elect
the remaining  members of the Board of Directors after election of not less than
25% of such members by holders of shares of Common Stock, voting separately as a
class.

         From time to time, Insituform East issues additional shares of stock as
a result of stock  dividends and  exercised  stock  options.  Changes in capital
structure  resulting from such additional stock issues decrease  CERBCO's equity
ownership.  No additional shares were issued in the three months ended March 31,
1998.  If all the  options  outstanding  at March 31, 1998 were  exercised,  the
resulting  percentages of CERBCO's equity ownership and total voting power would
be 29.7% and 54.7%, respectively.

         From time to time, Insituform East purchases shares of its common stock
for treasury.  Changes in capital structure  resulting from such stock purchases
increase CERBCO's equity ownership.  Insituform East did not purchase any shares
during the three months ended March 31, 1998.

5.       Discontinued Operations

         Prior to June 30,  1997,  CERBCO  beneficially  held  800  shares,  and
Capitol Office  Solution's  president held 400 shares, of Capitol Class B Stock,
representing 66 2/3% and 33 1/3%, respectively,  of the one outstanding class of
Capitol stock.

         On June 30, 1997, Capitol redeemed the 800 shares of Class B stock held
by the Company for $19 million plus a  pre-redemption  dividend of two-thirds of
the cash held by  Capitol  in  excess  of  $800,000  equaling  $3,789,593.  This
transaction was approved by the Company's stockholders at a meeting held on June
27, 1997. CERBCO's share of Capitol's operating results for the three months and
nine  months  ended  March 31,  1997 are shown  separately  in the  accompanying
condensed  consolidated  statements of operations as earnings from  discontinued
operations. Capitol's sales revenues of $5,939,913 and $17,441,265 for the three
months and nine months  ended  March 31,  1997 are not  included in sales in the
accompanying condensed consolidated statements of earnings.

6.       Accounts Payable and Accrued Liabilities

         Accounts payable and accrued liabilities consist of:

                                           Mar. 31, 1998         June 30, 1997

Accounts payable                              $1,074,759            $1,655,097
Accrued compensation and related expenses      1,194,082             1,876,988
Dividends payable                                      0             2,474,276
                                              ----------            ----------
                                              $2,268,841            $6,006,361
                                              ==========            ==========
7.       Contingencies

         As previously  reported by the Company,  in March 1990, the controlling
stockholders  of the Company,  Messrs.  George Wm. Erikson and Robert W. Erikson
(together,  the  "Eriksons"),  executed  a letter  of  intent  and  subsequently
executed four amendments thereto (collectively referred to herein as the "Letter
of Intent") with Insituform Technologies, Inc. ("ITI") to effect a sale of their
controlling  interest  in the  Company  to ITI  for  $6,000,000  (the  "Proposed
Transaction").  The Proposed  Transaction,  if  consummated,  would have had the
effect  of  making  ITI  the  controlling   stockholder  of  the  Company,  and,
indirectly,  of each of the  Company's  three direct  subsidiaries  at the time,
Insituform  East,  Capitol,  and  CERBERONICS.  In September  1990, the Eriksons
informed the Company that the Letter of Intent had expired without  consummation
of any transaction, that it would not be further extended, that negotiations had
ceased,  and that the Eriksons had no further  intention at the time of pursuing
the proposed sale of their controlling interest in the Company to ITI.

         Also as previously reported by the Company, two stockholders  commenced
a derivative  lawsuit in the Delaware Court of Chancery  against the Eriksons in
August,  1990,  making certain  claims with respect to the Proposed  Transaction
(the "Delaware  Action").  The Delaware Action finally was concluded on December
3, 1997, when the Delaware Supreme Court issued its order affirming the findings
of the Court of Chancery  with respect to (a) the trial  court's  assessment  of
certain  damages  against the Eriksons on remand from a previous  appeal and (b)
the renewed  petition of plaintiffs'  attorneys for an award of attorneys'  fees
and  expenses.  Those  findings by the Court of Chancery had been made on remand
from the same  Delaware  Supreme  Court after a 1996 ruling in which the Supreme
Court affirmed the Court of Chancery's  holding that CERBCO had not suffered any
transactional damages with respect to the Proposed Transaction.

         As  previously  reported by the  Company,  in January  1993,  a lawsuit
against the partners in the law firm of Rogers & Wells and the Company,  arising
out of the subject matter of the Delaware litigation,  was filed in the Superior
Court of the District of Columbia (the "D.C.  Complaint").  Plaintiffs  were the
same two  stockholders  who were  plaintiffs in the Delaware  litigation,  and a
former  director of the Company,  and alleged  that Rogers & Wells  breached its
duty of loyalty and care to the Company by  representing  allegedly  conflicting
interests of the Eriksons in the Proposed  Transaction with ITI. Plaintiffs also
claimed  that  Rogers  &  Wells  committed   malpractice  by  allegedly   making
misrepresentations  to the  Company's  Board and  allegedly  failing to properly
inform the  Company's  Board.  Plaintiffs  claimed  that the conduct of Rogers &
Wells  caused  the  Company  to  lose an  opportunity  to sell  its  control  of
Insituform East to ITI,  caused the Company to incur  substantial  expense,  and
unjustly  enriched  Rogers & Wells.  The D.C.  Complaint  sought to recover from
Rogers & Wells  (i)  damages  in an  amount  equal to all fees  paid to Rogers &
Wells,  (ii) damages in an amount not less than  $6,000,000  for the loss of the
opportunity  for the Company to sell its control of Insituform  East to ITI, and
(iii) punitive damages.  Although the D.C. Complaint stated that it was filed on
behalf of the Company, management does not believe that Rogers & Wells should be
sued on any of the claims set forth therein.

         Motions to  dismiss  this case by the  Company  and Rogers & Wells were
denied,  but a stay of the  proceedings  was granted  until  after the  Delaware
trial.  Plaintiffs  agreed to a stay in the Superior  Court  action  pending the
outcome of the appeal of the outcome of the Delaware  litigation to the Delaware
Supreme Court and, subsequently, the stay was continued at least until such time
as the Delaware  Court of Chancery  ruled upon  plaintiffs'  pending  motion for
post-remand  relief.  After the Delaware  Supreme  Court's most recent ruling on
December 3, 1997,  finally affirming the Delaware Court of Chancery with respect
to such post-remand relief and a renewed petition for counsel fees and expenses,
the stay of the District of Columbia action was lifted,  and plaintiffs filed an
amended  D.C.  Complaint.  In the  amended  D.C.  Complaint,  plaintiffs  assert
essentially  the same conflicts of interest  charges  against Rogers & Wells but
shift  their  focus  from  the  value of the  alleged  lost  opportunity  to the
litigation  expenses incurred by the Company in the Delaware Action.  Plaintiffs
now seek to recover  from Rogers & Wells (i)  damages in an amount  equal to all
fees paid to Rogers & Wells, (ii) damages for more than $2 million in attorneys'
fees  and  expenses  incurred  by  CERBCO  in  the  Delaware  Action  and  other
unspecified compensatory damages, and (iii) punitive damages. On March 27, 1998,
the Company filed its answer to the amended D.C.  Complaint,  in which it denied
all liability and asserted  certain  affirmative  defenses.  On the same day, it
filed its motion for summary judgment,  together with a supporting memorandum of
law, on the grounds of  collateral  estoppel  and res  judicata.  Rogers & Wells
likewise answered the amended D.C.  Complaint,  denying  liability,  and filed a
motion for summary judgment on collateral estoppel grounds. On Thursday,  May 7,
1998,  the  Company  filed its reply  memorandum  of points and  authorities  in
support of its motion for summary  judgment.  A decision from the D.C.  Court is
expected later this year.

         As  previously  reported by the Company,  on October 23, 1996,  Inliner
U.S.A.  and CAT  Contracting,  Inc. filed an antitrust  suit against  Insituform
Technologies,  Inc.  ("ITI") and Insituform East in United States District Court
for the Southern District of Texas, Houston Division, alleging violations by ITI
(including  all of its subsidiary  licensees) and Insituform  East of Sections 1
and 2 of the Sherman Act, Section 43(a) of the Lanham Act, Section 15(a) and (b)
of the Texas Business and Commercial Code, tortious  interference with contracts
and  business   disparagement.   Plaintiffs  are  seeking  from   defendants  an
unspecified amount of compensatory damages,  treble damages and attorneys' fees,
as well as punitive damages of $50 million.

         Insituform  East  believes it has strong  defenses to and is vigorously
contesting  the suit.  Insituform  East filed two  motions to dismiss the action
during the fiscal year ended June 30, 1997. In an extensive memorandum and order
of August 25, 1997, the Court granted a partial dismissal of plaintiffs'  claims
and ordered plaintiffs to replead remaining potential claims. Plaintiffs filed a
motion for leave to file a Second  Amended  Complaint  on  September  29,  1997.
Defendants each filed responses to plaintiffs'  motion. On January 30, 1998, the
Court by order  denied  plaintiffs'  motion to file a second  amended  complaint
because the proposed amended  complaint failed to comply in a number of material
respects with the Court's August 25, 1997 order.  Plaintiffs were granted twenty
days from receipt of the Court's  January 30, 1998 order to file a third amended
complaint or face  dismissal of the case  outright for failure to prosecute  its
alleged  claims.  On February 24, 1998,  plaintiffs  filed a motion for leave to
file  a  Third  Amended  Complaint.  Insituform  East  filed  an  opposition  to
plaintiff's motion asserting that the proposed Third Amended Complaint failed to
comply with the Court's  August 25, 1997 and January 30, 1998 orders.  The Court
has not yet taken  action with  respect to this  motion.  Although  the ultimate
outcome and  consequences of the suit cannot be ascertained at this time and the
results of legal  proceedings  cannot be  predicted  with  certainty,  it is the
opinion of the management of Insituform East that the suit is meritless and will
not have a material adverse effect on the financial  condition or the results of
operations of Insituform East.

         Management  believes ultimate resolution of these matters will not have
a  material  effect on the  financial  statements  of  CERBCO.  Accordingly,  no
provision for these  contingencies  has been reflected  therein.  The Company is
also  involved in other  contingencies,  none of which could,  in the opinion of
management,  materially  affect the Company's  financial  position or results of
operations.

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

Overview and Outlook

         The Company reported a consolidated loss of -$108,687 (-$.07 per share)
on sales of $4.1  million  for the third  quarter of fiscal  year 1998.  For the
first  nine  months of fiscal  year  1998,  the  Company  reported  consolidated
earnings of $319,963 ($.21 per share) on sales of $18.8  million.  For the third
quarter  and first nine  months of fiscal  year  1997,  the  Company  recognized
consolidated losses from continuing operations of -$539,609 (-$.37 per share) on
sales of $6.3 million and -$860,435 (-$.59 per share) on sales of $18.2 million,
respectively.  Consolidated  net earnings  for the third  quarter and first nine
months of the fiscal year 1997 were $93,276 ($.06 per share) and $843,166  ($.57
per  share),  respectively,  including  earnings  from  the  operations  of  the
Company's discontinued copy machine products and services segment.

         The Company  attributed  its fiscal year 1998 third quarter loss to the
consolidated  net  loss  realized  by  Insituform,  East,  Inc.,  the  Company's
majority-controlled  and only remaining  operating segment.  Insituform East and
MIDSOUTH Partners, its majority-controlled  subsidiary,  are principally engaged
in the trenchless rehabilitation of underground sewers and other pipelines using
the  patented  Insituform(R)  process.  Insituform  East  and  its  wholly-owned
subsidiaries  (collectively,  "East")  experienced  decreased  sales  at  normal
margins  during  the  third  quarter,   while  MIDSOUTH   Partners   experienced
significantly  reduced margins on normal levels of work it performed  during the
quarter.  CERBCO's  favorable  results  for the first nine months of fiscal year
1998 are primarily due to investment income earned on the short-term  investment
of cash  realized  from the sale of the  Company's  interest  in Capitol  Office
Solutions on June 30, 1997.

         During the third  quarter  of fiscal  year  1998,  the  parent  company
incurred  continuing  legal  expenses  related to the two lawsuits filed against
CERBCO and others by two minority  stockholders  in connection with the proposed
private  sale of a  controlling  interest in the Company  that was  abandoned in
September 1990. The first-filed of the two lawsuits (the "Delaware  Action") was
finally  concluded  during the  second  quarter  of fiscal  year 1998,  when the
Delaware  Supreme Court  affirmed the Court of  Chancery's  rejection of all but
$143,364 of plaintiffs'  petition for an award against  CERBCO of  approximately
$1.6 million in attorneys' fees and expenses. After the final disposition of the
Delaware  Action,  plaintiffs  filed an amended  complaint in their  District of
Columbia  lawsuit (the "D.C.  Complaint"),  and the attendant legal expenses are
expected to  continue.  From  inception of the  litigations  in 1990 through the
quarter ended March 31, 1998,  CERBCO's legal fees and expenses relating to both
lawsuits total approximately $2.3 million.

         The principal factor affecting the Company's future performance remains
the  volatility of Insituform  East's  earnings as a function of sales volume at
normal  margins.  Accordingly,  because a  substantial  portion of its costs are
semi-fixed in nature,  Insituform  East's  earnings  can, at times,  be severely
reduced or eliminated during periods of either depressed sales at normal margins
or  material  increases  in  discounted  sales,  even where total  revenues  may
experience an apparent  buoyancy or growth from the addition of discounted sales
undertaken  from  time to time for  strategic  reasons.  Conversely,  at  normal
margins, increases in Insituform East's period sales typically leverage positive
earnings significantly.

         Insituform  East's  losses in the second and third  quarters  of fiscal
year 1998 were  representative  of the result of depressed  sales volume despite
normal margin levels.  The first quarter of fiscal year 1998 was  representative
of the  significant  leveraging  effect to  positive  earnings of  increases  in
Insituform   East's  period  sales  at  normal  margins  primarily  due  to  the
significant impact of revenues  recognized during the quarter in connection with
the  installation  phase of the year-long $4.7 million Perry Nuclear Power Plant
project.

         With respect to forward-looking  information, and while there can be no
assurances regarding Insituform East's future operating performance, the Company
currently believes that present overall decreases in total marketplace orders in
East's  territory are likely to produce  negative results for Insituform East in
the fourth quarter of fiscal year 1998.  Although this trend could continue into
fiscal year 1999,  analysis of longer term data  indicates  that the fiscal year
1998 decline in total East marketplace  orders is a factor that tends to average
out over running three-year periods.  Indeed, total marketplace orders in fiscal
year 1997 were abnormally  high.  Thus, while selective cost saving actions have
been taken during this period of reduced sales,  Insituform East does not intend
to undertake at this time drastic cost reduction  measures that would ultimately
reduce future  productive  capacity,  erode operations  support  capabilities or
impair its ability to execute the complex requirements of non-core,  specialized
work such as the large Perry Nuclear project. In addition, while Insituform East
remains  unable to predict the  likelihood or timing of further such  favorable,
specialized  work,   building  upon  both  Insituform  East's  success  and  its
preeminent  capability  in this area will  continue as a strong  focus in future
business  development.   Income  from  the  Company's  non-operating  activities
presently is anticipated to approximate the normal levels of its holding company
expenses  into the  future;  accordingly,  absent  unusual  items the  Company's
forward-looking results are anticipated  substantially to parallel the Company's
approximate 33% participation in the forward results of Insituform East.

         Insituform East's total backlog value of all uncompleted and multi-year
contract awards was approximately $26.2 million at March 31, 1998 as compared to
$19.3 million at March 31, 1997. The twelve-month  backlog at March 31, 1998 was
approximately  $11.5 million as compared to $17.9 million at March 31, 1997. The
total backlog value of all  uncompleted  and  multi-year  contracts at March 31,
1998 and 1997 includes  work not  estimated to be released and installed  within
twelve months,  as well as potential work included in term contract awards which
may or may not be  fully  ordered  by  contract  expiration.  While  potentially
helpful as a possible trend indicator, backlog figures at specific dates are not
necessarily  indicative  of sales and  earnings  for future  periods  due to the
irregular   timing  and  receipt  of  major  project  awards   including  large,
multi-year,  menu-priced contracts with estimated but uncertain order quantities
further subject to the specifics of individual work releases.

         The Company believes the trenchless pipeline reconstruction marketplace
is  continuing  to expand,  thereby  enticing,  however,  the entry of ever more
imitations and substitute products hoping that cheap price alone may permit them
to succeed in a market otherwise dominated by Insituform. In those markets where
the lowest priced product may be deemed technically "good enough," Insituform is
at a  disadvantage.  Market share  participation  in this segment  strategically
undertaken  by  Insituform  East  from  time  to time  to  preserve  competitive
presence,  typically at levels materially below normal margins, will necessarily
dilute the overall margin performance of Insituform East.  Conversely,  in "best
value" and quality based markets,  Insituform  remains at a distinct  advantage.
While both the Federal  Government  and  industry  routinely  use best value and
quality-weighted  contract  award criteria in more  sophisticated  procurements,
municipalities  and  local  governments  have  been  politically   reluctant  to
modernize from simply  "low-bid"  buying to "best value" buying when  evaluating
sophisticated  processes  and  technologies.  In the face of mounting  technical
failures from awards based upon lowest price,  municipalities  are also expected
over time to increasingly  shift from low bid to  quality-driven  award criteria
when procuring trenchless technology to rehabilitate older pipelines.

Results of Operations

      Third Quarter ended 3/31/98 Compared with Third Quarter ended 3/31/97

         Consolidated  sales decreased $2.1 million (-34%) from $6.3 million for
the quarter ended March 31, 1997 to $4.2 million for the quarter ended March 31,
1998, due primarily to lower  workable  backlog  levels  experienced  during the
third quarter of fiscal year 1998.  Comparable  period sales for East  decreased
46%, while comparable period sales for MIDSOUTH Partners decreased 2%.

         Consolidated  operating  results  decreased  from an operating  loss of
-$1.2 million in the quarter ended March 31, 1997 to an operating  loss of -$1.6
million  in the  quarter  ended  March  31,  1998.  Consolidated  cost of  sales
decreased  22% and as a result,  gross profit  (loss) as a  percentage  of sales
decreased from a gross profit of 7% for the third quarter of fiscal year 1997 to
a gross profit  (loss) of (9%) for the third  quarter of fiscal year 1998.  This
decrease in gross profit as a percentage of sales is due primarily to absorption
of semi-fixed costs over significantly reduced sales during the third quarter of
fiscal year 1998. Insituform East's selling, general and administrative expenses
decreased  $0.3 million  (-21%),  primarily  as a result of  decreased  costs to
support  decreased  production  activities.  The  parent  company's  unallocated
general  corporate  expenses also  decreased  $0.2 million (-47%) in the quarter
ended  March 31,  1998,  as CERBCO  incurred  legal and  consulting  fees in the
quarter  ended  March  31,  1997 in  connection  with the  ultimate  sale of its
interest in Capitol Office Solutions.

         Investment income increased $0.2 million (363%) in the third quarter of
fiscal year 1998,  primarily  as a result of interest  earned on the  short-term
investment of cash  realized from the sale of the Company's  interest in Capitol
Office Solutions on June 30, 1997. Earnings from discontinued  operations in the
third quarter of fiscal year 1997  resulted from the then  operations of Capitol
Office Solutions.

        Nine Months Ended 3/31/98 Compared With Nine Months Ended 3/31/97

         Consolidated  sales  increased $0.6 million (3%) from $18.2 million for
the first nine  months of fiscal  year 1997 to $18.8  million for the first nine
months of fiscal year 1998,  due  primarily  to the $4.7 million  Perry  Nuclear
Power Plant project,  substantially completed during the first quarter of fiscal
year 1998 which offset lower sales resulting from lower workable  backlog levels
experienced during the second and third quarters of fiscal year 1998. Comparable
period sales for East increased 6%, while  comparable  period sales for MIDSOUTH
Partners decreased 3%.

         Consolidated  operating  results  increased  from an operating  loss of
-$1.8  million in the nine months ended March 31, 1997 to an  operating  loss of
-$1.5  million in the nine months  ended March 31,  1998.  Consolidated  cost of
sales increased 5%, and gross profit as a percentage of sales decreased from 15%
to 13% as a result.  This  decrease in gross profit as a percentage  of sales is
due  primarily  to  reduced  margins  on work  performed  by  MIDSOUTH  Partners
resulting  from both  discounted  sales and  performance  inefficiencies.  These
reduced  margins more than offset  improved  comparable  period  margins on East
work. Insituform East's selling,  general and administrative  expenses decreased
$0.3 million  (-9%),  primarily as a result of reduced legal  expenses and lower
costs to  support  reduced  production  activities  during  the second and third
quarters of fiscal year 1998. Insituform East incurred additional legal expenses
during fiscal year 1997 in connection  with the Inliner  U.S.A./CAT  Contracting
antitrust lawsuit.  The parent company's  unallocated general corporate expenses
decreased $0.2 million (-30%) in the nine months ended March 31, 1998, as CERBCO
incurred  legal and consulting  fees in fiscal year 1997 in connection  with the
Capitol Office Solutions transaction.

         Investment  income  increased  $0.5  million  (223%) in the first  nine
months of fiscal  year 1998,  primarily  as a result of  interest  earned on the
short-term  investment of cash realized from the Capitol Office  Solutions sale.
Earnings  from  discontinued  operations in the first nine months of fiscal year
1997 resulted from the then operations of Capitol Office Solutions.

Financial Condition

         During the nine months  ended  March 31,  1998,  the Company  used $4.2
million in cash in operating  activities,  due primarily to net earnings of $0.3
million plus $1.7 million in depreciation and amortization  expenses included in
operating  results  that did not  require  the  outlay of cash  offset by a $1.3
million  decrease in accounts  payable and accrued  expenses  and a $4.8 million
decrease in income taxes payable.

         During the nine months ended March 31, 1998, the Company  expended $1.1
million  for  equipment  purchases  and  other  capital  improvements.   Through
Insituform  East,  it received  and repaid  $1.8  million in bank line of credit
advances.  It also paid $2.5 million in dividends to  stockholders,  including a
$2.2 million special dividend to CERBCO  stockholders as a result of the Capitol
Office Solutions transaction.

         Although  the  Company  experienced  an $8.1  million  decrease in cash
during the first nine months of fiscal year 1998, its liquidity  remained strong
with working capital of over $24 million and a current ratio of 8.4 at March 31,
1998.  CERBCO  believes that  Insituform  East has cash  reserves,  bank line of
credit   availability  or  borrowing   potential  against   unencumbered  assets
sufficient  to meet its immediate  cash flow  requirements.  The parent  holding
company,  CERBCO, does not have a separate bank line of credit, but has cash and
temporary  investments  in excess of $18  million  which,  pending  longer  term
investment,  it  believes  are more  than  adequate  to meet  its own cash  flow
requirements,   or  the  temporary   requirements  of  Insituform  East  in  the
foreseeable future,  including  continuing legal fees and expenses of the parent
in  connection  with the  stockholder  litigation  now moved to the  District of
Columbia.

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

         The only material  pending legal  proceedings to which the Company is a
party or any such legal  proceedings  contemplated of which the Company is aware
are (a) a previously  disclosed  lawsuit  pending in the  Superior  Court of the
District of Columbia,  and (b) a previously  disclosed lawsuit filed in the U.S.
District Court for the Southern District of Texas, Houston Division [see Part I,
Item 1, "Notes to Condensed Consolidated Financial Statements (unaudited) - Note
7. Contingencies"].

Item 2.  Changes in Securities

         Not applicable.

Item 3.  Defaults upon Senior Securities

         Not applicable.

Item 4.  Submission of Matters to a Vote of Security Holders

         Not applicable.

Item 5.  Other Information

         Not applicable.

Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits:

         27   - Financial Data Schedule for the period ended March 31, 1998
         99     - CERBCO, Inc. Consolidating Schedules:  Statement of Operations
                Information for the three months ended March 31, 1998; Statement
                of  Operations  Information  for the nine months ended March 31,
                1998;  Balance Sheet Information and  Consolidating  Elimination
                Entries as of March 31, 1998.

(b)      Reports on Form 8-K:

         No reports on Form 8-K were filed  during the three  months ended March
31, 1998.


                                   SIGNATURES

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

Date: May 14, 1998

                                   CERBCO, Inc.
                                  (Registrant)

                                   /s/ ROBERT W. ERIKSON
                                   Robert W. Erikson
                                   President



                                   /s/ ROBERT F. HARTMAN
                                   Robert F. Hartman
                                   Vice President & Chief Financial Officer

<PAGE>




                       Exhibits to CERBCO, Inc. Form 10-Q





 Exhibit 27.       CERBCO, Inc. Financial Data Schedule

 Exhibit 99.       CERBCO,   Inc.   Consolidating   Schedules:    Statement   of
                   Operations  Information  for the Three Months Ended March 31,
                   1998;  Statement  of  Operations  Information  for  the  Nine
                   Months Ended March 31, 1998; Balance Sheet  Information;  and
                   Consolidating Elimination Entries as of March 31, 1998.