INDEPENDENT AUDITORS' REPORT


The Stockholders and Board of Directors
High Plains Corporation


We have audited the accompanying balance sheets of High Plains Corporation as
of June 30, 1998 and 1997, and the related statements of income, 
stockholders' equity and cash flows for each of the three years in the period
ended June 30, 1998.  These financial statements are the responsibility of 
the Company's management.  Our responsibility is to express an opinion on 
these 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 financial statements are free 
of material misstatement.  An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall 
financial statement presentation.  We believe that our audits provide a 
reasonable basis for our opinion. 

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of High Plains Corporation as 
of June 30, 1998 and 1997, and the results of their operations and cash flows
for each of the three years in the period ended June 30, 1998 in conformity 
with generally accepted accounting principles. 


                                                 ALLEN, GIBBS & HOULIK, L.C.


August 28, 1998 (Except for the last paragraph in Note 5, 
  which is as of September 24, 1998)
Wichita, Kansas


<PAGE>

                              HIGH PLAINS CORPORATION

                                  BALANCE SHEETS

                              June 30, 1998 and 1997


<TABLE>
                                      ASSETS


<CAPTION>
                                                    1998            1997

CURRENT ASSETS
<S>                                           <C>              <C>
Cash and cash equivalents                     $    674,894     $  2,389,758
Accounts receivable:
  Trade (less allowance of $75,000
    in 1998 and 1997)                            4,500,579        4,102,173
  Production credits and incentives                829,849        1,536,541
Inventories                                      6,328,232        4,246,783
Current portion of long-term notes 
  receivable                                        31,307          117,417
Prepaid expenses                                    85,168          309,350 
Refundable income tax                               30,000          145,328 

      Total current assets                      12,480,029       12,847,350 


PROPERTY, PLANT AND EQUIPMENT, AT COST

Land and land improvements                         433,496          323,496 
Ethanol plants                                  92,906,633       85,055,215 
Other equipment                                    473,345          393,683 
Office equipment                                   279,278          202,135 
Leasehold improvements                              48,002           48,002 

                                                94,140,754       86,022,531 
Less accumulated depreciation                  (23,819,484)     (20,444,381)

      Net property, plant and equipment         70,321,270       65,578,150 


OTHER ASSETS

Equipment held for resale                          264,554          427,432 
Deferred loan costs (less accumulated
  amortization of $38,095 and $10,857
  in 1998 and 1997)                                117,890          103,623 
Long-term notes receivable, less
  current portion                                       --           41,742 
Other                                               65,886           76,235 

      Total other assets                           448,330          649,032 
 
                                               $83,249,629      $79,074,532 

</TABLE>

<PAGE>

<TABLE>

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<CAPTION>
                                                    1998            1997

CURRENT LIABILITIES
<S>                                            <C>              <C>
Revolving lines-of-credit                      $ 9,000,000      $ 6,200,000 
Current maturities of capital
  lease obligations                                500,852          519,384
Accounts payable                                 8,364,074        5,114,452 
Accrued interest                                   223,722          298,551 
Accrued payroll and property taxes                 822,971          644,846 

      Total current liabilities                 18,911,619       12,777,233 

Revolving line-of-credit                         9,700,000        7,700,000 
Capital lease obligations, less
  current maturities                             2,002,623        2,500,014 
Other                                              364,240          441,109 

                                                12,066,863       10,641,123 


STOCKHOLDERS' EQUITY

Common stock, $.10 par value, authorized 
  50,000,000 shares; issued 16,410,622
  shares and 16,396,622 shares at
  June 30, 1998 and 1997, respectively, of
  which 411,178 shares were held as treasury
  stock at June 30, 1998 and 1997                1,641,062        1,639,662 
Additional paid-in capital                      37,457,167       37,348,072 
Retained earnings                               14,170,697       17,763,627 

                                                53,268,926       56,751,361 

Less:
    Treasury stock - at cost                      (863,911)        (863,911)
    Deferred compensation                         (133,868)        (231,274)

      Total stockholders' equity                52,271,147       55,656,176 

                                               $83,249,629      $79,074,532 

<FN>
                      The accompanying notes are an integral
                        part of these financial statements

</TABLE>

<PAGE>


                             HIGH PLAINS CORPORATION

                             STATEMENTS OF OPERATIONS

                     Years Ended June 30, 1998, 1997 and 1996

<TABLE>
<CAPTION>
                                     1998          1997            1996
<S>                              <C>            <C>            <C>
Product sales and revenues       $84,863,782    $63,121,510    $73,920,096
Revenues from forward contracts           --             --     14,005,313 

      Net sales and revenues      84,863,782     63,121,510     87,925,409 

Cost of products sold             83,126,259     59,414,514     69,414,221 
Expense (recovery) from
  futures/forward contracts        1,608,561       (610,069)     2,524,235 

      Total costs and expenses    84,734,820     58,804,445     71,938,456 

      Gross profit                   128,962      4,317,065     15,986,953 

Selling, general and
  administrative expenses          1,834,725      1,653,681      2,022,095 
Management restructuring costs       600,000             --             --

      Operating (loss) income     (2,305,763)     2,663,384     13,964,858 

Other income (expense):
  Interest and other income          128,155        276,345        175,296 
  Interest expense                (1,535,819)    (1,354,983)    (2,220,427)
  Gain on sale of equipment           26,157        129,649        256,606 

                                  (1,381,507)      (948,989)    (1,788,525)

      Net (loss) earnings 
      before income taxes         (3,687,270)     1,714,395     12,176,333 

Income tax benefit (expense)          94,340         18,895       (355,256)

      Net (loss) earnings        $(3,592,930)   $ 1,733,290    $11,821,077 

(Loss) earnings per share-basic  $      (.22)   $       .11    $       .75 

(Loss) earnings per share-
  assuming dilution              $      (.22)   $       .11    $       .74 

</TABLE>


[FN]
                       The accompanying notes are an integral
                          part of these financial statements.


<PAGE>

                             HIGH PLAINS CORPORATION

                        STATEMENTS OF STOCKHOLDERS' EQUITY

                     Years Ended June 30, 1998, 1997 and 1996


<TABLE>
<CAPTION>
                                            Common Stock
                                        Number                  Additional
                                          of                     Paid-In      Retained     Treasury     Deferred
                                        Shares      Amount       Capital      Earnings      Stock     Compensation  Total

<S>                                   <C>          <C>          <C>           <C>         <C>         <C>        <C>    
Balance, June 30, 1995                15,470,947   $1,547,095   $34,738,760  $ 4,209,260  $(244,377)  $      --  $40,250,738

Exercise of stock options                776,342       77,634     1,897,884                                        1,975,518
Purchase of common stock                                                                   (493,283)                (493,283)
Employee stock purchase                                                                                (141,937)    (141,937)
Amortization of deferred compensation                                                                    53,230       53,230
Income tax benefit from the exercise of
  stock options                                                     116,000                                          116,000
Net earnings for year                                                         11,821,077                          11,821,077

Balance, June 30, 1996                16,247,289    1,624,729    36,752,644   16,030,337   (737,660)   ( 88,707)  53,581,343
Exercise of stock options                149,333       14,933       516,560                                          531,493
Purchase of common stock                                                                   (126,251)                (126,251)
Employee stock purchase                                                                                (273,750)    (273,750)
Amortization of deferred compensation                                                                   131,183      131,183
Compensation expense on stock
  options granted                                                    78,868                                           78,868
Net earnings for year                                                          1,733,290                           1,733,290

Balance, June 30, 1997                16,396,622    1,639,662    37,348,072   17,763,627   (863,911)   (231,274)  55,656,176
Exercise of stock options                 14,000        1,400        19,600                                           21,000
Amortization of deferred compensation                                                                    97,406       97,406
Compensation expense on stock options 
  granted                                                            89,495                                           89,495
Net loss for year                                                             (3,592,930)                         (3,592,930)
Balance, June 30, 1998                16,410,622   $1,641,062   $37,457,167  $14,170,697  $(863,911)  $(133,868) $52,271,147

</TABLE>

[FN]
                                    The accompanying notes are an integral
                                       part of these financial statements.


<PAGE>


                             HIGH PLAINS CORPORATION

                             STATEMENTS OF CASH FLOWS

                     Years Ended June 30, 1998, 1997 and 1996

<TABLE>
<CAPTION>
                                           1998          1997        1996
<S>                                   <C>            <C>          <C>
Cash flows from operating activities:
  Net (loss) earnings                 $ (3,592,930)  $ 1,733,290  $11,821,077

  Adjustments to reconcile net (loss)
    earnings to net cash provided by
    operating activities:
      Depreciation and amortization      3,484,573     3,405,364    2,869,699
      Gain on sale of equipment            (26,157)     (129,649)    (256,606)
      Amortization of deferred
        compensation                        46,204       107,923       53,230
      Compensation expense on stock
        options granted                     89,495        78,868           --
      Payments received on notes
        receivable                         127,852       236,552       96,691
      Changes in operating assets and 
        liabilities:
        Accounts receivable                336,561    (3,773,905)   1,953,952
        Inventories                     (2,081,449)   (2,565,940)     964,434
        Equipment held for resale          157,540       105,794      606,353
        Refundable income tax              115,328       264,931     (294,259)
        Prepaid expenses                   224,182       235,821     (160,312)
        Accounts payable                 3,249,622     4,422,317   (3,103,913)
        Estimated contract commitments          --      (629,093)     629,093
        Accrued liabilities                103,296       168,262     (385,670)
          Net cash provided by
          operating activities           2,234,117     3,660,535   14,793,769
Cash flows from investing activities:
  Proceeds from sale of property,
    plant and equipment                    167,090        43,620       54,477
  Acquisition of property, plant
    and equipment                       (8,359,325)   (4,802,664)  (4,947,663)
  Decrease (increase) in other
    non-current assets                      10,349       (19,217)       5,591
          Net cash used in
          investing activities          (8,181,886)   (4,778,261)  (4,887,595)
Cash flows from financing activities:
  Payments on long-term debt                    --   (17,345,238)  (5,273,810)
  Payments on revolving
    lines-of-credit                     (4,900,000)   (3,100,000)  (1,000,000)
  Proceeds from revolving
    lines-of-credit                      9,700,000    15,000,000    3,000,000
  Payments on capital lease
    obligations                           (520,923)     (295,330)    (332,828)
  Increase in other non-current assets     (41,505)     (207,558)          --
  (Decrease) increase in other
    non-current liabilities                (25,667)       97,996       13,811
  Issuance of common stock                      --        49,500           --
  Proceeds from exercise of options         21,000       418,868    1,975,518
          Net cash provided by 
          (used in) financing
          activities                     4,232,905    (5,381,762)  (1,617,309)
          (Decrease) increase in cash 
          and cash equivalents          (1,714,864)   (6,499,488)   8,288,865
Cash and cash equivalents: 
  Beginning of year                      2,389,758     8,889,246      600,381

          End of year                 $    674,894   $ 2,389,758  $ 8,889,246

</TABLE>

[FN]

                      The accompanying notes are an integral
                        part of these financial statements.


<PAGE>

                             HIGH PLAINS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Cash Equivalents - High Plains Corporation, the "Company," considers 
     all highly liquid investments with a maturity of three months or less 
     when purchased to be cash equivalents. 

     The Company maintains its cash in bank deposit accounts which, at 
     times, may exceed federally insured limits.  The Company has not 
     experienced any losses in such accounts.  The Company believes it is
     not exposed to any significant credit risk on cash and cash equivalents.

     Inventories - Inventories are stated at the lower of cost (first-in,
     first-out) or market.  During the year ended June 30, 1997, the Company
     began hedging certain commodity transactions related to anticipated
     production requirements.  This was done to reduce risk due to market 
     price fluctuations.  Readily marketable exchange-traded futures 
     contracts were the designated hedge instruments since there is a high 
     correlation between the market value changes of such contracts and the 
     price changes on grain commodities.  Gains or losses arising from open 
     and closed hedging transactions were included as an adjustment to the 
     value of inventories and reflected in cost of products sold in the 
     statements of operations when the underlying purchase contracts were 
     fulfilled.  At the end of the year ending June 30, 1998, the Company 
     stopped purchasing futures contracts as hedge instruments, and sold all
     of its then held positions, resulting in a loss of approximately $1.6 
     million.

     Property, Plant and Equipment - Property, plant and equipment are 
     recorded at cost.  The cost of internally-constructed assets includes 
     direct and allocable indirect costs.  Plant improvements are 
     capitalized, while maintenance and repair costs are charged to expense 
     as incurred.  Periodically, a plant or a portion of a plant's equipment
     is shut down to perform certain maintenance projects which are expected
     to improve the operating efficiency of the plant over the next year.
     These expenses are generally incurred once a year and thus are
     capitalized and amortized over the future 12-month period benefited.
     Included in prepaid expenses at June 30, 1998 and 1997 were $-0- and
     $220,523, respectively, of these expenditures.

     Provisions for depreciation of property, plant and equipment are
     computed using the straight-line method over the following estimated
     useful lives:

<TABLE>
                   <S>                       <C>
                   Ethanol plants            5 - 40 years
                   Other equipment           5 - 10 years
                   Office equipment          3 - 10 years
                   Leasehold improvements         5 years

</TABLE>
                                    (Continued)


<PAGE>


                             HIGH PLAINS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Whenever events or changes in circumstances indicate that the carrying
     amount of a long-lived asset may not be fully recoverable, the Company
     reviews that asset for impairment.  Scheduled future expirations of
     state incentive payments and federal fuel tax incentive programs are
     not considered to be such an event or change because of the
     government's history of extending the expirations of these incentives.

     Capitalized Interest - The Company capitalized interest of $46,147 in
     1998 as part of the cost of construction and refurbishing at the
     Portales, New Mexico facility and $115,585 in interest in 1997 as part
     of the cost of construction at the York, Nebraska facility.

     Equipment Held for Resale - The Company acquired ethanol processing
     equipment located in New Iberia, Louisiana to be utilized in the
     construction of the York, Nebraska facility.  Amounts allocated for
     equipment not utilized for the Nebraska facility are recorded as
     equipment held for resale and these amounts are decreased as sales
     occur.  Management expects a gain upon its ultimate disposition and,
     accordingly, no loss has been provided for.

     Deferred Loan Costs - The Company incurred certain costs in connection
     with obtaining financing.  The Company is amortizing these costs over
     sixty months, the life of the debt.

     Fair Value of Financial Instruments - The fair values of financial
     instruments recorded on the balance sheet are not significantly
     different from the carrying amounts.

     Income Taxes - The Company uses an asset and liability approach to
     financial accounting and reporting for income taxes.  Deferred income
     tax assets and liabilities are computed annually for differences
     between the financial statement and tax bases of assets and liabilities
     that will result in taxable or deductible amounts in the future based
     on enacted tax laws and rates applicable to the periods in which the
     differences are expected to affect taxable income.  Valuation
     allowances are established when considered necessary to reduce deferred
     tax assets to the estimated amount expected to be realized.  Income tax
     expense is the tax payable or refundable for the period plus or minus
     the change during the period in deferred tax assets and liabilities.
     Under FASB Statement No. 109, Accounting for Income Taxes, (FAS 109)
     the tax benefit from utilization of loss carryforwards is not reflected
     as an extraordinary item.

                                 (Continued)


<PAGE>

                             HIGH PLAINS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Deferred Compensation - Under the Employee Stock Purchase Plan (Note 9),
     compensation is recognized as an expense in the period in which the
     employee performs the services, which is generally the period over
     which the stock appreciation is vested or earned.  With the exception
     of certain officers, the participating employees must continue to work
     for five years to acquire the full amount of the stock.  Compensation
     expense attributable to future services has been recorded as deferred
     compensation in the equity section of the balance sheets and is
     amortized over the period of future services.  Officers who have ten
     years of continuous service are allowed to prepay their obligation and
     receive the stock immediately and thus, the compensation attributable
     to their election is recognized immediately upon their election to
     participate in the plan.

     Stock-Based Compensation - The Company has chosen to continue to
     account for stock-based compensation for employees using the intrinsic
     value method prescribed in Accounting Principles Board Opinion No. 25,
     Accounting for Stock Issued to Employees, and related Interpretations.
     Accordingly, compensation cost for stock options is measured as the
     excess, if any, of the quoted market price of the Company's stock at
     the date of grant over the amount an employee must pay to acquire the
     stock.  However, the Company accounts for stock-based compensation for
     non-employees as provided under FASB Statement No. 123, Accounting for
     Stock-Based Compensation (FAS 123).  The fair value of the option grant
     is estimated on the date of grant using the Black-Scholes option
     pricing method.

     Earnings Per Share - The Company implemented FASB Statement No. 128,
     Earnings Per Share (FAS 128) for the interim periods and years ended
     after December 15, 1997.  Under FAS 128, the presentation of primary
     earnings per share (EPS) is replaced by the "basic" EPS.  Basic per
     share amounts are computed by dividing net (loss) income by the
     weighted average number of common shares outstanding.  In addition, a
     diluted EPS continues to be required and is computed similarly to
     "fully diluted" EPS as defined under APB Opinion No. 15 (See Note 11).
     Also, in accordance with FAS 128, the Company has restated all prior
     period EPS data presented in these financial statements.

     Recently Issued Accounting Standards - At June 30, 1998, pronouncements
     issued by the Financial Accounting Standards Board with future
     effective dates are either not applicable or not material to the
     financial statements of the Company.

                                  (Continued)


<PAGE>

                             HIGH PLAINS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Management Restructuring Costs - These costs include severance expenses
     related to management changes during fiscal year ending 1998.

     Estimates - The preparation of financial statements in conformity with
     generally accepted accounting principles requires management to make
     estimates and assumptions that affect:  1) the reported amounts of assets
     and liabilities, 2) disclosures such as contingencies, and 3) the 
     reported amounts of revenues and expenses included in such financial 
     statements.  Actual results could differ from those estimates.

     Contingencies - In the normal course of business, the Company becomes
     party to litigation and other contingencies that may result in loss or 
     gain contingencies.  The Company follows Statement of Financial Accounting
     Standards No. 5 , Accounting for Contingencies.  Under FAS No. 5, loss 
     contingencies are accrued if available information
     indicates that it is probable that a loss is incurred and the amount of
     such loss can be reasonably estimated.


 2.  DESCRIPTION OF BUSINESS

     Ethanol Production Business - The Company's principal business is the
     operation of three plants in Kansas, Nebraska and New Mexico for the
     distillation and production of industrial grade and fuel grade ethanol
     for sale to customers concentrated primarily in the Western United
     States for mixture with gasoline to be used as a motor fuel.  The
     Portales, New Mexico plant was acquired in December 1997.  The facility
     had been closed for approximately two years, was refurbished, and began
     operations in March 1998.  The Company's operations are dependent upon
     state governmental incentive payments.  Kansas production incentive
     payments recorded as product sales and revenues in the accompanying
     financial statements were $1,126,386 for fiscal 1996, $1,160,141 for
     fiscal 1997 and $1,238,545 for fiscal 1998.  The Kansas incentive
     program is currently scheduled to expire July 1, 2001.

     The State of Nebraska offers a transferable production tax credit in
     the amount of $.20 per gallon of ethanol produced for a period of sixty
     months from date of first eligibility.  The credit is only available to
     offset Nebraska motor fuels excise taxes.  The Company transfers these
     credits to a Nebraska gasoline retailer which then reimburses the
     Company for the credit amounts less a handling fee.  Not less than two
     million gallons and not more than twenty-five million gallons of
     ethanol produced annually at the Nebraska facility are eligible for the
     tax credit.  The Company will no longer be eligible for this credit
     after December 31, 1999.  Nebraska production tax credit amounts
     recorded as revenues in the accompanying financial statements were
     $4,428,437 in fiscal 1996, $4,019,584 in fiscal 1997 and $5,069,722 in
     fiscal 1998.

                                  (Continued)


<PAGE>

                             HIGH PLAINS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


 2.  DESCRIPTION OF BUSINESS (CONTINUED)

     The market for the Company's ethanol product is affected by the Federal
     government's excise tax incentive program.  This program, originally
     scheduled to expire in 2000, has been extended to December 31, 2007.
     Under this program, gasoline distributors who blend gasoline with
     ethanol receive a federal excise tax rate reduction for each blended
     gallon, resulting in an indirect pricing incentive to ethanol.  Under
     the recent extension, the current tax rate reduction equals $.054 per
     blended gallon containing 10% or more ethanol by volume.
     Alternatively, blenders may currently claim an income tax credit of
     $.54 per gallon of ethanol blended with gasoline.  However, in 2001,
     the tax rate reduction begins to decrease over the remaining life of
     the program.  The rate decreases to $.053 in 2001, $.052 in 2003 and
     $.051 in 2005.  The market for the Company's product is also affected
     through Federal regulation by the Environmental Protection Agency under
     the Clean Air Act and the Reformulated Gasoline Program.

     Shut Down of Plant Operations - Due to increasing corn and milo-
     feedstock prices, management temporarily suspended operations at both
     its York and Colwich facilities in May 1996.  The Company had forward
     contracted grain purchases to insure the availability of grain needed
     for its production process at a fixed price.  These contracts would
     have allowed continued operations through approximately August 1997.
     Due to grain prices rising to record levels in excess of the forward
     contracted levels, the Company sold all of its forward grain contracts
     for approximately $14 million after commissions. Expenses incurred
     prior to the year ending June 30, 1996 to fill these contracts were
     estimated to be approximately $2.5 million.  The Colwich facility
     reopened in September 1996, and the York facility reopened in October
     1996.

     Business Acquisition - In December 1997, the Company acquired an idle
     ethanol production facility in Portales, New Mexico.  The purchase,
     which had a total acquisition cost of $4,000,000, was funded from
     additional borrowings on the Company's reducing revolving line-of-
     credit (see Note 5).  The purchase was accounted for under the purchase
     method of accounting.  Accordingly, the purchase price was allocated to
     the net assets acquired based upon their estimated fair values as shown
     below.  The results of operations of the acquired facility are included
     in the financial statements beginning from the acquisition date.

<TABLE>
                         <S>            <C>
                         Land           $  110,000
                         Building          890,000
                         Equipment       3,000,000

                                        $4,000,000

                                 (Continued)


<PAGE>

                             HIGH PLAINS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


 2.  DESCRIPTION OF BUSINESS (CONTINUED)

     Year 2000 Issue - The Company is currently working to resolve any
     potential impact of the Year 2000 on the processing of date-sensitive
     information by the Company's computerized information systems.  Based
     on preliminary information, costs of addressing potential corrections
     are not currently expected to have material adverse impact on the
     Company's financial position, results of operations or cash flows in
     future periods.  However, if the Company, its customers or vendors are
     unable to resolve such processing issues in a timely manner, it could
     result in material financial risk.  Accordingly, the Company plans to
     devote the necessary resources to resolve all significant Year 2000
     issues in a timely manner.


 3.  NOTES RECEIVABLE

     In January 1995, the Company disposed of its engineering division, and
     certain property assets associated with the division were transferred
     to the former officer who took over the operations under a separate,
     unrelated company.  This company and former officer agreed to pay
     $300,000 and $100,000, respectively, in notes, plus interest at 9.75%
     over 45 months.  The remaining balances on these notes receivable were
     $31,307 and $-0- at June 30, 1998 and $119,370 and $39,789 at June 30,
     1997, respectively.  These notes are secured by the property
     transferred and the former officer's personal guarantee.


 4.  INVENTORIES

     Inventories consisted of:

</TABLE>
<TABLE>
<CAPTION>
                                                      June 30,
                                               1998             1997
        <S>                                <C>             <C>

        Raw materials                      $ 1,463,536     $    957,894
        Work-in-process                        529,246          396,747
        Finished goods                       3,437,794        2,149,904
        Spare parts                            897,656          664,530
        Adjustment to cost for
          hedged grain inventory                    --           77,708

                                           $ 6,328,232     $  4,246,783

</TABLE>
                                   (Continued)


<PAGE>


                             HIGH PLAINS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


 5.  REVOLVING LINES-OF-CREDIT

     On December 11, 1997, the Company amended its existing loan agreement
     with the bank.  This amendment increased the credit available on its
     two lines-of-credit for the purpose of providing additional working
     capital and to fund the Company's acquisition of an ethanol production
     facility in New Mexico.  The lines-of-credit have an interest rate
     option equal to the bank's prime rate or a rate based on the LIBOR
     rate, whichever the Company elects.

     Revolving lines-of-credit consisted of:

<TABLE>

<CAPTION>
                                        1998                               1997
                                      Interest                           Interest
                        Outstanding     Rate    Expiration   Outstanding   Rate    Expiration

<S>                     <C>            <C>       <C>         <C>          <C>       <C>        
Revolving line-         $ 2,000,000    7.94%     09/30/98    $ 2,300,000  8.14%     01/08/98                        
of-credit has a           2,000,000    7.97%     12/31/98      1,700,000  8.50%       N/A 
maturity of               2,000,000    8.00%     01/08/99             --                        
January 8, 1999
                        $ 6,000,000                          $ 4,000,000  

Reducing                $ 6,000,000    7.94%     09/30/98    $ 9,350,000  8.14%      01/08/98
revolving line-             850,000    7.94%     09/30/98        550,000  8.02%      09/30/97
of-credit has a             850,000    8.00%     12/31/98             --   
maturity of               5,000,000    8.00%     01/08/99             --       
January 10, 2002 
                        $12,700,000                           $ 9,900,000 

</TABLE>

     At June 30, 1998, all interest rates are LIBOR-based rates with their
     respective maturity dates as disclosed above.  For the year ended June 30,
     1997, all interest rates are LIBOR-based rates except the
     outstanding balance of $1,700,000 which bears interest at a prime rate
     of 8.5%.

                                 (Continued)

<PAGE>

                             HIGH PLAINS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


 5.  REVOLVING LINES-OF-CREDIT (CONTINUED)

     The maximum availability under the lines-of-credit as set forth above
     is limited so that the amount of collateral securing the lines at all
     times exceeds the outstanding balances by a ratio of at least 2 to 1.
     The maximum availabilities under the revolving and reducing lines-of-
     credit at June 30, 1998 were $6,500,000 and $13,100,000, respectively.
     Therefore, at June 30, 1998, the available, unused amount in the
     combined lines-of-credit was $900,000.  The maximum availability under
     the reducing revolving line-of-credit decreases each calendar quarter
     by $850,000.  Therefore, the Company can expect to pay at least
     $3,000,000 on this line-of-credit in the next fiscal year.  This amount
     is included in the current maturities of the lines-of-credit on the
     balance sheet.

     Collateral on the lines as amended under the new agreement includes all
     eligible receivables, inventory, general intangibles, property and
     equipment located at the Company's three ethanol facilities, and the
     Company's rights to payments under present or future production
     incentive contracts from the Ethanol Plant Production Credit Agreement
     with the State of Nebraska.

     The financing agreement contains various restrictions, including the
     maintenance of certain financial ratios, fulfilling certain net worth
     and indebtedness tests, and capital expenditure limitations.  At June 30,
     1998, the Company was in violation of certain covenants; however,
     on September 24, 1998, the bank has waived its rights to declare the
     debt due and payable based on these covenant violations through June 30,
     1999.


 6.  LEASES

     Sale - Leaseback Transaction - On December 12, 1996, the Company sold
     certain processing equipment for the production of industrial grade
     ethanol for $3,128,676 and concurrently entered into an agreement to
     lease the property back at $54,191 per month through December 12, 2002.
     The sale of equipment was recorded resulting in a gain of $87,447 which
     was deferred and will be recognized over a period not to exceed the
     six-year term of the lease agreement.  The lease has been classified as
     a capital lease.  The equipment under lease is included in ethanol
     plants totaling $3,128,676, less accumulated depreciation of $195,944,
     for a net book value of $2,932,732 at June 30, 1998.

                                  (Continued)


<PAGE>


                             HIGH PLAINS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


 6.  LEASES (CONTINUED)

     Other Capital Leases - The Company also leases various processing and
     office equipment under long-term agreements which have been classified
     as capital leases.  The leases have terms of three years or less, and
     expire through 2001.  As of June 30, 1998, cost and accumulated
     depreciation on equipment under capital leases amounted to $116,585 and
     $26,934, for a net book value of $89,651.  At June 30, 1997, cost and
     accumulated depreciation on equipment under capital leases amounted to
     $284,068 and $29,568, for a net book value of $254,500.

     Operating Leases - The Company leases 100 railroad cars under an
     operating lease expiring in fiscal year ending June 30, 1999.  Annual
     rentals are $618,000 for all 100 cars.  The Company also leases 32 cars
     under an operating lease expiring in June 30, 2002.  Annual rentals are
     $213,120 for all 32 cars.  The Company leases an additional 57 railroad
     cars under various operating leases expiring through fiscal year ending
     June 30, 2003.  These rail car leases require the Company to pay
     certain executory costs.  Corporate offices are also under a 5-year
     lease expiring in 2003 that requires annual rentals of $31,000.  Rent
     paid during the years ended June 30, 1998, 1997 and 1996 was
     $1,213,699, $977,449 and $865,941, respectively.

     Future Minimum Lease Payments - The following is a schedule of future
     minimum lease payments for capital leases and operating leases as of
     June 30, 1998.

<TABLE>
<CAPTION>
                                                Capital          Operating
       Year Ending June 30                       Leases            Leases
              <S>                            <C>                <C>
              1999                           $   672,749        $ 1,060,799
              2000                               658,644            350,959
              2001                               650,819            326,239
              2002                               650,290            313,879
              2003                               325,145             86,562

       Total minimum lease payments            2,957,647        $ 2,138,438
       Less amount representing interest         454,172

       Present value of net minimum
         lease payments                        2,503,475

       Less current maturities                   500,852

                                             $ 2,002,623

</TABLE>
                                   (Continued)

<PAGE>


                             HIGH PLAINS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


 7.  COMMITMENTS

     Forward Contracts - The Company periodically enters into forward
     contracts with suppliers and customers on both the purchase of grain
     and the sale of ethanol and DDG.  At June 30, 1998, the Company had
     forward contracts to purchase approximately 2,890,643 bushels of milo
     and corn at fixed prices totaling $7,142,661 with delivery dates of
     July 1998 through March 1999.  An additional 641,185 bushels were held
     under contracts for delivery, however, at June 30, 1998, no prices had
     been set.  The unpriced contracts are for deliveries from July through
     December 1998. The Company had forward contracts to sell 60,395 tons of
     DDG at fixed prices totaling approximately $4,769,785.  No losses were
     expected on these contracts.

     During 1998, the Company also entered into a contract to sell carbon
     dioxide, a production by-product, to another company.  The contract
     requires the Company to supply at least 200 tons of carbon dioxide gas
     per day from its York, Nebraska plant through 2008.

     Retirement and Consulting Agreement - On April 11, 1997, the Company
     entered into an agreement with the former President and Chairman of the
     Board to provide a retirement benefit package and consulting agreement
     for future services.  As part of the retirement package, the Company
     agreed to grant (on August 1, 1997) 14,000 non-qualified options at an
     exercise price equal to one-half of the lowest closing price achieved
     by the Company's stock between May 1, 1997 and August 1, 1997.

     In consideration for future consulting services to be provided by the 
     former President, the Company agreed to make payments equal to the amounts
     required under his former employment contract, which would have expire
     July 1, 2000. At June 30, 1998, this totaled $265,983 plus annual bonuses
     of 2% of net income before taxes.  The Company also agreed to grant the
     former President 50,000 non-qualified stock options on each April 11, 1997,
     1998 and 1999 at the then closing stock price.

     For compensation expenses recorded on the 64,000 and 50,000 shares
     issued in 1998 and 1997, respectively, see Note 9.

                                  (Continued)


<PAGE>

                             HIGH PLAINS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


 8.  INCOME TAXES

     For Federal income tax purposes at June 30, 1998, the Company had a net
     operating loss carryforward of approximately $21,422,000 and
     approximately $5,856,000 of federal general business tax credit
     carryforwards, which, if not used, will expire as follows:

<TABLE>
<CAPTION>
               Expires in            Operating          Net General
               Fiscal Year          Loss Amount        Business Credit
                 Ending             Carryforward        Carryforward
                  <S>               <C>                 <C>
                  1999              $        --         $ 1,263,000
                  2000                       --               7,000
                  2001                       --              86,000
                  2002                       --                  --
                  2003                5,409,000                  --
                  2004                1,553,000                  --
                  2005                  992,000           4,500,000
                  2008                    3,000                  --
                  2009                    3,000                  --
                  2010                  481,000                  --
                  2012                4,893,000                  --
                  2013                8,088,000                  --

                                    $21,422,000         $ 5,856,000
</TABLE>

     The general business credits expiring in fiscal 1999-2002 are
     investment tax credits and the credits expiring in fiscal 2005 are
     small ethanol producer tax credits.  In the event these credits would
     expire, the Company would receive a deduction of 50% of the investment
     tax credit and 100% deduction of the small ethanol producer credit in
     the year of expiration.

     The Company also has a Nebraska investment credit carryforward of
     $4,894,000, expiring in fiscal 2009, which may be used to offset taxes
     in the State of Nebraska.

                                 (Continued)


<PAGE>

                             HIGH PLAINS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


 8.  INCOME TAXES (CONTINUED)

     The tax net operating loss carryforward and federal tax credit
     carryforwards discussed above and other matters result in deferred tax
     assets under FAS 109 totaling $20,126,000 at June 30, 1998 (see below).
     The book basis of property, plant and equipment in excess of its tax
     basis results in an offsetting deferred tax liability of $15,069,000,
     and the valuation allowance offsets an additional $5,057,000, leaving
     no net deferred tax assets at June 30, 1998.  Future tax expenses, if
     any, may be offset, at least in part, by net increases in future tax
     assets (including changes in the valuation allowance) to the extent
     that such assets exceed the amounts of future deferred tax liabilities.
     The Company expects to continue annually to provide for a reasonable
     valuation allowance, to reduce deferred tax assets as needed until such
     time as future taxable income is generated or assured (if ever).

     Income taxes consisted of:
<TABLE>
<CAPTION>
                                                     June 30,
                                        1998           1997          1996
<S>                                <C>            <C>            <C>
Current tax (benefit) expense      $   (94,340)   $   (18,895)   $   355,256

Tax effect of changes in
  deferred tax assets
  and liabilities:
  Book basis of plant and
    equipment in excess of
    tax basis                        1,751,000      3,354,000      2,652,000
  Nondeductible accrued expenses       (97,000)       239,000       (303,000)
  (Increase) decrease in net 
    operating loss carryforward     (3,163,000)    (2,979,000)     1,588,000
  (Increase) decrease in tax 
    credits carryforward                 1,000        (80,000)        80,000
  Increase in Nebraska investment 
    credit carryforward               (366,000)      (931,000)      (170,000)
  AMT credit carryforward
    and other                         (122,000)       258,000       (230,000)
  Change in asset valuation
    allowance                        1,996,000        139,000     (3,617,000)

Deferred tax expense                        --             --             --

Income tax (benefit) expense       $   (94,340)   $   (18,895)   $   355,256

</TABLE>
                                 (Continued)

<PAGE>

                             HIGH PLAINS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


 8.  INCOME TAXES (CONTINUED)

     A reconciliation between the actual income tax expense and income taxes
     computed by applying the statutory Federal income tax rate to earnings
     before income taxes is as follows:

<TABLE>
<CAPTION>
                                                       June 30,
                                           1998          1997         1996
     <S>                               <C>           <C>          <C>
     Computed income tax (benefit)
       expense, at 34%                 $(1,253,672)  $  582,894   $ 4,139,953
     Utilization of net operating
       loss carryforwards                       --     (582,894)   (4,139,953)
     Increase in valuation allowance     1,253,672           --            --
     Alternative minimum tax                    --           --       239,256
     Other, net                            (94,340)     (18,895)      116,000

     Total income tax (benefit)
       expense                         $   (94,340)  $  (18,895)  $   355,256

</TABLE>

     The Company has deferred income tax liabilities and assets arising from
     the following temporary differences and carryforwards:

<TABLE>
<CAPTION>
                                                              June 30,
                                                         1998         1997
     <S>                                             <C>          <C>
     Deferred tax liabilities:
       Book basis of property,
         plant and equipment in
         excess of tax basis                         $15,069,000  $13,318,000

     Deferred tax assets:
       Net federal and state operating
         loss carryforwards                          $ 8,673,000  $ 5,510,000
       Nebraska investment credit
         carryforward                                  4,894,000    4,528,000
       General business credit carryforward            5,856,000    5,857,000
     AMT credit carryforward and other                   542,000      420,000
     Nondeductible accrued expenses                      161,000       64,000

                                                      20,126,000   16,379,000

     Less:  Valuation allowance                        5,057,000    3,061,000

                                                     $15,069,000  $13,318,000

     Net deferred income taxes                       $        --  $        --

</TABLE>

                                  (Continued)


<PAGE>

                             HIGH PLAINS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


 9.  STOCK-BASED COMPENSATION

     The Company has three stock-based compensation plans which are
     described below.  Grants to employees under those plans are accounted
     for following APB Opinion No. 25.  Accordingly, no compensation cost
     has been recognized for options granted to employees in the financial
     statements, except under the employee stock purchase plan where
     compensation expense equals the excess of the fair market value of the
     shares over the exercise price on the grant date.  Grants to non-
     employees under the plans are accounted for under FAS 123.  For the
     64,000 and 50,000 options granted to a non-employee in the years ended
     June 30, 1998 and 1997, $89,495 and $78,868, respectively, were
     recognized as compensation expense.  Had compensation cost for all the 
     stock-based compensation plans been determined based on the fair value
     grant date, consistent with the provisions of FAS 123, the Company's
     net earnings and earnings per share would have been reduced to the 
     proforma amounts below:

<TABLE>
<CAPTION>

                                       1998          1997           1996
          <S>                       <C>            <C>           <C>
          Net (loss) earnings:
            As reported             $(3,592,930)   $ 1,733,290   $11,821,077
            Pro forma                (3,866,883)     1,381,750    10,302,658
          (Loss) earnings
            per share:
            As reported             $      (.22)   $       .11   $       .74
            Pro forma                      (.24)           .09           .65

</TABLE>

     Fixed Stock Option Plans - The Company has two fixed option plans under
     which it may grant options to key employees, officers and directors to
     purchase common stock, with a maximum term of 10 years, at the market
     price on the date of grant.  Options up to 1,200,000 shares may be
     granted under the 1990 plan and options up to 3,000,000 shares may be
     granted under the 1992 plan.  All options are 100% vested at the date
     of grant.  The fair value under FAS 123 of each option granted is
     estimated on the date of grant using the Black-Scholes option pricing
     model with the following weighted average assumptions for 1998, 1997
     and 1996:  dividend rate of 0% for all years; price volatility of
     40.91%, 51.47% and 51.49%; risk-free interest rates of 5.7%, 6.6% and
     6.26%; and expected lives of 3 years, 5 years and 4 years.

                                 (Continued)


<PAGE>

                             HIGH PLAINS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


 9.  STOCK-BASED COMPENSATION (CONTINUED)

     A summary of the status of the two fixed plans at June 30, 1998, 1997
     and 1996 and changes during the years then ended is as follows:

<TABLE>
<CAPTION>

                          1998               1997                1996
                            Weighted-             Weighted-           Weighted-
                   Number   Average     Number    Average      Number   Average
                     of     Exercise      of      Exercise       of    Exercise
                   Shares   Price       Shares    Price        Shares  Price
<S>               <C>       <C>        <C>       <C>         <C>       <C> 
Outstanding and
exercisable at 
beginning of year 1,818,193 $ 5.6612   2,175,154 $ 5.7334    1,964,675 $ 4.7652
Granted             496,325   4.5781     204,333   3.9377      986,821   5.1525
Exercised            14,000     1.50     124,333   3.3689      776,342   2.5447
Expired or 
surrendered         504,600   5.4832     436,961   5.8665           -- 

Outstanding and 
exercisable at 
end of year       1,795,918   5.4443   1,818,193   5.6612    2,175,154   5.7334

Weighted average 
fair value per 
option of options 
granted during
the year                $     .71           $     2.04            $     2.38

</TABLE>

     The following table summarizes information about the outstanding
     options at June 30, 1998:

<TABLE>
<CAPTION>
                                                Weighted-     Weighted-
                                                 Average       Average
                                   Number       Remaining      Exercise
     Range of Exercise Prices    Outstanding      Life           Life
         <S>                       <C>            <C>          <C>
         $2.37 to $2.63            111,000        7.7          $ 2.484
         $3.19 to $4.81            442,200        6.2            3.556
         $5.12 to $5.63            810,718        4.2            5.334
              $8.34                432,000        5.7            8.344

                                 1,795,918

</TABLE>
                                  (Continued)


<PAGE>

                             HIGH PLAINS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


 9.  STOCK-BASED COMPENSATION (CONTINUED)

     The Company's 1990 and 1992 Stock Option Plans were approved for
     modification at the Company's November 1994 annual meeting of
     stockholders.  The approved amendments provide that when optionees
     exercise their options and remit the exercise payment to the Company,
     they may be granted a one-time option to purchase a like quantity of
     Common Shares as those options exercised (Reload Options).  The Reload
     Options shall have an exercise price equal to the closing sales price
     of the Company's Common Stock on the day in which the original options
     were exercised, and shall have an exercise period that extends to the
     later of one year from the date of grant of the Reload Option or the
     expiration date of the originally exercised option.  Options subject to
     reload included in total outstanding options at June 30, 1998 totaled
     1,142,000 shares.  These have a weighted average exercise price of
     $5.97.

     Employee Stock Purchase Plan - In August, 1995 the Company adopted a
     compensatory Employee Stock Purchase Plan, effective for a 3-year
     period, to provide employees of the Company with an incentive to remain
     with the Company and an opportunity to participate in the growth of the
     Company.  The plan is administered by the Company's Board of Directors.
     Employees with one year of service are able to elect annually to
     purchase shares of the Company's common stock at a price equal to 50%
     of its lowest market value recorded between May 1 and August 1 of each
     calendar year.  The aggregate number of shares which may be purchased
     under the plan shall not exceed 80,000 as adjusted for stock splits or
     stock dividends.

     Employees must elect to purchase a designated number of shares on or
     before May 15 of each calendar year, except that the election for the
     first year may be made on or before January 31, 1996.  The number of
     shares that may be purchased by each employee is limited to 100 shares
     per year of service.  The shares are paid for by the participating
     employees through payroll deductions ratably over a five-year period
     and prepayment is not permitted.  The employee vests in the shares over
     the same five-year period based on the amounts paid.  Shares are
     transferred to the employee only at the end of the five-year period.
     Compensation cost is measured on August 1 of each year, which is the
     first date that both the purchase price and the number of shares are
     known.  The amount of compensation measured on the measurement date is
     recorded as deferred compensation and charged to expense over the
     periods in which the employee performs the related services, which is
     the same as the vesting period.

                                   (Continued)


<PAGE>

                             HIGH PLAINS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


 9.  STOCK-BASED COMPENSATION (CONTINUED)

     The Company also adopted a stock purchase plan for certain key
     management personnel, which is similar to the above plan, except that
     the aggregate number of shares available shall not exceed 250,000 and
     the employee is limited to 1,000 shares plus an additional 1,000 shares
     for each year of service.  Vesting is the same as above except that any
     employee who is also an officer of the Company and who has achieved at
     least ten continuous years of employment shall have the option to
     prepay any balance due for shares purchased under the plan.  At that
     time, the Company will immediately transfer said shares to the
     employee.  The amount of compensation measured for this key management
     employee plan is on the same measurement date as set forth above for
     the employee plan.  Deferred compensation is recorded and charged to
     expense over the five-year vesting period except for those officers
     eligible to prepay.  For those officers, the expense is recognized
     immediately upon the measurement date.

     Employees and key management personnel elected to purchase 87,600 and
     75,700 shares with an exercise price per share of $1.50 and $2.50
     through the stock purchase plan in 1997 and 1996, respectively.  The
     related deferred compensation recorded at June 30, 1997 and 1996
     totaled $273,750 and $141,937, respectively.

     Amortization of the deferred compensation recognized in the income
     statement was $46,204, $107,923 and $53,230 for the periods ending
     June 30, 1998, 1997 and 1996, respectively.  Forfeitures of shares in
     1998 from employee terminations totaled 20,562 shares under the 1996 and
     1995 purchase years.  The fair value under FAS 123 of each purchased share
     is estimated on the date of grant using the Black-Scholes option pricing
     model with the following assumptions: expected life of 5 years for all 
     years; dividend rate of 0% for all years; risk-free interest rates of 6.8%
     and 5.6% in 1997 and 1996, and price volatility of 53% in 1997 and 1996. 
     The weighted average fair value per share granted would be $3.09 in 1997 
     and $2.91 in 1996.

                                  (Continued)


<PAGE>

                             HIGH PLAINS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


10.  MAJOR CUSTOMERS

     Sales to individual customers of 10% or more of net sales and revenues
     are as follows:
<TABLE>
<CAPTION>

                                                         Trade Accounts
                                                       Receivable Balance at
               Sales During the Year Ended June 30,          June 30,
Customer        1998         1997         1996            1998          1997

   <S>      <C>           <C>           <C>           <C>          <C>
   A        $17,956,247   $12,532,761   $        --   $  453,866   $   421,759
   B         15,255,183            --            --       559,299           --
   C          8,666,195     6,460,989     8,553,353       635,603      425,999
   D                 --     8,653,840    11,356,458            --      594,879
   E                 --            --    13,917,311            --           --

            $41,877,625   $27,647,590   $33,827,122   $ 1,648,768  $ 1,442,637

</TABLE>

11.  EARNINGS PER SHARE

     Basic earnings per share is computed by deducting from net earnings or
     adding to net losses the income not available to common stockholders
     and dividing the result by the weighted average number of shares
     outstanding during the period.

     Diluted earnings per share is computed by increasing the weighted
     average shares outstanding by the number of additional shares that
     would have been outstanding if all dilutive potential common shares had
     been issued, unless the effect is to reduce the loss or increase the
     income per common share outstanding.

<TABLE>
<CAPTION>
                                               For the Year Ended 1998
                                         Loss        Shares      Per Share
                                     (numerator) (denominator)    Amount
     <S>                             <C>            <C>           <C>
     Basic EPS:
       (Loss) income available to 
         common stockholders         $(3,592,930)   16,095,443    $ (.22)

     Diluted EPS:
       (Loss) income available to 
         common stockholders plus
         assumed conversions         $(3,592,930)   16,095,433    $ (.22)

</TABLE>

                                  (Continued)


<PAGE>

                             HIGH PLAINS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


11.  EARNINGS PER SHARE (CONTINUED)

     Options outstanding at June 30, 1998 to purchase 1,795,918 shares of
     common stock with a range of exercise prices from $2.37 to $8.34, were
     not included in the computation of diluted EPS because the options'
     exercise prices were greater than the average market price of the
     common shares.  The options expire over a ten-year period.

<TABLE>
<CAPTION>
                                                 For the Year Ended 1997
                                           Income       Shares      Per Share
                                         (numerator) (denominator)   Amount
     <S>                                 <C>          <C>             <C>
     Basic EPS:
       Income available to
         common stockholders             $1,733,290   15,933,157      $ .11

     Effect of Dilutive Securities
       Stock options                                      90,323

     Diluted EPS:
       Income available to common
         stockholders plus assumed
         conversions                     $1,733,290   16,023,480      $ .11

</TABLE>

     Options outstanding at June 30, 1997 to purchase 1,395,193 shares of
     common stock with a range of exercise prices from $5.63 to $8.34 were
     outstanding during fiscal 1997 but were not included in the computation
     of diluted EPS because the options' exercise prices were greater than
     the average market price of the common shares.

<TABLE>
<CAPTION>

                                                For the Year Ended 1996
                                            Income       Shares     Per Share 
                                          (numerator) (denominator)   Amount
     <S>                                  <C>           <C>            <C>
     Basic EPS:
       Income available to
         common stockholders              $11,821,077   15,736,310     $ .75

     Effect of Dilutive Securities
       Stock options                                       192,095

     Diluted EPS:
       Income available to common
         stockholders plus assumed
         conversions                      $11,821,077   15,928,405     $ .74

</TABLE>

                                  (Continued)


<PAGE>

                             HIGH PLAINS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


11.  EARNINGS PER SHARE (CONTINUED)

     Options outstanding at June 30, 1996 to purchase 1,779,821 shares of
     common stock with a range of exercise prices from $5.25 to $8.34 were
     outstanding during fiscal 1996 but were not included in the computation
     of diluted EPS because the options' exercise prices were greater than
     the average market price of the common shares.


12.  ADDITIONAL INFORMATION FOR STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                          1998        1997          1996
     <S>                              <C>          <C>           <C>
     Interest paid                    $1,656,796   $1,328,310    $2,249,297
     Income taxes paid                        --           --       645,000

     The Company had the following non-cash transactions:

                                          1998        1997          1996
     Purchase of plant and equipment
       in exchange for debt           $    5,000   $3,271,074    $   66,286
     Increase in accrued compensation
       costs at implementation of
       employee stock purchase plan           --      273,750       141,937
     Surrender of common stock in
       lieu of employee payroll
       tax obligations                        --      126,251       493,283
     Increase in additional paid-
       in-capital from tax benefit
       of exercise of stock options           --           --       116,000
     Decrease in deferred compensation
       from employee terminations         51,202       23,260            --
     Acceptance of receivable in
       exchange for sale of property,
       plant and equipment                28,275           --            --

</TABLE>

                                 (Continued)


<PAGE>


                             HIGH PLAINS CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


13.  401(k) PLAN

     The Company adopted a 401(k) Plan on June 1, 1991.  All employees who
     are over the age of 19 and have one year (1,000 hours) of service are
     eligible to participate.  Employees may contribute from 1% to 12% of
     their pay.  The Company matches 100% of the first 1% of employee salary
     deferrals and 50% of the next 5% of employee salary deferrals.  The
     Company contributions to the Plan for the years ended June 30, 1998,
     1997 and 1996 were $37,697, $27,822 and $27,100, respectively.


14.  QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
                                       Year Ended June 30, 1998

                First        Second        Third       Fourth       Fiscal
                Quarter      Quarter      Quarter      Quarter       1998

<S>           <C>          <C>          <C>          <C>          <C>
Net sales
and revenues  $22,570,837  $21,660,983  $19,123,056  $21,508,906  $84,863,782

Gross profit    2,064,738    1,171,191      437,837   (3,544,804)     128,962

Net (loss) 
earnings        1,370,881      405,408     (299,425)  (5,069,794)  (3,592,930)

Net (loss) 
earnings per 
common share:
  Basic       $      0.09  $      0.03  $     (0.02)  $    (0.32) $     (0.22)
  Assuming 
   dilution          0.09         0.03        (0.02)       (0.32)       (0.22)

</TABLE>