SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC  20549

                                 FORM 10-K/A-1

[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

                                      None
<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"),
<PAGE>

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
OPERATIONS-Financial Condition, Liquidity 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
Company has participated  in one exploratory  well and  four development  wells.
The Company  does not  anticipate any  significant development  drilling on  its
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.

<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.
<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         29,000        25,000
      Corporate Interest                                   29,000         43,000        40,000

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


</TABLE>


<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 in  the  Brundage Canyon  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 substantial 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.

<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
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.
<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 December  31, 1996  this
discontinuance was completed.




ENVIRONMENTAL TESTING AND MANAGEMENT
-----------------------------------

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.
<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.

The following companies are considered major  customers which accounted for  ten
percent or more of total environmental testing revenue in 1998, 1997 and 1996.
<TABLE>
<CAPTION>
                                    1998               1997                1996
Company                            Revenue            Revenue             Revenue
-------                            -------            -------             -------

<S>                           <C>               <C>                 <C>
Newmont                               -                 9%                  22%
Dames & Moore                         -                  -                  15%
Owens                                28%                12%                  -
Amoco                                8%                 10%                  -
Remediation Technologies             16%                 -                   -
</TABLE>

As noted under competition, the Environmental Testing and Management industry is
highly competitive.  There are  no relationships  between  the Company  and  its
customers. No adverse  effects have been  noted from the  loss of any  customers
noted above.

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.
<PAGE>

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.

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
-----------------------------------------------
In accordance  with  FASB  Statement  no.  69  "Disclosure  About  Oil  and  Gas
Activities", the Company presents estimates of oil and gas reserves in order  to
assist the reader in making an  evaluation of the Company's reserves.   Inherent
in the reserve evaluation process are numerous risks associated with  attempting
to quantify unknown volumes and unknown costs. The reader is reminded  therefore
that the  following  information is  not  presented  as actual,  but  rather  as
estimates of future expectations. The reserve information following was based on
year-end prices.  The reader is reminded that oil and gas prices have fluctuated
since year-end and management foresees further fluctuation, both up and down.

<TABLE>
<CAPTION>
         CAPITALIZED COSTS RELATING TO OIL AND GAS PRODUCING ACITIVTIES

                   (All Activities are in the United States)

                                                      DECEMBER 31,
                                                      ------------
                                             1998         1997         1996
                                             ----         ----         ----
<S>                                        <C>          <C>          <C>
Proved oil and gas properties            $ 1,655,000  $ 1,659,000 $  1,621,000
Unproved oil and gas properties               16,000       29,000       28,000

                                           1,671,000    1,688,000    1,649,000
Accumulated depreciation, depletion
      and amortization, and valuation
      allowances                             905,000      834,000      770,000

Net Capitalized costs                    $   766,000  $   854,000 $    879,000


</TABLE>
<PAGE>
<TABLE>
<CAPTION>
    COST INCURRRED IN OIL AND GAS ACQUISITION, EXPLORATION, AND DEVELOPMENT
              ACTIVITIES (All Activities are in the United States)

                                             Year Ended December 31,
                                           1998         1997          1996
                                           ----         ----          ----
<S>                                      <C>          <C>          <C>
Acquisition of properties
     Proved                            $      -            -             -
     Unproved                                 -            -             -
     Exploration costs                        -            -             -
     Development costs                      3,000      69,000          295,000




                                       $    3,000   $  69,000    $     295,000


</TABLE>
<TABLE>
<CAPTION>
                 RESULTS OF OPERATIONS FOR PRODUCING ACTIVITIES
                   (All operations are in the United States)

                                                      1998          1997          1996
                                                      ----          ----          ----
<S>                                                  <C>           <C>           <C>
Revenues:
     Oil and gas sales                             $ 236,000     $ 322,000     $ 181,000
     Gain on sale of assets                               -         11,000         7,000

                                                     236,000       333,000       188,000

Expenses:
     Production costs                                 46,000       129,000        61,000
     Unsuccessful exploration                          7,000        10,000        12,000
     Depreciation, depletion valuation
       provisions and impairments                     84,000       111,000        67,000

                                                     137,000       250,000       140,000

                                                      99,000        83,000        48,000
     Income Tax                                           -             -             -

Results of operations from producing
     activities (excluding corporate overhead
     and interest costs)                           $  99,000     $  83,000     $  48,000


</TABLE>

Change in reserves

The Company has not had reserve reports prepared since 1991, because of the cost
to prepare  and  oil  and gas  sales  being  a minor  amount  on  the  Company's
Statements of Operations.  When required  to prepare  a reserve  report at  this
time, the Company used reserves at the end of 1999 and backed into reserves  for
1998, 1997 and 1996. The only increases  in reserve for these periods were  from
drilling three wells in  the Brundage Canyon Field  in 1996 and purchasing  nine
small ORR interests in Texas.  The Company  sold two wells in  Converse  County,
Wyoming in 1996 neither of which had any significant reserves.

The Company's major reserves come from  two prospects, one in the Recluse  Field
in Campbell County,  Wyoming where  the reports show  813,000 mcf's  of gas,  of
which 791,000 are proved undeveloped  reserves. The proved undeveloped  reserves
are the result of the active coalbed methane play that is currently unfolding in
the Powder River Basin.  The other  major prospect is in Duchesne County,  Utah.
The Company is showing  52,000 barrels of oil  and 62,000 mcf's  of gas on  this
prospect of which 26,000 barrels of oil and 41, 000 mcf's are proved undeveloped
on a direct offset of a good producer.
<PAGE>
<TABLE>
<CAPTION>
                          RESERVE QUANTITY INFORMATION
                    ( All Reserves are in the United States)

                                         1998               1997              1996
                                         ----               ----              ----
                                    Bbls      McF      Bbls      McF     Bbls      McF
                                    ----      ---      ----      ---     ----      ---
<S>                                <C>     <C>       <C>      <C>       <C>     <C>
Proved developed
And undeveloped reserves
   (a) (b) (c)
Beginning of year                   73,200 1,278,000   84,200 1,327,000  52,300 1,360,000
Revision of previous estimates           -         -        -         -       -         -
Purchase of minerals in place            -         -        -         -       -     9,000
Extension and discoveries                -         -        -         -  36,400    15,000
Production                         (8,300)  (68,000) (11,000)  (49,000) (4,500)  (57,000)
Sales or exchange of minerals in
place                                    -         -        -         -       -         -

                                    64,900 1,210,000   73,200 1,278,000  84,200 1,327,000


Proved developed Reserves:
Beginning of year                   47,100   415,000   58,100   464,000  26,200   497,000
End of Year                         38,800   347,000   47,100   415,000  58,100   464,000
<FN>
(A)   The Company has no oil and gas applicable to long-term supply agreements
    with Government or authorities in which the Company acts as producer.
(B)   The Company's proportional interest in reserves of proportionately
    consolidated investees is consolidated in this statement
(C)   The Company does not file reserve reports with any Federal authority or
    agency.
</TABLE>
<TABLE>
<CAPTION>


  STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOW AND CHANGES THEREIN
                     RELATED TO PROVED OIL AND GAS RESERVES
                    (All Reserves are in the United States)

                      Standardized Measure is as follows:

                                                 1998             1997            1996
                                                 ----             ----            ----
<S>                                          <C>              <C>              <C>
Future cash flows                          $   3,191,000    $   4,275,000   $    3,705,000
Future production and development cost          (618,000 )     (1,875,000 )     (1,325,000 )
Future Income taxes                                 -                -                -

Future net cash flows                          2,573,000        2,400,000        2,380,000

10% annual discount rate                        (772,000 )       (720,000 )        714,000

     Discounted future net cash flows      $   1,801,000    $   1,680,000   $    1,666,000



The following are the principal sources of change in
the standardized measure of discounted future net
cash flows:
Balance, beginning of the year             $   1,680,000    $   1,666,000   $      828,000
Sales, net of production cost                   (179,000 )       (187,000 )       (111,000 )
Net Changes in process and production
costs                                            135,000          103,000          542,000
Discoveries and purchase of reserves in
place                                               -                -             619,000
Development costs incurred                        (3,000 )        (69,000 )       (295,000 )
Revision of previous quantity estimates             -                -               -


Accretion of discount                            168,000          167,000           83,000

     Balance, end of year                  $   1,801,000    $   1,680,000   $    1,666,000


</TABLE>
<PAGE>

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 (bbls)   Gas (Mcf)
            ----------   ---------
<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
<PAGE>

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>

Productive Wells
----------------
     The following  table reflects  the total  gross  and net  wells,  expressed
separately for oil and gas as of December 31, 1998.

              Gross                                     Net
              -----                                     ---
          Oil        Gas                         Oil          Gas
          21         47                          1.23         .94

Drilling Activity
-----------------

The following reflects the exploratory and development wells drilled for the
past three years.
<TABLE>
<CAPTION>
                               Exploratory Wells
                               -----------------
           Productive               Dry               Total Wells
           ----------               ---               -----------
        Gross       Net       Gross       Net       Gross       Net
<S>   <C>        <C>        <C>        <C>        <C>        <C>
1996      0          0          0          0          0          0
1997      0          0          0          0          0          0
1998      0          0          0          0          0          0
</TABLE>
<TABLE>


<CAPTION>
                               Development Wells
                               -----------------
           Productive               Dry               Total Wells
           ----------               ---               -----------
<S>   <C>        <C>        <C>        <C>        <C>        <C>
1996      3         0.46        0          0          3         0.46
1997      0          0          0          0          0          0
1998      0          0          0          0          0          0
</TABLE>

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  three
developmental wells which were productive.   The Company did not participate  in
drilling any development wells in 1998 nor 1997.
<PAGE>

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.
<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
                                              ---------
                                     HIGH                  LOW
                                     ----                  ---
<S>   <C>                     <C>                 <C>
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
      Fourth Quarter                 3 1/8                1 1/4
1998:
      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.
<PAGE>

ITEM 6 - FINANCIAL DATA

All data as retroactively restated to conform with Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes.
<TABLE>
<CAPTION>
                                                     Year Ended December 31,
                                                     -----------------------
                                  1998          1997          1996          1995          1994
                                  ----          ----          ----          ----          ----
<S>                            <C>           <C>           <C>           <C>           <C>
Operating revenues from
 continuing operations           2,445,00      2,131,00      2,146,00      3,293,00      2,595,00

Net income (loss) from
 continuing operations             128,00       (275,00       (731,00        110,00       (247,00

Net income (loss)                  150,00       (275,00       (744,00       (274,00        179,00

Income (loss) from continuing
 operations per share*                 .1           (.2           (.5            .0           (.1

Net income (loss per share:)           .1           (.2           (.5           (.2            .1



Total assets                     3,057,00      3,194,00      3,776,00      4,015,00      4,944,00

Long-term debt                     340,00        415,00        445,00        493,00        677,00

Shareholders' equity             2,155,00      2,012,00      2,248,00      2,992,00      3,236,00

Dividends declared per share             -             -             -             -             -
<FN>
*  As restated for 20:1 reverse stock split.
</TABLE>
<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
skeleton crew.   The Company  continued to perform  work in  these regions,  but
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  $275,000
loss in 1997 was reversed to  a $150,000 net income in 1998.   This was a  turn-
around of $425,000.  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.
The buildings had been vacant for five years. The buildings were listed with two
different realtors for two years at a  listing price of $450,000 with no  offers
received. After expiration of the contract, the Officers of the Company began to
aggressively seek a buyer. The Officers  negotiated the terms of the sale  after
consideration of present  market value, future  market prospects  and cash  flow
requirements to maintain the mortgage. The terms of the sale 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 sale of the buildings  by
the Officers of the corporation, saved approximately $28,000 in realtor fees.

    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). The savings  realized is the  difference between the  CEO
salary and  the covenant  not to  compete  expense, approximately  $40,000.  The
savings is anticipated  to continue as  there are no  plans to  fill the  vacant
administrative position. It is important to note that purchase of Mr.  McQuade's
stock 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.
<PAGE>

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


The following information is provided for the years ending December 31, 1998 and
1997:
<TABLE>
<CAPTION>
                                                  1998        1997
                                                  ----        ----
<S>                                             <C>         <C>
Working Capital                                   204,00     (140,00 ) *
Long-term debt to equity                            1:6.        1:4.
Cash provided (utilized by operations)            136,00     (148,00 )
Cash and short-term investments available         262,00      235,00
<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.

Results of operations
---------------------

Environmental revenues 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>
<PAGE>

Sales                     2,211,00    1,792,00    1,959,00
Operating expenses        1,856,00    1,746,00    2,276,00

                            355,00       46,00     (317,00  )


</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
  wells drilled in 1996.
<PAGE>

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  being  performed  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 expenses per year for the Company's oil and
gas industry:
<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 for income taxes is required due to the utilization  of
net operating loss carryforwards.

Overall, total revenues increased by 15%  during 1998, as a result of  acquiring
several large clients in the environmental testing and management industry. This
increase more  than  compensated for  the  decline in  oil  and gas  prices  and
production. Total operating expenses decreased by 2.5% primarily as a result  of
realization of the  cost cutting measures  in reducing administrative  overhead,
resignation of CEO,  disposition of building.  Cost cutting  measures were  also
realized in  the overhead  costs of  the  environmental testing  and  management
industry as the Company completed the consolidation of locations.

Year 2000 Compliance
--------------------

Year 2000 Compliance is the ability of computer hardware and software to respond
to the problems posed by the fact that computer programs traditionally have used
two digits  rather  than  four  digits  to  define  an  applicable  year.  As  a
consequence, any of  the Company's  computer programs  that have  date-sensitive
software may recognize a date using "00" as  the year 1900 rather than the  year
2000.  This  could  result  in  a  system  failure  or  miscalculations  causing
interruption of operations, including temporary inability to perform  accounting
<PAGE>

functions and delays in the receipt of  payments from purchasers of oil and  gas
production and environmental testing customers.

The Company  has  been identifying  and  correcting affected  applications.  The
review of applications is expected to be completed by early 1999. New accounting
software systems will be implemented  by the end of  1999. Costs to modify  such
applications have been, and are estimated,  to remain immaterial to our  results
of operations or financial condition. We  are also working with our vendors  and
suppliers to  assess  their  compliance.  Letters  have  been  accumulated  from
significant customers regarding their year 2000 compliance. The Company  intends
to evaluate the relationship  with any customers or  vendors who cannot  provide
assurances on compliance. The  Company has received  assurance letters from  all
financial institutions with which it conducts  business. Upon the completion  of
the Company's year  2000 review, the  Company intends to  develop a  contingency
plan to address potential year 2000 problems.









ITEM 8 - FINANCIAL STATEMENTS



Hawks Industries, Inc. and Subsidiaries


Index to Consolidated Financial Statements

Report of Certified Public Accountants on
    the Financial Statements                             20
Consolidated Balance Sheets                              21
Consolidated Statements of Operations                    22
Consolidated Statements of Shareholders' Equity          23
Consolidated Statements of Cash Flows                    24
Notes to Consolidated Financial Statements               25-35

<PAGE>
          ------------------------------------------------------------
                        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.

In our report dated February  12, 1999, we expressed  an opinion that the  1998,
1997 and 1996 financial  statements did not  fairly present financial  position,
results of  operations and  cash flows  in  conformity with  generally  accepted
accounting principles because the  Company had not  provided for recognition  of
deferred taxes in  accordance with Statement  of Financial Accounting  Standards
No. 109, Accounting for Income  Taxes. As described in  Note 4, the Company  has
changed its method of accounting for that  item and has restated its 1998,  1997
and 1996  financial statements  to conform  with generally  accepted  accounting
principles. Accordingly,  our  present  opinion  on  the  1998,  1997  and  1996
financial statements, as presented herein, is  different from that expressed  in
our previous report.

In our opinion, 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,  1997and
1996, in conformity with generally accepted accounting principles.

                                   /s/ Lovelett, Hargens & Skogen, P.C.
Casper, Wyoming
February 5, 2000
<PAGE>
<TABLE>
<CAPTION>
                    HAWKS INDUSTRIES, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                           December 31, 1998 and 1997

                                                                       1998             1997
                                                                       ----             ----
<S>                                                               <C>              <C>
                      ASSETS
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                                                        257,000          215,000

                                                                        588,000          455,000

                                                                 $    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 $1,351,410 in 1997           13,000           13,000
   Capital in excess of par value of common stock                     3,046,000        3,046,000
   Retained (deficit)                                                  (897,000)      (1,047,000)
   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.
</TABLE>
<PAGE>
<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 management               2,211,000       1,792,000       1,959,000
   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 management               1,856,000       1,746,000       2,276,000
   Depreciation, depletion and amortization             208,000         254,000         239,000
   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                                                    -               -               -
   Deferred                                                   -         (11,000 )        11,000

                                                              -         (11,000 )        11,000

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

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


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 operations         $         .11   $        (.20 ) $        (.55 )
   Discontinued operations (net)                              -               -            (.01 )

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



<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                    HAWKS INDUSTRIES, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                  Years Ended December 31, 1998, 1997 and 1996

                                                               Capital in    Accumulated         Common Stock
                                      Common Stock Issued       Excess of     Earnings         Held in Treasury
                                      -------------------                                      ----------------
                                     Shares        Amount       Par Value     (Deficit)      Shares        Amount
                                     ------        ------       ---------     ---------      ------        ------
<S>                                <C>           <C>           <C>           <C>           <C>           <C>
Balance January 1, 1996 as
  previously reported                1,339,443        13,000 $   2,841,000 $     138,000             - $           -
Cumulative effect on prior
  years of retroactive restatement
  for accounting change                      -             -       166,000      (166,000 )           -             -

Balance January 1, 1996
  as restated                        1,339,443        13,000     3,007,000       (28,000 )           -             -
Net loss                                     -             -             -      (744,000 )           -             -

Balance December 31, 1996            1,339,443        13,000     3,007,000      (772,000 )           -             -
Stock issued to Employee Stock
  Ownership Plan Trust                  11,967             -        39,000             -             -             -
Net loss                                     -             -             -      (275,000 )           -             -

Balance December 31, 1997            1,351,410        13,000     3,046,000    (1,047,000 )           -             -
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 $   3,046,000 $    (897,000 )       6,175 $       7,000



<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<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 operations              $   150,000  $  (275,000 ) $  (731,000)
   Adjustments to reconcile net gain (loss) to net
     cash provided by (used in) operating activities
     Depreciation, depletion and amortization              208,000      254,000       237,000
     Deferred tax adjustment                                     -       11,000       (11,000)
      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 accounts receivable         (95,000)     (10,000 )     384,000
        Decrease (increase) in costs in excess of
          billings and other current assets                (17,000)      41,000       (45,000)
         Increase (decrease) in accounts payable and
            accrued expenses                               (69,000)    (158,000 )     292,000

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

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


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

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

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


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

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

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


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

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


<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<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  operations of 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 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.
<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 loan  to
an officer of the Company.  At December 31, 1998 and 1997, receivables consisted
of the following:
<TABLE>
<CAPTION>
                                            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.  An
allowance for  impairment  has been  established  and expense  charged  for  the
estimated  impairment  of  non-producing  (unproved)  leasehold  interests.  The
allowance is determined  based on future  expiration of  leases and  information
obtained by management regarding possible drilling activity.

In addition, unamortized  capital costs  of proved  oil and  gas properties  are
reduced to fair value if the sum  of expected undiscounted future cash flows  is
less than net book value.
<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.

An average contract takes two weeks  to complete. Jobs are billed when  complete
with payment  usually received  within 30  to  60 days.  Occasionally  contracts
extend longer than  two weeks.  Contracts are  then broken  into components  and
billed as components are completed.

Income taxes:

As described in  Note 4, the  Company has retroactively  restated the  financial
statements for deferred taxes as required  by Statement of Financial  Accounting
Standards Number 109, Accounting for Income Taxes.

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.

Covenant not to compete

The covenant not to compete is being amortized over the life of the agreement on
the straight line method.
<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  liabilities have been  recorded as bonding  and
insurance coverage  is  deemed adequate  to  cover any  potential  environmental
costs.

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>

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

      Notes payable were as follow at December 31, 1998 and 1997
<TABLE>
<CAPTION>
                                                                                     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 $200,000, 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>
     Long-term debt at December 31, 1998 and 1997 is as follow:
<TABLE>
<CAPTION>
                                                                                     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>
<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


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 may be 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.


The tax effects of temporary differences that gave rise to significant  portions
of the deferred tax (assets) liabilities were as follows at December 31:

</TABLE>
<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.
<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               -

                                           $   8,520,000   $      19,000


</TABLE>
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 ESOP  contribution
provided by the Company and its subsidiaries was $19,000, $8,000, and $58,000 in
1998, 1997 and 1996, respectively.  The compensation expense used to compute the
ESOP contribution was $806,000, $901,000, 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.
<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  Director, 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.
<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 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          29,000          25,000
              Corporate Interest                              29,000          43,000          40,000


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


</TABLE>
<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>
<PAGE>

Navigational products          $         -   $         -   $  44,000
</TABLE>
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>
<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>
  A                      -                  2%        9%                  -         22%             22%
  B                      -                   -         -                  -         15%               -
  C                     28%                18%       12%                12%           -               -
  D                      8%                 4%       10%                17%           -              3%
  E                     16%                22%         -                  -           -               -
</TABLE>
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 13.  Note Receivable

The note receivable on December 31, 1998, consisted of $35,000 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
<PAGE>

2000                                     5,000
2001                                     5,000
2002                                     6,000
2003                                     6,000
Thereafter                               9,000

                                     $  35,000


</TABLE>
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.
<PAGE>



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

                                     -NONE-


                                    PART III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS

The following information is furnished as  of October 12, 1999, with respect  to
the nominee and the  other Directors whose terms  in office will continue  after
the meeting.
<TABLE>
<CAPTION>

                                   Principal Occupation          Year Since       Share of
                                During the Last Five Years         which        Common Stock      Percent
                                 and Position with Company      Continuously    Beneficially        of
Name/Age                         (In Addition to Director)       A Director         Owned          Class
--------                         -------------------------       ----------         -----          -----
<S>                            <C>                             <C>             <C>              <C>
Dwight B. Despain/ 45          Appointed  as  a   Class  III        1992            2,050         0 .2
                               Director  August   24,  1992.
                               Attorney    with   Dixon    &
                               Despain,  Casper,   WY  since
                               1990;  Warnick  &  Blood  Law
                               Offices from 1985-1990.

Bruch A. Hinchey/ 50           Appointed  as  a   Class  III        1993        115,928(a)(c)       8.7
                               Director   May    12,   1993;
                               President     of      Western
                               Environmental  Services   and
                               Testing,  Inc. 1981 to  1997.


                               President      of       Hawks
                               Industries,  Inc.  and  Vice-
                               President     of      Western
                               Environmental   Services    &
                               Testing, inc. since 1998.

James E. Meador, Jr./ 46       Appointed   as  a   Class   I        1993        120,545(b)(c)       9.1
                               Director  May 12, 1993;  Vice
                               President     of      Western
                               Environmental  Services   and
                               Testing,  Inc. 1981 to  1997.
                               President     of      Western
                               Environmental   Services    &
                               Testing,   Inc.   and   Vice-
                               President      of       Hawks
                               Industries, Inc. since 1998.

Gerlad M. Moyle/ 44            Appointed    as   Class    II        1994              8             -0-
                               Director June 30,  1994; Land
                               Manager  of Brown  Operating,
                               Inc. since 1984.
<PAGE>
<FN>
(a)  Included are  11,553  shares  allocated in  the  Company's  Employee  Stock
Ownership Plan-Trust.

(b)  Included are 14,120 shares  allocated to Mr. Meador  and his spouse in  the
     Company's Employee Stock Ownership Plan-Trust.


(c)  Included are 1,675  shares Mr. Meador  and Mr. Hinchey  own through  H &  M
     Properties.
</TABLE>

ITEM 11 - EXECUTIVE COMPENSATION
<TABLE>
<CAPTION>
                                         Annual compensation                                 Long term compensation
                                         -------------------                                 ----------------------
                                                                                    Awards             Payouts
                                                                                    ------             -------
Name and principal       Year    Salary     Bonus       Other annual      Restricted     Securities      LTIP      All
position                          ($)        ($)      Compensation ($)       Stock       Under-Lying   payouts    other
                                                                           Award(s)        Option        ($)     Compen-
                                                                                          SARS (#)                sation
(a)                      (b)      (c)        (d)            (e)               (f)            (g)         (h)       (i)
<S>                      <C>  <C>         <C>       <C>                 <C>            <C>            <C>       <C>

CEO-Bruce A. Hinchey     1998    80,000      -0-          (a,b,c)             -0-            -0-         -0-       -0-
President and Director   1997    87,800      -0-          (a,b,c)             -0-            -0-         -0-       -0-
of Hawks Industries,     1996   105,000      -0-          (a,b,c)             -0-            -0-         -0-       -0-
Inc. Vice President of
Western Environmental
Services & Testing,
Inc.


James E . Meador, Jr.    1998    80,000      -0-          (a,b,c)             -0-            -0-         -0-       -0-
Vice President and       1997    87,800      -0-          (a,b,c)             -0-            -0-         -0-       -0-
Director of Hawks        1996   105,000      -0-          (a,b,c)             -0-            -0-         -0-       -0-
Industries, Inc.,


President of Western
Environmental Services
& Testing, Inc.

Joseph J. McQuade        1997    98,280      -0-           (a,b)              -0-            -0-         -0-       -0-
President, CEO and       1996   105,000      -0-           (a,b)              -0-            -0-         -0-       -0-
Director of Hawks
Industries.

All Executive Officers   1998   160,000      -0-                              -0-            -0-         -0-       -0-
as a Group (Two in       1997   273,880      -0-                              -0-            -0-         -0-       -0-
number)                  1996   315,000      -0-                              -0-            -0-         -0-       -0-
                                  (a)
<FN>
(a) Messers. Hinchey, Meador and McQuade received other compensation valued at
less than 10% of the compensation reported in this table.

(b) Not included is the amount which was accrued under the Company's Employee
Stock Ownership Plan-Trust discussed below.

(c) Pursuant to employment agreements expiring 2004, Messers. Hinchey and Meador
would receive a lump sum payment of approximately four years' salary and each
would receive approximately $100,000 in consideration of receiving a reduced
salary in past years if employment should be terminated by the Company without
cause.
<PAGE>
</TABLE>

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table shows the beneficial ownership of the shares of the Company
as of the close of business on October 12, 1999, of each person known to the
company to be the beneficial owner of more than 5% of the Company's issued and
outstanding Common Stock and of all Officers and Directors as a group. Unless
noted to the contrary, each person or entity has direct ownership and sole
voting dispositive power.
<TABLE>
<CAPTION>
                                                  Percent
                                                  Of Class
Name and Address              Shares Owned      Outstanding
----------------              ------------      -----------
<S>                           <C>            <C>
Bruce A Hinchey                  115,928            8.7
913 Foster Road                  (a)(c)
Casper, Wyoming  82601

James E. Meador, Jr.             120,545            9.1
913 Foster Road                  (b)(c)
Casper, Wyoming  82601

Anne D. Zimmerman                153,167            11.5
Revocable Trust
400 East 1st Street
Casper, Wyoming  82601

All Officers and Directors       389,640            29.3
and 5% Shareholders as a
Group (three in number)


<FN>
(a) Included are 11,553 shares allocated in the Company's Employee Stock
Ownership Plan-Trust.

(b) Included are 11629 and 2,491 shares allocated to Mr. Meador and his spouse
respectively in the Company's Employee Stock Ownership Plan-Trust.

(c) Included are 1,675 shares Mr. Meador and Mr. Hinchey own through H & M
Properties.
</TABLE>
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).
<PAGE>

                                    PART IV
<PAGE>


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 October 18, 1998.
      3.1b  Certificate of Registration and Articles of Continuance filed with
            the Wyoming Secretary of State on April 15, 1998.


(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 shares of Hawks Industries, Inc., Common Stock on the open market
or in negotiated transactions, depending on market conditions.

<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
and on the dates indicated.


Signatures                                                  Date
----------                                                  ----


/s/ Bruce A. Hincey                                    February 11, 2000
-------------------------
Bruce A. Hinchey, President,
Principal Executive Officer
and Director


/s/ James E. Meador Jr.                                February 11, 2000
-------------------------
James E. Meador, Jr.
Vice President and Director


/s/ Bill Ukele                                         February 11, 2000
-------------------------
Bill Ukele
Chief Financial Officer


/s/ Dwight B. Despain                                  February 11, 2000
-------------------------
Dwight B. Despain
Secretary/Treasurer and Director


/s/ Gerald E. Moyle                                    February 11, 2000
-------------------------
Gerald E. Moyle
Director
<PAGE>

                                  EXHIBIT 21.0
                       LIST OF SUBSIDIARIES OF REGISTRANT

           HAWKS INDUSTRIES, INC. SUBSIDIARIES-STATE OF INCORPORATION
                               DECEMBER 31, 1998

<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 Testing, Inc.     (Hawks Ind.)      Wyoming
Central Wyoming Properties, Inc.                     (Hawks Ind.)      Wyoming
</TABLE>
<PAGE>