FORM 10-Q

                   SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C.  20549


(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

       For the quarterly period ended         September 30, 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 0-13817


                        MARGATE INDUSTRIES, INC.
         ------------------------------------------------------
         (Exact name of registrant as specified in its charter)


        Delaware                                 84-8963939              
----------------------------         ------------------------------------
(State or other jurisdiction         (I.R.S. Employer Identification No.)
of incorporation or organization)


129 N. Main Street      Yale, Michigan                           48097   
----------------------------------------                       ----------
(Address of principal executive offices)                       (Zip Code)


  (Registrant's telephone number, including area code) (810) 387-4300
                                                       --------------

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 September 30, 1998, the Company had 4,503,637 shares of its $.005 Par
Value Common Stock outstanding.

<PAGE>

                        MARGATE INDUSTRIES, INC.

                                FORM 10-Q


                                  INDEX
                                  -----


PART I:   FINANCIAL STATEMENTS                                    PAGE(S)
------    --------------------                                    -------


Item 1.   Financial Information


            Consolidated Balance Sheets. . . . . . . . . . . . . . . 3-4


            Consolidated Income Statement. . . . . . . . . . . . . . . 5


            Consolidated Statements of Changes in
              Stockholders' Equity . . . . . . . . . . . . . . . . . . 6


            Consolidated Statements of Cash Flows. . . . . . . . . . . 7


            Notes to Consolidated Financial
              Statements . . . . . . . . . . . . . . . . . . . . .8 - 10


Item 2.     Management's Discussion and Analysis of Financial
              Condition and Results of Operations. . . . . . . . . . .11


PART II:    OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . .12
-------     -----------------



                                   -2-

<PAGE>

                MARGATE INDUSTRIES, INC. AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS
                -----------------------------------------


                                               September 30,  December 31,
                                                   1998           1997
                                               ------------   ------------
                                                (Unaudited)
ASSETS
------

CURRENT ASSETS

 Cash and cash equivalents                       $1,518,952     $  110,822 

 Accounts receivable                              1,994,155      1,864,240 

 Notes receivable                                   153,350         17,800 

 Inventories - parts and supplies                   164,990         41,991 

 Prepaid expenses and other                          24,865         37,394 

 Prepaid Federal income tax                         104,046         41,000 

 Deferred tax asset                                  12,400         12,400 
                                                 ----------     ---------- 

       Total Current Assets                       3,972,758      2,125,647 

Other                                                52,700         56,764 

Notes receivable                                    430,074              - 

PROPERTY, PLANT AND EQUIPMENT
 At cost net of accumulated depreciation
 and amortization of $1,553,134 and 
 $1,324,045 at September 30, 1998 and
 December 31, 1997, respectively                  3,749,496      4,038,979 
                                                 ----------     ---------- 

       Total Assets                              $8,205,028     $6,221,390 
                                                 ==========     ========== 







See Notes to Consolidated Financial Statements.

                                   -3-

<PAGE>

                MARGATE INDUSTRIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED BALANCE SHEETS (Continued)
                -----------------------------------------


                                               September 30,  December 31,
                                                   1998           1997
                                               ------------   ------------
                                               (Unaudited)

LIABILITIES & STOCKHOLDER'S EQUITY
----------------------------------

CURRENT LIABILITIES

 Notes payable                                   $  868,077     $  626,000 
 Current portion of long-term debt                   84,023        213,832 
 Accounts payable                                   493,069        425,746 
 Accrued salaries and wages                          84,732         63,924 
 Accrued workers' compensation                       15,870          6,870 
 Accrued federal income tax                               -              - 
 Other accrued liabilities                           22,825          5,835 
                                                 ----------     ---------- 

       Total Current Liabilities                  1,568,596      1,342,207 

DEFERRED TAX LIABILITY                              439,700        235,700 
OTHER POSTRETIREMENT BENEFITS                       419,856        419,856 
NOTES PAYABLE - Long-term                           205,446        412,160 

STOCKHOLDERS' EQUITY

 Common stock, $.005 par value per
    share; 25,000,000 shares authorized,
    4,503,637 and 4,573,637 shares issued
    and outstanding at September 30, 1998
    and December 31, 1997, respectively              22,518         22,868 
 Paid in for common stock in excess
    of par value                                  7,363,428      7,410,725 
 Accumulated deficit                             (1,814,516)    (3,622,126)
                                                 ----------     ---------- 

       Total Stockholders' Equity                 5,571,430      3,811,467 
                                                 ----------     ---------- 

       Total Liabilities and
         Stockholders' Equity                    $8,205,028     $6,221,390 
                                                 ==========     ========== 





See Notes to Consolidated Financial Statements

                                   -4-

<PAGE>

                MARGATE INDUSTRIES, INC. AND SUBSIDIARIES
                     CONSOLIDATED INCOME STATEMENTS
                -----------------------------------------
                               (Unaudited)
<TABLE>
<CAPTION>

                               Three Months Ended        Nine Months Ended
                                  September 30,            September 30,
                                1998        1997         1998        1997
                              --------    --------     --------    --------
<S>                          <C>         <C>          <C>         <C>
NET SALES                    $2,523,248  $1,885,119   $7,453,750  $8,032,290 

COST OF SALES                 2,317,488   1,968,191    6,784,808   7,067,655 
                             ----------  ----------   ----------  ---------- 

GROSS PROFIT                    205,760     (83,072)     668,942     964,635 

SELLING, GENERAL AND
 ADMINISTRATIVE EXPENSES        207,368     240,465      613,621     728,525 

RELATED PARTY SERVICES
 AND SALES COMMISSIONS                0           0        4,231      10,808 
                             ----------  ----------   ----------  ---------- 

INCOME (LOSS) FROM OPERATIONS    (1,608)   (323,537)      51,090     225,302 

DIVIDEND AND INTEREST INCOME
 (EXPENSE) NET                    8,690     (26,908)      (4,859)    (86,561)

OTHER (EXPENSE)                       0           0     (143,214)          0 
                             ----------  ----------   ----------  ---------- 

INCOME (LOSS) BEFORE PROVISION
 FOR EXTRAORDINARY ITEM           7,082    (350,445)     (96,983)    138,741 

GAIN ON SALE OF 45% INTEREST
 IN NEW HAVEN FOUNDRY                 0           0    2,075,000           0 

INCOME (LOSS) BEFORE PROVISION
 FOR INCOME TAXES                 7,082    (350,445)   1,978,017     138,741 

PROVISION FOR FEDERAL INCOME
 TAXES                            3,880     116,000      170,407      55,000 
                             ----------  ----------   ----------  ---------- 

INCOME (LOSS)                $    3,202  $ (234,445)  $1,807,610  $   83,741 
                             ==========  ==========   ==========  ========== 

BASIC EARNINGS PER
 COMMON SHARE:               $    0.011  $   (0.051)  $    0.396  $    0.018 

WEIGHTED AVERAGE SHARES
 OUTSTANDING                  4,552,658   4,573,637    4,566,557   4,573,637 
</TABLE>





See Notes to Consolidated Financial Statements.

                                   -5-

<PAGE>

                MARGATE INDUSTRIES, INC. AND SUBSIDIARIES
       CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
       ----------------------------------------------------------
                               (Unaudited)

<TABLE>
<CAPTION>
                                                    NINE MONTHS ENDED SEPTEMBER 30, 1998

                                COMMON STOCK        PAID IN FOR
                              ----------------      COMMON STOCK
                            NUMBER OF               IN EXCESS OF    ACCUMULATED   STOCKHOLDERS'
                             SHARES       AMOUNT      PAR VALUE       DEFICIT        EQUITY
                            --------     --------    -----------     ---------      --------
<S>                         <C>         <C>          <C>            <C>           <C>
Balance - January 1, 1998   4,573,637   $   22,868   $7,410,725     $(3,622,126)  $3,811,467 

Repurchase of common stock    (70,000)        (350)     (47,297)              0      (47,647)

Net income                         --           --           --       1,807,610    1,807,610 
                           ----------   ----------   ----------      ----------   ---------- 

Balance -
     September 30, 1998     4,503,637   $   22,518   $7,363,428     $(1,814,516)  $5,571,430 
                           ==========   ==========   ==========      ==========   ========== 
</TABLE>


<TABLE>
<CAPTION>

                                                   NINE MONTHS ENDED SEPTEMBER 30, 1997

                                COMMON STOCK       PAID IN FOR
                              ----------------     COMMON STOCK
                            NUMBER OF              IN EXCESS OF   ACCUMULATED    STOCKHOLDERS'
                             SHARES      AMOUNT      PAR VALUE      DEFICIT         EQUITY
                            --------    --------    -----------    ---------      --------
<S>                         <C>         <C>          <C>           <C>            <C>
Balance - January 1, 1997   4,573,637   $   22,868   $7,410,725    $(3,771,125)   $3,662,468 

Net income                         --           --           --         83,741        83,741 
                           ----------   ----------   ----------     ----------    ---------- 

Balance -
     September 30, 1997     4,573,637   $   22,868   $7,410,725    $(3,687,384)   $3,746,209 
                           ==========   ==========   ==========     ==========    ========== 
</TABLE>











See Notes to Consolidated Financial Statements.

                                   -6-

<PAGE>

                MARGATE INDUSTRIES, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                -----------------------------------------
                               (Unaudited)

                                                     Nine Months Ended
                                                       September 30,
                                                   1998           1997
                                               ------------   ------------

INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS

OPERATING ACTIVITIES                             $2,241,578     $  612,750 

INVESTING ACTIVITIES:

 Purchase of plant and equipment                   (125,731)      (214,166)
                                                 ----------     ---------- 

Net cash used in investing activities              (125,731)      (214,166)

FINANCING ACTIVITIES:

 Net proceeds (repayments) -
  line of credit (net)                              242,077       (250,000)
 Purchase of common stock                           (47,647)             - 
 Principal payments under
  long-term obligations                            (336,523)      (155,147)
 Proceeds from long-term obligations                      -              - 
 Decrease (increase) notes receivable              (565,624)        13,320 
                                                 ----------     ---------- 

Net cash provided by (used in)
 financing activities                              (707,717)      (391,827)

NET INCREASE (DECREASE) IN CASH AND
 CASH EQUIVALENTS                                 1,408,130          6,757 

CASH AND CASH EQUIVALENTS - Beginning               110,822          2,086 
                                                 ----------     ---------- 

CASH AND CASH EQUIVALENTS - Ending               $1,518,952     $    8,843 
                                                 ==========     ========== 








See Notes to Consolidated Financial Statements.

                                   -7-

<PAGE>

                MARGATE INDUSTRIES, INC. AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               ------------------------------------------

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
      The consolidated Balance Sheet as of September 30, 1998 and the
      related Consolidated Statements of Operations, Changes in
      Stockholders' Equity, and Cash Flows for the nine months ended
      September 30, 1998 and 1997 are unaudited.  In the opinion of
      management, all adjustments necessary for a fair presentation of such
      financial statements have been included.  The results of operations
      for the nine months ended September 30, 1998 and 1997 are not
      necessarily indicative of the results to be expected for the whole
      year.

      The notes to the financial statements are presented as permitted by
      Form 10-Q and do not contain certain information included in the
      Company's annual financial statements.

NOTE 2 - DIVIDENDS
      The Company had paid dividends from 1992 through the second quarter
      of 1995, but suspended dividends thereafter.

NOTE 3 - STATEMENTS OF CASH FLOWS
      A reconciliation of net income to net cash flows provided by
      operating activities is as follows:

                                                       Nine Months Ended
                                                         September 30,
                                                          (unaudited)
                                                      1998           1997
                                                   ----------     ----------

Net income                                         $1,807,610     $   83,741 
Adjustments to reconcile net income to
  net cash from operating activities:
    Depreciation and amortization                     272,000        245,000 
    Loss on disposal of fixed assets                  143,214             -- 
    Changes in assets and liabilities:
      Accounts receivable                            (129,915)        69,833 
      Inventories                                    (122,999)       (37,500)
      Prepaid expenses                                 12,529          9,986 
      Prepaid Federal tax                             (63,046)       270,870 
      Other assets                                      4,064         15,271 
      Accounts payable                                 67,323        (88,469)
      Accrued workers' compensation                     9,000          5,996 
      Accrued salaries and wages                       20,808           (462)
      Deferred income tax                             204,000              - 
      Other liabilities                                16,990         38,454 
                                                   ----------     ---------- 

        Net cash provided (used) by
          operating activities                     $2,241,578     $  612,720 
                                                   ==========     ========== 

                                   -8-

<PAGE>

NOTE 4 - EARNINGS PER SHARE
      The weighted average number of shares used to compute the net income
      per shares was 4,566,567 and 4,573,637 fully diluted for the nine 
      month periods ended September 30, 1998, respectively.

NOTE 5 - NOTES PAYABLE
      Notes payable consist of the following at September 30, 1998:

      Note payable bank, due in monthly principle
      installments of $7,583, plus interest at
      prime in payment of loan guarantee for
      investment in CEDS, uncollateralized,
      maturing January 1999.                           $  30,333

      Capital Lease - Yale - due in monthly
      installments of $868.48 including interest
      at 9.0% maturing September 2001.                    24,337

      Note payable Ft. Atkinson, due in monthly
      installments of $3,992, including interest
      at 4% through July 2003.                           216,705

      Capital lease - Ft. Atkinson - due in
      monthly installments of $705 including
      interest at 17.9% through July 2001.                18,094
                                                       ---------

                                                         289,469
      Less current portion                                84,023
                                                       ---------
                                                       $ 205,446

      Maturities of notes payable obligations are as follows:

          Year ended September 30:
               1999:                                   $  84,023
               2000:                                      56,628
               2001:                                      56,954
               2002:                                      45,049
               2003:                                      46,815
                                                       ---------

                                                       $ 289,469
                                                       =========

      The Company maintains a bank line-of-credit of $1,300,000 for working
      capital requirements.  The applicable interest rate is at 1/2% below
      the prime lending rate, currently 8.5% at September 30, 1998.  The
      line-of-credit is secured by all accounts receivable, inventories and
      equipment of the Company.  Additionally, certain required financial
      ratios must be maintained.  The Company is in compliance with all
      covenant requirements as of September 30, 1998.  The Company has
      borrowings against the line of $868,077 and $332,000 at September 30,
      1998 and 1997, respectively.

                                   -9-

<PAGE>

NOTE 6 - NOTES RECEIVABLE

      Notes receivable consist of the following at September 30, 1998:

      Notes receivable - Wesley Industries, Inc.
      due in quarterly payments of $4,450 plus
      interest at prime rate.                           $  8,900

      Note receivable - Wesley Industries, Inc.
      due in quarterly payments of $35,000
      including imputed interest commencing
      June 1, 1998, with a final payment of
      the remaining outstanding principal and
      imputed interest balance on March 1, 2003.        $574,524

NOTE 7 - SALE OF STOCK IN INVESTEE COMPANY
      On March 24, 1998, the Company sold its remaining 45% interest in New
      Haven Foundry to Wesley Industries, Inc. which owned the other 55%. 
      Terms of the agreement included a purchase price of $2,200,000 with
      $1,500,000 paid at closing and the $700,000 balance including
      interest due in the form of a promissory note payable in quarterly
      installments of $35,000.  The promissory note is secured by the
      shares of the New Haven Foundry.  In addition, the Company entered
      into a new cleaning contract with New Haven Foundry which includes
      a per piece price and a service fee of $2,800,000 paid in quarterly
      installments of $140,000 over five (5) years.  The gain on sale is
      reported on the consolidated income statement net of legal fees.









                                  -10-

<PAGE>


<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         ---------------------------------------------------------------
         RESULTS OF OPERATIONS
         ---------------------

   The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial condition
and results of operation during the periods included in the accompanying
consolidated financial statements for the nine (9) months ended September
30, 1998.

FORWARD-LOOKING STATEMENTS MAY NOT PROVE ACCURATE
-------------------------------------------------

   When used in this Form 10-Q, the words "anticipate," "estimate,"
"expect," "project," and similar expressions are intended to identify
forward-looking statements.  Such statements are subject to certain risks,
uncertainties and assumptions including the possibility that the Company's
projected sales, revenues and contract negotiations are not realized. 
Should one or more of these uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated, estimated or projected.

LIQUIDITY & CAPITAL RESOURCES
-----------------------------

   The Company has a consolidated line of credit of $1,300,000 with
monthly interest payments at the prime rate with the National Bank of
Detroit.  The line is collateralized by substantially all assets. 
Borrowings as of September 30, 1998 were $868,077.

RESULTS OF OPERATIONS
---------------------

   The Company is reporting year-to-date pre-tax loss on operations
before extraordinary item of ($96,983) for the nine months ended September
30, 1998 as compared to profit of $138,741 for the same period in 1997. 
Net sales for the period ended September 30, 1998 were approximately
$7,453,750; which represents a decrease of 7.2% from 1997 sales through
September 30, 1997 of $8,032,290.  The loss in 1998 includes a one-time
loss of $143,214 for the Michigan Casting Plant where the Company is not
renewing its lease.  The production operations were previously consolidated
with Yale Industries in 1996.

   The cost of sales for the nine months ended September 30, 1998 as a
percentage of sales was 91.0% as compared to 88.0% for the same period in
1997.

   Selling, General and Administrative for the nine months ended
September 30, 1998 as a percentage of sales was 8.2% as compared to 9.1%
for the same period in 1997.

   Sales for the nine months were down compared to the first nine months
of 1997 due primarily to the loss of a major customer at the Ft. Atkinson
plant.  Sales were also down due to the General Motors strike.

   Management anticipates improved results for the fourth quarter of the
year based on projected increased sales at the Ft. Atkinson plant.

                                  -11-

<PAGE>

                                 PART II

Item 1. Legal Proceedings
        -----------------

        None

Item 2. Changes in Securities
        ---------------------

        None

Item 3. Defaults Upon Senior Securities
        -------------------------------

        None

Item 4. Submission of Matters to a Vote of Securities Holders
        -----------------------------------------------------

        None

Item 5. Other Information
        -----------------

        None

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

        None









                                  -12-

<PAGE>

                               SIGNATURES
                               ----------


   Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned thereunto duly authorized.

MARGATE INDUSTRIES, INC.



By: /s/ William H. Hopton
   -------------------------------
   William H. Hopton

Date:   November 2, 1998









                                  -13-