SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, DC  20549

                                   FORM 10-K

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

                  For the fiscal year ended December 31, 1997


                         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 March 17, 1998, was $1,351,515.

As of March 17, 1998, Registrant had 1,351,515 shares of Common Stock, $.01 Par
Value outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

Definitive Proxy Materials filed pursuant to Regulation 14 C by paper dated
November 17, 1997, and EDGAR, March 5, 1998, into Part III.

<PAGE>

                                    PART I.

ITEM 1 - BUSINESS

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.

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 1997, the Company's principal operations consisted of Environmental Testing
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>
                                                     1997             1996            1995

       <S>                                       <C>              <C>             <C>
       Sales to unaffiliated customers:
         Oil and gas industry                 $       333,000  $       188,000  $      196,000
         Environmental testing and management
           industry                                 1,798,000        1,958,000       3,097,000

                                              $     2,131,000  $     2,146,000  $    3,293,000


       Discontinued operations                $           -    $        44,000  $       28,000


       Operating profit or (loss):
         Oil and gas industry                 $       (36,000) $       (43,000) $      (46,000)
         Environmental testing and management
           industry                                   (51,000)        (433,000)        323,000
         Unallocated Corporate expenses              (159,000)        (247,000)       (192,000)

                                              $      (246,000) $      (723,000) $       85,000


        Discontinued operations               $           -    $       (13,000) $     (330,000)


       Identifiable assets:
         Oil and gas industry                 $       854,000  $       879,000  $      619,000
         Environmental testing and management
           industry                                   893,000        1,080,000       1,203,000
         Corporate assets                           1,447,000        1,806,000       2,107,000
         Discontinued operations                          -                -            86,000


                                              $     3,194,000  $     3,765,000  $    4,015,000


       Capital expenditures:
         Oil and gas industry                 $        92,000  $       358,000  $      189,000
         Environmental testing and management
           industry                                    30,000          207,000         214,000
         Other capital expenditures                       -             49,000           7,000
         Discontinued operations                          -                -             1,000

                                              $       122,000  $       614,000  $      411,000


       Depreciation, depletion and
       amortization:
         Oil and gas industry                 $       111,000  $        67,000  $       39,000
         Environmental testing and management
           industry                                   103,000          116,000          98,000
         Other depreciation, depletion and
           amortization                                40,000           56,000          57,000

                                              $       254,000  $       239,000  $      194,000


         Discontinued operations                          -    $         2,000  $       61,000


</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 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 seven 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, 1997 this carryover was $2,119,000.

<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, 1997 had a net operating loss ("NOL") carryforward
of $11,148,000.

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 2011.


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 ENGINEERING

Competition

The Environmental Engineering 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, 1995, 1996, and 1997, the
company provided services for customers in 14, 13, 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.

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 23 full-time employees.
(Administration and Accounting 3, Environmental 18 and Corporate Management 2).
All employees are provided with the opportunity to participate in a
comprehensive health and benefits package.  All eligible employees participate
in the Company's Employee Stock Ownership Plan.

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


ITEM 2 - PROPERTIES

PROPERTIES - REAL ESTATE

The Company owns facilities consisting of five separate buildings located on
approximately ten acres.

On March 22, 1994, the Company purchased a 10,600 square foot building 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 one building, an office building of 10,600 square feet.
An adjacent building has 6,000 square feet.  Next to it is an 11,500 square foot
warehouse.  These buildings have been listed for sale and prior to the sale have
been periodically rented to outside parties.

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

In addition, W.E.S.T. rents office space in Evanston, Wyoming on a month-to-
month basis from a third party.  In 1995 the Company also rented office space in
Cheyenne, Wyoming on a month-to-month basis.

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

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

Disclosures of Oil and Gas Producing Activities

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

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

Net Quantities of Oil and Gas Produced

The net quantities of oil and gas produced by the Company during each of the
last three fiscal years are as follow:
<TABLE>
<CAPTION>
             Oil (bbls)  Gas (Mcf)
<S>         <C>         <C>
    1995        6,500      52,000
    1996        4,500      57,000
    1997       11,000      49,000
</TABLE>


Average Sales Price and Production Costs

The following table reflects information concerning each of the last three
fiscal years:
<TABLE>
<CAPTION>
                                         1997          1996          1995
<S>                                 <C>           <C>           <C>
Average sales price per bbl             $18.25        $20.84        $17.50
Average sales price per Mcf               2.30          1.47          1.30
Average production cost per
 net equivalent bbl*                      6.55          4.34          5.38
</TABLE>

* Natural gas has been converted into equivalent bbls using a conversion ratio
of 6:1.

<PAGE>

Drilling Activity

The Company has not participated in the drilling of exploratory wells in 1997,
1996, nor 1995.  In late 1995, the Company participated in the drilling one
development well which was a productive well.  In 1996 the Company participated
in the drilling of 3 developmental wells which were productive.  The Company did
not participate in drilling any development wells in 1997.


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

At the Company's annual meeting held on January 8, 1998, the Company submitted
the following items to a vote of security holders through the solicitation of
proxy or otherwise.

Proposal to affect a 20 for 1 reverse stock split.  This reverse split changed
the number of shares outstanding from 27,028,194 to 1,351,515.  Results of the
election were as follows:
<TABLE>
                <S>                <C>
                For                    20,742,315
                Against                 3,251,585
                Abstain                   262,869
</TABLE>


The other proposal submitted to voters was to change the Company's State of
Domicile from the State of Delaware to the State of Wyoming.  Results of the
election were as follows:
<TABLE>
                <S>                <C>
                For                    19,024,720
                Against                   246,100
                Abstain                   209,386
</TABLE>


The Directors elected by the shareholders at the Annual Meeting were as follows:

Bruce A. Hinchey
Dwight B. Despain
<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>
1995:
      First Quarter                    1 1/4                1 1/4
      Second Quarter                   1 1/4                5/8
      Third Quarter                    5 5/8                1 1/4
      Fourth Quarter                   4 3/8                3 1/8
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 3/4                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
</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 March 6, 1998 there were 902 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

<TABLE>
<CAPTION>
                                              Year Ended December 31,
                         1997           1996          1995          1994           1993
<S>                     <C>           <C>           <C>            <C>           <C>
Operating revenues
 from continuing
 operations          $  2,131,000   $  2,146,000  $  3,293,000  $  2,595,000   $  2,602,000
Net income (loss)
 from continuing
 operations              (264,000)      (742,000)      117,000      (250,000)      (275,000)
Net income (loss)        (264,000)      (755,000)     (213,000)      268,000       (410,000)
Income (loss) from
 continuing
 operations per
 share*                      (.20)          (.55)          .09          (.12)          (.18)
Net income (loss) per
 share*                      (.20)          (.56)         (.16)          .14           (.29)
Total assets            3,194,000      3,765,000     4,015,000     4,883,000      4,461,000
Long-term debt            415,000        445,000       493,000       677,000        554,000
Shareholder's equity    2,012,000      2,237,000     2,992,000     3,175,000      2,912,000
Dividends declared
 per share                     -             -             -              -             -

</TABLE>

*  As restated for 20:1 reverse stock split.

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

Liquidity and Capital Resources:

In late 1994, the Company made decisions to expand the San Marcos, Texas office
and in 1996, decided to expand services further by opening an office in Salt
Lake City, Utah.  These decisions came after the record breaking year of 1995.
The operational losses from 1996 were unacceptable.  In order to correct the
corporate direction, management made several positive steps to improve the
financial condition of the Company.  As a result, 1997 proved to be an eventful
year for the Company.

In 1997, the Company had a loss of $264,000.  The Company has continued to
reduce their Texas and Utah offices and for year 1997, reduced the loss by 52
percent over the 1996 operating loss, of which approximately $20,000 was a
carryover from 1996 office reductions.  The Company still plans to work in these
areas, but all jobs will be run out of the Casper office.  Of the $264,000 loss
for 1997, the Company had non-cash depreciation, depletion and amortization
write-offs of $254,000.

Texas Office -- Management closely scrutinized and discovered that the operation
was not productive.  It was decided to reduce the personnel expense by 78
percent.  These changes reduced the revenues by 33%.  Clients are now being
serviced and maintained by the Casper, Wyoming office personnel.  Further cuts
and complete dissolution of the Texas office will be realized in 1998.

Salt Lake City Office -- The management of the Salt Lake City office has been
removed from employment with the Company.  All clients are now being serviced
from the Casper and Evanston, Wyoming offices.  This consolidation occurred mid
to late 1997, and resulted in a 75 percent decrease in losses.

Casper Office -- The Casper office houses the Hawks Corporate offices, as well
as maintaining the majority of the environmental equipment and personnel for the
organization.

In a cost savings move on May 1, management reduced the salaries of two of the
three executive officers employed by the Corporation:  The salary reductions
were as follow:
     Bruce A. Hinchey    24%
     James E. Meador, Jr.     24%
On May 15, Joseph J. McQuade's salary was reduced by 10%.

These corrections were the keystone to a net $350,000 cost savings.

In the first quarter of 1998, Joseph J. McQuade, CEO, terminated his employment.
As a result a significant cost savings will result.  (See Note 14, "Subsequent
Events" of the accompanying financial statements).  Those negotiations were
successful and his departure will be effective in the first quarter of 1998.

It is important to note that the majority of funding for the Agreement with Mr.
McQuade will come from outside investors.

Evanston, Wyoming Office -- The operation of the Oil and Gas production
analytical laboratory realized an increase of more than 30% and the net income
increased 309%.  The equipment remained in good operational condition, fewer
repairs were needed, and our major clients in the area increased our workload as
oil and gas production increased.

The industry wide reduction in environmental engineering and testing services
continued through mid-1997, however the trend reversed as evidenced by client
contact late in 1997 and early 1998.  Environmental companies nationwide have
faced the downturn.  Those remaining, such as W.E.S.T., have faired well by
increasing market share.

<PAGE>
The Company purchased approximately $122,000 in property and equipment for 1997
compared to $614,000 in 1996 and $410,000 in 1995.  Of the $122,000 purchased,
$92,000 was for equipment on the three development wells drilled in Brundage
Canyon.  We are anticipating two additional development wells in 1998 and the
environmental testing business will require some additional equipment.
Purchases of equipment should be held to the 1997 figure.

The Company continues to attempt to sell its facilities on 6WN Road in Casper
and has leased two of the three facilities which amounts to approximately 75% of
the debt service on the buildings.  The sale of either of the Casper properties
or the San Marcos property would have a significant positive impact on the
Company's liquidity and capital resources.

The following information is provided for the years ending December 31, 1997 and
1996:
<TABLE>
<CAPTION>
                                                   1997               1996
<S>                                              <C>                 <C>
Working capital                               $      (140,000)*    $      (41,000)
Long-term debt to equity                                1:4.9               1:5.0
Cash provided (utilized) by operations        $      (148,000)     $      160,000
Cash and short-term investments available     $       235,000      $      619,000
</TABLE>

* $140,000 loan on office building listed as current liability.

In addition, in late 1996 the Company purchased 33.7 acres of undeveloped
commercial real estate in Casper,  Wyoming.  The land is adjacent to and fronts
Interstate 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.  Business real estate development has increased at adjoining
property.  There is no announced time table for development of the land.

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 $835,000.  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 $19,000 on non-producing
properties which is net of an allowance for impairment of $8,000.  Management
believes 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 has had
environmental studies done prior to purchase and our environmental lab has been
instructed on the appropriate procedures for disposals of various kinds of
waste.  Such wastes (although relatively insignificant in amount) are tested
prior to disposal as part of an environmental assurance program.


Results of Operations:

This summarization of the Results of Operations will not include the activities
of the discontinued operations.  The reader is referred to the section above
entitled Liquidity and Capital Resources and to Footnote No. 9 of the
Consolidated Financial Statements.

<PAGE>
Environmental revenues decreased from $3,124,000 to $1,959,000 between 1995 and
1996, this was the result of the Company being able to acquire several large
clients in 1995 and the subsequent completion of some of those contracts.  With
the completion of these jobs, and a general downturn in the demand for
environmental services, environmental revenues decreased by $167,000 or 8.5%,
from $1,959,000 in 1996 to $1,792,000 in 1997.  This decrease was mainly due
from reducing the size of the Texas office.  Environmental expenses decreased
from $2,674,000 in 1995 to $2,276,000 in 1996 but did not decrease
proportionately with the dramatic decrease in revenues.  The reason for this is
the Company's inability to decrease its trained staff without jeopardizing its
ability to compete in the market.  Between 1996 and 1997 the company was able to
reduce costs by $530,000 or 23% 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
and the majority of the jobs being run from the Casper office.

Oil and gas sales declined slightly from $186,000 in 1995 to $181,000 in 1996.
Oil and gas sales increased from $181,000 in 1996 to $322,000 in 1997 or 78% due
to the drilling of three development wells in 1996 in the Brundage Canyon field.
Oil and gas expenses decreased by $50,000 to $73,000  from 1995 to 1996.  This
decline reflects the Company's' acquisition of certain producing overriding
royalties as compared to the bulk of the sales being from more expensive
properties in prior years.  Oil and gas expenses increased from $73,000 in 1996
to $139,000 in 1997, a 90% increase reflecting the additional wells drilled in
the Brundage Canyon Field.

Depreciation, depletion and amortization was $194,000 in 1995 compared to
$239,000 in 1996, a 45% increase.  This increase reflects the depreciation on
the increased assets purchased in 1995 and 1996.  Depreciation, depletion and
amortization increased from $239,000 in 1996 to $254,000 in 1997, a 6.2%
increase due to the depletion and depreciation in the Brundage Canyon Oil Field.

General and administrative costs increased from $217,000 in 1995 to $281,000 in
1996.  This increase in overhead costs reflects an increased number of staff
from 1995 to 1996.  General and administrative costs decreased by $43,000 from
$281,000 in 1996 to $238,000 in 1997, a 15.3% decrease due to decreases in staff
and other cost-cutting efforts.

Interest expense decreased from $76,000 in 1995 to $65,000 in 1996.  This
decrease was due to a declining borrowing base between the years.  Interest
expense increased in 1997 to $72,000 from $65,000 in 1996, a 10.7% increase due
to additional outstanding loans.  Interest income decreased from $67,000 in 1995
to $43,000 in 1996 to $20,000 in 1997, a 35.8% decrease in 1996 and a 53.4%
decrease in 1997 reflecting the utilization of investments for operations.
Provision for income taxes reflect the amount of current income taxes payable.
No provision has been made for deferred taxes in 1995, 1996, or 1997.

Management believes that although disclosures mandated by SFAS No. 109 are
generally informative, that in the Company's case the application of SFAS No.
109 leads to disclosures which are confusing.  To comply with SFAS No. 109 is to
record deferred income tax expense on the books of the Company, when in fact,
the Company has $11,148,000 of net operating loss carryforwards, $2,119,000 of
depletion carryforwards and $43,000 of various income tax credits.  This issue
is derived from the application of the provisions of SFAS No. 109 to companies
who have had quasi reorganizations in the past.  (Hawks Industries applied the
quasi reorganization provisions ARB #43, effective in 1988.)  Specifically,
paragraphs 39 and 49 of SFAS No. 109 require that in cases where there has been
a quasi reorganization, that the tax benefits of loss carryforwards and credits,
earned prior to the date of the quasi reorganization, be ignored when
calculating deferred income tax benefits.  Although management believes that
such obscure provisions may give rise to great fodder in the world of academia,
we believe that to apply the principles of SFAS No. 109, paragraphs 39 and 49,
is at variance with the economic realities of the present case.  Accordingly, we
have not applied the provisions of SFAS No. 109, paragraphs 39 and 49.

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



ITEM 8 - FINANCIAL STATEMENTS


Hawks Industries, Inc. and Subsidiaries


Index to Consolidated Financial Statements

Report of Certified Public Accountants on
    the Financial Statements                                                16
Consolidated Balance Sheets                                                 17
Consolidated Statements of Operations                                       18
Consolidated Statements of Shareholders' Equity                             19
Consolidated Statements of Cash Flows                                       20
Notes to Consolidated Financial Statements                                  21

<PAGE>


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



                          INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying consolidated balance sheets of Hawks
Industries, Inc. and subsidiaries as of December 31, 1997 and 1996 and the
related consolidated statements of operations, shareholders' equity, and cash
flows for the years ended December 31, 1997, 1996 and 1995. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

As described in Note 4, Statement of Financial Accounting Standards No. 109,
~Accounting~for~Income~Taxes~requires that deferred taxes be reflected for
temporary differences resulting from differences between the financial statement
and tax basis of assets and liabilities.  SFAS No. 109 also precludes the use of
tax benefits resulting from the carryforward of net operating losses which
originated prior to the Company's quasi-reorganization to increase net income
and specifically requires that they be treated as direct additions to paid-in-
capital.  The Company has not provided for recognition of deferred taxes in
accordance with generally accepted accounting principles.  If such a provision
were made, net income for 1997, 1996 and 1995 would be increased/(decreased) by
approximately $(11,000), $11,000 and $(61,000), respectively.

In our opinion, except for the effects of omitting deferred income taxes, as
discussed in the third paragraph, the consolidated financial statements referred
to above present fairly, in all material respects, the financial position of
Hawks Industries, Inc. and subsidiaries as of December 31, 1997 and 1996 and the
results of their operations and their cash flows for the years ended December
31, 1997, 1996 and 1995, in conformity with generally accepted accounting
principles.

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

          /s/ Hocker, Lovelett, Hargens & Skogen, P.C.
Casper, Wyoming
March 2, 1998
<PAGE>


<TABLE>
                    HAWKS INDUSTRIES, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                           December 31, 1997 and 1996

<CAPTION>
ASSETS                                                             1997            1996
<S>                                                             <C>             <C>
CURRENT ASSETS
  Cash (including certificates of deposit 1996 $2,000)        $       30,000  $       48,000
  Accounts receivable                                                330,000         320,000
  Short-term investments                                             205,000         571,000
  Costs on uncompleted contracts in excess of related
   billings                                                           12,000          51,000
  Other current assets                                                50,000          52,000

    Total current assets                                             627,000       1,042,000

PROPERTY AND EQUIPMENT, net
 (successful efforts method)                                       2,112,000       2,266,000

NOTE RECEIVABLE                                                       38,000          42,000

LAND INVESTMENT                                                      202,000         202,000

OTHER ASSETS                                                         215,000         213,000

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


    LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
  Notes payable                                               $      240,000  $      485,000
  Current maturities of long-term debt                               227,000         101,000
  Accounts payable                                                   275,000         402,000
  Accrued liabilities                                                 25,000          95,000

    Total current liabilities                                        767,000       1,083,000

LONG TERM DEBT                                                       415,000         445,000

SHAREHOLDERS' EQUITY
  Capital stock:
    Preferred stock, $.01 par value; authorized 19,940,000
      shares; no shares issued                                           -                -
    Common stock, $.01 par value; authorized 100,000,000
      shares; outstanding 1997 - 27,028,194 shares;
      1996 - 26,788,858                                              270,000         268,000
  Capital in excess of par value of common stock                   2,623,000       2,586,000
  Retained (deficit) (since elimination of deficit
   at December 31, 1988)                                            (881,000)       (617,000)

                                                                   2,012,000       2,237,000

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


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

<TABLE>

                    HAWKS INDUSTRIES, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                  Years ended December 31, 1997, 1996 and 1995
<CAPTION>
                                         1997          1996          1995
<S>                                    <C>           <C>           <C>
Operating revenue:
  Oil and gas                        $    322,000  $    181,000  $    186,000
  Environmental                         1,792,000     1,959,000     3,124,000
  Gain (loss) on sale of assets            17,000         6,000       (17,000)

                                        2,131,000     2,146,000     3,293,000

Operating expenses:
  Oil and gas                             139,000        73,000       123,000
  Environmental                         1,746,000     2,276,000     2,674,000
  Depreciation, depletion and
   amortization                           254,000       239,000       194,000
  General and administrative              238,000       281,000       217,000

                                        2,377,000     2,869,000     3,208,000

Operating income (loss) from
 continuing operations                   (246,000)     (723,000)       85,000
Other income (expense):
  Other income                             34,000         3,000           -
  Interest income                          20,000        43,000        67,000
  Interest expense                        (72,000)      (65,000)      (76,000)
  Sale of Marketable Securities               -             -          41,000

Gain (loss) from continuing
 operations before taxes                 (264,000)     (742,000)      117,000
Provision for taxes:
  Current                                     -             -             -

Gain (loss) from continuing
 operations                              (264,000)     (742,000)      117,000
Discontinued operations                       -         (13,000)     (330,000)

Net income (loss)                    $   (264,000) $   (755,000) $   (213,000)


Weighted average number of
 common shares outstanding as
 restated for 20:1 reverse stock
 split                                  1,351,147     1,339,443     1,328,915


Earnings (loss) per common share as
 restated for 20:1 reverse stock
 split:
  Gain (loss) from continuing
   operations                        $       (.20) $       (.55) $        .09
  Discontinued operations (net)               -            (.01)         (.25)

                                     $       (.20) $       (.56) $       (.16)



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

<TABLE>

                    HAWKS INDUSTRIES, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                  Years Ended December 31, 1997, 1996 and 1995
<CAPTION>
                                                                   Capital in   Accumulated
                                          Common Stock Issued      Excess of      Earnings
                                           Shares      Amount      Par Value     (Deficit)
<S>                                     <C>            <C>         <C>           <C>
Balance January 1, 1995                  26,322,782   $ 263,000   $  2,561,000  $  351,000
Stock issued to Employee Stock Ownership
 Plan Trust                                 461,076       5,000         24,000         -
Stock bonus granted employee                  5,000          -           1,000         -
Net loss                                         -           -             -      (213,000)

Balance December 31, 1995                26,788,858     268,000      2,586,000     138,000
Net loss                                         -           -             -      (755,000)

Balance December 31, 1996                26,788,858     268,000      2,586,000    (617,000)
Stock issued to Employee Stock Ownership
 Plan Trust                                 239,336       2,000         37,000         -
Net loss                                         -           -             -      (264,000)

Balance December 31, 1997                27,028,194   $ 270,000   $  2,623,000  $ (881,000)

<FN>

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


<TABLE>

                    HAWKS INDUSTRIES, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years Ended December 31, 1997, 1996 and 1995
<CAPTION>
                                                     1997             1996            1995
<S>                                              <C>              <C>             <C>
Cash flows from operating Activities:
  Gain (loss) from continuing operations      $      (264,000) $      (742,000) $      117,000
  Adjustments to reconcile net gain/loss to
   net cash provided:
    Depreciation, depletion and amortization          254,000          237,000         194,000
    Gain on sale of assets                            (17,000)          (6,000)        (24,000)
    Impairment of non-producing oil and gas
      property                                          6,000            6,000          37,000
    Changes in operating assets and
      liabilities:
       Decrease (increase) in accounts
       receivable                                      (10,000)         384,000         (269,000)
       Decrease (increase) in costs in excess
        of billings and other current assets            41,000          (45,000)          24,000
       Increase (decrease) in accounts payable
        and  accrued expenses                         (158,000)         292,000         (202,000)

                                                      (148,000)         126,000         (123,000)
  Operating cash flow from discontinued
   operations                                             -             34,000        (127,000)

Net cash flows provided by (used in) oper.
 activities                                          (148,000)         160,000        (250,000)

Cash flow from investing activities:
  Purchases of property and equipment                (122,000)        (614,000)       (410,000)
  Proceeds from sale of properties                     33,000           42,000         216,000
  Decrease (increase) in other assets                  (2,000)           3,000          13,000
  Increase in land investment                             -           (202,000)             -
  Decrease (increase) in note receivable                4,000            4,000         (46,000)
  Decrease (increase) in short-term
   investments                                        366,000          236,000        (807,000)

                                                      279,000         (531,000)     (1,034,000)
  Investing cash flow from discontinued
   operations                                             -              1,000         285,000

Net cash provided by (used in) investing
activities                                            279,000         (530,000)       (749,000)

Cash flows from financing activities:
  Proceeds from sale of stock                             -                -            30,000
  Proceeds from debt obligations incurred             200,000          331,000         182,000
  Reduction of debt obligations                      (349,000)         (95,000)       (307,000)

                                                     (149,000)         236,000         (95,000)
  Financing cash flow from discontinued
   operations                                             -            (15,000)        (49,000)

Net cash provided by (used in) financing
activities                                           (149,000)         221,000        (144,000)

Decrease in cash and cash equivalents                 (18,000)        (149,000)     (1,143,000)
Cash and cash equivalents at beginning of year         48,000          197,000       1,340,000

Cash and cash equivalents at end of year      $        30,000  $        48,000  $      197,000

<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 30 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".

     On December 31, 1988 the Company effected a quasi-reorganization whereby
     all of its assets (primarily those in the oil and gas industry segment)
     were revalued to their estimated fair market value and the retained
     earnings deficit was eliminated.

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

     Principles of consolidation:

     The Consolidated Financial Statements include the accounts of the Company
     and its subsidiaries. The Company's proportionate share of partnership and
     joint venture assets, liabilities, revenue and expenses is consolidated in
     the financial statements. In consolidation, all significant intercompany
     accounts and transactions have been eliminated.
<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 owned 100% of IAP.  (All assets have
     been sold or transferred to Hawks Industries, Inc. at December 31, 1995 and
     operations have been discontinued).  IAP had two wholly-owned subsidiaries,
     SanTech, Inc., which assembled and sold navigational products, and Hawks
     Book Company, formed to own and operate printing equipment.  All of Hawks
     Book Company's assets have been sold at December 31, 1995 and operations
     have been discontinued.  All of SanTech, Inc. assets and liabilities have
     been sold or transferred to Hawks Industries, Inc. and operations have been
     discontinued at December 31, 1996.

     The Company also owns 100% of W.E.S.T. which does 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,
     1997, the Company had approximately $135,000 in excess of insured levels.

     Accounts receivable:

     Accounts receivable consists of regular receivables from customers and a
     receivable from a loan to an officer of the Company.  At December 31, 1997
     and 1996, receivables consisted of the following:
<TABLE>
<CAPTION>
                                              Regular
                                              Accounts      Loan to
                                 Total       Receivable     Officer
<S>                             <C>           <C>           <C>
     1997                     $    330,000  $    318,000  $     12,000


     1996                     $    320,000  $    305,000  $     15,000



</TABLE>
<PAGE>



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

     Property and equipment:

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

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

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

     Environmental testing revenue and cost recognition:

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

     Income taxes:

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

     Investment tax credits will be reflected in the Statement 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 their effect would be antidilutive.  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 1,351,515.  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.

<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, 1997 and 1996, no material liabilities have been recorded
     as a range of loss cannot be reasonably estimated.

     Use of estimates:

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

     Fair value of financial instruments:

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

     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, 1997 and 1996 consists of the
following:
<TABLE>
<CAPTION>
                                                        1997         1996
      <S>                                              <C>           <C>
      Non-producing oil and gas properties, net of
       valuation allowance of $8,000 in 1997 and
       $2,000 in 1996                                $     19,000  $     26,000
      Producing oil and gas properties                  1,659,000     1,622,000
      Furniture and fixtures                              391,000       394,000
      Transportation equipment                            235,000       265,000
      Buildings and leasehold improvements                816,000       816,000
      Engineering and lab equipment                     1,111,000     1,084,000
      Other                                               118,000       118,000

                                                        4,349,000     4,325,000
      Less accumulated depreciation and depletion       2,237,000     2,059,000

                                                     $  2,112,000  $  2,266,000


</TABLE>
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Notes payable were as follows at December 31, 1997 and 1996
<CAPTION>
                                                          1997         1996
      <S>                                              <C>           <C>
      Short-term notes payable due bank, interest at
       8.0% $50,000 matured January 1, 1997 and
       $150,000 matured June 23, 1997 collateralized
       by certificate of deposit                     $        -    $    200,000
      Revolving line of credit $200,000, interest at
       7.25% maturing June 23, 1998 collateralized
       by certificate of deposit                          200,000       285,000
      Short-term note payable due bank, interest at
       11.5%, payable $700 per month including
       interest until October 15, 1998, then balance
       due in lump sum, collateralized by building         40,000           -


                                                     $    240,000  $    485,000


</TABLE>

<TABLE>
Long-term debt at December 31, 1997 and 1996 is as follows:
<CAPTION>
                                                           1997          1996
      <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, (9.815% at December 31, 1997),
       payable $1,490 per month including interest
       until April 1, 2003, collateralized by office
       building                                      $     74,000  $     84,000
      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       149,000
      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                          97,000       101,000
      Mortgage note payable to bank, interest set at
       4% above U.S. Treasury Bill index for one
       year each April 1st, (9.99% at December 31,
       1997) payable $1,251 per month including
       interest until March 22, 2009, collateralized
       by office building                                 102,000       106,000
      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 $22,000 and $17,000 at 1997
       and 1996                                             2,000        11,000
      Note payable, State of Wyoming, interest at 4%,
       due in quarterly installments of
       approximately $4,000 including interest until
       May 14, 1998, unsecured                             16,000        23,000
      Installment loans payable, due at various times
       from March 1998 to August, 1999, interest
       rates from 7.0% to 10%, secured by equipment        15,000        72,000
      Note payable Wyoming Industrial Development
       Corporation, interest at 7.33%, payable
       $3,991 per month including interest until
       October 5, 2002, collateralized by equipment       192,000           -

                                                          642,000       546,000
      Less current maturities                             227,000       101,000

                                                     $    415,000  $    445,000


</TABLE>
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>

Note 3. Notes Payable, Long-Term Debt and Pledged Assets (continued)
<CAPTION>
     Aggregate maturities of long-term   debt are as follows:
      <S>                         <C>
      1998                      $    227,000
      1999                            62,000
      2000                            64,000
      2001                            69,000
      2002                            64,000
      Thereafter                     156,000

                                $    642,000


</TABLE>


     Actual cash payments for interest during the years ended December 31, 1997,
     1996, and 1995 were $72,000, $66,000 and $78,000 respectively.



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

     Under SFAS 109 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.

     Management believes that although disclosures mandated by SFAS No. 109 are
     generally informative, that in the Company's case the application of SFAS
     No. 109 leads to disclosures which are confusing.  To comply with SFAS No.
     109 is to record deferred income tax expense (credit) on the books of the
     Company, when in fact, the Company has $11,148,000 of net operating loss
     carryforwards, $2,119,000 of depletion carryforwards and $43,000 of various
     income tax credits.  This issue is derived from the application of the
     provisions of SFAS No. 109 to companies who have had quasi reorganizations
     in the past.  (Hawks Industries applied the quasi reorganization provisions
     ARB #43, effective in 1988.)  Specifically, paragraphs 39 and 49 of SFAS
     No. 109 require that in cases where there has been a quasi reorganization,
     that the tax benefits of loss carryforwards and credits, earned prior to
     the date of the quasi reorganization, be ignored when calculating deferred
     income tax benefits.  Although management believes that such obscure
     provisions may give rise to great fodder in the world of academia, we
     believe that to apply the principles of SFAS No. 109, paragraphs 39 and 49,
     is at variance with the economic realities of the present case.
     Accordingly, we have not applied the provisions of SFAS No. 109, paragraphs
     39 and 49.

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

     The following disclosures are provided to show a condensed version of the
     financial statements had SFAS No. 109 been implemented.
<TABLE>
<CAPTION>
          Balance Sheet                              1997           1996
<S>                                               <C>            <C>
     Current assets                             $     627,000  $   1,053,000
     Other assets                                   2,567,000      2,723,000

      Total assets                              $   3,194,000  $   3,776,000


     Current liabilities                        $     767,000  $   1,083,000
     Other liabilities                                415,000        445,000

      Total liabilities                             1,182,000      1,528,000

     Capital stock                                    270,000        268,000
     Capital in excess of par value                 2,789,000      2,752,000
     Retained earnings (deficit)                   (1,047,000)      (772,000)

      Total equity                                  2,012,000      2,248,000

      Total liabilities and equity              $   3,194,000  $   3,776,000


</TABLE>


<TABLE>
<CAPTION>

          Income Statement               1997          1996          1995
<S>                                   <C>           <C>           <C>

     Gain (loss) from continuing
      operations before taxes       $   (264,000) $   (742,000) $    117,000

     Provision for taxes:
      Current                                -             -             -
      Deferred                           (11,000)       11,000       (17,000)

                                         (11,000)       11,000       (17,000)

     Gain (loss) from continuing
     operations                         (275,000)     (731,000)      100,000
     Discontinued operations (net of
     taxes)                                  -         (13,000)     (374,000)

     Net income (loss)              $   (275,000) $   (744,000) $   (274,000


</TABLE>

     If SFAS No. 109 was implemented, deferred tax (assets) liabilities would be
     comprised of the following at December 31:
<TABLE>
<CAPTION>
     Tax effects of temporary
     differences for:                    1997          1996          1995
<S>                                   <C>           <C>           <C>
     Accounting for oil & gas
     properties                     $     57,000  $     75,000  $     75,000

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

     Other liabilities                       -         (11,000)          -
     Tax loss carryforwards           (3,514,000)   (3,432,000)   (3,452,000)
     Tax credit carryforwards            (86,000)     (126,000)     (181,000)

      Total deferred tax assets       (3,600,000)   (3,569,000)   (3,633,000)

     Net deferred asset               (3,543,000)   (3,494,000)   (3,558,000)
     Asset valuation allowances        3,543,000     3,483,000     3,558,000

        Net deferred tax asset      $        -    $    (11,000) $        -


</TABLE>

     When subsequently recognized, approximately $2,600,000 of the 1997 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, 1997, 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        Investment
                                                      Operating        Tax
             Year Ending December 31,:                  Losses       Credits
<S>                                                   <C>           <C>
                        1998                           1,653,000        24,000
                        1999                           2,209,000         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           -

                                                    $ 11,148,000  $     43,000


</TABLE>

     The Company also has approximately $43,000 in unused jobs tax credits and
     $2,119,000 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, 1997 and 1996.  SFAS No. 123, Accounting for Stock Based
     Compensation, has no effect on the Consolidated Statement of Operations as
     there have been no changes in the outstanding options.

     The Company has an Employee Stock Ownership Plan-Trust.  To be eligible to
     participate, employees must be 21 years of age and have had at least one
     year of continuous employment with the Company. The Company, at the
     discretion of the board of directors, may contribute to the plan an amount
     not to exceed 25 percent of total qualified compensation in any given year
     for any individual to a maximum of $30,000.  On occasion, when the Company
     has contributed less than the amount allowed, the Company has made
     additional contributions under the carryover provisions of the plan in
     subsequent years.  The total cost to the Company and its subsidiaries was
     $8,000, $58,000, and $63,000 in 1997, 1996, and 1995, respectively.  The
     ESOP compensation expense was $901,000, $1,145,000, and $1,140,000 in 1997,
     1996, and 1995, respectively.
<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.  Rent paid was $12,000 in
     1995.  There is a remaining balance owed by the Company of $10,774.

     During the 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.



Note 7.   Lease Commitments and Total Rental Expense

     The Company rents equipment under various operating lease agreements.  The
     total minimum rental commitments at December 31, 1997 under the agreements
     are $3,000 which is due during the year ending December 31, 1998.


     The total equipment rental expense included in the Statements of Operations
     for the years ended December 31, 1997, 1996, and 1995  is $43,000, $28,000,
     and $198,000, respectively.
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
Note 8.    Financial Information Relating to Industry Segments
<CAPTION>
                                            1997          1996          1995
      <S>                                <C>           <C>           <C>
      Sales to unaffiliated customers:
        Oil and gas industry           $    333,000  $    188,000  $    196,000
        Environmental testing and
         management industry              1,798,000     1,958,000     3,097,000

                                       $  2,131,000  $  2,146,000  $  3,293,000


      Discontinued operations          $        -    $     44,000  $     28,000


      Operating profit or (loss):
        Oil and gas industry           $    (36,000) $    (43,000) $    (46,000)
        Environmental testing and
         management industry                (51,000)     (433,000)      323,000
        Unallocated Corporate expenses     (159,000)     (247,000)     (192,000)

                                       $   (246,000) $   (723,000) $     85,000


       Discontinued operations         $        -    $    (13,000) $   (330,000)


      Identifiable assets:
        Oil and gas industry           $    854,000  $    879,000  $    619,000
        Environmental testing and
         management industry                893,000     1,080,000     1,203,000
        Corporate assets                  1,447,000     1,806,000     2,107,000
        Discontinued operations                 -             -          86,000

                                       $  3,194,000  $  3,765,000  $  4,015,000


      Capital expenditures:
        Oil and gas industry           $     92,000  $    358,000  $    189,000
        Environmental testing and
         management industry                 30,000       207,000       214,000
        Other capital expenditures              -          49,000         7,000
        Discontinued operations                 -             -           1,000

                                       $    122,000  $    614,000  $    411,000


      Depreciation, depletion and
      amortization:
        Oil and gas industry           $    111,000  $     67,000  $     39,000

        Environmental testing and
         management industry                103,000       116,000        98,000
        Other depreciation, depletion
         and amortization                    40,000        56,000        57,000

                                       $    254,000  $    239,000  $    194,000


        Discontinued operations                 -    $      2,000  $     61,000


</TABLE>
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 9.   Discontinued Operations

     On December 23, 1994, the Company adopted a formal plan to sell its
     publishing segment for $1,800,000.  The disposal date for a substantial
     portion of the operations was December 23, 1994.  Assets of the publishing
     segment sold consisted of the following:
<TABLE>
<S>                                         <C>
     Accounts receivable                  $    130,000
     Inventory                                 293,000
     Other current assets                      205,000
     Property and equipment                     20,000
     Book masters and copyright                 50,000

     Total assets                         $    698,000


</TABLE>

     In 1995 the publishing company had a $142,000 loss which was $100,000
     operating loss and $42,000 loss on the sale of the remaining equipment.

     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.

     On December 23, 1994, the Company adopted a formal plan to sell its
     printing segment.  The disposal date was August 15, 1995.  The assets of
     the printing products segment to be sold as an operating unit, consisted
     primarily of inventory and property and equipment.  The printing company
     assets were sold during 1995 resulting in a loss of $113,000 in addition
     the company had a loss from operations of $80,000 prior to the sale.

     In 1994, the Company estimated an additional loss on the disposal of all
     discontinued operations of $128,000 to be incurred during the phase-out
     period of January 1, 1995 through December 31, 1995.  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
     $458,000 were incurred during 1995 and $13,000 in 1996, exceeding the
     original estimates by $340,000.  Accordingly, the accompanying consolidated
     statements of operations for 1996 and 1995 includes the additional loss.
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 9.   Discontinued Operations (continued)

     Operating results of the publishing, navigational products, printing, and
     environmental assembly segments for the period prior to disposal are shown
     separately in the accompanying consolidated income statements.

     Net sales of the discontinued segments for 1997, 1996, and 1995 were as
     follows:
<TABLE>
<CAPTION>
                                          1997          1996          1995
<S>                                    <C>           <C>           <C>
     Publishing                      $        -    $        -    $     14,000
     Navigational products                    -          44,000        92,000
     Printing                                 -             -          81,000

                                     $        -    $     44,000  $    187,000


</TABLE>

     These amounts are not included in net sales in the accompanying
     consolidated statements of operations.

Note 10. Short-term Investments

     Short-term investments consisted of treasury bills and certificates of
     deposits which are intended to be held until maturity.  The following
     schedule summarizes investment activity for the years ended December 31,
     1997 and 1996.
<TABLE>
<CAPTION>

                                                       1997          1996

<S>                                                 <C>           <C>
     Beginning balance, at cost                   $    571,000  $    807,000
     Purchase of investments                               -         253,000
     Redemption of investments                        (383,000)     (518,000)
     Earnings on investments                            17,000        29,000

     Ending balance, at cost                      $    205,000  $    571,000


     Approximate market value                     $    205,000  $    571,000


</TABLE>

     At December 31, 1997 the investments are scheduled to mature during the
     year ending December 31, 1998.


Note 11. Major Customers

     The following companies are considered major customers which accounted for
     ten percent or more of total revenues in 1997, 1996 and 1995.
<TABLE>
<CAPTION>
                                          Percentage      Service
                                     1997   1996   1995
<S>                                 <C>    <C>    <C>    <C>
     Newmont Gold                     9%     22%    23%  Environmental testing
     Dames and Moore                   -     15%    10%  Environmental testing
     Owens Corning                    12%     -      -   Environmental testing
     Amoco Production                 10%     -      -   Environmental testing
</TABLE>
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 12.  Note Receivable

      The note receivable on December 31, 1997, consisted of $42,000 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 above
      assets.  The note has an interest rate of 9%.
<TABLE>
<CAPTION>

             Maturities on this note are as follows:
<S>                                           <C>
                  1998                             4,000
                  1999                             4,000
                  2000                             5,000
                  2001                             5,000
                  2002                             6,000
                  Thereafter                      18,000

                                            $     42,000


</TABLE>

Note 13.  Subsequent 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 have been purchased by the third party investor at $.10 per
     share.  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 has, 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, has been 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 has been made as of yet on the Board of Directors.

     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 3,063,331 shares and therefore has acquired
     11.2% 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 1,351,515.

Note 14.   Supplemental Disclosure

     Noncash Financing Activities

     The Company issued 239,336 shares of common stock with a market value of
     $39,000 in exchange for amount payable to the Employee Stock Owner Plan &
     Trust.

     Other Disclosures

     The Company paid no income taxes during the years ended December 31, 1997,
     1996, and 1995.
<PAGE>

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

                                     -NONE-


                                    PART III

The information called for by Items 10, 11, 12, and 13 is incorporated by
reference from the Company's Definitive Proxy Materials to be filed by paper
dated November 17, 1997 and EDGAR confirming copy March 5, 1998 pursuant to
Regulation 14 A.


ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Related Transactions:

During the 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.

                                    PART IV

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

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

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


     2.   Financial Statement Schedules and Exhibits required to be filed by
     Item 8 of this form and by paragraph (d) of this Item:


     (b)  Reports on Form 8-K

     The Company filed no reports on form 8K for the fourth quarter.
<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. Hinchey                                   March 17, 1998
------------------------------
Bruce A. Hinchey, President,
Principal Executive Officer
and Director


/s/ James E. Meador, Jr.                               March 17, 1998
------------------------------
James E. Meador, Jr.
Vice President and Director


/s/ Bill Ukele                                         March 17, 1998
------------------------------
Bill Ukele
Chief Financial Officer


/s/ Dwight B. Despain                                  March 17, 1998
------------------------------
Dwight B. Despain
Secretary/Treasurer and Director


/s/ Gerald E. Moyle                                    March 17, 1998
------------------------------
Gerald E. Moyle
Director
<PAGE>

                                  EXHIBIT 21.0
                       LIST OF SUBSIDIARIES OF REGISTRANT

           HAWKS INDUSTRIES, INC. SUBSIDIARIES-STATE OF INCORPORATION
                               DECEMBER 31, 1997

<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>