SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, DC  20549

                                   FORM 10-K

[X]               ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934
                                       or
[ ]               TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)

                  For the fiscal year ended December 31, 1998


                         Commission file number 0-5781

                            HAWKS INDUSTRIES, INC.
             (Exact Name of Registrant as specified in its charter)


        Delaware                                             83-0211955
(State or other jurisdiction of                            (IRS Employer
incorporation or organization)                          Identification No.)

913 Foster Road, Casper, Wyoming                                82601
(Address of principal executive offices)                     (Zip Code)

Registrant's telephone number, including area code:   (307) 234-1593

Securities registered pursuant to Section 12 (b) of the Act:  None
Securities registered pursuant to Section 12 (g) of the Act:
                          Common Stock, $.01 Par Value

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
                                         ----        ---

The aggregate market  value of the  voting stock held  by non-affiliates of  the
Registrant computed by  reference to  the average bid  and asked  prices of  the
Common Stock, $.01 Par Value, on February 25, 1999, was $1,335,338.

As of February 25, 1999, Registrant had 1,335,338 shares of Common Stock, $.01
Par Value outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

Definitive  Proxy  Materials  filed  pursuant  to  Regulation  14(a)  by  EDGAR,
September 25, 1998
<PAGE>

                                    PART I.

ITEM 1 - BUSINESS
Forward-Looking Statements

This Form  10-K  includes "forward-looking  statements"  within the  meaning  of
Section 27A of the Securities Act Of 1933, as amended ( the " Securities Act" ),
and Section  21E of  the Securities  Exchange  Act Of  1934,  as amended  (  the
"Exchange Act").    All statements  other  than statements  of  historical  fact
included in  this Form  10-K  are forward  looking  statements.   These  forward
looking statements  include,  without  limitations, statements  under  "ITEM  7.
MANAGEMENT'S DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION AND RESULTS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS-Financial Condition, Lquidity and
Capital Resources", and notes to the Financial Statements located elsewhere
herein regarding the Company's financial position and liquidity, the amount
of and its liability to make debt service payments, its strategies, financial
instruments, and other matters, are forward looking statements.  Although the
Company believes that the expectations reflected in  such forward-looking
statements are reasonable, it can give no assurance that such expectations
will prove to have been correct.  Important factors that could cause actual
results to differ materially from the Company's expectations are disclosed in
this Form  10K including  without limitation in conjunction with the forward-
looking statements included in this Form 10-K.


History - General

Except where the context otherwise requires, the term "the Company", as used  in
this Report, refers to the Registrant and its subsidiaries.

The Company was incorporated on March  19, 1971 and through mid-1986 was  solely
engaged in the business of oil and gas exploration, development and  production,
and conducted  its operations  primarily in  the Rocky  Mountain region  of  the
United States.

In February, 1986, when the price of crude  oil on the futures and spot  markets
dropped below $12 per barrel, management determined that until such time as  the
price of  crude oil  stabilized in  the  world markets  and returned  to  higher
levels, exploration funds from industry and  private investors would be  further
curtailed and that economics,  except in selected  instances, would not  justify
the drilling of further exploratory and development wells in the Rocky  Mountain
area.

Consequently, the  Company  ceased the  drilling  of development  wells  on  its
properties, the drilling of exploratory wells under which it would share in  the
cost, and  drastically reduced  its  exploration staff.    Since that  time  the
ThepCompany pdoescnotteanticipateeanyorsignificant developmentevdrilling onelits
properties. In  mid 1992,  the Company  further de-emphasized  its oil  and  gas
activities and determined to restrict their  oil and gas business to buying  and
selling of producing properties. In conjunction with this decision, the  Company
sold most of the oil and gas interests wherein it acted as operator and  reduced
technical staff accordingly.

In 1986,  due to  the instability  in the  oil  and gas  industry a  program  of
diversification was commenced and the Company acquired a controlling interest in
International Aviation Publishers, Inc., ("IAP"), a publishing company, and in a
light manufacturing facility,  SanTech, Inc., ("SanTech"),  funded partially  by
the State  of Wyoming  and by  local  government grants  and assistance.    That
diversification was highly successful and International Aviation Publishers grew
to be a source of steady cash flow and profitability for the Company.

In 1992, in a continuing mode  of diversification, the Company acquired 100%  of
the outstanding  shares  of  Western  Environmental  Services  &  Testing,  Inc.
("W.E.S.T."), a privately held environmental testing and consulting firm.

2<PAGE>

In 1993, due to a downturn in the aviation industry and specifically to a nearly
45% decrease in student enrollment in aviation maintenance schools, IAP's  sales
declined.   Accordingly,  the Company's  growth  in  1993 was  directed  at  the
environmental business.  Additional environmental staff was employed to meet the
increasing demand for the Company's services.

During late 1994, the Company received an unsolicited offer to buy its  aviation
publishing assets (IAP).   Accordingly, as of  December 31, 1994,  substantially
all of the publishing  assets were sold for  approximately $1,800,000.  In  this
report and in the accompanying financial statement, the results of operations of
IAP have been shown  as "discontinued operations"  in accordance with  generally
accepted accounting principles.

As a result of the sale of IAP,  it  became  impractical  to  continue  the
navigational supplies business (SanTech) and  the printing business (Hawks  Book
Company).  They are also included in discontinued operations.  During 1995,  all
the assets of the  printing company were  sold and a  significant amount of  the
"navigational supplies" assets were also sold.

In 1996, the Company made a  significant investment in undeveloped real  estate.
The Company plans on holding this real estate as a long term investment.
3<PAGE>

In 1998, the Company's principal  operations consisted of Environmental  Testing
and Management and Oil and Gas operations.

 The following industry  segment information will  give the  reader a  financial
overview of each of the Company's industry segments.  A detailed description  of
each segment follows thereafter.
<TABLE>
<CAPTION>
                                                  1998         1997          1996
<S>                                           <C>           <C>           <C>
     Sales to unaffiliated customers:
      Oil and gas industry                   $    236,000  $   333,000  $    188,000
      Environmental testing and management
        industry                                2,209,000    1,798,000     1,958,000

                                             $  2,445,000  $ 2,131,000  $  2,146,000

     Discontinued Operations                 $          -  $         -  $     44,000

     Operating profit or (loss):
      Oil and gas industry                   $     33,000  $   (36,000) $    (43,000)
      Environmental testing and management
        industry                                  246,000      (51,000)      433,000)
      Unallocated Corporate expenses             (151,000)    (159,000)     (247,000)

                                             $    128,000  $  (246,000) $   (723,000)

     Identifiable assets:
      Oil and gas industry                   $    750,000  $   854,000  $    879,000
      Environmental testing and management
        industry                                1,127,000      893,000     1,080,000
      Corporate assets                          1,180,000    1,447,000     1,806,000

                                             $ 3,057,000  $  3,194,000  $ 3,765,000

     Capital expenditures:
      Oil and gas industry                   $      3,000  $    92,000  $    358,000
      Environmental testing and management
        industry                                  213,000       30,000       207,000
      Other capital expenditures                        -           -         49,000

                                             $   216,000  $    122,000  $    614,000

     Depreciation, depletion and
     amortization:
      Oil and gas industry                   $     79,000  $   111,000  $     67,000
      Environmental testing and management
        industry                                  106,000      103,000       116,000
      Other depreciation, depletion and
        amortization                               23,000       40,000        56,000
                                             $    208,000  $   254,000  $    239,000

     Discontinued Operations                 $          -  $         -  $      2,000

     Interest Income:
       Oil and gas industry                  $     10,000  $         -             -
       Environmental testing and management
        industry                                        -        2,000             -
     Corporate interest                            13,000       18,000        43,000

                                             $     23,000  $    20,000  $     43,000

     Interest Expense:
       Oil and gas industry                  $      5,000  $         -  $          -
       Environmental testing and management
        industry                                   36,000       26,000        25,000
       Corporate Interest                          29,000       46,000        40,000

                                             $     70,000  $    72,000  $     65,000


</TABLE>
4<PAGE>

OIL AND GAS

To the date of this report the Company  had participated in the drilling of  315
gross (63.47 net) wells of which 219 gross (39.17 net) have been successful.  In
general terms, the  Company has ceased  its drilling  and exploration  activity.
The likelihood of  the Company  participating in  additional wells  in the  near
future is  remote.    The  Company  does, however,  have  several  oil  and  gas
properties which it will attempt to have drilling completed on where the Company
will have a non-operating interest.

The Company's  oil and  gas activity  will be  predominantly in  the buying  and
selling of existing producing properties.

Competition

The oil and gas industry is highly  competitive.  Domestic producers of oil  and
gas must not only compete  with each other, but  must compete with producers  of
imported oil and gas and alternative  energy sources such as coal, atomic  power
and hydroelectric power.

Markets

The availability of a ready market for oil and gas produced by the Company  will
depend upon numerous  factors beyond the  control of the  Company including  the
extent of  domestic production  and  importation of  foreign  oil and  gas;  the
proximity of the Company's properties to gas pipelines and other  transportation
facilities; the  availability, capacity  and cost  of such  pipelines and  other
transportation facilities; the marketing of other competitive fuels; fluctuation
in demand; state  and federal governmental  regulation of production,  refining,
transportation and sales;  general national and  worldwide economic  conditions,
pricing, and use; and allocation of oil and gas and their substitute fuels.

With the exception of  brief periods when political  and economic unrest in  the
Middle East  (such  as  the  last  half of  1990),  or  when  short-term  market
"interruptions" such as  the Alaska  oil spill  caused prices  to rise  rapidly,
prices of crude oil  and refined petroleum products  generally have declined  in
the last  eight  years as  a  result of  an  oversupply of  petroleum  products,
particularly gasoline and fuel oils, relative  to the demand for such  products.
The prices received for oil production have become increasingly volatile.   This
has resulted in great uncertainty in the oil  and gas industry and has led  many
companies engaged in  oil and gas  exploration and  production to  substantially
curtail their activities. This situation of subsantial oversupply relative to
demand is due in part to increased production and lower rates of consumption
caused by voluntary conservation efforts as  well as increased competition  from
alternative fuels.

No  certainty  exists  as  to  the  length  of  time  that  this  situation   of
substantially reduced prices will exist.  However, as long as the supply of  oil
available on a  worldwide basis exceeds  demand by a  substantial margin, it  is
likely that oil prices will remain subject to downward pressure.

In response  to the  current oversupply  of natural  gas, many  purchasers  have
unilaterally reduced the quantities of  gas purchased under existing  contracts,
and a  number of  purchasers have  stated their  intentions not  to honor  their
contractual commitments to purchase specified  quantities of gas from  producers
at the prices set out in their respective purchase contracts.  In many instances
buyers cannot readily be located for gas production resulting in gas wells being
shut-in or  curtailed  for various  periods  of time.    In addition,  many  gas
purchasers are refusing to honor  obligations under so-called "take-or-pay"  gas
contracts.  There  can be no  assurance that markets  for gas and  oil will  not
continue to decline.

The Company's contracts with its gas purchasers generally provide that they  are
not obligated  to  purchase all  of  the gas  which  the wells  are  capable  of
producing, and the Company has experienced curtailment problems to date.   There
is  also  no  assurance  that  the  Company  will  not  experience   significant
curtailment problems in the future.
5<PAGE>

Regulation

The Company's operations will be affected  from time to time in varying  degrees
by political  developments and  federal  and state  laws  and regulations.    In
In particular, oil and gas production operations and economics are affected by
price control, tax and other laws relating to the petroleum industry, by changes
in such laws and by constantly changing administrative regulations.

State statutory provisions relating to oil and gas generally require permits for
the drilling of wells  and also cover  the spacing of  wells, the prevention  of
waste, the rate  of production,  the prevention  and clean-up  of pollution  and
other matters.

The wellhead sale of natural gas in  the United States is subject, with  certain
significant exceptions,  to  a regulatory  scheme  implemented pursuant  to  the
Natural Gas Policy Act of 1978 (the  "NGPA") and overseen by the Federal  Energy
Regulatory Commission  (the  "FERC").   The  NGPA classified  gas  into  various
categories in maximum permissible prices.  However, none of the NGPA prices  can
be collected unless purchasers willing to pay such prices can be located.  As  a
result of the general decline in prices for  oil and gas, many of the  contracts
for purchases of gas  at NGPA maximum prices  have been renegotiated.   Contract
provisions allowing  price reductions  have been  exercised or  purchasers  have
refused to  accept production  at such  prices claiming,  among other  defenses,
force majeure  and commercial  impracticability.   As  a  result, a  larger  and
increasing percentage of gas is sold at prices below NGPA maximum lawful  rates.
Sales of gas  at prices lower  than such NGPA  rates are  common throughout  the
natural gas industry.


Environmental Regulation

Various federal, state and local laws and regulations covering the discharge  of
materials into the environment, or otherwise  relating to the protection of  the
environment, may affect the Company's operations and costs as a result of  their
effect on oil and gas exploration, development and production activities.

Environmental protection laws to date have not required the Company to make any
significant additional capital outlays. It is not anticipated that the Company
will be required in the near future to expend amounts that are material in
relation to its  total capital expenditure  program by  reason of  environmental
laws and regulations.   The  Company believes  that its  operations comply  with
environmental laws and regulations,  but inasmuch as  such laws and  regulations
are constantly being revised and changed,  the Company is unable to predict  the
ultimate cost  of  complying with  present  and future  environmental  laws  and
regulations.


Taxation

The Company's oil and gas operations  are affected by certain provisions of  the
federal income  tax laws  applicable to  the petroleum  industry.   Current  law
permits the Company  to deduct currently,  rather than capitalize,  "intangible"
drilling and development  costs incurred or  borne by it.   The  Company, as  an
independent producer, is  also entitled  to deduction  for percentage  depletion
with respect to the first  1,000 barrels per day  of domestic crude oil  (and/or
equivalent units of  domestic natural  gas) produced  by it  if such  percentage
depletion exceeds cost depletion.

Generally, this deduction  is a specified  percentage (currently  15%) of  gross
income from oil and gas property.   Percentage depletion may not exceed 100%  of
the net income, and is limited in the aggregate to 65% of the Company's  taxable
income.  Any  depletion exceeding the  65% limitation, however,  may be  carried
over indefinitely.  At December 31, 1998 this carryover was $2,143,000.
6<PAGE>

The Company's oil and gas activities are also subject to state and local income,
severance, property  and other  taxes.   It is  anticipated that  the  aggregate
burden of these taxes will increase in the future.

It is possible that subsequent legislation, court  decisions and  governmental
agency actions could further limit tax  benefits and impose further tax  burdens
on the oil and gas activities of the Company.

The Company at December 31, 1998  had a net operating loss ("NOL")  carryforward
of $8,520,000.

The Tax  Reform  Act  of  1986  made substantial  changes  with  regard  to  NOL
carryforwards.   After  an "ownership  change"  the  taxable income  of  a  loss
corporation available  for offset  by pre-change  NOL carryforwards  is  limited
annually to a prescribed  rate times the value  of the loss corporation's  stock
immediately before the ownership change.  In general, an ownership change occurs
if ownership of  more than 50%  in value of  the stock of  the loss  corporation
changes during the three year period preceding the test date.  Under federal tax
law, the amount and availability of loss carryforwards are subject to a  variety
of interpretations and restrictive tests applicable  to the Company.  Under  the
Code, the utilization of such loss carryforward could be limited or  effectively
lost upon certain changes  in ownership.  The  net operating loss  carryforwards
expire between 1998 and 2012.


DISCONTINUED OPERATIONS

As of December 31, 1994 the Company sold substantially all of the assets of  its
aviation publishing  business for  approximately $1,800,000.   The  Company  had
purchased this business on July  1, 1986 for less  than $300,000.  During  1995,
the Company sold its  printing assets for $221,000.   Also the Company  realized
$36,000 from  the sale  of navigational  supply assets  and from  furniture  and
fixtures.

In conjunction with the  sale of its aviation  publishing business, the  Company
chose to discontinue  its navigational products  business in  order to  maximize
sales of existing inventory. This discontinuance involved the gradual
liquidation of inventory and sale of equipment. At Decemberd 31,1996 this
discontinuance was completed.


ENVIRONMENTAL TESTING AND MANAGMENT

Competition

The Environmental Testing  and Management industry  is also highly  competitive.
Many of  the  company's  competitors  both  in  its  primary  market  areas  and
throughout the United  States are  substantially larger  and have  significantly
greater financial and human resources.

Markets

The Company concentrates its  activities primarily in  the Rocky Mountains,  the
mid-continent area and  in Texas.   However, during,  1996, 1997  and 1998,  the
company provided  services for  customers in  14, 14,  and 13  different  states
respectively, and one foreign country (Indonesia).   In the area of air  quality
and air emissions the Company provides  to its customers compliance testing  for
air emissions  in  accordance  with  certain  federal  and  state  environmental
standards.  In addition, they perform evaluations of process operations for  the
users of  emissions equipment;  and to  a lesser  degree, the  Company  performs
"performance guarantees" for newly purchased abatement equipment for some of its
customers.  The Company also provides  ambient air surveys for new or  renewable
air emission permits.

In addition, the Company also provides industrial hygiene and indoor air quality
evaluations, as  well  as  corrective planning  with  a  full-time  professional
certified industrial hygienist on staff.
7<PAGE>

In the area  of water  waste, the Company  performs analysis  for virtually  all
kinds of discharge of water  waste.  The company  also evaluates all public  and
private drinking  water  supplies  for compliance  with  existing  environmental
standards.  The  Company performs environmental  analysis of  real property  for
customers involved in the transfer of real property.  This includes the analysis
for lending  institutions  prior  to funding  the  purchase  of  real  property.
Lastly, the Company provides soil analysis primarily for the mining industry.

Regulation

The  Clean   Drinking  Water   Act  mandates   certification  requirements   for
laboratories who  are engaged  in the  analysis of  public drinking  water.   In
addition,  the  Company  is  subject  to  certain  regulations  of  the  Nuclear
Regulatory   Commission   governing   testing   standards   for    environmental
laboratories.

The Environmental  Protection Agency  (EPA)  and Nuclear  Regulatory  Commission
perform periodic  audits  in  the  form of  on-site  walk  throughs  at  testing
facilities and direct  observation of  test procedures.   In  addition, the  EPA
submits "blind samples"  for which  the Company  analyzes and  submits its  test
results.  These results are measured  against standardized testing performed  by
the EPA on the same sample to determine a lab's ability to analyze samples.

In addition, most state environmental  agencies conduct on-site evaluations  for
compliance with established professional testing standards and techniques.

Taxation

The  Company's   environmental   contracts  are   generally   not   individually
significant.  To  the degree  that a contract  is in  process at  year end,  the
Company employs the completed  contract method of  accounting for income  taxes.
Generally this method provides that no income or expense will be recognized on a
contract until such time as the contract is completed. In the environmental
testing business, there is no feasible way to determine the percentage of
completion for many types of contracts.


EMPLOYEES

As of  the  date  of  this  report, the  Company  has  25  full-time  employees.
(Administration and Accounting 3, Environmental 20 and Corporate Management  2).
All  employees  are  provided   with  the  opportunity   to  participate  in   a
comprehensive health and benefits package.   All eligible employees  participate
in the Company's Employee Stock Ownership Plan.

None of the employees are represented by  a union and the Company believes  that
its relationship with its employees is good.


ITEM 2 - PROPERTIES

PROPERTIES - REAL ESTATE

The Company owns facilities  consisting of three  separate buildings located  on
approximately seven acres.

On March 22, 1994, the Company purchased a 7,600 square foot office building and
3,000 square foot laboratory on 4 acres in  an industrial park in Casper.   This
facility will accommodate  the expected  growth of  the Company's  environmental
business and now houses  the Corporate oil and  gas, environmental testing,  and
accounting offices.
8<PAGE>

The Company also owns a 5,000 sq. ft. building in San Marcos, Texas which housed
all environmental personnel  and equipment for  the Company's Texas  operations.
This building has been listed for sale

The Company also owned one building, an office building of 10,600 square  feet.
An adjacent building had  6,000 square feet.   Next to it  was an 11,500  square
foot warehouse.  These buildings were  sold on June 1, 1998,  see Note 8 in  the
financial statements.

In addition, W.E.S.T.  rents office space  in Evanston, Wyoming  on a  month-to-
month basis from a third party.

Management believes that the  existing facilities are  now adequate for  current
needs.

In late 1996  the Company purchased  33.7 acres of  undeveloped commercial  real
estate in Casper,  Wyoming.   The land is adjacent  to and fronts Interstate  25
and is  dissected by  East  Second Street  (the  main business  thoroughfare  in
Casper).  The land was purchased for less than 18 cents per square foot.   There
is no announced time table for development of the land.

Disclosures of Oil and Gas Producing Activities

The Financial  Accounting  Standards  Board Statement  of  Financial  Accounting
Standards No. 69, Disclosures about Oil  and Gas Producing Activities,  requires
certain disclosures about an entity's oil  and gas producing operations.   Those
disclosures are applicable  if any one  of revenues, results  of operations,  or
assets, generated or attributable to the  oil and gas activities, are more  than
10% of total revenues, operations, or total assets.  The Company in recent years
has acquired significant non oil and gas operating assets.

Although technically  required to  do  so, the  Company  has not  presented  the
required disclosure.  Management feels that with  the sale of its major oil  and
gas producing property in 1992, and  with the continually decreased emphasis  on
oil and gas producing activities, the information is relatively meaningless.  In
In addition, based on costs of prior years, the estimated costs to obtain all
of such information would be at least $10,000. For these reasons the disclosure
has not been presented.

Net Quantities of Oil and Gas Produced

The net quantities of  oil and gas produced  by the Company  during each of  the
last three fiscal years are as follow:
<TABLE>
<CAPTION>
             Oil    Gas (Mcf)
           (bbls)
<S>       <C>       <C>
  1996        4,500    57,000
  1997       11,000    49,000
  1998        8,300    68,000

</TABLE>
Average Sales Price and Production Costs

The following table reflects information concerning each of the last three
fiscal years:
<TABLE>
<CAPTION>
                                1998      1997      1996
<S>                           <C>       <C>       <C>
Average sales price per bbl    $12.03    $18.25    $20.84
Average sales price per MCF      1.99       2.30      1.47
Average production cost per
  net equivalent bbl*             2.32      6.55      4.34
<FN>
* Natural gas has been converted into equivalent bbls using a conversion ratio
of 6:1.
</TABLE>
9<PAGE>

Drilling Activity

The Company has not participated in  the drilling of exploratory wells in  1998,
1997 nor  1996.    In  1996  the Company  participated  in  the  drilling  of  3
developmental wells which were productive.   The Company did not participate  in
drilling any development wells in 1998.


Title to Properties

As is  customary in  the oil  and gas  industry, a  preliminary title  check  is
conducted at the time properties believed to be suitable for drilling operations
are acquired by the Company.  Prior to the commencement of drilling  operations,
curative work determined to be appropriate as a result of a title examination is
customarily performed with  respect to  significant defects  before the  Company
commences such  operations.    The  Company  believes  that  the  title  to  its
properties is marketable  in accordance with  standards generally acceptable  in
the oil and gas industry.


ITEM 3 - LEGAL PROCEEDINGS

The Company is not involved  in or aware of  any pending or threatened  material
legal proceedings, to which the Company is a party or which any of its  property
is the subject.


ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS


James E. Meador, Jr. was elected by the shareholders at the annual meeting held
on November 4, 1998 to continue to serve on the board of  directors.

No matters were submitted during the Fourth Quarter of the fiscal year covered
by this report to a vote of security holders.
10<PAGE>


                                    PART II


ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED MATTERS

The Company's  Common Stock  is traded  in the  over-the-counter market  and  is
quoted by  NASDAQ  under the  symbol  "HAWK".   The  high and  low  closing  bid
quotations for the  calendar period indicated,  as reported by  NASDAQ and  then
restated to reflect the February, 1998, 20 for 1 reverse stock split, are  shown
in the following table:

<TABLE>
<CAPTION>
                                         Bid Price
<S>      <C>                 <C>             <C>
                                   HIGH              LOW
1996:
         First Quarter            4 3/8             1 7/8
         Second Quarter           4 3/8             1 7/8
         Third Quarter            5 5/8             3 1/8
         Fourth Quarter             5               3 1/8
1997:
         First Quarter            3 1/2             3 1/8
         Second Quarter           3 1/8             1 1/4
         Third Quarter            4 3/8             1 7/8
1998:    Fourth Quarter           3 1/8             1 1/4
         First Quarter            2 1/2              5/8
         Second Quarter           1 5/8              7/8
         Third Quarter           1 11/16              1
         Fourth Quarter          1 29/32            1 1/8

</TABLE>
Bid quotations represent prices between dealers,  do not include retail  markup,
markdown, or commissions and do not necessarily represent actual transactions.


Number of Shareholders

As of February 22, 1999 there were 828 holders of record of the Company's Common
Stock.


Dividends

The Company has never paid any dividends on  its common stock and does not  have
any current plans to pay  any dividends in the  foreseeable future.  Should  the
Company determine at  some future date  that the payment  of dividends would  be
desirable, any such dividends would be dependent upon the earnings and financial
condition of the Company.
11<PAGE>

ITEM 6 - FINANCIAL DATA
<TABLE>
<CAPTION>
                                       Year Ended December 31,
                                 1998        1997        1996        1995        1994
<S>                            <C>         <C>         <C>         <C>         <C>
Operating revenues from
 continuing operations         2,445,000   2,131,000   2,146,000   3,293,000   2,595,000
Net income (loss) from
 continuing operations           128,000    (264,000)   (742,000)    117,000    (250,000)
Net income (loss)                150,000    (264,000)   (755,000)   (213,000)    268,000
Income (loss) from continuing
 operations per share*               .11        (.20)       (.55)        .09        (.12)
Net income (loss per share:)         .11        (.20)       (.55)       (.16)        .14
Total assets                   3,057,000   3,194,000   3,765,000   4,015,000   4,883,000
Long-term debt                   340,000     415,000     445,000     493,000     677,000
Shareholders' equity           2,155,000   2,012,000   2,237,000   2,992,000   3,175,000
Dividends declared per share           -           -           -           -           -


<FN>
*  As restated for 20:1 reverse stock split.
</TABLE>
12<PAGE>

ITEM 7- MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources

During 1998,  Management  continued  to  make  positive  steps  to  improve  the
financial condition of  the Company.   Operations in  the Salt  Lake City,  Utah
office were  curtailed and  the San  Marcos, Texas  office was  operated with  a
manpower and equipment were provided by the Casper, Wyoming office. The Casper
operations increased in workload within its region also.

The Company improved its financial position considerably in 1998.  The  $264,000
loss in 1997 was reversed to  a $150,000 net income in 1998.   This was a  turn-
around of $414,000.  A negative working capital position of $140,000 in 1997 was
reversed to positive working  capital of $204,000  in 1998, another  substantial
turn-around of $344,000.   Items contributing  to these positive  moves were  as
follow:

    1.  During 1998,  total revenues increased by  15% while operating  expenses
decreased by 2.5%.  These changes  resulted in accounts receivable increases  by
$95,000 and accounts payable decreases by $80,000.

    2.  The Company sold its buildings on 6 WN Road in Natrona County,  Wyoming.
This enabled the Company to pay off approximately $190,000 in current portion of
long-term debt and short-term  notes payable, along  with providing the  company
with approximately  $65,000 in  cash and  $100,000 in  4% convertible  preferred
stock.  That stock  is convertible to cash  or common stock  upon request.   The
buildings had been listed  with a realtor for  more than two  years.  They  were
sold by the officers  of the corporation, which  saved approximately $28,000  in
realtor fees. The buildings were sold to a related party. (See Note 8, "Sale  of
Buildings", in the accompanying financial statements.

    3. Through local banks, the Company has been able to use accounts receivable
as collateral  for  short-term  borrowings  for  current  cash  demands  in  its
environmental engineering business.  This, along with a $200,000 revolving  line
of credit, has enabled  the Company to perform  on larger contracts which  would
not have been possible in the past.  Also, the Company has a $230,000  revolving
line of credit for its oil and gas division.  To date, the Company has  borrowed
$100,000 of this line of credit to pay  off past drilling costs in its  Brundage
Canyon Field.  The balance of that loan, at December 31, 1998 was $65,000.
    4.  As noted in the December 31, 1997  10K,  Joseph J. McQuade, former  CEO,
terminated his  employment  in the  first  quarter of  1998.   This  results  in
significant cost savings.   (see note 14,  "Significant Events", concerning  the
contingent liability  associated  with  this termination,  of  the  accompanying
financial statements).  It is important to note that the majority of the funding
for this agreement with Mr. McQuade came from outside investors.

The Company purchased $216,000  in property and equipment  for 1998 compared  to
$122,000 in 1997,  and $614,000 in  1996.  Of  the $216,000  purchased in  1998,
$213,000 was environmental testing equipment, of which approximately one half of
this for a  portable Fourier Transmission  Infra-Red Spectrometer  (FTIR).   The
FTIR has allowed the Company to perform over $500,000 worth of contracts  during
1998 for a major  international manufacturer.  More  work for that leading  edge
technology is anticipated for 1999 and beyond.

The Company continues to  attempt to sell its  facilities in San Marcos,  Texas.
The sale  of this  property would  have  a significant  positive impact  on  the
Company's liquidity and capital resources.

In addition,  in late  1996  the Company  purchased  33.7 acres  of  undeveloped
commercial real estate in Casper, Wyoming.  The land is adjacent to, and fronts,
Interstate Highway 25 and is bisected  by east Second Street (the main  business
thoroughfare in Casper).   The land  was purchased for  less than  18 cents  per
square foot.    Business real  estate  development has  increased  at  adjoining
property, with major corporations moving into  the area.  There is no  announced
timetable for development of the land.
13<PAGE>

The following information is provided for the years ending December 31, 1998 and
1997:
<TABLE>
<CAPTION>                                      1998        1997
<S>                                           <C>         <C>
Working Capital                             $  204,000   $ (140,000)*
Long-term debt to equity                         1:6.3        1:4.9
Cash provided (utilized by operations)         136,000     (148,000)
Cash and short-term investments available      262,000      235,000

<FN>
*$140,000 loan on office building listed as current liability.
</TABLE>

Management believes that the carrying value of producing oil and gas  properties
is not in excess of the future revenues which will be recovered.  Carrying value
of producing properties, net of depletion,  is $736,000.  Oil and gas  revenues,
net of expenses, were $183,000 for the year.  As many of the Company's producing
properties are  natural gas  properties, with  lives  in excess  of  twenty-five
years, we believe the carrying value of the assets is fully recoverable.

In addition,  the  Company  has  carrying  value  of  $14,000  on  non-producing
properties, which is net of an  allowance for impairment of $2,000.   Management
believes, since  the  majority  of  the  non-producing  properties  are  mineral
interests, the allowance is adequate and the remaining costs in the assets  will
be recovered.

Management knows of no environmental assessment problems nor of the potential of
any such environmental assessment.  All purchased real estate had  environmental
studies performed prior to  purchase and our  environmental laboratory has  been
instructed on the appropriate procedures for disposal of various kinds of waste.
Such wastes (although relatively  insignificant in amount)  are tested prior  to
legal disposal as part of a continual environmental assurance program.

Environmentalerevenues increased to $2,211,000 in  1998 from $1,792,000 in  1997
and $1,959,000  in  1996, demonstrating  a  23% increase  from  1997 and  a  13%
increase above 1996.  This was the result of the Company acquiring several large
clients in 1998 while maintaining the  Company's regular clients.  The  decrease
of $167,000 in revenues from 1996 to 1997 was  a result of the reduction in  the
operational size of  the Texas office.   Environmental  expenses increased  from
$1,746,000 in 1997 to $1,856,000 in 1998 or  a 6% increase, this was the  result
of a 23% increase in sales as noted above.  Environmental expenses decreased  by
$530,000 from  $2,276,000 in  1996 to  $1,746,000 in  1997.   This decrease  was
mainly  due  to  decreases  in  staff  in  Texas,  Utah,  and  Cheyenne.    Also
contributing to this decrease  was the decision to  provide service of most  all
jobs from the Casper headquarters.  Shown below is a table showing net  revenues
and operating expense for the Company's environmental industry:
<TABLE>
<CAPTION>
                            1998        1997        1996
<S>                       <C>         <C>          <C>
Sales                    $ 2,211,000 $ 1,792,000 $  1,959,000
Operating expenses        1,856,0000   1,746,000    2,276,000

                         $  355,0000 $    46,000 $   (317,000)

</TABLE>

Oil and gas sales  declined from $322,000 in  1997 to $236,000  in 1998 or  27%.
This decline was caused by two activities:
(1)      Average oil prices declined by 34%  and average gas prices declined  by
  13% and
(2)      Flush production in 1997  received on the  three Brundage Canyon,  Utah
  well drilled in 1996.

Oil and gas sales increased from $181,000 in 1996 to $322,000 in 1997.  As noted
above, this increase in  1997 was due  to the productive  wells drilled in  late
1996. Oil and gas expenses declined from $139,000 in 1997 to $53,000 in 1998.
This decline was largely due to less maintenance beingp erformed on the
Company's working  interest  properties  by operators.    Less  maintenance was
performed due to the  lower prices received for  oil during 1998.   Oil and  gas
expenses increased  from $73,000  in 1996  to 139,000  in 1997,  a 90%  increase
reflecting additional wells drilled  in the Brundage Canyon  Field.  Below is  a
table showing revenues and operating expense per year for the Company's oil  and
gas industry:
14<PAGE>

<TABLE>
<CAPTION>
                             1998        1997        1996
<S>                        <C>         <C>         <C>
Sales                    $   236,000 $   322,000 $   181,000
Operating expenses            53,000     139,000      73,000

                         $   183,000 $   183,000 $   108,000

</TABLE>
Depreciation, depletion,  and amortization  were $208,000  in 1998  compared  to
$254,000 in  1997 or  an 18%  decrease.   This  decrease was  a result  of  less
depreciation, depletion, and amortization on oil and gas properties, results  of
a decline in production from  prior years in the  Brundage Canyon Field and  the
sale of the  building located at  6WN Road located  in Natrona County,  Wyoming.
Depreciation, depletion, and  amortization increased  from $239,000  in 1996  to
$254,000 in 1997, a 6% increase which as noted above was a result of the "flush"
production in  1997 from  the  Brundage Canyon  field.   Depreciation  from  the
environmental testing  industry  has remained  relatively  flat over  the  three
years.

General and administrative costs decreased from $238,000 in 1997 to $200,000  in
1998, a 16% decrease which was the result  of decreases in staff and other  cost
cutting efforts. General and administrative costs decreased by $43,000 from
$281,000 in 1996 to $238,000 in 1997,a 15.3% decrease. These decreases  were
due to decreases in staff, salary reductions, and other cost cutting efforts.

Interest expense  was  approximately the  same  for  the years  1998  and  1997.
Interest expense decreased by  $2,000 from $72,000 in 1997 to $70,000 in 1998 as
new notes with lower  interest rates have  replaced some of  the debt paid  off.
Interest expense increased  in 1997  to $72,000 from  $65,000 in  1996, a  10.7%
increase due to additional outstanding loans.

Interest income  increased  from $20,000  in  1997 to  $23,000  in 1998.    This
increase was the result of collecting interest on royalties of $10,000 that were
not paid within the period allowed.  Interest income would have been less due to
lower interest rates on certificates of deposit.  Interest income decreased from
$43,000 in 1996 to $20,000 in 1997 reflecting the utilization of investments for
operations. No provision has been made for deferred taxes in 1996, 1997 or  1998
and no provision  for income taxes  is required due  to the  utilization of  net
operating loss carryforwards.

Management believes  that although  disclosures mandated  by  SFAS No,  109  are
generally informative, that in the Company's  case, the application of SFAS  No.
109 leads to disclosures which are confusing.  To comply with SFAS No. 109 is to
record deferred income tax expense  on the books of  the Company, when in  fact,
the Company has $8,500,000  of net operating  loss carryforwards, $2,143,000  of
depletion carryforwards and $61,000 of various  income tax credits.  This  issue
is derived from the  application of the provisions  of SFAS No.109 to  companies
who have had quasi reorganizations in  the past.  (Hawks Industries applied  the
quasi reorganization  provisions ARB  #43, effective  in 1988.)    Specifically,
paragraphs 39 and 49 of SFAS No. 109 require that in cases where there has  been
a quasi reorganization, that the tax benefits of loss carryforwards and credits,
earned  prior  to  the  date  of  the  quasi  reorganization,  be  ignored  when
calculating deferred income  tax benefits.   Although  management believes  that
such obscure provisions may give rise to great fodder in the world of  academia,
we believe that to apply the principles of SFAS No. 109, paragraphs 39 and 49,
is at variance with the economic realities of the present case. Accordingly, we
have not applied the provisions of SFAS No. 109, paragraphs 39 and 49.

It is  management's intent  to attempt  to reflect  the economic  realty of  our
present tax situation.   Given  all of  the future  tax benefits  which will  be
available to the Company to offset  future net income, management believes  that
the financial statements presented have accomplished our goal.
15<PAGE>



Year 2000 Compliant

The Company's computer systems, software, and related technologies are  affected
by the Year  2000 compliance  issue.  We  have been  identifying and  correcting
affected applications to  ensure that all  of our key  computer systems will  be
Year 2000 compliant by  early 1999.  We  are also working  with our vendors  and
suppliers to ensure their compliance.  It appears that the Company will have  no
trouble meeting this goal. Costs to modify such applications have been, and  are
estimated, to  remain  immaterial to  our  results of  operations  or  financial
condition.








Hawks8Industries,LInc.TandNSubsidiaries


Index to Consolidated Financial Statements

Report of Certified Public Accountants on
    the Financial Statements                                                17
Consolidated Balance Sheets                                                 18
Consolidated Statements of Operations                                       18
Consolidated Statements of Shareholders' Equity                             20
Consolidated Statements of Cash Flows                                       21
Notes to Consolidated Financial Statements                                  22
16<PAGE>


                    ----------------------------------------
                    HOCKER, LOVELETT, HARGENS & SKOGEN, P.C.
                    ----------------------------------------
                          Certified Public Accountants



                          INDEPENDENT AUDITORS' REPORT

To the Shareholders and Board of Directors
Hawks Industries, Inc.
Casper, Wyoming

We  have  audited  the  accompanying   consolidated  balance  sheets  of   Hawks
Industries, Inc.  and subsidiaries  as of  December 31,  1998 and  1997 and  the
related consolidated statements  of operations, shareholders'  equity, and  cash
flows for the years ended December  31, 1998, 1997 and 1996. These  consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated 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 audit to  obtain
reasonable assurance  about whether  the consolidated  financial statements  are
free of material  misstatement. An audit  includes examining, on  a test  basis,
evidence supporting the  amounts and disclosures  in the consolidated  financial
statements. An audit also includes assessing the accounting principles used  and
significant estimates  made by  management, as  well as  evaluating the  overall
consolidated financial  statement  presentation.  We  believe  that  our  audits
provide a reasonable basis for our opinion.

As described in  Note 4, Statement  of Financial Accounting  Standards No.  109,
Accounting for  Income  Taxes requires  that  deferred taxes  be  reflected  for
temporary differences resulting from differences between the financial statement
and tax basis of assets and liabilities.  SFAS No. 109 also precludes the use of
tax benefits  resulting from  the carryforward  of  net operating  losses  which
originated prior to  the Company's quasi-reorganization  to increase net  income
and specifically requires that they be  treated as direct additions to  paid-in-
capital.  The  Company has  not provided for  recognition of  deferred taxes  in
accordance with generally accepted accounting principles.   If such a  provision
were made, net income for 1998, 1997 and 1996 would be increased/(decreased)  by
approximately $0, $(11,000), $11,000, respectively.

In our opinion,  except for the  effects of omitting  deferred income taxes,  as
discussed in the third paragraph, the consolidated financial statements referred
to above present  fairly, in all  material respects, the  financial position  of
Hawks Industries, Inc. and subsidiaries as of December 31, 1998 and 1997 and the
results of their operations  and their cash flows  for the years ended  December
31, 1998,  1997  and 1996,  in  conformity with  generally  accepted  accounting

The Company  has not  presented  the disclosures  about  oil and  gas  producing
activities that  the  Financial Accounting  Standards  Board has  determined  is
necessary to  supplement,  although  not  required to  be  part  of,  the  basic
financial statements.

                                   /s/ Hocker, Lovelett, Hargens & Skogen, P.C.
Casper, Wyoming
February 12, 1999
17<PAGE>

<TABLE>
<CAPTION>

                    HAWKS INDUSTRIES, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                           December 31, 1998 and 1997
                               ASSETS                                     1998          1997
<S>                                                                     <C>          <C>
CURRENT ASSETS
  Cash                                                                $    60,000   $    30,000
  Accounts receivable                                                     425,000       330,000
  Short-term investments                                                  202,000       205,000
  Costs on uncompleted contracts in excess of related billings             15,000        12,000
  Other current assets                                                     64,000        50,000

    Total current assets                                                  766,000       627,000

PROPERTY AND EQUIPMENT, net
 (successful efforts method)                                            1,703,000     2,112,000

INVESTMENTS AND OTHER ASSETS
  Note Receivable                                                          35,000        38,000
  Land Investment                                                         196,000       202,000
  Available for sale investment                                           100,000             -

 Other Assets                                                            2588,000      2455,000

                                                                      $ 3,057,000   $ 3,194,000


                LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
  Notes payable                                                       $   203,000   $   240,000
  Current maturities of long-term debt                                    128,000       227,000
  Accounts payable                                                        195,000       275,000
  Accrued liabilities                                                      36,000        25,000

    Total current liabilities                                             562,000       767,000

LONG TERM DEBT                                                            340,000       415,000

CONTINGENT LIABILITY (See Note 14)                                              -             -

SHAREHOLDERS' EQUITY
  Capital stock:
  Preferred stock, $.01 par value; authorized 997,000 shares no
   shares issued                                                                -             -
  Common stock, $.01 par value, authorized 5,000,000 shares;
   shares issued 1,351,513 in 1998 and 1997                                13,000        13,000
  Capital in excess of par value of common stock                        2,880,000     2,880,000
  Retained (deficit)                                                     (731,000 )    (881,000)
  Less Common Stock held in treasury at cost, 6,175 and 0
   shares in 1998 and 1997, respectively                                   (7,000 )           -

                                                                        2,155,000     2,012,000

                                                                      $ 3,057,000   $ 3,194,000


<FN>
See Notes to Consolidated Financial Statements.
18<PAGE>


</TABLE>
<TABLE>
<CAPTION>
                    HAWKS INDUSTRIES, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                  Years ended December 31, 1998, 1997 and 1996
                                  1998           1997         1996
<S>                              <C>           <C>           <C>
Operating revenue:
 Oil and gas                   $   236,000   $   322,000   $   181,000
 Environmental testing and       2,211,000     1,792,000     1,959,000
   management
 Gain (loss) on sale of assets      (2,000 )      17,000         6,000

                                 2,445,000     2,131,000     2,146,000

Operating expenses:
 Oil and gas                        53,000       139,000        73,000
 Environmental testing and       1,856,000     1,746,000     2,276,000
   management
 Depreciation, depletion and       208,000       254,000       239,000
   amortization
 General and administrative        200,000       238,000       281,000

                                 2,317,000     2,377,000     2,869,000

Operating income (loss) from
 continuing
      operations                   128,000      (246,000 )    (723,000 )
Other income (expense):
 Other income                       21,000        34,000         3,000
 Interest income                    23,000        20,000        43,000
 Interest expense                  (70,000 )     (72,000 )     (65,000 )
 Sale of buildings                  48,000             -         -

Gain (loss) from continuing
 operations before
    taxes                          150,000      (264,000 )    (742,000 )
Provision for taxes:
 Current                                 -             -             -

Gain (loss) from continuing        150,000      (264,000 )    (742,000 )
 operations
Discontinued operations                  -                     (13,000 )

Net income (loss)              $   150,000   $  (264,000 ) $  (755,000 )


Weighted average number of
     common shares outstanding   1,351,451     1,351,147     1,339,443


Earnings (loss) per common
 share :
 Gain (loss) from continuing   $       .11   $      (.20 ) $      (.55 )
   operations
 Discontinued operations (net)           -                        (.01 )
                                                   -

                               $       .11   $      (.20 ) $      (.56 )



<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
19<PAGE>

<TABLE>
<CAPTION>
                CONSOLIDATEDDSTATEMENTSNOF SHAREHOLDERS'IEQUITY
                  Years Ended December 31, 1998, 1997 and 1996

                                                          Capital
                                                         in Excess   Accumulated      Common Stock
                                  Common Stock Issued     of Par      Earnings      Held in Treasury
                                  Shares      Amount       Value      (Deficit)    Shares     Amount
<S>                              <C>         <C>         <C>         <C>          <C>        <C>
Balance January 1, 1996          1,339,443 $    13,000 $ 2,841,000 $     138,000         - $         -
Net loss                                 -           -           -      (755,000)        -           -

Balance December 31, 1996        1,339,443      13,000   2,841,000      (617,000)        -           -
Stock issued to Employee Stock
  Ownership Plan Trust              11,967           -      39,000             -         -           -
Net loss                                 -           -           -      (264,000)        -           -

Balance December 31, 1997        1,351,410      13,000   2,880,000      (881,000)        -           -
Purchase of Treasury Stock               -           -           -             -     6,175       7,000
Additional Shares issued
  in 20 for 1 Reverse Split            103           -           -             -         -           -
Net Income                               -           -           -       150,000         -           -

Balance December 31, 1998        1,351,513 $    13,000 $ 2,880,000 $    (731,000)    6,175 $     7,000

<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
20<PAGE>


<TABLE>
<CAPTION>

                    HAWKS INDUSTRIES, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years Ended December 31, 1998, 1997 and 1996
                                    1998          1997         1996
<S>                               <C>          <C>           <C>
Cash flows from operating
activities:
 Gain (loss) from continuing    $   150,000   $  (264,000) $  (742,000 )
   operations
 Adjustments to reconcile net
   gain (loss) to net cash
   provided by (used in)
   operating activities
   Depreciation, depletion and      208,000       254,000      237,000
    amortization
    Net gain on sale of assets      (46,000 )     (17,000)      (6,000 )
   Impairment of non-producing
    oil and gas property              5,000         6,000        6,000
   Changes in operating assets
    and liabilities:
    Decrease (increase) in          (95,000 )     (10,000)     384,000
    accounts receivable
    Decrease (increase) in
      costs in excess of            (17,000 )      41,000      (45,000 )
      billings and other
    Increaset(decrease) in
      accounts payable and          (69,000 )    (158,000)     292,000
      accrued expenses

                                    136,000      (148,000)     126,000
Operating cash flow from                  -             -       34,000
 discontinued operations

Net cash flows provided by (used    136,000      (148,000)     160,000
 in) oper. activities


Cash flow from investing
activities:
 Purchases of property and         (216,000 )    (122,000)    (614,000 )
   equipment
 Proceeds from sale of              358,000        33,000       42,000
   properties
 Decrease (increase) in other       (42,000 )           ()       3,000
   assets                                           2,000
 Decrease (increase) in land          6,000                   (202,000 )
   investment                                      -
 Decrease in note receivable          3,000         4,000        4,000
 Decrease in short-term               3,000       366,000      236,000
   investments

                                    112,000       279,000     (531,000 )
 Investing cash flow from                 -                      1,000
   discontinued operations                         -

Net cash provided by (used in)      112,000       279,000     (530,000 )
investing activities


Cash flows from financing
aPurchases:of Treasury Stock         (7,000 )           -
                                                                 -
 Proceeds from debt obligations     137,000       200,000      331,000
   incurred
 Reduction of debt obligations     (348,000 )    (349,000)     (95,000 )

                                   (218,000 )    (149,000)     236,000 )
 Financing cash flow from                 -                    (15,000 )
   discontinued operations                         -

Net cash provided by (used in)     (218,000 )    (149,000)     221,000
financing activities


Increase (decrease) in cash and      30,000       (18,000)    (149,000 )
cash equivalents
Cash and cash equivalents at         30,000        48,000      197,000
beginning of year

Cash and cash equivalents at end$    60,000   $    30,000  $    48,000
of year


<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
21<PAGE>

                    HAWKS INDUSTRIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.   Nature of Business and Significant Accounting Policies

Nature of business:
The Company, through its subsidiary, Western Environmental Services and Testing,
Inc. (WEST), acquired in 1992, is engaged in the environmental testing business.
WEST's emphasis and area of, greatest expertise is in air quality testing.
Professional air quality evaluations are performed to determine the emissions of
pollutants into the  atmosphere from  industrial sources.   Industrial  hygiene,
along with  indoor air  quality  for the  general  public and  private  business
sectors, is also provided.

The chemical laboratory, with  analytical services for air,  soils and water  is
located at the Casper facility.  During 1993, WEST formed a subsidiary,  Western
Environmental Services, Inc. to manage environmental remediation and  clean-ups.
Due to the decline in the  funding of clean-ups nationwide, this subsidiary  was
substantially closed in September, 1996.

The Company provides services to the  general public, although most clients  are
industrial entities.   Fees for  services are due  upon receipt  of invoice  and
normally collected within sixty to ninety days.

The Company is  also presently  engaged in investing  in oil  and gas  producing
properties with an emphasis on non-operating interests.  Previously the  Company
had been involved in exploration and  production activity but has  de-emphasized
this part of the oil and gas business in the last five years.  Sales of oil  and
gas are  made  to domestic  petroleum  purchasing and  refining  companies  with
payment normally received within thirty to sixty days of date of sale.

The Company formed Central Wyoming Properties, Inc. (a wholly owned  subsidiary)
in 1996  to acquire  real estate  investments.   The  Company, through  a  joint
venture with outside parties,  to date, has acquired  an ownership share of  one
property.

The Company had  also been engaged  in the business  of aviation publishing  and
navigational products assembly  and sales through  its subsidiary  International
Aviation Publishers,  Inc., acquired  in 1986.   During  1990 IAP  formed a  new
subsidiary, Hawks Books Company, which acquired printing equipment to print  IAP
books and also to provide outside printing services. Substantially all of the
assets of IAP were sold as of December 31,1994 and operationslof IAP, Hawks
Book Company, and SanTech, Inc. are shown as "Discontinued Operations".

This summary of significant  accounting policies of  Hawks Industries, Inc.  and
subsidiaries (the Company) is presented to assist in understanding the Company's
financial statements. The financial statements and notes are representations  of
the Company's management. These accounting policies,  with the exception of  the
adoption of SFAS No.  109, conform to  generally accepted accounting  principles
and  have  been  consistently  applied  in  the  preparation  of  the  financial
statements.

Principles of consolidation:

The Consolidated Financial Statements  include the accounts  of the Company  and
its subsidiaries. The  Company's proportionate  share of  partnership and  joint
venture assets,  liabilities,  revenue,  and expenses  is  consolidated  in  the
financial statements. In  consolidation, all  significant intercompany  accounts
and transactions have been eliminated.
22<PAGE>

Note 1.   Nature of Business and Significant Accounting Policies (continued)

The  Company  has  one  wholly-owned   oil  and  gas  subsidiary,   Burton/Hawks
Exploration Co., Ltd.

The Company also owns 100% of W.E.S.T. which provides environmental services and
testing.   W.E.S.T.  has  one wholly  owned  subsidiary,  Western  Environmental
Services, Inc. which managed environmental  clean-up projects and performs  site
evaluations.

The Company also owns  100% of Central Wyoming  Properties, Inc. which has  real
estate investments.

Cash equivalents:

For purposes of the Statement of Cash Flows, the Company considers highly liquid
debt instruments purchased with a  maturity of three months  or less to be  cash
equivalents.

Concentration of credit risk for cash held at banks:

The Federal Deposit  Insurance Corporation insures  up to  $100,000 of  deposits
maintained at any one financial institution.  On December 31, 1998, the  Company
had approximately $160,000 in excess of insured levels.

Accounts receivable:

Accounts  receivable  consist  of  regular  receivables  from  customers  and  a
receivable from a loan to an officer of the  Company.  At December 31, 1998  and
1997, receivables consisted of the following:
<TABLE>
                                      Regular
                                     Accounts    Loan to
                           Total    Receivable   Officer
<S>                        <C>        <C>         <C>
1998                     $ 425,000  $  425,000  $       -

1997                     $ 330,000  $  318,000  $  12,000


</TABLE>

Property and equipment:

The Company uses  the successful efforts  method of accounting  for oil and  gas
producing  activities  as  prescribed  by  Statement  of  Financial   Accounting
Standards (SFAS) Statement No. 19, "Financial Accounting and Reporting by Oil
and Gas Producing Companies".  Under this method, the costs of unsuccessful
exploratory wells and delay rentals are expensed as incurred.  Lease acquisition
costs and  costs  of  drilling and  equipping  productive  exploratory  and  all
development wells  are capitalized.   Depreciation  and depletion  of  producing
properties and  equipment is  computed by  the unit-of-production  method  using
Company estimates of unrecovered proved producing  oil and gas reserves.   Total
capitalized costs for individual  proved oil and gas  properties are limited  to
the estimated  future net  revenues  from production  of  proved reserves.    An
allowance for  impairment  has been  established  and expense  charged  for  the
estimated impairment of non-producing leasehold interests.
23<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.   Nature of Business and Significant Accounting Policies (continued)


Buildings and  leasehold improvements,  furniture and  fixtures,  transportation
equipment, and engineering and lab equipment are stated at cost and  depreciated
over their  estimated  useful  lives  ranging  from  three  to  forty-one  years
principally by the straight-line method.

The costs  of maintenance  and  repairs are  charged  to operating  expenses  as
incurred.   The  costs of  significant  additions, renewals  and  betterment  of
properties are capitalized and depreciated over the remaining or extended useful
lives of the properties.

Environmental testing revenue and cost recognition:

Income from  environmental  testing  contracts is  reflected  in  the  financial
statements by  the  completed  contract method  whereby  income  and  costs  are
recognized when the  testing has been  completed and a  report has been  issued.
The Company is in the environmental testing business. Due to the process
involved, there is  no way feasible to accurately determine the percentage of
completion at any time during the process.

Income taxes:

The Company  has elected  to omit  deferred taxes  as required  by Statement  of
Financial Accounting Standards Number 109,  "Accounting for Income Taxes"  (SFAS
No. 109).

Investment tax credits will  be reflected in the  Statements of Operations as  a
reduction of income taxes in the year in which they become available for use.

Earnings per share:

Earnings per common share were computed  by dividing net earnings (loss) by  the
weighted average number of shares outstanding  during the year.  Computation  of
the  weighted  average  number  of  outstanding  shares  excludes  common  stock
equivalents because they have no effect  for 1998.  On  January 8, 1998, at  the
Company's Annual meeting, a proposal was submitted to effect a 20 for 1  reverse
stock split which reduced  the company's outstanding  shares from 27,028,194  to
1,351,513.  Therefore, throughout these financial statements, earnings per share
have been restated to reflect the reverse split.

Bad debt:

Uncollectible accounts  receivable are  charged directly  against earnings  when
they are determined to be uncollectible.  Use of this method does not result  in
a material  difference from the valuation method required by generally  accepted
accounting principles.

Theecovenant notctopcompete is being amortized over the life of the agreement on
the straight line method.
24<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.   Nature of Business and Significant Accounting Policies (continued)

Environmental costs:

Environmental expenditures that  relate to  current operations  are expensed  or
capitalized  in  accordance  with  generally  accepted  accounting   principles.
Liabilities for  these  expenditures  are recorded  when  it  is  probable  that
obligations have been incurred and the amounts can be reasonably estimated.   At
December 31, 1998  and 1997,  no material liabilities  have been  recorded as  a
range of loss cannot be reasonably estimated.

Use of estimates:

The preparation of  financial statements in  conformity with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the  reported  amounts  of  assets  and  liabilities  and  disclosure  of
contingent assets and liabilities  at the date of  the financial statements  and
the reported  amounts of  revenues and  expenses  during the  reporting  period.
Actual results could differ from those estimates.  The Company uses estimates to
compute depreciation  and depletion  on  oil and  gas  properties and  on  other
depreciable assets.

Fair value of financial instruments:

The carrying value of cash, receivables  and accounts payable approximates  fair
value due to the  short maturity of  these instruments.   The carrying value  of
short and long-term debt approximates fair value based on discounting the
projected cash flows using market rates available for similar maturities. None
of the financial instruments are held for trading purposes.
The carrying  value of  the  available for  sale  investment is  the  guaranteed
redemption price of the 4% preferred stock.

Advertising costs:

The Company  expenses advertising  costs as  incurred.   Advertising  costs  are
deemed immaterial in amount.


Note 2.   Property and Equipment

      Property and  equipment at  December 31,  1998 and  1997 consists  of  the
following:
<TABLE>
<CAPTION>
                                                                      1998         1997
     <S>                                                           <C>          <C>
     Non-producing oil and gas properties, net of valuation
      allowance of $2,000 in 1998 and $8,000 in 1997              $    14,000  $    19,000
     Producing oil and gas properties                               1,655,000    1,659,000
     Furniture and fixtures                                           369,000      391,000
     Transportation equipment                                         200,000      235,000
     Buildings and leasehold improvements                             371,000      816,000
     Engineering and lab equipment                                  1,258,000    1,111,000
     Other                                                             59,000      118,000

                                                                    3,926,000    4,349,000
     Less accumulated depreciation and depletion                    2,223,000    2,237,000

                                                                  $ 1,703,000  $ 2,112,000


</TABLE>
25<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3. Notes Payable, Long-Term Debt and Pledged Assets
<TABLE>
<CAPTION>
      Notes payable were as follow at December 31, 1998 and 1997
                                                                          1998         1997
     <S>                                                               <C>           <C>
     Revolving line of credit $230,000, interest at Citibank Prime
         plus /%, (8.5% at December 31, 1998)  Maturing
         May 13, 1999, collateralized by oil and gas properties       $    65,000  $         - 
     Revolving lines of credit $200,00, interest at 6.35% to 7%
      maturing March 23, 1999 and June 22, 1999 collateralized by
      certificates of deposit                                             138,000      200,000
     Short-term note payable due bank, interest at 11.5%, payable
         $700 per month including interest                                      -       40,000


                                                                      $   203,000  $   240,000


</TABLE>
<TABLE>
<CAPTION>
     Long-term debt at December 31, 1998 and 1997 is as follow:
                                                                          1998         1997
     <S>                                                               <C>           <C>
     Mortgage note payable to bank, interest set at 3.125%
         above U.S. Treasury Bill index for one year each June 1st,
         collateralized by office building                            $        -   $    74,000
     Mortgage note payable to City of Casper, interest at 4%,
         payable $859 per month including interest until
         June 8, 1998 then balance due in lump sum,
         collateralized by office building and warehouse                       -       144,000
     Mortgage notes payable to W.D. Hodges and Jim Ferris Properties,
      interest at 9% payable $971 per month until September 17,
      2013, collateralized by building                                     95,000       97,000
     Mortgage note payable to bank, interest set at 4% above U.S.
          Treasury Bill index for one year each April 1st, (9.3% at
          December 31, 1998) payable $1,213 per month including
          interest until March 22, 2009, collateralized by office
          building                                                         96,000      102,000
     Lease payable, Eaton Financial Corporation, payable $1,227 per
      month including interest, collateralized by computer equipment
      with original cost of $49,000, accumulated depreciation of
      $27,000 and $22,000 at 1998 and 1997                                     -         2,000
     Note payable, State of Wyoming, interest at 4%, due in monthly
      installments of approximately $1,000 including interest until
      paid, unsecured                                                       6,000       16,000
     Installment loans payable, due at various times from June 1999
      to May, 2001, interest rates from 7.5% to 10%, secured by
      equipment                                                            37,000       15,000
     Note payable Wyoming Industrial Development Corporation,
         interest at 7.33%, payable $3,991 per month including
         interest until October 5, 2002, collateralized by equipment      157,000      192,000
     Note payable Wyoming Industrial Development Corporation,
      interest at 6.96%, payable $4,475 per month including
         interest until June 15, 2000, collateralized by  equipment        77,000            -

                                                                          468,000      642,000
     Less current maturities                                              128,000      227,000

                                                                      $   340,000  $   415,000


</TABLE>
26<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3. Notes Payable, Long-Term Debt and Pledged Assets (continued)

Aggregate maturities of long-term debt are as follow:
<TABLE>
     <S>                    <C>
     1999                  $ 128,000
     2000                     86,000
     2001                     57,000
     2002                     48,000
     2003                     13,000
     Thereafter              136,000

                           $ 468,000


</TABLE>
Actual cash payments for interest during the years ended December 31, 1998, 1997
and 1996 were $70,000, $72,000 and $66,000 respectively.

Note 4.   Income Taxes, Accounting Change, Prior Period Restatement

Under SFAS No.109,  (accounting for income  taxes) deferred  income taxes  arise
from temporary  differences resulting  from  differences between  the  financial
statement and tax basis of assets  and liabilities.  In financial reporting  for
oil  and  gas  properties,  the  Company  uses  differing  methods  to   compute
depreciation on  certain  equipment for  financial  statement purposes  and  tax
purposes; the tax depreciation  deductions are larger  than those for  financial
statement purposes primarily due to accelerated depreciation methods and shorter
lives for  tax purposes;  for financial  statement  purposes, an  allowance  for
impairment is  established for  estimated  impairment of  non-producing  leases;
however, no deduction  is taken  for taxes  until the  lease has  expired or  is
dropped; intangible drilling costs are capitalized for financial statement
purposes and maybbe expensed for tax purposes as the expenses are incurred; and,
the carrying value of certain equipment  has been reduced to approximate  market
value, but the loss will be recognized  for tax purposes upon disposition.   The
Company recognizes  income and  expense from  some  investments on  the  accrual
basis, but uses the cash basis for tax purposes.  Deferred taxes are  classified
as current and  noncurrent depending  on the  classification of  the assets  and
liabilities  to  which  they  relate.    Deferred  taxes  arising  from   timing
differences that are  not related  to an asset  or liability  are classified  as
current or noncurrent depending on the  periods in which the timing  differences
are expected to reverse.

Management believes  that although  disclosures mandated  by  SFAS No.  109  are
generally informative, that in  the Company's case the  application of SFAS  No.
109 leads to disclosures which are confusing.  To comply with SFAS No. 109 is to
record deferred income tax expense (credit) on the books of the Company, when in
fact, the Company has $8,500,000 of net operating loss carryforwards, $2,143,000
of depletion carryforwards  and $61,000  of various  income tax  credits.   This
issue is derived  from the  application of  the provisions  of SFAS  No. 109  to
companies who have  had quasi reorganizations  in the past.   (Hawks  Industries
applied the  quasi  reorganization  provisions  ARB  #43,  effective  in  1988.)
Specifically, paragraphs 39 and 49 of SFAS  No. 109 require that in cases  where
there  has  been  a  quasi  reorganization,  that  the  tax  benefits  of   loss
carryforwards and credits, earned prior to the date of the quasi reorganization,
be ignored when calculating deferred income  tax benefits.  Although  management
believes that such obscure provisions may give rise to great fodder in the world
of academia, we believe that to apply the principles of SFAS No. 109, paragraphs
39 and 49,  is at  variance with  the economic  realities of  the present  case.
Accordingly, we have not applied the  provisions of SFAS No. 109, paragraphs  39
and 49.
27<PAGE>

Note 4.   Income Taxes, Accounting Change, Prior Period Restatement (continued)

The following  disclosures are  provided  to show  a  condensed version  of  the
financial statements had SFAS No. 109 been implemented.
<TABLE>
<CAPTION>
Balance Sheet                               1998           1997
<S>                                       <C>           <C>
Current assets                          $   766,000   $     627,000
Other assets                              2,291,000       2,567,000

Total assets                            $ 3,057,000   $   3,194,000


Current liabilities                     $   562,000   $     767,000
Other liabilities                           340,000         415,000

Total liabilities                           902,000       1,182,000

Capital stock                                13,000          13,000
Capital in excess of par value            3,046,000       3,046,000
Retained earnings (deficit)                (897,000 )    (1,047,000
             Less Treasury stock             (7,000 )             -

Total equity                              2,155,000       2,012,000

Total liabilities and equity            $ 3,057,000   $   3,194,000


</TABLE>

<TABLE>
<CAPTION>
Income Statement                            1998          1997           1996
Gain (loss) from continuing operations    <C>           <C>            <C>
 before taxes                           $   150,000   $  (264,000 )  $  (742,000 )

Provision for taxes:
Current                                           -             -              -
Deferred                                          -       (11,000 )       11,000

                                                  -       (11,000 )       11,000

Gain (loss) from continuing operations      150,000      (275,000 )     (731,000 )
Discontinued operations (net of taxes)            -             -        (13,000 )

Net income (loss)                       $   150,000   $  (275,000 )  $  (744,000 )


</TABLE>
If SFAS No.  109 was  implemented, deferred  tax (assets)  liabilities would  be
comprised of the following at December 31:
<TABLE>
<CAPTION>
Tax effects of temporary differences         1998            1997             1996
for:
<S>                                       <C>             <C>              <C>
Accounting for oil & gas properties     $      54,000   $      57,000    $      75,000

Total deferred tax liabilities                 54,000          57,000           75,000

Other liabilities                                   -               -          (11,000 )
Tax loss carryforwards                     (2,896,000 )    (3,514,000 )     (3,432,000 )
Tax credit carryforwards                      (62,000 )       (86,000 )       (126,000 )

Total deferred tax assets                  (2,958,000 )    (3,600,000 )     (3,569,000 )

Net deferred asset                         (2,904,000 )    (3,543,000 )     (3,494,000 )

Asset valuation allowances                 (2,904,000 )     3,543,000        3,483,000

   Net deferred tax asset               $        -       $       -        $    (11,000 )
</TABLE>

When subsequently recognized, approximately $2,379,000 of the 1998 deferred  tax
assets' tax benefits  will be  allocated directly  to contributed  capital as  a
result of the Company's quasi reorganization in 1988.
28<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4.   Income Taxes, Accounting Change, Prior Period Restatement (continued)

At December 31, 1998, the Company's net operating loss and tax credits available
for carryforward to offset future taxable income and tax liabilities for  income
tax reporting purposes expire as follows:
<TABLE>
<CAPTION>
                                                 Net
                                              Operating      Investment
         Year Ending December 31,              Losses        Tax Credits
<S>                                          <C>             <C>
                   1999                        1,234,000           7,000
                   2000                        1,713,000          12,000
                   2001                        3,767,000               -
                   2003                          101,000               -
                   2004                           96,000               -
                   2009                          265,000               -
                   2010                          359,000               -
                   2011                          744,000               -
                   2012                          241,000               -
</TABLE>                                    $   8,520,000   $      19,000

The Company  also has  approximately  $43,000 in  unused  jobs tax  credits  and
$2,143,000 in  percentage depletion  carryforwards  available to  offset  future
income tax liabilities.  These items do not expire.


 Note 5.  Stockholders' Equity

The Company  had  an Incentive  Stock  Option Plan  for  key employees  and  had
reserved 50,000 shares of  unissued common stock to  be issued thereunder.   The
plan expired on November 19, 1991.  The option price was the market value of the
shares on the date the option  ($2.80) is granted except for beneficial  holders
of more than ten percent of the  total outstanding shares of the Company,  whose
option price was one hundred ten percent of said market price.  No option may be
exercised by any employee until all previously granted options still outstanding
to the same employee  are exercised.  There  were 2,500 options outstanding  and
exercisable at December 31, 1998 and 1997.   SFAS No. 123, Accounting for  Stock
Based Compensation, has no effect on the Consolidated Statement of Operations as
there have been no changes in the outstanding options.

The Company  has an  Employee Stock  Ownership Plan-Trust.   To  be eligible  to
participate, employees must be 21 years of age and have had at least one year of
continuous employment with the  Company. The Company, at  the discretion of  the
board of  directors, may  contribute to  the plan  an amount  not to  exceed  25
percent of total qualified compensation in any given year for any individual  to
a maximum of $30,000.  On occasion,  when the Company has contributed less  than
the amount  allowed, the  Company has  made additional  contributions under  the
carryover provisions of the  plan in subsequent  years.  The  total cost to  the
Company and its subsidiaries was $19,000, $8,000, and $58,000 in 1998, 1997  and
1996, respectively.  The ESOP compensation  expense was $806,000, $901,000,  and
and $1,145,000 in 1998, 1997 and 1996, respectively.

On November 9, 1998 the Board of Directors of Hawks Industries, Inc.  authorized
the repurchase of up to forty  thousand shares of Hawks Industries, Inc.  common
stock on the open  market or in negotiated  transactions, depending upon  market
conditions. Through February 25, 1999 the Company has acquired 16,175 shares  or
1.2% of the outstanding common shares.
29<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 6.   Related Parties


The Company, through its subsidiary W.E.S.T., rented an office and laboratory in
Casper, Wyoming from a company affiliated with two directors (Bruce Hinchey  and
James Meador) of the Company.  There is a remaining balance owed by the  Company
of $7,274.

During  1997,  the  former  CEO,  Joseph  J.  McQuade  made  multiple   personal
transactions at various times on the corporate  credit card issued to him.   All
transactions were accounted for, and full reimbursement to the Company had  been
made as of January 31, 1998.  On other occasions CEO, Joseph J. McQuade advanced
funds to the Company for operations.  Full reimbursement to Mr. McQuade had been
made as of January 31, 1998.

During 1998, Officer and  Board of Dsirector, Dwight  B. Despain provided  legal
services to the Company.  Total billings to the Company from Mr. Despain in 1998
were $34,400.  Total payments to Mr. Despain during 1998 were $8,700.


Note 7. Lease Commitments and Total Rental Expense

At times the Company rents equipment under various operating lease agreements,
however at December  31, 1998 there were no outstanding lease agreements.

The total equipment rental expenses included in the Statements of Operations for
the years  ended December  31, 1998,  1997 and  1996 were  $29,000, $43,000  and
$28,000, respectively.


Note 8. Sale of Buildings


On May 26, 1998, the Company signed an agreement to sell its building located at
7345 6WN Road  and 7383 6WN  Road in Natrona  County, Wyoming to  WERCS, a  non-
public Wyoming Corporation.  As set forth in the agreement, the closing date was
June 1, 1998 and the total sales price for both buildings was $417,000.

The Company's cost in  the building was  $506,000.  The  Company's basis in  the
building was $367,000.  Therefore, the  Company had an approximate $50,000  gain
resulting from the transaction.

The $417,000 was received as $317,000 cash and 10,000 shares WERCS 4%  preferred
convertible stock, with a guaranteed resale value of $100,000.

The majority owner  of WERCS, A  Wyoming Corporation, is  Dr. Gail D.  Zimmerman
whose spouse, through the Anne D.  Zimmerman Revocable Trust, owns 11.4% of  the
outstanding shares of Hawks industries, Inc. stock.
30<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 9.    Financial Information Relating to Industry Segments
<TABLE>
<CAPTION>                            1998         1997         1996
     <S>                         <C>           <C>           <C>
     Sales to unaffiliated
     customers:
      Oil and gas industry      $    236,000  $   333,000  $   188,000
      Environmental testing and
        management industry        2,209,000    1,798,000    1,958,000

                                $  2,445,000  $ 2,131,000  $ 2,146,000


     Discontinued operations    $          - $         -   $    44,000


     Operating profit or (loss):
      Oil and gas industry      $     33,000  $   (36,000) $   (43,000 )
      Environmental testing and
        management industry          246,000      (51,000)    (433,000 )
      Unallocated Corporate         (151,000     (159,000)    (247,000 )
        expenses

                                $    128,000  $  (246,000) $  (723,000 )


     Identifiable assets:
      Oil and gas industry      $    750,000  $   854,000  $   879,000
      Environmental testing and
        management industry        1,127,000      893,000    1,080,000
      Corporate assets             1,180,000    1,447,000    1,806,000

                                $  3,057,000  $ 3,194,000  $ 3,765,000


     Capital expenditures:
      Oil and gas industry      $      3,000  $    92,000  $   358,000
      Enmanagementlindustry and      213,000       30,000      207,000
      Other capital                        -                    49,000
      expenditures                                 -

                                $    216,000  $   122,000  $   614,000


     Depreciation, depletion and
     amortization:
      Oil and gas industry      $     79,000  $   111,000  $    67,000
      Environmental testing and
        management industry          106,000      103,000      116,000
      Other depreciation,
        depletion and                 23,000       40,000       56,000
        amortization

                                $    208,000  $   254,000  $   239,000


        Discontinued operations $          -  $         -  $     2,000


     Interest Income:
      Oil and gas industry      $     10,000  $         -  $         -
      Environmental testing and
        management industry                -        2,000            -
      Corporate intrest               13,000       18,000       43,000

                                $     23,000  $    20,000  $    43,000


     Interest Expense:
      Oil and gas industry      $      5,000  $         -  $         -
      Environmental testing and
        management industry           36,000       26,000       25,000

     Corporate Interest         $    270,000  $   472,000  $   465,000


</TABLE>
31<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10. Discontinued Operations

On December 23, 1994, the Company adopted a formal plan to sell its navigational
products segment.  A portion  of the product line  was sold in conjunction  with
the disposal of the publishing segment on December 23, 1994.  The final disposal
date was extended to December 31, 1996.  The assets of the navigational products
segment were sold piece meal and consisted primarily of inventory, and  property
and equipment.

Due to the additional operating losses incurred during the phase-out period  and
unanticipated losses  on  the disposition  of  certain equipment  sales,  actual
losses of $13,000 occurred  in 1996.  Accordingly, the accompanying consolidated
statements of operations for 1996 includes the additional loss.

Operating results of the navigational products, segment for the period prior  to
disposal are shown in the accompanying consolidated income statements.

Net sales of the discontinued segments for 1998, 1997 and 1996 were as follow:
<TABLE>
<CAPTION>
                                  1998        1997        1996
<S>                              <C>         <C>         <C>
Navigational products                  -           -   $ 44,000

These amounts are not included in net sales in the accompanying consolidated
Statements of Operations.

Note 11. Short-term Investments

Short-term investments consisted of certificates of deposits which are  intended
to be  held  until  maturity.   The  following  schedule  summarizes  investment
activity for the years ended December 31, 1998 and 1997.

</TABLE>
<TABLE>
<CAPTION>
                                             1998         1997
<S>                                         <C>         <C>
Beginning balance, at cost                $ 205,000   $   571,000
Purchase of investments                           -
                                                            -
Redemption of investments                   (12,000 )    (383,000 )
Earnings on investments                       9,000        17,000

Ending balance, at cost                   $ 202,000   $   205,000


Approximate market value                  $ 202,000   $   205,000


</TABLE>
At December 31,  1998 the investments  are scheduled to  mature during the  year
ending December 31, 1999.

Note 12. Major Customers

The following companies are considered major  customers which accounted for  ten
percent or more of total revenue or accounts receivable in 1998, 1997 and 1996.

<TABLE>
<CAPTION>         1998                  1997                  1996
                     Accounts              Accounts              Accounts
Company   Revenue   Receivable  Revenue   Receivable  Revenue   Receivable
<S>       <C>       <C>         <C>       <C>         <C>       <C>
   A         -          2%         9%         -         22%        22%
   B         -          -          -          -         15%         -
   C        28%        18%        12%        12%         -          -
   D         8%         4%        10%        17%         -          3%
   E        16%        22%         -          -          -          -
</TABLE>
32<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 13.  Note Receivable

The note receivable on December 31, 1998, consisted of $38,000 due from the sale
of printing equipment,  building and  other assets, part  of which  is shown  in
current assets.  The note receivable is secured by the above noted assets.   The
note has an interest rate of 9%.

     Maturities on this note are as follow:
<TABLE>
<S>                                   <C>
1999                                 $   4,000
2000                                     5,000
2001                                     5,000
2002                                     6,000
2003                                     6,000
Thereafter                              12,000
</TABLE>                             $   38,000
Note 14.  Significant Events

Effective February  1, 1998,  Registrant, Hawks  Industries, Inc.,  and a  third
party investor, entered into an agreement  with the Company's President,  Joseph
J. McQuade, whereby Mr.  McQuade and his  immediate family's stockholdings  were
purchased by the third party investor at $.10 per share ($2.00 post-split).  The
Company has entered into a severance agreement with Mr. McQuade which includes a
covenant not to compete.  Under the terms of the Agreement, the Company will pay
$50,000 per year for  four (4) years, payable  in semi-monthly installments,  to
McQuade in exchange for  the non-compete provision.   Mr. McQuade, effective  on
the same date, resigned as President of the Company and Chairman of the Board of
Directors.  Mr. Bruce  A. Hinchey, presently the  Company's Vice President,  was
elected by the Board  of Directors to  be the President  of the Corporation  and
James E. Meador, Jr., was selected to be the new Vice-President.  No replacement
for Mr. McQuade, on the Board of Directors, has been made as of the date of this
report.

The third party investor, the Anne  D. Zimmerman Revocable Trust dated  November
14, 1991 ("the Trust"),  by acquiring Mr. McQuade's  and his immediate  family's
shares, has 153,167 shares and therefore  has acquired 11.4% of the  outstanding
shares of the Company.  As such, the Trust is deemed to be a controlling person.
The Trustee of the Trust, Anne D. Zimmerman, will not sit on the Company's Board
of Directors, nor will she be an employee or officer of the Company.

Reverse Stock Split

At the Company's Annual Meeting held  on January 8, 1998, the Company  submitted
to a vote of security holders, through the solicitation of proxies or otherwise,
a proposal to effect a 20 for 1 reverse  split which was approved.  The  reverse
split changed the number of shares outstanding from 27,028,194 to 1,351,513.

Note 15.   Supplemental Disclosure
Noncash Financing and Investing Activities

As reported in  Note 8, in  the sale of  Corporate assets  the Company  received
10,000 shares of preferred stock valued at $100,000.

Other Disclosures
The Company paid no income taxes during the years ended December 31, 1998,  1997
and 1996.

33<PAGE>


ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
      FINANCIAL DISCLOSURE

                                     -NONE-


                                    PART III

The information  called for  by Items  10, 11,  12, and  13 is  incorporated  by
reference from the Company's Definitive Proxy Materials to be filed pursuant  to
Regulation 14 (a).


ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Related Transactions:

During the  prior  year, the  CEO,  Joseph  J. McQuade  made  multiple  personal
transactions at various times on the corporate  credit card issued to him.   All
transactions were accounted for, and full reimbursement to the Company has been 
made as of January 31, 1998. On other occasions CEO, Joseph J.McQuade advanced
funds to the Company for operations.  Full reimbursement to Mr. McQuade has been
made as of January 31, 1998.

During 1998, the  Company sold  its properties on  6WN Road  in Natrona  County,
Wyoming to WERCS, a  Wyoming Corporation.   The majority owner  of WERCS is  Dr.
Gail D. Zimmerman whose spouse, through  the Anne D. Zimmerman Revocable  Trust,
owns 11.4% of the outstanding stock of Hawks Industries, Inc. (See Note 8 of the
consolidated financial statements).

                                    PART IV

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8K

(a)   The following documents are filed as part of this Report:

      1.       Financial Statements:
               Report of Certified Public Accountants
               Consolidated Balance Sheets
               Consolidated Statements of Operations
               Consolidated Statements of Shareholders' Equity
               Consolidated Statements of Cash Flows
            Notes to Consolidated Financial Statements

      2.    Financial Statement Schedules as required by Item 8 above

The following documents are incorporated by reference:

3.          Exhibits
     21.List of Subsidiaries of Registrant
3.1a Certificate of Incorporation filed with the Delaware Secretary of State  on
3.1b Certificate of98Registration and  Articles of  Continuance filed  with  the
     Wyoming Secretary of State on April 15, 1998.
34<PAGE>

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8K
(continued)

(b)   Reports on Form 8-K

On January 7, 1999, the Company filed an  8K as of December 31, 1998,  notifying
the public that  the Company's  Board of  Directors authorized  the purchase  of
forty thousand share of Hawks Industries, Inc., Common Stock on the open  market
or in negotiated transactions, depending on market conditions.
35<PAGE>

                                   SIGNATURES


Pursuant to the requirements of Section 13 and 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.

                                          HAWKS INDUSTRIES, INC.

                                          /s/__Bruce A. Hinchey
                                          Bruce A. Hinchey, President


Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following  persons on behalf and in the  capacities
Signatures dates indicated.                                 Date


__/s/  Bruce A. Hinchey                                     February 25, 1999
Bruce A. Hinchey, President,
Principal Executive Officer
and Director


__/s/ James E. Meador, Jr.                                  February 25, 1999
James E. Meador, Jr.
Vice President and Director


__/s/ Bill Ukele                                            February 25, 1999
Bill Ukele
Chief Financial Officer


__/s/ Dwight B. Despain                                     February 25, 1999
Dwight B. Despain
Secretary/Treasurer and Director


__/s/ Gerald E. Moyle                                       February 25, 1999
Gerald E. Moyle
Director
36<PAGE>

                                  EXHIBIT 21.0
                       LIST OF SUBSIDIARIES OF REGISTRANT

           HAWKS INDUSTRIES, INDECEMBERD31,I1998TATE OF INCORPORATION

<TABLE>
<CAPTION>
Company                                     Parent        State
<S>                                     <C>             <C>
Burton-Hawks Exploration Co., Ltd.       (Hawks Ind.)    Colorado
Western Environmental Services Inc.      (WEST, Inc.)    Colorado
Western Environmental Services and       (Hawks Ind.)    Wyoming
Testing, Inc.
Central Wyoming Properties, Inc.         (Hawks Ind.)    Wyoming
</TABLE>
37<PAGE>