EXHIBIT 10.26
                                 NON-STATUTORY
                            STOCK OPTION AGREEMENT
                                      of
                             METALCLAD CORPORATION

       THIS NON-STATUTORY STOCK OPTION AGREEMENT, hereinafter referred to as
  the "Option" or the "Agreement" is made as of the 15th of May, 1997
  between METALCLAD CORPORATION, a Delaware corporation (the "COMPANY") and
  Juan Morales, Jr. (the  OPTIONEE"), residing at Calzada Del Valle No. 1
  Ote., Garza Garcia, Nueve Leon, 66220, Mexico.

       The Board of Directors of the COMPANY hereby grants an option on
  100,000 shares of common stock of the COMPANY ("Common Stock") to the
  OPTIONEE at the price and in all respects subject to the terms,
  definitions and provisions of the Agreement.

       1.  Option Price.  The option price is $1.25 per share.

       2.  Exercise of Option.

           2.1  Right to Exercise.  The options shall be exercisable by the
  OPTIONEE, his personal representative, or his assignee, in whole or in
  part in accordance with the terms of this Agreement and is exercisable for
  a period of (10) years from the date hereof; expiring on May 29, 2007.

           2.2  Method of Exercise.  This Option shall be exercisable by a
  written notice which shall:

                (a)  State the election to exercise the Option, the number
  of shares in respect of which it is being exercised, the person in whose
  name the shares are to be issued (if the shares are issued to
  individuals), the names, addresses and Social Security Numbers of such
  persons; and

                (b)  Contain such representations and agreements as to the
  holder's investment intent with respect to such shares of Common Stock as
  are required by law may be satisfactory to the COMPANY's counsel; and

                (c)  Be signed by the person or persons entitled to exercise
  the Option and, if the Option is being exercised by any person or persons
  other than the OPTIONEE, be accompanied by proof, satisfactory to counsel
  for the COMPANY, of the right of such person or persons to exercise the
  Option; and

                (d)  Be accompanied by a payment for the purchase price of
  those shares with respect to which the Option is being exercised in the
  form of a certified or bank cashier's or teller's check.  The certificate
  or certificates for shares of Common Stock as to which the Option shall be
  exercised shall be registered in the name of the person or persons<PAGE>





  exercising the Option.

           2.3  Restriction on Exercise.  As a condition to his exercise of
  this Option, the COMPANY may require the person exercising this Option to
  comply with applicable laws or regulations.

       3.  Transferability of Option.  This Option may be transferred in any
  manner by will or the laws of descent or distribution and may be exercised
  during the lifetime of the OPTIONEE by an assignee of the OPTIONEE.

       4.   100,000 shares of the Common Stock which it now holds as
  authorized and unissued shares.  If the Option should expire or become
  unexercisable for any reason without having been exercised in full, the
  unpurshased shares which were subject thereto shall be free from any
  restrictions occasioned by this Option Agreement.  If the COMPANY has been
  listed on the stock exchange, the COMPANY will not be required to issue or
  deliver any certificate or certificates for shares to be issued hereunder
  until such shares have been listed (or authorized for listing upon
  official notice of issuance) upon each stock exchange on which outstanding
  shares of the same class may then be listed and until the COMPANY has
  taken such steps as may, in the opinion of counsel for the CORPORATION, be
  required by law and applicable regulations, including the rules and
  regulations of the Securities and Exchange Commission, and state blue sky
  laws and regulations, in connection with the issuance or sale of such
  shares, and the listing of such shares on each such share on each such
  exchange.  The COMPANY will use its best efforts to comply with any such
  requirements forthwith upon the exercise of the Option.

       5.  Adjustments Upon Changes in Capitalization.  If all or any
  portion of the Option is exercised subsequent to any stock dividend,
  split-up, capitalization, combination or exchange of shares, merger,
  transaction of or by the COMPANY, as a result of which shares of any class
  shall be issued in respect of outstanding shares of the class covered by
  the Option or shares of the class covered by the Option shall be changed
  into the same or a different number of shares of the same or another class
  or classes, the person or persons so exercising such an Option shall
  receive, for the aggregate option price payable upon such exercise of the
  Option, the aggregate number and class of shares equal to the number and
  class of shares he or she would have had on the date of exercise had the
  shares been purchased for the sale aggregate price at the date the Option
  was granted and had not been disposed of, taking into consideration any
  such stock dividend, split-up, recapitalization, combination or exchange
  of shares, merger, consolidation, acquisition of property or stock,
  separation, reorganization, or other similar change or transaction;
  provided, however, that no fractional share shall be issued upon any such
  exercise, and the aggregate price paid shall be appropriately reduced on
  account of any fractional share not issued.  Provided, however, any shares
  which are issued at or about this option price or pursuant to warrant or
  options whose exercise price is at or above the exercise price provided in
  the agreement shall not be considered to be diluted for the purpose of
  this agreement and no adjustment will be made.

       6.  Notices.  Each notice relating to this Agreement shall be in
  writing and delivered in person or by certified mail to the proper
  address.  Each notice shall be deemed to have been given on the date it is
  received.  Each notice to the COMPANY shall be addressed to it at its
  principal office, at 3737 Birch Street, Suite 300, Newport Beach,<PAGE>





  California 92660, to the attention of the Secretary of the COMPANY.  Each
  notice to the OPTIONEE or other person or persons then entitled to
  exercise the Option shall be addressed to the OPTIONEE or such other
  person or persons at the OPTIONEE's address set forth in the heading of
  this Agreement.  Anyone to whom a notice may be given under this Agreement
  may designate a new address by notice to that effect.

       7.  Benefits of Agreement.  This Agreement shall inure to the benefit
  of and be binding upon each successor of the COMPANY.  All obligations
  imposed upon the OPTIONEE and all rights granted to the COMPANY under this
  Agreement shall be binding upon the OPTIONEE's heirs, legal
  representatives, and successors.  This Agreement shall be the sole and
  exclusive source of any and all rights which the OPTIONEE, his heirs,
  legal representatives, or successors may have in respect to the Plan or
  any options or Common Stock granted or issued thereunder, whether to him,
  or herself, or to any other person.

       8.  Resolution of Disputes.   Any dispute or disagreement which
  should arise under, or as a result of, or in any way relate to, the
  interpretation, construction or application of this Agreement will be
  determined by the Board of Directors of the COMPANY.  Any determination
  made hereunder shall be final, binding, and conclusive for all purposes.

  IN WITNESS WHEREOF, the COMPANY and the OPTIONEE have caused this
  Agreement to be executed as the day, month and year first above-written.


  COMPANY:      METALCLAD CORPORATION
                a Delaware corporation


                By:
                   ------------------------------------
                   GRANT S. KESLER, President



  (CORPORATE SEAL)



  OPTIONEE:
                   ------------------------------------
                   Juan Morales, Jr.