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             June 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 June 30, 1998, the Company had 4,573,637 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
                -----------------------------------------


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

CURRENT ASSETS

   Cash and cash equivalents                     $1,521,645     $  110,822 

   Accounts receivable                            1,980,007      1,864,240 

   Notes receivable                                 157,800         17,800 

   Inventories - parts and supplies                  88,992         41,991 

   Prepaid expenses and other                        42,236         37,394 

   Prepaid Federal income tax                       100,166         41,000 

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

         Total Current Assets                     3,903,246      2,125,647 

Other                                                56,764         56,764 

Notes receivable                                    455,550              - 

PROPERTY, PLANT AND EQUIPMENT
   At cost net of accumulated depreciation
   and amortization of $1,463,134 and 
   $1,324,045 at June 30, 1998 and 
   December 31, 1997, respectively                3,805,414      4,038,979 
                                                 ----------     ---------- 

         Total Assets                            $8,220,974     $6,221,390 
                                                 ==========     ========== 





See Notes to Consolidated Financial Statements.

                                   -3-

<PAGE>

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


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

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

CURRENT LIABILITIES

   Notes payable                                 $  741,077     $  626,000 
   Current portion of long-term debt                 93,481        213,832 
   Accounts payable                                 597,727        425,746 
   Accrued salaries and wages                        75,474         63,924 
   Accrued workers' compensation                     12,870          6,870 
   Other accrued liabilities                         23,216          5,835 
                                                 ----------     ---------- 

         Total Current Liabilities                1,543,845      1,342,207 

DEFERRED TAX LIABILITY                              439,700        235,700 
OTHER POSTRETIREMENT BENEFITS                       419,856        419,856 
NOTES PAYABLE - Long-term                           201,698        412,160 

STOCKHOLDERS' EQUITY

   Common stock, $.005 par value per
      share; 25,000,000 shares
      authorized, 4,573,637 shares issued
      and outstanding                                22,868         22,868 
   Paid in for common stock in excess
      of par value                                7,410,725      7,410,725 
   Accumulated deficit                           (1,817,718)    (3,622,126)
                                                 ----------     ---------- 

         Total Stockholders' Equity               5,615,875      3,811,467 
                                                 ----------     ---------- 

         Total Liabilities and
           Stockholders' Equity                  $8,220,974     $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        Six Months Ended
                                     June 30,                June 30,
                                1998        1997         1998        1997
                              --------    --------     --------    --------
<S>                          <C>         <C>          <C>         <C>
NET SALES                    $2,648,632  $3,010,330   $4,930,502  $6,147,171 

COST OF SALES                 2,355,278   2,528,606    4,467,320   5,099,464 
                             ----------  ----------   ----------  ---------- 

GROSS PROFIT                    293,354     481,724      463,182   1,047,707 

SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES         188,553     231,928      406,253     488,060 

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

INCOME FROM OPERATIONS          100,570     238,988       52,698     548,839 

DIVIDEND AND INTEREST
   INCOME (EXPENSE) NET           7,780     (31,149)     (13,549)    (59,653)

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

INCOME (LOSS) BEFORE
   PROVISION FOR
   EXTRAORDINARY ITEM           108,350     207,839     (104,065)    489,186 

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

INCOME BEFORE PROVISION
   FOR INCOME TAXES             108,350     207,839    1,970,935     489,186 

PROVISION FOR FEDERAL
   INCOME TAXES                  34,527      75,000      166,527     171,000 
                             ----------  ----------   ----------  ---------- 

NET INCOME                   $   73,823  $  132,839   $1,804,408  $  318,186 
                             ==========  ==========   ==========  ========== 

BASIC EARNINGS
   PER COMMON SHARE:         $    0.016  $    0.029   $    0.395  $    0.070 

WEIGHTED AVERAGE SHARES
   OUTSTANDING                4,573,637   4,573,637    4,573,637   4,573,637 

See Notes to Consolidated Financial Statements.

                                   -5-

<PAGE>

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




</TABLE>
<TABLE>
<CAPTION>
                                                    SIX MONTHS ENDED JUNE 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 

Net income                         --           --           --       1,804,408    1,804,408 
                           ----------   ----------   ----------      ----------   ---------- 

Balance - June 30, 1998     4,573,637   $   22,868   $7,410,725     $(1,817,718)  $5,615,875 
                           ==========   ==========   ==========      ==========   ========== 
</TABLE>


<TABLE>
<CAPTION>

                                                   SIX MONTHS ENDED JUNE 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                         --           --           --        318,186       318,186 
                           ----------   ----------   ----------     ----------    ---------- 

Balance - June 30, 1997     4,573,637   $   22,868   $7,410,725    $(3,452,939)   $3,980,654 
                           ==========   ==========   ==========     ==========    ========== 
</TABLE>












See Notes to Consolidated Financial Statements.

                                   -6-

<PAGE>

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

                                                     Six Months Ended
                                                         June 30,
                                                    1998           1997
                                                 ----------     ----------

INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS

OPERATING ACTIVITIES                             $2,313,758     $   (5,664)

INVESTING ACTIVITIES:

   Purchase of plant and equipment                  (91,649)      (171,455)
                                                 ----------     ---------- 

Net cash used in investing activities               (91,649)      (171,455)

FINANCING ACTIVITIES:

   Net proceeds - line of credit                    115,077        272,000 
   Principal payments under long-term
    obligations                                    (330,813)      (101,035)
   Decrease (increase) notes receivable            (595,550)         8,900 
                                                 ----------     ---------- 

Net cash provided by (used in)
   financing activities                            (811,286)       179,865 

NET INCREASE IN CASH AND
   CASH EQUIVALENTS                               1,410,823          2,746 

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

CASH AND CASH EQUIVALENTS - Ending               $1,521,645     $    4,832 
                                                 ==========     ========== 











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 June 30, 1998 and the related
          Consolidated Statements of Operations, Changes in Stockholders'
          Equity, and Cash Flows for the six months ended June 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 six months ended
          June 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:

                                                     Six Months Ended
                                                         June 30,
                                                        (unaudited)
                                                    1998           1997
                                                 ----------     ----------

          Net income                             $1,804,408      $ 318,186 
          Adjustments to reconcile net
           income to net cash from
           operating activities:
            Depreciation and amortization           182,000        164,000 
            Loss on disposal of fixed assets        143,214             -- 
            Changes in assets and
             liabilities:
               Accounts receivable                 (115,767)      (632,394)
               Inventories                          (47,001)       (59,000)
               Prepaid expenses                      (4,842)       (96,184)
               Prepaid Federal tax                  (59,166)       264,300 
               Other assets                              --         15,271 
               Accounts payable                     171,981       (125,515)
               Accrued workers' compensation          6,000          2,996 
               Accrued salaries and wages            11,550         11,234 
               Deferred income tax                  204,000        122,570 
               Other liabilities                     17,381          8,872 
                                                 ----------     ---------- 

                 Net cash provided (used)
                  by operating activities        $2,313,758     $   (5,664)
                                                 ==========     ========== 

                                   -8-

<PAGE>

NOTE 4 - EARNINGS PER SHARE
          The weighted average number of shares used to compute the net income
          per shares was 4,573,637 and 4,573,637 fully diluted for the six
          month periods ended June 30, 1998 and 4,573,637 and 4,793,637 fully
          diluted at June 30, 1997.

NOTE 5 - NOTES PAYABLE
          Notes payable consist of the following at June 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 December 31, 1998.                       $  53,083

          Note payable Ft. Atkinson, due in monthly
          installments of $3,992, including interest
          at 4% through July 2003.                            223,212

          Capital lease, due in monthly installments
          of $705 including interest at 17.9% through
          July 2001.                                           18,884
                                                            ---------

                                                              295,179
          Less current portion                                 93,481
                                                            ---------
                                                            $ 201,698

          Maturities of notes payable obligations are as follows:

          Year ended June 30:
           1999:                          $ 97,816
           2000:                            47,327
           2001:                            50,122
           2002:                            45,409
           2003:                            46 573
           Thereafter                        7,932
                                         ---------
                                         $ 295,179
                                         =========

          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 June 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 June 30, 1998.  The Company has
          borrowings against the line of $741,077 and $854,000 at June 30, 1998
          and 1997, respectively.



                                   -9-

<PAGE>

NOTE 6 - NOTES RECEIVABLE
      Notes receivable consist of the following at June 30, 1998:

      Notes receivable - Wesley Industries, Inc.
      due in quarterly payments of $4,450 plus
      interest at prime rate.                          $ 13,350

      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.       $600,000

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 $2,600,000 paid in quarterly
      installments of $140,000 over five (5) years.









                                  -10-

<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 six (6) months ended June 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 1/2% below the prime rate with the National
Bank of Detroit.  The line is collateralized by substantially all assets. 
Borrowings as of June 30, 1998 were $741,077.

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

     The Company is reporting year-to-date pre-tax loss on operations
before extraordinary item of ($104,065) for the six months ended June 30,
1998 as compared to profit of $489,186 for the same period in 1997.  Net
sales for the period ended June 30, 1998 were approximately $4,920,502;
which represents a decrease of 19.8% from 1997 sales through June 30, 1997
of $6,147,171.  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 six months ended June 30, 1998 as a
percentage of sales was 90.6% as compared to 83.0% for the same period in
1997.

     Selling, General and Administrative for the three months ended June
30, 1998 as a percentage of sales was 8.2% as compared to 7.9% for the same
period in 1997.

     Sales for the first six months were down compared to the first six
months of 1997 due primarily to the loss of a major customer at the Ft.
Atkinson plant.

     Management anticipates improved results for the second half 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
          -----------------------------------------------------

          An Annual Meeting of Shareholders is scheduled for June 24, 1998
          for the election of Directors.

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

          None

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

          On March 30, 1998, the Registrant filed a Form 8-K reporting
          under Item 2, the sale of a 45% ownership interest in the New
          Haven Foundry to Wesley Industries, Inc.









                                  -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:     August 3, 1998









                                  -13-