<PAGE>

                                   FORM 10-K
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

     [ X ]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
          SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1997

                                      OR
                                                            
     [   ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from                    to                          

                                        Commission file number 0-12444-D

                            THE ROCKIES FUND, INC.
                         -------------------------     
            (Exact Name of Registrant as Specified in its Charter)

         Nevada                                     84-0928022
-----------------------------------            ---------------------
(State or other jurisdiction                     I.R.S. Employer 
of incorporation or organization)              Identification number

            4465 Northpark Drive, Colorado Springs, Colorado  80907
          --------------------------------------------------------
             (Address of principal executive offices)  (Zip Code)

     Registrant's telephone number, including area code:   (719) 590-4900

Securities registered pursuant to Section 12(b) of the Act:

     Title of each class      Name of each exchange on which registered
     -------------------      ---------------------------------------------
     None                     None

Securities registered pursuant to Section 12(g) of the Act:

     Title of Each Class
     $.01 Par Value Common Stock

     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 [  ]

     Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.                                              [  ]

     As of December 31, 1997, the aggregate market value of the Common Stock
of the Registrant based upon the average of the closing bid and asked prices
of the Common Stock as quoted on the National Quotation Bureau, LLC held by
non-affiliates of the Registrant was $765,574.  As of  December 31, 1997,
640,256 shares of Common Stock of the Registrant were outstanding.
<PAGE>
<PAGE>

                      DOCUMENTS INCORPORATED BY REFERENCE

     The Registrant hereby incorporates herein by reference the following
documents:


Part IV - Exhibits
------------------

     1.   Incorporated by reference from the Fund's final Registration
Statement on Form N-2, No. 2-86057, as filed with the Securities and Exchange
Commission.

     2.   Incorporated by reference from the Fund's Notification Pursuant to
Rule 14f-1 under the Securities Exchange Act of 1934, as filed with the
Commission on January 15, 1991.

     3.   Incorporated by reference from the Fund's Annual Report on Form 10-K
for the fiscal year ended December 31, 1995.


Forward-Looking Statements
--------------------------

     In addition to historical information, this Annual Report contains
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, and are thus prospective.  The forward-looking
statements contained herein are subject to certain risks and uncertainties
that could cause actual results to differ materially from those reflected in
the forward-looking statements.  Factors that might cause such a difference
include, but are not limited to, competitive pressures, changing economic
conditions, those discussed in the Section entitled "Management's Discussion
and Analysis of Financial Condition and Results of Operations," and other
factors, some of which will be outside the control of the Fund.  Readers are
cautioned not to place undue reliance on these forward-looking statements,
which reflect management's analysis  only as of the date hereof.  The Fund
undertakes no obligation to publicly revise these forward-looking statements
to reflect events or circumstances that arise after the date hereof.  Readers
should refer to and carefully review the information in future documents the
Fund files with the Securities and Exchange Commission.<PAGE>
<PAGE>

                                    PART I

                               ITEM 1. BUSINESS

History and Background
----------------------

     The Rockies Fund, Inc. (the "Fund") was incorporated on August 2, 1983,
under the laws of the State of Nevada, for the principal purposes of making
venture capital investments in developing companies throughout the United
States.  The Fund's initial capitalization consisted of a purchase of 12,500
shares of the Fund's Common Stock for a total of $100,000 by Galbreath
Financial Investment Corporation, an affiliate of the Fund's former Advisor,
Galbreath Financial Services Corporation, on August 5, 1983.  On November 16,
1983, the Fund completed a public offering of its stock, whereby the Fund sold
a total of 425,000 shares of its $.01 par value Common Stock at a price of
$8.00 per share.  The Fund received net proceeds from the offering of
$2,890,000.

     Effective January 29, 1991, the Fund entered into an Agreement Concerning
the Change in Management ("Agreement"), which provided for the termination of
the Fund's management and advisor agreements and the resignation of the then
existing Board of Directors and executive officers of the Fund. Prior to
January 29, 1991, Galbreath Financial Services Corporation ("Advisor") had
provided management and administrative services to the Fund pursuant to a
Management Agreement between the parties and had provided investment services
pursuant to an Investment Advisory Agreement between the parties.  Under the
terms of the Agreement, and with the approval of the Fund's majority and
controlling stockholder, D.A. Davidson & Company, the former five (5) members
of the Fund's Board of Directors, resigned in sequence and the vacancies
created by those resignations were filled by the Fund's current Board of
Directors, to serve until the next regular annual meeting of the Fund's
stockholders.  (See Part III - "Directors and Executive Officers")

     The Fund has elected treatment as a "business development company" under
the Investment Company Act of 1940, as amended (the "Act"), and is therefore
subject to the provisions of the Act which apply to such companies.  As a
"business development company", the Fund is relieved from compliance with a
number of provisions of the Act which otherwise would significantly affect its
operations, but remains subject to other regulations affecting investment
companies.  In order to maintain its status as a business development company,
approximately 70% of the Fund's assets must be comprised of venture capital
investments.

     As a business development company, the Fund invests in, and makes
managerial assistance available to, new and developing companies.  Prior to
making an investment in a company which is eligible for the Fund's venture
capital portfolio, the Fund's management conducts a review of the portfolio
company's operations to determine whether it is appropriate for investment by
the Fund.  This review may include familiarization with the portfolio
company's business plan, a tour of the proposed portfolio company's
facilities, credit and reference checks and a careful review of the portfolio
company's product, its markets and growth prospects.

     Consistent with the Fund's offer to provide managerial assistance to its
portfolio companies, the Fund attempts to arrange for its officers and
directors to serve as directors of such companies.  Also, the Fund assists
portfolio companies in their efforts to recruit management, to define their
product planning and marketing strategies, to form financial plans and to
develop corporate goals.  The Fund also assists such companies in establishing
professional relationships, in obtaining additional financing, in evaluating
merger opportunities and in conducting private and public offerings of their
securities.

Financial Information About Industry Segments
---------------------------------------------

     Since inception, the Fund has operated primarily in the venture capital
industry and plans to continue to devote a majority of its resources to
operations within this arena.  However, during the third quarter of fiscal
1993, the Fund acquired a 26,500 square foot office building which was sold
effective March 31, 1997 for a net gain of approximately $388,000.  In a
concurrent transaction structured to qualify as a tax free exchange under
section 1031 of the Internal Revenue Code of 1986, as amended, the Fund, on
April 1, 1997, consummated the purchase of 5 acres of undeveloped commercial
real estate, and on September 4, 1997, consummated the purchase of a
commercial building to lease as a source of income.

     The following table sets forth for each of the Fund's last three fiscal
years, the amounts of revenue, operating profit or loss and identifiable
assets, attributable to the Fund's investment activities and to the operation
of the Fund's office building as of March 31, 1997, and undeveloped and
developed commercial real estate purchased on April 1 and September 4, 1997,
respectively.  The following information should be read in conjunction with
the Financial Statements and related Notes contained elsewhere in this report
and Management's Discussion and Analysis of Financial Condition and Results of
Operations.


                                              As of or For the Years Ended 
                                                       December 31
                                                1997      1996      1995 

Investment Income:

          Venture Capital Industry         $ 63,777    $36,057    $ 19,971 
          Real Estate                        57,890    170,434     157,565 

Net Investment Income (Loss):

          Realized Investment Income        (51,374) 1,549,196      31,889 
          Venture Capital Industry          (11,276)  (488,522)   (289,512)

          Real Estate                       (14,520)    59,833      30,570 

Identifiable Assets:

          Venture Capital Industry        3,322,424  2,733,821   1,525,053 
          Real Estate (land, building, 
               and construction in 
               progress at cost)            491,242    736,271     661,734 



Narrative Description of Business
---------------------------------

     Venture Capital Operations

     The Fund's primary business remains investing in, and making managerial
assistance available to, new and developing companies.  To this end, effective
July 19, 1994, the Fund changed and expanded its Investment Objective.  As
amended, the Fund's Investment Objective is capital appreciation by making
venture capital investments primarily in developing companies located
throughout the United States and its territories which the Fund's management
believes offer significant growth opportunities.  The Fund also invests in
more established companies which are experiencing financial difficulties if
such companies present special opportunities for growth.  Thus, the Fund
invests in companies involving a high degree of risk and possessing the
potential for significant capital appreciation.  In 1997, the Fund purchased
certain real estate which management believes represents investments
consistent with the Fund's investment objectives.

     The Fund seeks to follow certain guidelines when identifying potential
portfolio companies, and attempts to invest in those companies which are
unique with regard to their products or their production or marketing
techniques.  The Fund also looks for investment opportunities in companies
that produce products for which there is a discernible demand, at competitive
costs.  Strong growth potential, a reasonable opportunity for liquidity,
increases in gross revenues in excess of industry averages and a lack of
dependence upon governmental contracts or any one sector of the economy, are
important factors which the Fund generally considers prior to making an
investment.

     The Fund presently has four employees.  The Fund's executive officers and
directors screen, evaluate and structure investments and provide managerial
assistance to portfolio companies.  The Fund's officers and directors provide
guidance regarding the propriety and structuring of investments and establish
periodically the valuation of securities held by the Fund.

     The venture capital business is highly competitive.  A recent dramatic
increase in the number of businesses engaged in venture capital investment
activities has meant that a larger number of firms are competing for a limited
number of attractive investment opportunities.  Notwithstanding these
developments, however, no single firm or group of firms dominates the
industry.  Where possible, the Fund seeks to participate with other venture
capitalists in their investment activities.

     The following descriptions of certain companies in which the Fund has
invested contain information which has been obtained from officers and
directors of the respective companies, and from documents furnished to the
Fund by such companies.  The description of the Fund's investments includes
valuation information which is based upon certain valuation methods which are,
in order of preference, the Public Market Method (used when there is an
established public market for the portfolio company's securities), the Private
Market Method (based upon private transactions), the Appraisal Method
(reflecting a comparison between the portfolio company and other public or
private companies engaged in the same or similar business activities), and the
Cost Method (based upon the cost of the Fund's investments as adjusted to
reflect significant developments affecting the investment).
<PAGE>
<PAGE>

                              PORTFOLIO COMPANIES

     AMERICAN EDUCATIONAL PRODUCTS, INC.
     -----------------------------------

     The Fund, at December 31, 1997, held 31,000 shares of American
Educational Products, Inc. common stock, after giving effect to a one-for-five
(1:5) reverse stock split. The stock is restricted as to sale due to the
company being an affiliate,  non-income producing and has been valued by the
Board of Directors at its quoted market value of $5.875 per share or $182,125. 
These shares are pledged as collateral, at December 31, 1997, on a $300,000
promissory note payable (See Redwood Broadcasting, Inc.).  The Fund also held,
at December 31, 1997, common stock purchase warrants  to purchase an
additional 40,000 shares of common stock of American Educational Products,
Inc. at an exercise price of $4.50 per share.  The Board of Directors valued
these warrants at $1.375 each or $55,000, representing the difference between
their exercise price and the market value of the common stock. The Fund also
held at December 31, 1997 common stock purchase warrants  to purchase an
additional 31,000 shares at an exercise price of $10.00 per share.  These
warrants were valued at their quoted market price of $0.25 each or $7,750, and
are also pledged as collateral on the aforementioned $300,000 promissory note
payable.

     ASTEA INTERNATIONAL
     -------------------

     The Fund, at December 31, 1997, held 15,000 shares of Astea International
common stock, which stock is unrestricted as to sale, non-income producing,
and has been valued at its quoted market price of $1.875 per share or $28,125.

     BEAR STAR (fka COLUMBINE HOME SALES, LLC.)
     ------------------------------------------

     The Fund has invested in Bear Star, which investment is restricted as to
sale, non-income producing, and has been valued by the Board of Directors at
$0.  The Fund also holds a note receivable from Bear Star with remaining
amounts due of $5,814.  The note accrues interest at the rate of 10% per year,
and is due on demand.
     
     CABLE AND COMPANY WORLDWIDE
     ---------------------------

     The Fund, at December 31, 1997, held 50,000 shares of Cable and Company
Worldwide common stock, which stock is unrestricted as to sale, non-income
producing, and has been valued at its quoted market price of $.125 per share
or $6,250.

     COVA TECHNOLOGIES
     -----------------

     The Fund, at December 31, 1997, held 917 shares of Cova Technologies
common stock, which stock is restricted as to sale, non-income producing, and
has been valued by the Board of Directors at its cost of $20,035.

     CUSA TECHNOLOGIES, INC.
     -----------------------

     The Fund, at December 31, 1997, held 30,000 shares of Cusa Technologies,
Inc. common stock, which stock is unrestricted as to sale, non-income
producing and has been valued at its quoted market price of $1.031 per share
or $30,938.  These shares are pledged as collateral, at December 31, 1997, on
a $300,000 promissory note payable (See Redwood Broadcasting, Inc.).

     DAMACH, INC.
     ------------

     The Fund, at December 31, 1997, held a note receivable from Damach in the
amount of $32,500 which accrues interest at the rate of 12% per year and was
originally due on December 31, 1996.  An agreement was signed on March 4, 1997
to extend this promissory note on a month to month basis or until the Fund
makes a written request for payment.

     EXPLORATION COMPANY, THE
     ------------------------

     The Fund, at December 31, 1997, held 36,000 shares of The Exploration
Company common stock, which stock is unrestricted as to sale, non-income
producing, and has been valued at its quoted market price of $2.00 per share
or $72,000. 

     GEORGESON, PHIL
     ---------------

     The Fund, at December 31, 1997, held a note receivable from Phil
Georgeson in the amount of $4,602.  The note is unsecured, accrues interest at
the rate of 12% per year and is due on demand.

     GLOBAL CASINOS, INC.
     --------------------

     The Fund, at December 31, 1997, held 17,680 shares of Global Casinos,
Inc. common stock, after giving effect to a 1-for-10 reverse split.  The stock
is restricted as to sale due to the company being an affiliate, non-income
producing, and has been valued at its quoted market price of $3.50 per share,
or $61,880.  The Fund, at December 31, 1997, also held a note receivable from
Global Casinos, Inc. in the amount of $175,000, which note is unsecured,
accrues interest at 8% per year, and is due November 1, 1998.  This note is
convertible into shares of Global Casinos, Inc. common stock at a conversion
price of $5.00 per share.  The Fund holds a second note receivable from Global
Casinos in the amount of $43,904, which is unsecured, accrues interest at 9%
per year, is due on demand, and is convertible into Global Casinos, Inc.
common stock at $5.00 per share.  The Fund holds a third note receivable from
Global Casinos, Inc. in the amount of $75,000, which is secured, accrues
interest at 12% per year plus an additional 12% fee per year and is due April
15, 1998. The Fund also owns 35,000 Global warrants exercisable at $6.00,
35,000 warrants exercisable at $7.00 and 35,000 warrants exercisable at $8.00
per share, all of which expire as of February 1, 1999 and have been valued at
$0 by the Board of Directors.

     GUARDIAN TECHNOLOGIES, INC.
     ---------------------------

     The Fund, at December 31, 1997, held 126,366 shares of Guardian
Technologies common stock, after giving effect to a one-for-three (1:3)
reverse split.  The Fund has pledged 22,500 shares as collateral, at December
31, 1997, on a $300,000 promissory note payable (See Redwood Broadcasting,
Inc.). The stock is restricted due to the company being an affiliate, non-
income producing, and has been valued at its quoted market price of $2.75 per
share or $347,506.  The Fund also held warrants to purchase an additional
137,000 shares of Guardian Technologies common stock, which warrants are also
restricted due to the company being an affiliate, non-income producing, and
have been valued at their quoted market price of $.3125 each or $42,813. The
Fund has pledged 67,000 warrants as collateral, at December 31, 1997, on a
promissory note payable to Redwood Microcap, Inc.

     HAMPTON COURT RESOURCES
     -----------------------

     The Fund, at December 31, 1997, held 12,500 shares of Hampton Court
Resources common stock, which stock is restricted as to sale, non-income
producing and has been valued at its quoted market price of $1.29 per share or
$16,162.  These shares are pledged as collateral, at December 31, 1997, on a
$300,000 promissory note payable (See Redwood Broadcasting, Inc.).

     KINETIKS.COM
     ------------

     The Fund, at December 31, 1997, held 113,500 shares of Kinetiks.com
common stock, which stock is unrestricted as to sale, non-income producing,
and has been valued at $0.  The Fund also held warrants to purchase and
additional 400,000 shares of Kinetiks.com common stock at an exercise price of
$.25 per share.  The warrants have been valued by the Board of Directors at
$0.  The Fund also held a note receivable in the amount of $25,000 which is
unsecured, accrues interest at the rate of 10% per year, and is due on demand. 
The note provides for a default interest rate of 18% and an additional 50,000
warrants for each 30-day period that it goes unpaid.

     LAND RESOURCE CORPORATION
     -------------------------

     The fund, at December 31, 1997, held 10,000 shares of Land Resource
Corporation common stock, which stock is restricted as to sale, non-income
producing, and has been valued by the Board of Directors at its cost of $1.00
each or $10,000.

     LONE OAK VINEYARDS, INC.
     ------------------------

     The Fund, at December 31, 1997, held 49,000 shares of Loan Oak Vineyards,
Inc. common stock, which stock is restricted as to sale, non-income producing,
and has been valued by the Board of Directors at $2.66 per share or $130,536
which represents an estimate of the underlying fair value of the Fund's
interest in Lone Oak Vineyards, Inc. equity.

     MARCO FOODS, INC.
     -----------------

     The Fund, at December 31, 1997, held a note receivable from Marco Foods,
an affiliate of the Fund, in the amount of $127,338, which is unsecured,
accrues interest at 12% per year and is due on demand.
     
     OPTIMAX INDUSTRIES, INC. (fka PLANTS FOR TOMORROW, INC.)
     --------------------------------------------------------

     At December 31, 1997, the Fund held 115,191 shares of Optimax Industries,
Inc. common stock, which stock is unrestricted as to sale, non-income
producing and has been valued at its quoted market price of $.156 per share or
$18,004. The shares of Optimax are pledged as collateral securing the Fund's
line of credit with a bank.

     PREMIUM CIGARS, INC.
     --------------------

     The Fund, at December 31, 1997, held 5,000 shares of Premium Cigars
common stock, which stock is unrestricted as to sale, non-income producing and
has been valued at its quoted market price of $1.5625 per share or $12,813. 
These shares are pledged as collateral, at December 31, 1997, on a $300,000
promissory note payable (See Redwood Broadcasting, Inc.).

     REDWOOD BROADCASTING, INC.
     --------------------------

     The Fund, at December 31, 1997, held 255,000 shares of Redwood
Broadcasting, Inc. common stock, which stock is restricted as to sale, non-
income producing, and has been valued at its quoted market price of  $1.75 per
share or $446,250.  The shares were purchased in exchange for a $300,000, 10
year, 8% promissory note.

     SHIVA CORPORATION
     -----------------

     The Fund, at December 31, 1997, held 2,630 shares of Shiva Corporation
common stock, which is unrestricted as to sale, non-income producing and has
been valued at its quoted market price of $8.5625 per share or $22,519.

     SOUTHSHORE CORPORATION
     ----------------------

     At December 31, 1997, the Fund held 15,000 shares of Southshore
Corporation common stock, which stock is unrestricted as to sale, non-income
producing, and has been valued at its quoted market price of $.25 per share or
$3,750.  These shares are pledged as collateral, at December 31, 1997, on a
$300,000 promissory note payable (See Redwood Broadcasting, Inc.).

     TELS CORPORATION
     ----------------

     The Fund, at December 31, 1997, held 30,000 shares of TELS Corporation
common stock, which stock is unrestricted as to sale, non-income producing,
and has been valued at its quoted market price of $.3125 per share or $9,375.

     TRAINING DEVICES, INC.
     ----------------------

     The Fund, at December 31, 1997, held 20,000 shares of Training Devices,
Inc. common stock, which stock is restricted as to sale, non-income producing,
and has been valued by the Board of Directors at $2.00 per share or $40,000,
based on the price of the company's most recent financing in October of 1997.

     USASURANCE GROUP
     ----------------

     The Fund, at December 31, 1997, held 73,500 shares of Usasurance Group
common stock, which stock is unrestricted as to sale, non-income producing,
and has been valued at its quoted market price of $2.00 per share or $147,000.
          
     WHITEWING LABS
     --------------

     The Fund, at December 31, 1997, held 20,000 shares of Whitewing Labs
common stock, which stock is unrestricted as to sale, non-income producing,
and has been valued at its quoted market price of $.75 per share or $15,000.

     WILSHIRE TECHNOLOGIES, INC.
     ---------------------------

     The Fund, at December 31, 1997, held 247 Wilshire Technologies, Inc.
warrants, which warrants are restricted as to sale, non-income producing, and
have been valued by the Board of Directors at $0 based on their exercise price
being greater than the market price of Wilshire Technologies common stock. 

<PAGE>
<PAGE>

                              ITEM 2.  PROPERTIES

     Real Estate Operations
     ----------------------

     During the third quarter of fiscal 1993 the Fund purchased a 26,500
square foot office building located in Colorado Springs, Colorado (the
"Northpark Building").  The Building was acquired primarily to provide office
space for the Fund and as a potential source of income.  The Fund sold its
Northpark Building, effective March 31, 1997.  The sale was structured as a
tax-free exchange under Section 1031 of the Internal Revenue Code of 1986, as
amended, (the "Code").  The proceeds received were utilized to pay
approximately $478,000 of mortgage, line of credit and other debt resulting in
a net gain of $388,000.  

     In a concurrent transaction structured to qualify as a tax-free exchange
under Section 1031 of the Code, the Fund, on April 1, 1997, consummated the
purchase of 5 acres of undeveloped commercial real estate located at 3210
Woodmen Road, Colorado Springs, Colorado (the "Woodmen Property").  The Fund
plans to undertake a phased development of two commercial office buildings on
the Woodmen Property which will, upon completion, consist of an aggregate of
55,000 square feet of commercial office space.  The purchase price for the
Property was $390,000 and was paid in cash at the time of closing, utilizing a
portion of the proceeds realized by the Fund from the sale of the Northpark
Building.  The Fund intends to hold this new real estate in a wholly owned
subsidiary called Strategic Properties, Inc.
     
     Real Estate Investments
     -----------------------

     Effective September 4, 1997, The Fund purchased commercial real estate
located at 3515 North Chestnut, Colorado Springs, (the "Chestnut Building")
for a purchase price of $600,000 and incurred approximately $20,000 of
improvements as of December 31, 1997.  The Fund utilized $100,000 from the
Northpark Building sale proceeds towards the purchase of the new Chestnut
Building as a tax-free exchange under Section 1031 of the Code and borrowed
the remaining $500,000 from State Bank and Trust at an initial interest rate
of 9.75% with the assignment of all rents as collateral.  The Fund as of
December 31, 1997, has signed an agreement to lease the Chestnut Building for
8 months and 9 days expiring on September 1, 1998 for $35,000.  The tenant
agreeing to pay for all property taxes, utilities, insurance and maintenance
associated with the building during the term of the lease.  In addition, the
Fund agreed to sell and the tenant agreed to buy the Chestnut Building for
$775,000 upon the completion of the lease, September 1, 1998, for an
approximate net gain of $155,000.  The tenant as of December 23, 1997, paid
the Fund $35,000 prepaid rent through September 1, 1998.  The tenant as of
January 1998 paid the Fund $7,500 earnest and partial payment of the Chestnut
purchase price.  
     
     In addition, effective September 24, 1997,  $50,000 of the Northpark
Building sale proceeds were utilized to purchase a 20% investment in Plaza
Hotel & Apartments, a 40 room hotel, located at 116 East Park Street, Hot
Springs Park, Thermopolis, Wyoming, (the "Hotel Investment"), as a tax free
exchange under section 1031 of the Code for a total investment of $200,000. 
The Fund owes $150,000 to Wyoming Resorts, LLC at an 8% per annum interest
rate.  The Fund is currently under contract to sell the Hotel Investment for
$200,000.

     Office Facilities
     -----------------

     The Fund is currently leasing executive office space in the Northpark
Building under a lease with the new owners, Northpark, L.L.C., for $900 a
month.
     
     The commercial real estate market in Colorado Springs, Colorado, although
steadily improving over the last several years, still remains very
competitive.  While the Board does not believe that a single firm or group
dominates the commercial real estate industry in Colorado Springs, many of the
participants are well-established and possess far greater financial and market
resources than the Fund.

     The Fund's principal executive offices are maintained in the office
Building located at 4465 Northpark Drive, Colorado Springs, Colorado  80907. 
The Fund's telephone number at that address is (719) 590-4900.


                           ITEM 3. LEGAL PROCEEDINGS

     In early 1996, the Fund received requests for information from the United
States Securities and Exchange Commission ("SEC") related to an investigation
begun by the SEC in 1994 into various matters, including the administrative
and record keeping practices of the Fund, its securities trading activities
and those of its officers and directors.  In September 1996, the Company was
notified by the Commission's Staff that it intends to request that the
Commission commence an administrative proceeding against the Company and its
directors based upon certain transactions in securities formerly included in
the Company's securities portfolio.  The Company has responded to the
Commission with a written submission which sets forth why there exists no
basis in fact or law for such a proceeding.  It is impossible to predict
whether the Staff will recommend a proceeding against the Company or any of
its directors, and if such a recommendation is made, whether the Commission
will authorize the institution of a proceeding.  There can be no assurance of
the outcome of this matter or the ultimate effect on the Fund's financial
position.

     Other than the foregoing, the Fund is not a party to any material pending
legal proceeding.


             ITEM 4. MATTERS SUBMITTED TO VOTE OF SECURITY HOLDERS

     The Fund did not submit any matters to a vote of its security holders
during the fourth quarter of its fiscal year ending December 31, 1997.

<PAGE>
                                    PART II

               ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK
                      AND RELATED SECURITY HOLDER MATTERS

Price Range of Common Stock

     The outstanding shares of common stock, are traded over-the-counter and
quoted in the OTC Electronic Bulletin Board under the symbol "ROCE."  The
reported high and low bid prices for the common stock are shown below for the
period from January 1, 1996 through March 31, 1998:

                                                 Bid
               1996                         Low      High   
          --------------------------------------------------

          First Quarter                     1.75      2.00
          Second Quarter                    2.00      2.50
          Third Quarter                     2.50      3.75
          Fourth Quarter                    3.50      4.00

              1997                                          
          --------------------------------------------------

          First Quarter                     4.00      4.125
          Second Quarter                    3.50      4.125
          Third Quarter                     4.00      4.375
          Fourth Quarter                    4.375     4.375

              1998                                          
          --------------------------------------------------
          
          First Quarter                     4.375     4.43
          (through 03/31/98)


          The high bid price of the Fund's common stock as of March 31, 1998
was $4.43.  The prices presented are bid prices which represent prices between
broker-dealers and do not include retail mark-ups and mark-downs or any
commissions to the broker-dealer.  The prices do not reflect prices in actual
transactions.

          As of December 31, 1997, there were approximately 106 holders of
record of the Fund's common stock.  The closing bid price of the stock on that
date was $ 4.375.

Dividends

          No cash dividends were paid by the Fund in 1996 or 1997.


                        ITEM 6. SELECTED FINANCIAL DATA

          The selected financial data presented below is derived from audited
financial statements of the Fund. The following information should be read in
conjunction with the Financial Statements and related Notes contained
elsewhere in this report and Management's Discussion and Analysis of Financial
Condition and Results of Operations.


                       Balance Sheet Data at December 31

---------------------------------------------------------------------------
                            1997         1996     1995     1994     1993
---------------------------------------------------------------------------

Assets
     Investments $3,148,989   $2,154,497  $1,400,374   $ 1,699,582 $1,830,719

     Cash            21,890      499,404       1,193       37,081      9,072 
     Property 
     and 
     equipment, 
     net            509,669      764,521     714,918      655,556    660,982 
     Other          133,118       51,670      70,302       30,858      3,323 
                 -----------  ----------- -----------  ----------- ----------

     Total assets 3,813,666    3,470,092   2,186,787    2,423,077  2,504,096 
                 -----------  ----------- -----------  ----------- ----------
Liabilities
     Long-term 
       debt, 
       current      899,106      262,821     191,627      195,444    165,444 
     Payables       164,268      342,107     165,542       65,114    115,879 
     Accrued 
       interest 
       payable        8,565        7,428      19,588       14,628     14,268 
     Other accrued 
       liabilities   23,011       33,901      39,697       12,500     70,123 
     Cash overdraft   8,049          -0-       8,653          -0-     24,522 
     Deposits, 
       deferred rent 
       and taxes     54,334          -0-         -0-          -0-        -0- 
     Long-term 
       liabilities  351,531      375,103     454,116      428,352    462,274 
Accrued income
        taxes           -0-      118,000         -0-          -0-        -0- 
                 -----------  ----------- -----------  ----------- ----------

     Total 
     liabilities  1,508,864    1,139,360     879,223      716,038    852,510 
                 -----------  ----------- -----------  ----------- ----------

     Net assets  $2,304,802   $2,330,732  $1,307,564   $1,707,039  $1,651,586
                 ===========  =========== ===========  =========== ==========
Net assets per 
     share (shares 
     issued and
     outstanding: 
     640,256
     in 1992 
     - 1997)     $      3.60  $      3.64 $      2.04  $      2.67 $     2.58
<PAGE>
<PAGE>

           Statement of Operations Data for Years Ended December 31

---------------------------------------------------------------------------
                                 1997    1996     1995     1994     1993
---------------------------------------------------------------------------


Investment Income        $ 121,667  $ 206,491  $177,536  $166,575  $  67,795 
Gain on sale of land 
     and building          388,476 
Less expenses            535,939    635,180    436,478    531,724    304,139 
                         ----------------------------------------------
Net Investment loss        (25,796) (428,689)  (258,942) (365,149)  (236,344)

Net realized gain 
     (loss) from sales 
     and permanent write-
     downs of securities   (51,374) 1,549,196    31,889   192,577    642,478 

Unrealized net 
     appreciation
     (depreciation) 
     of investments         51,240    (97,339) (172,422)  228,025    188,444 
--------- ---------      ----------------------------
Net increase (decrease) 
     in net assets 
     from investment
     activities          $ (25,930) $1,023,168 $(399,475) $ 55,453  $594,578 

Per share amounts:

Net investment loss      $   (0.04) $   (0.67) $  (0.40)  $  (0.56) $  (0.36)

Net realized (losses)
     gains from 
     investments             (0.08)      2.42      0.05       0.30      1.00 

Net unrealized 
     appreciation
     (depreciation) of 
     investments              0.08      (0.15)    (0.27)      0.35      0.29 

Net increase(decrease) 
     in net assets per 
     common share from 
     investment 
     activities          $   (0.04) $    1.60  $   (.62)  $   0.09  $   0.93 


<PAGE>
<PAGE>
                 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATION

     The following discussion and analysis should be read in conjunction with
the Financial Statements and Notes thereto appearing elsewhere in this report.

Liquidity and Capital Resources - December 31, 1997

     During the year ended December 31, 1997, the Fund incurred  realized
gains from sales of securities (before income tax) and unrealized appreciation
of investments.  Total assets increased accordingly:

     Investments increased from $2,154,497 on December 31, 1996 to $3,148,989
on December 31, 1997, an increase of $994,492 or 46.2%, primarily due to
increases of approximately 7% in the value of the Fund's holdings of American
Education Products, 12% in the value of the FunD's holdings of Guardian
Technologies, 14% in the value of the Fund's holdings of Redwood Broadcasting
and 5% in the value of the Fund's holdings of Usasurance Group.  Notes
receivable, net of allowances, increased from $313,404 on December 31, 1996 to
$458,158 on December 31, 1997, an increase of $144,754 or 46%, attributable to
new notes from Global Casinos and Marco Foods.  Global Casinos, Inc., an
international gaming company and affiliate, comprises approximately 64%, and
Marco Foods, Inc., also an affiliate, comprises approximately 28% of total
notes receivable.  Also contributing to the increase in investments was the
purchase of commercial real estate for $621,358, including improvements, and a
$200,000 hotel investment.  The commercial real estate and hotel investment
are under contracts for sale for a total of $975,000, representing an increase
in value of approximately $145,000 as of December 31, 1997.

     Cash decreased significantly from $499,404 at December 31, 1996 to
$21,890 at December 31, 1997, primarily due to the purchase of property and
improvements during 1997.  Property and equipment decreased from $764,521 at
December 31, 1996 to $509,669 at December 31, 1997, a decrease of 254,852 or
33.3% as a result of the Northpark building sale, which had a carrying value
of $775,356 and the purchase of 5 acres of undeveloped commercial real estate
and subsequent improvements for $491,2442.  Other assets increased from
$51,670 as of December 31, 1996 to $133,118 as of December 31, 1997 an
increase of $81,448 or 158%, due to an increase in accrued interest receivable
in conjunction with notes receivable and investment securities sold for those
securities sold yet awaiting proceeds as of December 31, 1997.

     Based on the foregoing, total assets increased from $3,470,092 at
December 31, 1996, to $3,813,667 as of December 31, 1997, an increase of
343,575 or 10%.

     Long-term debt increased significantly from $262,821 as of December 31,
1996 to $899,106 as of December 31, 1997, an increase of $636,285 or 242%. 
The increase in long-term debt is mainly attributable to the commercial real
estate "Chestnut Building" loan with a balance of $497,528, an increase in
margin account balances of $96,885, a $150,000 balance for the Thermopolis
Hotel Investment, and a note payable of $281,348 at December 31, 1997,
incurred in connection with the purchase of Redwood Broadcasting, Inc. shares. 
As of December 31, 1997, the Fund had a line of credit for $75,000 with an
outstanding balance of $74,500, that accrues interest at 10.5%, collateralized
by the Fund's security holdings.  As of December 31, 1996, The Fund had an
additional  line of credit for $100,000 with State Bank & Trust which was paid
with  the Northpark building sale proceeds on March 31, 1997.  Payables
decreased significantly from $342,107 at December 31, 1996 to $164,268 at
December 31, 1997, mainly attributable to a decrease in trades pending during
1996.  The Fund, as of December 31, 1997 had an overdrawn cash account of
$8,049.

     As a result, total liabilities increased from $1,139,360 at December 31,
1996 to $1,508,864 on December 31, 1997 an increase of $369,504 or 32.4%
     
     Due to the increase in liabilities, net assets decreased from $2,330,732
at December 31, 1996 to $2,304,802 at December 31, 1997 and from $3.64 per
share to $3.60 per share, respectively, a decrease of $.04 per share or 1.1%.

     Other than the 1998 anticipated  sale of the Fund's Chestnut building and
Hotel investment, Management knows of no trends or demands, commitments,
events or uncertainties which will result in the Fund's liquidity or capital
resources materially increasing or decreasing.

Results of Operations - 1997 Compared to 1996 and 1995

     As a direct result of the sale of the Northpark building as of March 31,
1997, rental income decreased to $57,890 in 1997.  This compares with rental
income of $170,434 in 1996 and$157,565 in 1995.  Interest and dividend income
on the other hand  increased significantly from $614 in 1995 to $30,248 in
1996 and $63,777 in 1997.  This increase is mainly attributable to an increase
in notes receivable.  As a result of the foregoing, total investment income
changed from  $177,536 in 1995, to $206,491 in 1996, and $121,667 as of
December 31, 1997.
         
     Total expenses changed from $436,478 at 1995, to $635,180 at 1996, and
$535,939 in 1997.  Contributing to the change in expenses from 1996 to 1997
was a decrease in wages and salaries of 16.9%, as one employee became part-
time on August 1, 1997; a significant decrease in professional fees of 42.8%
due to a decrease in legal fees; travel and entertainment increased 197.1%, as
some investments required travel in 1997; building expenses decreased
significantly, 58.3% due to the sale of the Northpark building and minimal
expenses incurred on the Chestnut building; investment expense decreased 40%
as the Fund experienced lower trading activity in 1997; and donations
increased 667.1% as the Fund donates approximately $1,000 per month to The
Good News Foundation.

     As a result of decreased investment income and expenses in 1997,
investment loss decreased to $(414,267) in 1997, compared to $(428,689) in
1996, and $(258,942) in 1995.

     Net realized gain (loss) from sale of investments decreased significantly
in 1997 to $(51,374) from $1,549,196 in 1996 and $31,889 in 1995, a decrease
of $1,600,570.  This decrease is mainly attributable to the sale of Shiva
Corp. (fka Airsoft) which increased $1,846,098 in value during 1996. Net
unrealized appreciation (depreciation) of investments increased in 1997 to
$51,240 from $(97,339) in 1996 and (172,422) in 1995.  Net loss from
investments was ($134) for 1997.
     
     Other than the 1998 anticipated sale of the Fund's Chestnut building and
Hotel Investment, Management knows of no trends or uncertainties that will
have any material impact on the income or expenses of the Fund.

Recently issued accounting pronouncements

     The Financial Accounting Standard's Board recently issued Statement of
Financial Accounting Standard (SFAS) No.'s 130 and 131, "Reporting
Comprehensive Income" and "Disclosures about Segments of an Enterprise and
Related Information," respectively.  Both of these statements are effective
for fiscal years beginning after December 15, 1997.  SFAS No. 130 establishes
requirements for disclosure of comprehensive income which includes certain
items previously not included on the statement of income including minimum
pension liability adjustments and foreign currency translation adjustments,
among others.  Reclassification of earlier financial statements for
comparative purposes is required.  SFAS No. 131 revises existing standards for
reporting information about operating segments and requires the reporting of
selected information in interim financial reports.  SFAS No. 131 also
establishes standards for related disclosures about products and services,
geographic areas, and major customers.  Management believes that
implementation of SFAS No. 130 and No. 131 will not materially impact the 
Fund's financial statements.

Year 2000 issues

     The Company recognizes the need to ensure its operations will not be
adversely impacted by Year 2000 software failures.  Software failures due to
processing errors potentially arising from calculations using the Year 2000
date are a known risk.  The Company is addressing this risk to the
availability and integrity of financial systems and the reliability of the
operational systems.  The Company is evaluating and managing the risks and
cost associated with this problem, including communicating with brokers,
custodians and trust companies, and others with which it does business to
coordinate Year 2000 conversion. The total cost of compliance and its effect
on the Fund's future results of operations is being determined as part of
the detailed conversion planning process.


             ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     See Item 14(a) below for a list of the Financial Statements and Financial
Statement Schedules included in this report following the signature page.  The
supplementary financial information required by Item 302 of Regulation S-K
does not apply to the Fund.


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

     None.
<PAGE>













                            THE ROCKIES FUND, INC.


                                  YEARS ENDED
                          DECEMBER 31, 1997 AND 1996
<PAGE>
                            THE ROCKIES FUND, INC.

                    YEARS ENDED DECEMBER 31, 1997 AND 1996

                               TABLE OF CONTENTS



                                                        Page
                                                                              


Independent auditors' report                            F-3 

Financial statements:                                       

     Statements of assets and liabilities         F-4 - F-5 

     Schedule of investments                      F-6 - F-11

     Statements of operations                    F-12 - F-13

     Statements of shareholders' equity                 F-14

     Statements of cash flows                    F-15 - F-16

     Statements of changes in net assets                F-17

Notes to financial statements                    F-18 - F-28

<PAGE>




                         INDEPENDENT AUDITORS' REPORT


The Shareholders and Directors
The Rockies Fund, Inc.

We have audited the accompanying statements of assets and liabilities of The
Rockies Fund, Inc. (the "Fund"), including the schedule of investments as of
December 31, 1997 and 1996 and the related statements of operations,
shareholders' equity, cash flows, and changes in net assets for the years then
ended.  These financial statements and schedule are the responsibility of the
Fund's management.  Our responsibility is to express an opinion on these
financial statements and schedule 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 financial statements and
schedule are free of material misstatement.  An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements.  Our procedures included confirmation of securities owned as of
December 31, 1997 and 1996, by correspondence with the brokers or verification
by examination.  An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation.  We believe that our audits provide
a reasonable basis for our opinion.

In our opinion, the financial statements and schedule referred to above
present fairly, in all material respects, the financial position of The
Rockies Fund, Inc. as of December 31, 1997 and 1996 and the results of its
operations, its cash flows, and changes in net assets for the years then ended
in conformity with generally accepted accounting principles.

As explained in Note 1, the financial statements include securities valued at
$256,000 (12% of net assets) at December 31, 1997, whose values have been
estimated by the Board of Directors in the absence of readily ascertainable
market values.  We have reviewed the procedures used by the Board of Directors
in arriving at its estimate of value of such securities and have inspected
underlying documentation, and, in the circumstances, we believe the procedures
are reasonable and the documentation appropriate. However, because of the
inherent uncertainty of valuation, those estimated values may differ
significantly from the values that would have been used had a ready market for
the securities existed, and the differences could be material.



GELFOND HOCHSTADT PANGBURN & CO.

Denver, Colorado
March 30, 1998<PAGE>
                            THE ROCKIES FUND, INC.
                     Statements of Assets and Liabilities
                          December 31, 1997 and 1996

---------------------------------------------------------------------------
ASSETS                                             1997         1996
---------------------------------------------------------------------------

Investments, at value (cost of $3,118,071, 
     1997 and $1,999,819, 1996) (Note 3):         
     Restricted and unrestricted securities       $ 1,725,831    $1,841,093 
     Notes receivable                                 458,158       138,404 
Real estate    965,000                                      - 
                                                  ------------   ------------
                                                    3,148,989     1,979,497 
Cash:
     Held by related party (Note 6)                         -       391,698 
     Held by others                                    21,890       107,706 
Investment securities sold (Note 6)                    79,511        15,809 
Accrued interest receivable                            53,045        12,789 
Receivables from investees (Note 6)                       562        23,072 
                                                  -------------  ------------

       Total current assets                         3,303,997     2,530,571 
                                                  -------------  ------------

Property and equipment (Notes 2 and 3):
     Land                                             390,000       102,775 
     Building                                               -       633,496 
Leasehold improvements                                      -        86,614 
     Automobile                                        15,162             - 
     Furniture and fixtures                             8,739        12,461 
Equipment      -                                        1,484    
Construction in progress                              101,242             - 
                                                  -------------  ------------
                                                      515,143       836,830 

       Less accumulated depreciation                    5,474        72,309 
                                                  -------------  ------------
                                                      509,669       764,521 
                                                  -------------  ------------
     
Investment in long-term note receivable,
     related party (cost of $175,000)                       -       175,000 
                                                  -------------  ------------


Total assets   $                                  3,813,666  $   3,470,092 
                                                  -------------  ------------


                                  (continued)
                       See Notes to Financial Statements

<PAGE>


                            THE ROCKIES FUND, INC.
               Statements of Assets and Liabilities (Continued)
                          December 31, 1997 and 1996
---------------------------------------------------------------------------
LIABILITIES AND NET ASSETS                         1997         1996
---------------------------------------------------------------------------

Cash overdraft                                  $     8,049    $         - 
Payables:
     Trade                                          108,506         71,659 
     Construction (Note 2)                           55,762              - 
     Related party (Note 6)                               -        153,566 
Investment securities purchased (Note 6)                  -        116,882 
Accrued liabilities:
     Property taxes and other                        23,011         33,901 
     Income taxes  (Note 4)                               -        118,000 
     Interest payable                                 8,565          7,428 
Current maturities of long-term debt (Note 3):
     Related parties                                172,374          6,500 
     Others                                         726,732        256,321 
Deposits and deferred rent (Note 2)                  41,334              - 
Deferred tax liability (Note 4)                      13,000                
                                                -------------------------------
            Total current liabilities             1,157,333        764,257 
Security deposits and other liabilities                   -         59,754 
Long term debt, net of current maturities 
     (Note 3)                                       259,531        315,349 
Deferred tax liability (Note 4)                      92,000              - 
                                                ---------- -   -----------

            Total liabilities                     1,508,864      1,139,360 

Commitments and contingencies 
     (Notes 2 and 5)                            -----------    ------------

Net assets and shareholders' equity 
     (equivalent to $3.60 per share for 
     1997 and $3.64 per share for 1996)         $ 2,304,802    $ 2,330,732 
                                                ============   ===========
COMPONENTS OF NET ASSETS

Common stock, $.01 par value; authorized 
     5,000,000 shares; 640,256 shares 
     issued and outstanding                     $     6,403    $     6,403 
                                                ------------   -----------

Additional paid-in capital                        2,901,243      2,901,243 
                                                ------------   -----------

Accumulated deficit:
     Accumulated net investment loss             (1,919,099)    (1,893,303)
     Accumulated net realized gains from sales 
     of securities                                1,285,337      1,336,711 
     Unrealized net appreciation 
     (depreciation) of investments                   30,918        (20,322)
                                                -----------    -----------

            Total accumulated deficit              (602,844)      (576,914)
                                                
                                                            
Net assets  $                                   2,304,802  $   2,330,732 
                                                ===========    ===========

<PAGE>
                                    THE ROCKIES FUND, INC.
                                    Schedule of Investments
                            December 31, 1997 and December 31, 1996
                        Initial        **Cost at  Fair value at   Fair
value at
                             Investment     December 31, December 31,      
December 31,
Company          Position          date            1997         1997          
1996
                                                                               

Restricted Securities:

American Educational31,000 common shares *** September 1996 $155,000 $182,125$
145,313 
  Products, Inc.* (1)  9,000 common shares   September 1996        -      -     
42,188 
                          40,000 warrants 
                  (exercisable @ $4.50)   September 1996    -     55,000      - 
                           31,000 warrants
             (exercisable @ $10.00)***     June 1997      -        7,750      - 
                                                      155,000      244,875      
187,500 

Bear Star, LLC*    5% partnership interest    November 1994  -     -      - 

COVA Technologies*    917 common shares      July 1996     20,035   20,035      
20,035 

Global Casinos, Inc.* (2)3,800 common shares  November 1993 76,000 13,300      
16,150 
           4,331 common shares    January 1994       50,068       15,159 
 18,407 1,724 common shares  January 1994     19,932        6,034      7,327

 1,250 common shares    February 1994      25,000        4,375      5,313

       75 common shares     March 1994             -          263      319 
     500 common shares    October 1994       10,000        1,750      2,125

     5,000 common shares    February 1996      17,208       17,500      
21,250 
    1,000 common shares     March 1996         3,125        3,500      4,250

    105,000 warrants    November 1996           -            -      - 
                                                   201,333       61,880      
75,140 

Guardian Technologies, Inc.* (3)8,333 common sharesFebruary 1997  8,750     
  22,916      - 
       90,533 common shares     March 1997       126,450      248,966      - 
       5,000 common shares      June 1997         6,260       13,750      - 
    20,000 common shares ***     August 1997       29,005       55,000      - 
     2,500 common shares ***   September 1997       8,061        6,875      - 
          70,000 warrants     March 1997        13,440       21,910      - 
        67,000 warrants ***     March 1997        12,815       20,903      - 
                                                  204,781      390,319      - 

Hampton Court Resources12,500 common shares ***September 1997    11,542    
   16,162      - 

Land Resource Corporation*10,000 common shares March 1997     
   10,000       10,000      - 

Lone Oak Vineyards, Inc.*35,000 common shares February 1997      35,000     
  93,240      - 
                       7,000 common shares    October 1997        7,000      
 18,648      - 
                       7,000 common shares    November 1997       7,000    
   18,648      - 
                                                                 49,000    
  130,536      - 

Redwood Broadcasting, Inc.5,000 common shares February 1997           -      
  8,750      - 
                     200,000 common shares    December 1997     240,000    
  350,000      - 
                      50,000 common shares    December 1997      60,000    
   87,500      - 
                                                                300,000   
   446,250      - 

Training Devices, Inc.20,000 common shares    February 1997      25,000    
   40,000      - 

Wilshire Technologies, Inc.   247 warrants    December 1997           -      
      -      - 

Total Restricted Securities                                     976,691 
   1,360,057      
282,675 


Unrestricted Securities:

Alouette Cosmetics     2,500 common shares    November 1996           -      
      -      7,500


Astea International    5,000 common shares   September 1996           -     
       -      
28,438 
                       5,000 common shares    November 1996           -       
     - 28,438 
                      10,000 common shares    February 1997      54,875    
   18,750      - 
                       5,000 common shares      June 1997        16,354    
    9,375      - 
                                                                 71,229     
  28,125      
56,875 

Corfacts, Inc.       200,000 common shares      July 1996             -      
      -      10,000 

Cusa Technologies, Inc.***30,000 common sharesNovember 1997      33,360     
  30,938      - 

Enhanced Services      2,500 common shares    December 1996           -      
      -      8,125


Exploration Company, The7,500 common shares    August 1996            -     
       -      41,250 
                       3,000 common shares   September 1996           -      
      -      16,500 
                       7,500 common shares    October 1996            -       
     -      41,250 
                      36,000 common shares    October 1997      109,080     
  72,000      - 
                                                                109,080  
     72,000      
99,000 

Healthwatch, Inc.     34,400 common shares    October 1996            -       
     -      68,800 
                      45,000 common shares    December 1996           -     
       -      90,000 
                                                                      -      
      -      158,800 

Image Matrix     10,000 units (1com/1wrnt)      June 1996             -      
      -      33,750 

J T's Restaurants      1,500 common shares    December 1996           -       
     -      3,188


Kinetiks.com          10,000 common shares   September 1996      38,125     
       -      6,250

                      11,000 common shares    October 1996       24,313      
      -      6,875

                      20,000 common shares    November 1996      12,188      
      -      12,500 
                      62,500 common shares    December 1996      44,852        
    -      39,063 
                      10,000 common shares      July 1997         3,281     
       -      - 
                          400,000 warrantsFebruary 97-September 97       
    -            - - 
                                                                122,758      
      -      
64,688 

Laser Recording Systems, Inc.100,000 common sharesJune 1995           -     
       -      2,000


Optimax Industries, Inc.115,191 common shares ***June 1994      138,229     
  18,004      
287,978 
                  20,000 common shares ***      June 1994             -     
       -      
50,000 
                           12,500 warrants   September 1993           -      
      -      9,375

                                                                138,229    
   18,004      347,353 

Pacific Biometrics, Inc.7,500 common shares   October 1996            -     
       -      23,438 
                            7,500 warrants    October 1996            -       
     -      1,406

                                                                      -      
      -      24,844 

Poore Brothers         4,000 common shares    December 1996           -      
      -      14,250 

Progress Software      1,000 common shares    December 1996           -       
     -      19,750 

Premium Cigars International, Inc.5,000 common shares ***August 199723,893 
   12,813      - 

S&P 500          10 puts December 1997 550      July 1996             -        
    -      5,875

                 10 puts December 1997 550     August 1996            -        
    -      5,875

                 20 puts December 1997 550   September 1996           -        
    -      11,750 
                 40 puts December 1997 600    December 1996           -        
    -      33,000 
                                                                      -        
    -      56,500 

S2 Golf, Inc.         20,825 common shares      July 1996             -        
    -      19,523 

Shiva Corporation      2,630 common shares    December 1996           -    
   22,519      91,098 

Shopsmith             10,000 common shares   September 1996           -       
     -      25,000 
                      10,000 common shares    October 1996            -      
      -      25,000 
                                                                      -        
    -      50,000 

Southshore Corporation 7,400 common shares     March 1994             -       
     -      3,700

                      10,000 common shares    December 1995           -        
    -      5,000

                  15,000 common shares ***   September 1997       7,715     
   3,750      - 
                                                                  7,715     
   3,750      8,700


Tampa Bay Corporation 10,000 common shares   September 1996           -     
       -      13,750 
                       5,000 common shares    December 1996           -       
     -      6,785

                                                                      -       
     -      
20,535 

TELS Corporation      20,000 common shares     August 1996       12,813     
   6,250      9,376

                      10,000 common shares   September 1996       5,938      
  3,125      4,688

                                                                 18,750      
  9,375      14,064 

Topro, Inc.            2,500 common shares   September 1996           -      
      -      6,250

                       2,500 common shares    November 1996           -       
     -      6,250

                       2,500 common shares    December 1996           -       
     -      6,250

                                                                      -     
       -      18,750 

Usasurance Group      15,000 common shares      July 1996        94,550     
  30,000      60,000 
                      10,000 common shares   September 1996      62,750    
   20,000      40,000 
                       2,500 common shares    October 1996       12,375     
   5,000      10,000 
                      31,500 common shares    December 1996      73,777    
   63,000      126,000 
                       1,500 common shares    December 1996           -       
     -      6,000

                       2,500 common shares    January 1997        8,750     
   5,000      - 
                       4,500 common shares      June 1997         6,106    
    9,000      - 
                       7,500 common shares    December 1997       7,875   
    15,000      - 
                                                                266,183   
   147,000      
242,000 

Whitewing Labs        20,000 common shares    January 1997       31,350    
   15,000      - 

Total Unrestricted Securities                                   836,678    
  365,774      1,558,418 

Total Restricted and Unrestricted                             1,813,369  
  1,725,831      
1,841,093 


Notes Receivable:

Columbine Home Sales, LLC*Note Receivable, 10%
                             due on demand    December 1995           -     
   5,814      5,814


Damach                Note Receivable, 12%
                             due on demand    October 1996       32,500    
   32,500      32,500 

Phil Georgeson        Note Receivable, 12%
                             due on demand     August 1996        4,602       
 4,602      15,090 

Global Casinos, Inc.*  Note Receivable, 8%
                               due 11/1/98    November 1996     175,000  
    175,000      175,000 
                       Note Receivable, 9%
                             due on demand     March 1997        43,904    
   43,904      - 
                      Note Receivable, 24%
                               due 4/15/98     August 1997       75,000    
   75,000      - 
                                                                293,904    
  293,904      175,000 

Kinetiks.com          Note Receivable, 10%
                             due on demand    February 1997      25,000    
   25,000      - 

Marchco Foods, Inc.*  Note Receivable, 12%
                             due on demand    January 1997      127,338    
  127,338      - 

Navidec, Inc.         Note Receivable, 10%    October 1996            -       
     -      25,000 

NECO Land Resources, LLC*Note Receivable, 8%
                             due on demand     August 1996            -        
    -      10,000 

Topro, Inc.           Note Receivable, 12%   September 1997           -       
     -      50,000 

Subtotal Notes Receivable                                       483,344    
  489,158      313,404 

Allowance for Doubtful Notes                                          -    
  (31,000)     - 

Net Notes Receivable                                            483,344    
  458,158      313,404 

Investments in Real Estate:

Chestnut Building      Land & Building at 
                          3515 N. Chestnut          
                Colorado Springs, Colorado   September 1997     621,358   
   765,000      - 

Hotel Investment               Building at
                           116 E. Park St.
                      Thermopolis, Wyoming   September 1997     200,000   
   200,000      - 

Total Real Estate Investments                                   821,358   
   965,000      - 


TOTAL INVESTMENTS                                                $3,118,071
  $3,148,989   $2,154,497 

               
* These entities are considered to be affiliated companies as a result of the 
Company's
investment and/or position on the entities' Board of Directors.

** After permanent write-downs.

*** These securities have been pledged as collateral on certain long-term debt
 obligations.

               
(1) After giving effect to a 1:5 reverse split

(2) After giving effect to a 1:10 reverse split

(3) After giving effect to a 1:3 reverse split

(4) Restricted and unrestricted securities at December 31, 1996, have been 
reclassified to
conform to the 1997 presentation.  The total value of the securities 
classified as restricted
and unrestricted at December 31, 1996 were as follows:

                         Restricted  $964,166
                         Unrestricted        876,927
                                     $1,841,093














                  See Notes to Financial Statements
<PAGE>


                        THE ROCKIES FUND, INC.
                       Statements of Operations
                Years Ended December 31, 1997 and 1996




                                                   1997         1996
                                                                      

Investment income:
     Rental (Note 2)                            $  57,890   $ 170,434 
     Consulting and other services                 10,822             
     5,809 
     Interest and dividends (Note 6)               52,955      30,248 
                                                  121,667     206,491 
Expenses:
     Wages and salaries                           141,817     170,762 
     Professional fees                             79,579     139,207 
     Custodian fees (Note 6)                            -       9,109 
     Directors' fees                                7,000       6,000 
     Interest                                      62,907      57,519 
     Travel and entertainment                      45,959      15,365 
     Office    112,449                                         80,973 
     Building expenses                             46,072     110,601 
     Investment expenses (Note 6)                  25,076      43,679 
     Donations                                     15,080       1,965 
                                                  535,939     635,180 
     Investment loss                             (414,272)  (428,689)

Gain on sale of land and building (Note 2)        388,476           - 

     Net investment loss                        $ (25,796)  $(428,689)

Realized and unrealized gain (loss)
      from investments:
     Net realized gain (loss) from 
       investments                              $ (51,374)  
$1,667,196 
     Income tax expense  (Note 4)                       -     118,000)
                                                  (51,374)  1,549,196
     Net unrealized appreciation (depreciation) of investments
       Beginning of year                          (20,322)     77,017 
       End of year                                 30,918     (20,322)
     Net unrealized appreciation (depreciation) of investments        
     51,240      (97,339)

Net gain (loss)from investments                 $    (134)  $1,451,857 

Net increase (decrease) in net assets resulting from operations      $
     (25,930)  $ 1,023,168 

     
Basic per share amounts:
     Net investment loss                        $   (0.04)  $   (0.67)
     Net realized gain (loss) from investments      (0.08)       2.42 
     Net unrealized appreciation (deprecation) of investments         
     0.08      (0.15)
               $ (0.04)                         $   1 .60 
Weighted average common shares outstanding        640,256     640,256 

<PAGE>
                                    THE ROCKIES FUND, INC.
                              Statements of Shareholders' Equity
                            Years Ended December 31, 1997 and 1996

                                                                               
  Accumulated deficit
                                                                      
                                                                               
Accumulated
                                                                         net
realized
                                                                        gains
(losses)
                                                Accumulated    from sales
                                      Unrealized net        
                               Additional         net       and permanent
                                       appreciation
                    Common         paid-in      investment       write-
downs                                 (depreciation)       Net
                  stock         capital         loss       of securities
                                      of investments       assets     


Balances at January 1, 1996   
 $   6,403      $2,901,243     $(1,464,614)   $(212,485)
            $                           77,017   $     1,307,564 

Net investment loss           
                                         (428,689)               
                                                       (428,689)
Net realized gain on investments                                             
        1,549,196 
                                                                              
                                                                         
            1,549,196 
Unrealized net depreciation
            of investments                                                     
                                        (97,339)       (97,339)
Balances at December 31, 1996 
      6,403      2,901,243     (1,893,303)     1,336,711 
                                        (20,322)       2,330,732 

Net investment loss  
                                                   (25,796)               
                                                       (25,796)
Net realized loss on investments                                             
          (51,374)
                                                       (51,374)
Unrealized net appreciation 
            of investments                                                     
                                        51,240         51,240 
Balances at December 31, 1997           $   6,403      $2,901,243   
  $(1,919,099)   $1,285,337 
            $                           30,918   $     2,304,802 
<PAGE>
                                    THE ROCKIES FUND, INC.
                                   Statements of Cash Flows
                            Years Ended December 31, 1997 and 1996



                                             1997  1996
                                                                               
Cash flows from operating activities:
          Net investment loss                     $(25,796)   $(428,689)
          Net realized (loss) gain from investments           (51,374)1,549,196 
                                                  (77,170)  1,120,507 
          Adjustments to reconcile net investment
          loss and net realized (loss) gain from investments
          to net cash used in operating activities:
            Net realized (loss) gain from investments         51,374 (1,667,196)
            Gain on sale of land and building   (388,476)           - 
            Depreciation expense                  10,030       27,348 
            Decrease (increase) in operating assets:
             Accrued interest receivable         (40,256)     (10,659)
             Receivable from investees            22,510       38,446 
             Investment securities sold and other assets      (63,702)(9,155)
            Increase (decrease) in operating liabilities:
             Payables                           (177,839)     237,606 
             Accrued liabilities                (127,753)     138,551 
             Deposits and deferred rent           34,080          792 

               Net cash used in operating activities          (757,202)(123,760)

Cash flows from investing activities:
          Proceeds from sales of investments   2,313,477    4,567,702 
          Purchases of investments            (2,188,031)  (3,855,325)
          Proceeds from sale of land and building1,080,000      1,000 
          Purchase of property                  (390,000)      (3,414)
          Capital expenditures - construction in progress    (101,242)- 

               Net cash provided by investing activities      714,204 709,963 


                                          (continued)
<PAGE>


                                    THE ROCKIES FUND, INC.
                             Statements of Cash Flows (Continued)
                            Years Ended December 31, 1997 and 1996



                                           1997  1996
                                                                             
Cash flows from financing activities:
          Increase (decrease) in cash overdraft    8,049       (8,653)
          Proceeds from long-term debt                 -       96,022 
          Repayment of long-term debt           (442,565)    (175,361)

             Net cash used in financing activities            (434,516)(87,992)

Net increase (decrease) in cash                 (477,514)     498,211 

Cash at beginning of year                        499,404        1,193 

Cash at end of year                               $21,890     $499,404 

Supplemental disclosure of cash flows information:

  Cash paid for interest                          $61,770     $ 69,671


Supplemental disclosures of noncash investing and financing activities:

During 1996, the Fund settled an $85,944 note payable, which entitled the 
holder to convert the
note to 50% equity in the Fund's building.  To cancel the note, the Fund gave 
the note holder
40,321 shares of Redwood Broadcasting, Inc. common stock, 7,000 shares of Palo 
Verde Group,
Inc. common stock, and a $93,000 promissory note payable.  The transaction 
resulted in
termination of the note holder's right to convert the note into equity in the 
building.  The
resultant cost to terminate the note holder's right of $74,537 was allocated to
 the Fund's
building.  The Fund subsequently reduced the $93,000 promissory note by 
$35,876, in exchange
for 20,500 shares of Discovery Technologies, Inc. common stock. 

During 1997, the Fund purchased a 20% interest in a Hotel Investment property 
in exchange for a
$150,000 promissory note payable and $50,000 cash, the Fund purchased 250,000 
shares of Redwood
Broadcasting, Inc. in exchange for a $300,000 note payable, and the Fund 
purchased the Chestnut
Building investment in exchange for a $500,000 mortgage note payable and 
$100,000 cash.
<PAGE>

                        THE ROCKIES FUND, INC.
                  Statements of Changes in Net Assets
                Years Ended December 31, 1997 and 1996



                                             1997  1996
                                                                      
Increase (decrease) in net assets
          from investment activities:

            Net investment loss                   $(25,796)   $(428,689)
          
            Net realized (loss) gain from investments
             (net of income tax expense of $118,000 
             in 1996)                            (51,374)   1,549,196 
                
            Net unrealized appreciation (depreciation)                
               of investments                     51,240      (97,339)

            Net increase (decrease) in net assets from
             investment activities               (25,930)   1,023,168 

Net assets at beginning of year                2,330,732    1,307,564 

Net assets at end of year                         $2,304,802  $2,330,732 
<PAGE>
                        THE ROCKIES FUND, INC.

                     NOTES TO FINANCIAL STATEMENTS

                YEARS ENDED DECEMBER 31, 1997 AND 1996


1.   Organization and summary of significant accounting policies:

     Organization:

     The Rockies Fund, Inc. (the "Fund") was incorporated in Nevada on
     August 2, 1983 for the principal purpose of making venture
     capital investments in developing companies throughout the United
     States.  The Fund is registered under the Investment Company Act
     of 1940, as amended, as a business development company.  In order
     to maintain its status as a business development company,
     approximately seventy percent of the Fund's assets must be
     comprised of venture capital investments.

     The Fund currently makes investments in small public and private
     companies, some of which are in the early stages of development
     with little or no operating history, or more developed companies
     that operate at losses or which experience substantial
     fluctuations in operating results.  These companies may also need
     substantial capital to support expansion or to achieve or
     maintain a competitive position.  Such companies may face intense
     competition and risk of product and technological obsolescence or
     rapidly changing regulatory environments which could adversely
     affect such companies' operations.  These companies may have
     insufficient cash flow to service their debt obligations,
     including bridge loans made by the Fund.  As a result, no
     assurance can be provided that the Fund's investments will not
     result in substantial or complete losses.  The Fund's management
     serves on the boards of directors of a number of its portfolio
     companies.  In 1997, the Fund also invested in commercial real
     estate ventures located in Colorado and Wyoming.

     A significant portion of the Fund's investments consists of
     securities that are subject to restrictions on sale.  Restricted
     securities cannot be sold publicly without prior agreement with
     the issuer to register these securities under the Securities Act
     of 1933, as amended (the "Act"), or by selling such securities
     under Rule 144 of the Act, or other rules under the Act which
     permit only limited sales under specified conditions.  The Fund's
     ability to sell its investments in restricted securities may be
     limited by, and subject to, the lack or limited nature of a
     trading market for such securities.  These limitations could
     prevent or delay any sale of the Fund's securities or reduce the
     amount of proceeds that might otherwise be realized.  Restricted
     securities generally sell at a price lower than similar
     securities that are not subject to restrictions on sale.  When
     restricted securities are sold to the public, the Fund, under
     certain circumstances, may be deemed an Underwriter or a
     Controlling Person for the purposes of the Act, and be subject to
     liabilities as such under the Act.

     As shown  in the accompanying financial statements, the Fund
     incurred net investment losses in 1997 and 1996.  The Fund may be
     required to liquidate investments or obtain debt or equity
     financing to fund operations in the future.

     Investment valuation and transactions:

     Securities listed or traded on an exchange are valued at their
     last bid price on the exchange where the securities are
     principally traded.  Securities reported on the NASDAQ National
     Market System are valued at the closing bid price on the
     valuation date.  Securities traded in the over-the-counter market
     are valued at the last bid price, based upon quotes furnished by
     independent market makers for such securities.  Investments in
     notes receivable are unsecured and are valued at net realizable
     value.  The Fund performs on-going evaluations regarding
     collectibility of receivables and provides allowances for
     potential losses.

     In the absence of readily ascertainable market values,
     investments in restricted securities without quoted market prices
     are carried at estimated fair value as determined by the Fund's
     Board of Directors (the "Board").  Due to the inherent
     uncertainty of valuation, those estimated values may differ
     significantly from the values that would have been used had a
     ready market for the investments existed, and the differences
     could be material.  The estimated fair value of restricted
     securities at December 31, 1997 and 1996 total approximately
     $1,360,000 and $964,000, respectively.  The estimated fair value
     of restricted securities whose values have been estimated by the
     Board in the absence of readily attainable market values is
     approximately $256,000 and $30,000 at December 31, 1997 and
     December 31, 1996, respectively.

     Securities transactions are accounted for on a trade date basis. 
     Where possible, realized gains and losses on the sales of
     investments are determined using the specific identification
     method.  If the specific identification method cannot be
     utilized, realized gains and losses are determined using the
     first-in, first-out method.  Substantially all of the Fund's
     investments are non-income producing.

     In September 1997, the Fund purchased two commercial real estate
     investments located in Colorado and Wyoming.  At December 31,
     1997, these investments are under contract for sale in 1998, and
     are recorded at their estimated fair values, which is based on
     the agreed-upon, respective sales prices of these properties
     (Note 2).

     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
     periods.  Actual results could differ from those estimates.

     Recently issued accounting pronouncements:

     The Financial Accounting Standard's Board recently issued
     Statement of Financial Accounting Standard (SFAS) No.'s 130 and
     131, "Reporting Comprehensive Income" and "Disclosures about
     Segments of an Enterprise and Related Information," respectively. 
     Both of these statements are effective for fiscal years beginning
     after December 15, 1997.  SFAS No. 130 establishes requirements
     for disclosure of comprehensive income which includes certain
     items previously not included on the statement of operations
     including minimum pension liability adjustments and foreign
     currency translation adjustments, among others.  Reclassification
     of earlier financial statements for comparative purposes is
     required.  SFAS No. 131 revises existing standards for reporting
     information about operating segments and requires the reporting
     of selected information in interim financial reports.  SFAS No.
     131 also establishes standards for related disclosures about
     products and services, geographic areas, and major customers. 
     Management believes that implementation of SFAS No. 130 and No.
     131 will not materially impact the  Fund's financial statements.
     
     Financial instruments:

     The carrying values of the Fund's financial instruments (other
     than investments), including cash, receivables, payables,
     accruals and non-related party debt approximates fair values
     primarily due to the short maturities of these instruments and
     based on borrowing rates that management believes are currently
     available to the Fund for instruments with similar terms.  The
     fair values of the related party debt are not practicable to
     estimate, due to the related party nature of the underlying
     transactions.

     Property and equipment:

     Property and equipment is recorded at cost.  Deprecation is
     provided over the estimated useful lives of the assets using the
     straight-line method as follows: furniture, fixtures, automobile
     and equipment, 3 to 10 years; leasehold improvements, 6 to 8
     years; building, 40 years.  Assets under construction are not
     depreciated until placed into service.

     Management assesses the carrying value of long-lived assets for
     impairment when circumstances warrant such a review, primarily by
     considering available appraisal information and current and
     projected income and annual cash flows on an undiscounted basis. 
     If management determines that an impairment has occurred, an
     impairment loss is recognized based on the difference between the
     assets' carrying values over the estimated fair values.  Based on
     management's review, the Fund does not believe that any long-
     lived asset impairments occurred in 1997.

     Earnings (loss) per share:

     The Company adopted SFAS No. 128 during 1997.  This statement
     requires dual presentation of basic and diluted earnings per
     share ("EPS") with a reconciliation of the numerator and
     denominator of the basic EPS computation to the numerator and
     denominator of the diluted EPS computation.  Basic EPS amounts
     are based on the weighted average shares of common stock
     outstanding.  Diluted EPS reflects the potential dilution that
     could occur if securities other than contracts to issue common
     stock were exercised or converted into common stock or resulted
     in the issuance of common stock that then shared in the earnings
     of the entity.  The Company had no potential common stock
     instruments which would result in diluted EPS in 1997 and 1996. 
     The adoption of SFAS No. 128 did not impact previously reported
     EPS.

     Reclassifications:

     Certain 1996 amounts have been reclassified to conform to the
     1997 presentation.
<PAGE>
2.   Real estate transactions:

     Real estate operations:

     Through March 31, 1997, the Fund owned a building and land
     located in Colorado Springs, Colorado (the "Northpark Building"). 
     The Fund occupied certain office space in this building and
     leased the remaining space to other parties under leases expiring
     through 2002.  Effective March 31, 1997, the Fund sold the
     Northpark Building, as well as building improvements net of
     certain liabilities for $1,080,000.  The Fund paid the related
     mortgage and other liabilities of approximately $478,000 and
     transferred the existing leases to the new building owner.  The
     Fund recognized a $388,000 gain on the transaction.  The Fund is
     currently leasing office space in the Northpark Building from the
     new owner on a month-to-month basis.  Lease expense for 1997 was
     approximately $8,100. 

     On April 1, 1997, the Fund purchased five acres of undeveloped
     commercial land, also located in Colorado Springs, Colorado (the
     "Woodmen Property"), for $390,000.  The Fund intends to develop
     and build a commercial office building on this property.  Through
     December 31, 1997, the Fund incurred approximately $101,000 of
     land development and building design costs, which are recorded as
     construction in progress.
     
     Real estate investments:

     During 1997, the Fund purchased two real estate investments
     located in Colorado and Wyoming.  In September 1997, the Fund
     purchased a 49,000 square foot commercial office building located
     in Colorado Springs, Colorado (the "Chestnut Building") for
     $100,000 cash and a $500,000 mortgage note payable.  In December
     1997, the Fund entered into an agreement to lease the Chestnut
     Building to an unrelated party for $35,000 through August 1998,
     at which time the party has agreed to purchase the building for
     $775,000.  The Fund received the $35,000 rent in 1997, which has
     been recorded as deferred rent.

     In September 1997, the Fund also purchased a 20% interest in a
     40-room hotel located in Thermopolis, Wyoming (the "Hotel
     Investment"), for $50,000 cash and a $150,000 promissory note
     payable.  The Hotel Investment was purchased from a party who is
     a shareholder and board member of certain Fund investee
     companies.  In March 1998, the Fund entered into a contract to
     sell the 20% interest back to this party for $200,000.<PAGE>
3.   Long-term debt:
                                                     1997        1996
          Related parties:

          Note payable, interest at 8%, default interest at
          12%, due through September 1998, collateralized
          by the Hotel Investment                   $150,000   $- 

          Notes payable, interest at 7%-12%,
          unsecured, due on demand                    9,244    6,500 

          Note payable, non-interest bearing, paid in March
          1998, collateralized by certain Fund investments in
          securities                                           13,130
             - 

            Total related parties                   172,374    6,500 

<PAGE>
3.        Long-term debt (continued):
                                                     1997        1996
          Others:

          Line of credit, interest at prime plus 2%
          (10.5% at December 31, 1997), due May 1998,
          collateralized by certain Fund investments in
          securities, $500 remaining credit available 
          at December 31, 1997                       74,500   74,500 

          Line of credit, interest at prime plus 2%
          (10.25% at December 31, 1996), collateralized
          by the Northpark Building, paid March 31, 1997
          in connection with the sale of Northpark Building   -
          100,000 

          Note payable, interest at 8%, principal and
          interest due in monthly installments of $3,640,
          due January 2007, collateralized by
          certain Fund investments in securities    281,348   - 

          Mortgage note payable, interest at prime plus 1.25%
          (9.75% at December 31, 1997), principal and 
          interest due in monthly installments of $4,790,
          remaining principal and interest due August 2002, 
          collateralized by the Chestnut Building and an 
          assignment of rents                                 497,528
               - 

          Mortgage note payable, interest at 8%, collateralized
          by Northpark Building, paid March 31, 1997 in 
          connection with the sale of Northpark Building      -
          358,436 

          Note payable, interest at 8%,
          unsecured, paid in March 1997                   -   14,125 
          
<PAGE>
3.        Long-term debt (continued):

          Others (continued):

          Borrowings on margin accounts, variable interest rates
          (8% and 9.5% at December 31, 1997), due on demand   121,494
               24,609 

          Other long-term obligation                 11,393   - 

            Total others                                      986,263
                 571,670 

               Total long-term debt               1,158,637   578,170
               

               Less current maturities             (899,106)  
               (262,821)

                                                  $  259,531  $
315,349

          Aggregate long-term debt maturities  are as follows:

                    1998           $899,106
                    1999            23,629
                    2000            25,590
                    2001            27,715
                    2002            30,015
                    Thereafter     152,581                            
                                         $             1,158,636

     The weighted average interest rate on all debt for 1997 and 1996
     was 8.8%.  Interest expense incurred on related party debt was
     $5,362 and $3,567 in 1997 and 1996, respectively.

<PAGE>
4.   Income taxes:

     Deferred tax assets and liabilities are recognized for the future
     tax consequences attributable to differences between the
     financial statement carrying amounts of existing assets and
     liabilities and their respective tax bases.  Deferred tax assets
     and liabilities are measured using enacted tax rates expected to
     apply to taxable income in the years in which those temporary
     differences are expected to reverse.  The effect on deferred tax
     assets and liabilities of a change in tax rates is recognized in
     the statement of operations in the period that includes the
     enactment date.  Income tax expense (benefit) consists of the
     following:

                               1997           1996  
          Current:
            Federal           $(94,000)      $100,000 
            State            (11,000)        18,000 
                            (105,000)       118,000 
          Deferred
            Federal           94,000              - 
            State             11,000              - 
                             105,000              - 
                              $    -         $118,000 


     The reconciliation between the statutory federal expense
     (benefit) and the effective tax  is as follows:

                                                   1997         1996  

               Statutory federal income tax expense (benefit) (34%)  $
               (9,000)                            $388,000 
               State taxes, net of federal income tax benefit  (1,000)
                                                  37,000 
               Net operating losses not utilized (utilized)    10,000 
                                                  (315,000)
               Alternative minimum tax                 -        8,000 

               Income tax expense                 $    -      $118,000 <PAGE>
4.   Income taxes (continued):

     The tax effects of temporary differences that give rise to
     significant portions of the deferred tax assets and deferred tax
     liabilities at December 31, 1997 and 1996 are as follows:

                                                 1997          1996 

          Deferred tax assets:
            Net operating loss carryforwards   $58,000       $    - 
            Investments, unrealized net losses                9,575 
            Less valuation allowance                         (9,575)

            Net deferred tax assets             58,000            - 
          Deferred tax liabilities:
            Investments, unrealized net gains  (13,000)           - 
            Property and equipment, deferred gain            
(150,000)   - 

            Gross deferred tax liabilities    (163,000)           - 

            Net deferred tax liabilities       $(105,000)    $    - 

     At December 31, 1997, the Fund has approximately $150,000 of net
     operating loss carry forwards which expire through 2012.

5.   Commitments and contingencies:

     Securities and Exchange Commission investigation:

     Beginning in 1994, the United States Securities and Exchange
     Commission (the :"SEC") began an investigation into certain
     matters, including the administrative and record keeping
     practices of the Fund, its securities trading activities and
     those of one of its officers.

     In September 1996, the Fund received notification from the SEC
     that the SEC staff was planning to recommend that an enforcement
     action be brought against the Fund, its president, and each of
     its directors for certain alleged violations of federal
     securities laws.  In July 1997, the Fund received notification
     that the SEC was planning to recommend an enforcement action
     against the Fund's President for certain additional alleged
     violations of SEC laws. 

     The SEC invited the Fund and the Fund's president to make
     submissions setting forth the position and arguments of the Fund
     and the Fund's president regarding the SEC staff's planned
     recommendation.  The Fund did so in October 1996, and at the
     SEC's request, the Fund supplemented its submission in December
     1996.  The Fund's president also did so in August 1997.  The Fund
     has not received a response to the 


     submissions and has not been advised of any timetable for the SEC
     staff to make its final determination about whether to recommend
     an enforcement action.  Management is unable to predict, with any
     certainty, the outcome of the investigation, or the ultimate
     effect on the Fund.

     Employee benefits:

     The Fund maintains a salary-deferred, simplified employee pension
     plan.  Employer contributions are discretionary, and there were
     no employer contributions in 1997 and 1996.

     Consulting agreement:

     In October 1996, the Fund entered into an agreement with a former
     officer of the Fund, whereby the former officer provided
     consulting services for $1,000 a month.  The agreement was
     terminated in 1997.  Consulting expense for 1997 and 1996 was
     $12,000 and $2,000, respectively.

6.   Transactions with investees and related parties:

     Receivables from investees represent reimbursable expenses
     totaling $562 and $23,072 at December 1997 and 1996,
     respectively.

     The Fund utilizes a brokerage and trust company as primary
     custodian of its securities.  This company is also the majority
     shareholder of the Fund.  Custodial fees incurred in 1997 and
     1996 were $13,234 and $8,900, respectively, and at December 31,
     1996, the Fund has a payable due to this affiliate, for
     investment securities purchased, of approximately $153,566.  As
     of December 31, 1997, the Fund has a receivable due from this
     affiliate for investment securities sold of $4,959.<PAGE>
                 


                               PART III

     ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The present term of office of each director will expire at the
next annual meeting of shareholders.  The name, position with the
Fund, and age of each director and officer are as follows:

                                                  Officer/
                                                  Director
Name                         Age                TitleSince
                                                                      

Stephen G. Calandrella       37              President,1991
                                      Chief Executive Officer,
                                             and Director

Charles C. Powell            44               Director1991

Clifford C. Thygesen         63               Director1991

Barbara A. Hamstad           32       Chief Accounting Officer1996
                                            and Treasurer

Windy D. Haddad              25     Chief Administrative Officer1996
                                            and Secretary
                                               

     Stephen G. Calandrella, President and Director.  Mr. Calandrella
has been President and a Director of  The Rockies Fund, Inc. since
February, 1991, and Chief Executive Officer since January 30, 1994. 
Mr. Calandrella has previously served as a Director of Kelly Motors,
Ltd., Good Times Restaurants, Inc., Southshore Corp., and Cogenco
International, Inc.  Mr. Calandrella also served as a Director for
Combined Penny Stock Fund, Inc. and Redwood MicroCap Fund, Inc., both
of which are closed-end investment companies registered under the
Investment Company Act of 1940.  Mr. Calandrella currently serves as
Interim President and a member of the Board of Directors of Global
Casinos, Inc., a publicly-held company engaged in the ownership and
operation of domestic and international casinos and limited stakes
gaming properties; and as a Director of Optimax Industries, Inc., a
NASDAQ listed holding company;  American Educational Products, a
NASDAQ listed supplier of childrens' learning tools; and Guardian
Technologies, a NASDAQ listed maker of bullet proof vests; and Gold
Capital Corporation, a publicly traded mining company.   Mr.
Calandrella has also engaged in financing and consulting activities
for development stage companies, which consist of advising public and
private companies on capital formation methods, enhancing shareholder
valuations, mergers, acquisitions and corporate restructuring, as well
as arranging for bridge loans and equity purchases.

     Charles M. Powell, Director.  Mr. Powell is currently President
and Director of Antalys Corporation, a wholly owned subsidiary of Baan
Company.  From 1992 to 1996, Mr. Powell was Vice-President of Finance
for KaPre Software.  From March 1992 to June 1993, Mr. Powell was CEO
of Generation 5 Technologies, Inc.  From January 1989 to March 1992,
he was Director of International Operations at J.D. Edwards & Company,
a software company that develops and distributes general business
application financial software.  From September to December, 1988, Mr.
Powell was employed by the company to provide assistance in financial
and operation areas.  From April 1988 to June 1989, Mr. Powell was
President of Sheridan Securities, Inc., an investment banking firm. 
From January 1987 to March 1988 he was international sales manager for
Columbine Systems, a software development Fund for the broadcast
industry.  From January 1985 to December 1986, he was employed by
Aweida Systems engaged in the business of distributing company
products, first as Chief Financial Officer and subsequently as Vice
President of Marketing.  From February 1979 to December 1985, he was
employed by Storage Technology, Inc., engaged in the business of
manufacturing computer storage devices in a variety of capacities,
with his last position being that of Vice President of Financial
Marketing.  Mr. Powell graduated from the University of Colorado with
a Bachelor of Science degree in accounting and finance in 1976 and he
received his license as a Certified Public Accountant in 1976.  Mr.
Powell currently serves as a Director for The Rockies Fund, 
Kinetics.com, and International Nursing.

     Clifford C. Thygesen, Director.  Mr. Thygesen has been a director
of the Fund since February, 1991.  Mr. Thygesen has also been a
Director of American Educational Products, Inc. since 1986, and
President since January, 1996.  American Education Products is a
publicly traded company involved in the manufacture and distribution
of educational products, with principal offices in Boulder, Colorado. 
Mr. Thygesen is also a current Director of Wall Street Racing Stables,
a publicly-traded company involved in the ownership, racing and
breeding of  thoroughbred horses.  Mr. Thygesen is also a partner in
two land development firms located on Colorado Springs and Fleming,
Colorado and a Director of Usasurance Group.   From 1971 to 1973, Mr.
Thygesen was Vice-President of Operations for the Ithaca Gun Company
of Ithaca, New York, a manufacturer of high quality firearms.  From
1973 to 1976, Mr. Thygesen served as President of Alpine Designs
Corporation, a company which produces backpacking equipment, ski wear
and hunting apparel.  From 1977 to 1981, he served as Vice-President
of Manufacturing for Pure Cycle Corporation, a company that designed
water recycling systems for residential use.  From 1981 until
February, 1988, Mr. Thygesen was President, Chief Operating Officer
and a Director of Tri Coast Environmental Corporation, formerly
Colorado Venture Capital Corporation.  He received his B.S. degree in
Industrial Administration from the University of Illinois in 1961.

     Barbara A. Hamstad,  Mrs. Hamstad has served as Internal
Accountant for The Rockies Fund, Inc. since September of 1993 and as
Chief Accounting Officer and Treasurer since September, 1996.  Mrs.
Hamstad also serves as Secretary and Director for Marco Foods, Inc., a
small public shell actively trading in the stock market.  Prior to
Mrs. Hamstad's accounting positions she worked as a Vendor Cost
Analyst for Raytheon in Santa Barbara, California.  From January,
1989, through June, 1992, she analyzed vendor cost proposals for
subcontracted components, conducted on-site evaluations of
subcontractors, and developed price recommendations based on detailed
analyses of cost structure.  From June 1987 through August 1988, she
worked as a Financial Assistant at IDS Financial Services in San Luis
Opisbo, California.  Mrs. Hamstad graduated from California
Polytechnic State University, San Luis Obispo, CA, with a bachelor's
degree in Business Administration, concentrating in Financial
Management.

     Windy D. Haddad,  has worked for The Rockies Fund, Inc. since
August 9, 1993 and has served as Chief Administrative Officer since
October 1, 1995 and as Corporate Secretary since September 1, 1996. 
Ms. Haddad currently serves as Corporate Secretary of Global Casinos,
Inc., a NASDAQ listed gambling company.   She also serves as Vice
President, Secretary and Director of Land Resources Corporation, a
real estate development Fund with operations in Flemming, Colorado,
and as a Director of Lone Oak Vineyards a 40 acre vineyard property in
Napa Valley, California.  Ms. Haddad graduated from Colorado College
in 1993, earning her Bachelor of Arts Degree in Economics.
     
     There are no material proceedings to which any director, officer
or affiliate of the Fund, or any owner of record or beneficially of
more than five percent (5%) of any class of voting securities of the
Fund, or any associate of any such director, officer, affiliate of the
Fund, or security holder is a party adverse to the Fund or any of its
subsidiaries or has a material interest adverse to the Fund or any of
its subsidiaries.

     During the last five (5) years except as set forth herein no
director or officer of the Fund has:
     
     (1)  had any bankruptcy petition filed by or against any business
          of which such person was a general partner or executive
          officer either at the time of the bankruptcy or within two
          years prior to that time;

     (2)  been convicted in a criminal proceeding or subject to a
pending criminal proceeding;

     (3)  been subject to any order, judgment, or decree, not
          subsequently reversed, suspended or vacated, of any court of
          competent jurisdiction, permanently or temporarily
          enjoining, barring, suspending or otherwise limiting his
          involvement in any type of business, securities or banking
          activities; or

     (4)  been found by a court of competent jurisdiction in a civil
          action, the Commission or the Commodity Futures Trading
          Commission to have violated a federal or state securities or
          commodities law, and the judgment has not been reversed,
          suspended, or vacated.

     Mr. Calandrella serves as Interim President of Global Casinos,
Inc., a portfolio and affiliated company.  During 1995, Global
Casinos, Inc. caused one of its wholly-owned subsidiaries, Casinos
USA, Inc. to file a voluntary petition for reorganization under
Chapter 11 of the United States Bankruptcy Code.  In December 1996,
the United States Bankruptcy Court for the District of Colorado
entered an order confirming a plan of the organization for Casinos
USA, Inc.

     There currently exists no arrangement or understanding between
any executive officer and between any other person pursuant to which
any person is to be selected as an executive officer.  No family
relationships exist between any current or prospective executive
officer or director.

     Each director of the Fund who is not also an officer is paid the
sum of $1,000 for each director's meeting attended by such director. 
All directors are reimbursed for expenses associated with attendance
at Board of Directors meetings of the Fund.  Other than the foregoing,
no director receives any additional compensation or remuneration as a
member of the Fund's Board of Directors.

     Each Director is elected to serve a term of one (1) year and is
elected annually at the regular annual meeting of the Fund's
stockholders.  Each executive officer is elected annually at the first
meeting of the Fund's Board of Directors held immediately following
each annual meeting of shareholders.  Each executive officer holds
office until his successor is duly elected and qualified or until his
resignation or until he has been removed in the manner provided by
Fund's By-laws.

     No Director has resigned or declined to stand for reelection to
the Board of Directors since the date of the last annual meeting of
the Fund's stockholders due to any disagreement with the Fund on any
matter relating to the Fund's operations, policies or practices.

     During the fiscal year ended December 31, 1997, the Fund had four
(4) directors meetings which were attended in person by all of the
Fund's directors.  The Fund does not have a standing audit, nominating
or compensation committee of the Board of Directors, or committees
performing similar functions.

<PAGE>
           COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

     Under the Securities Laws of the United States, the Fund's
Directors, its Executive (and certain other) officers, and any persons
holding more than ten percent (10%) of the Fund's common stock are
required to report their ownership of the Fund's common stock and any
changes in that ownership to the Securities and Exchange Commission
and the NASDAQ stock market.  Specific due dates for these reports
have been established and the Fund is required to report in this
Report any failure to file.  Based upon information provided to the
Company, all of these filing requirements were satisfied by its
Officers and Directors and ten percent holders as of December 31,
1997.

                   ITEM 11.  EXECUTIVE COMPENSATION

     The following tables and discussion set forth information with
respect to all plan and non-plan compensation awarded to, earned by or
paid to the Chief Executive Officer ("CEO"), and the Fund's three (3)
most highly compensated executive officers other than the CEO, for all
services rendered in all capacities to the Fund and its subsidiaries
for each of the Fund's last three (3) completed fiscal years;
provided, however, that no disclosure has been made for any executive
officer, other than the CEO, whose total annual salary and bonus does
not exceed $100,000.
                                                                      

                      SUMMARY COMPENSATION TABLE
                                                                      

                                       Long Term Compensation
            Annual Compensation            Awards           Payouts
                                                                      
                            Other
Name                       Annual Restricted
and                        Compen-   Stock         LTIP All Other
Principal      Salary       Bonus   sationAward(s)   Options/Payouts
Compensa-
Position  Year   ($)   ($)   ($)      ($)  SARs(#)      ($) tion ($)
                                                                      

          1997 $48,000 -0-   -0-     $-0-    -0-    -0-    -0-
Stephen G.
Calandrella,    1996 $48,000 -0-      -0-$-0-    -0-    -0- -0-
President
          1995 $48,000 -0-   -0-     $-0-    -0-    -0-    -0-
                                                                      

     No other executive officer of the Fund received compensation
during the years ended December 31, 1997, 1996 or 1995, in excess of
$100,000.

     All officers and employees of the Fund are eligible to
participate in the Fund's group health and dental insurance plan.  The
Fund also provides a Salary Deferred Simplified Employee Pension Plan
(SAR-SEP) adopted since September, 1994.  There has been no employer
contribution made to the Plan since inception, nor does the Fund incur
any administrative fees associated with this Plan.  The Fund currently
has one (3 year) employment agreement written to an executive officer, 
Ms. Windy D. Haddad, effective October 1, 1995.   In 1996, the Fund
issued two cash bonuses to its employees, Mrs. Barbara Hamstad and Ms.
Windy Haddad. 

     Mr. John R. Overturf, Jr. resigned as Vice President of  The
Rockies Fund Inc, effective August 28, 1996 and he signed a Consultant
Agreement with The Rockies Fund, Inc., effective October 1, 1996, as a
consultant for the Fund's Chestnut Building and other real estate
transactions at $1,000 per month and subject to a 30 day cancellation
by either party in writing.   Mr. Craig T. Rogers resigned as Chief
Operating Officer and Secretary, effective  October 1, 1996.<PAGE>
       ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                            AND MANAGEMENT

     The following table sets forth as of December 31, 1997, the
number of shares of the Fund's common stock owned by each person who
owned of record, or was known to own beneficially, more than five
percent (5%) of the Fund's outstanding shares of common stock, sets
forth the number of shares of the Fund's outstanding common stock
beneficially owned by each of the Fund's current directors and
officers and sets forth the number of shares of the Fund's common
stock beneficially owned by all of the Fund's current directors and
officers as a group:

Title of  Name and Address               Amount and Nature           
Percent
Class     of Beneficial Owner       of Beneficial Ownership(1)       
of Class
______________________________________________________________________
___________

Common    D.A Davidson & Co.(2)              233,367                 
36.4%
Stock     8 Third Street, North
                  Great Falls, Montana 59401

Common    Stephen G. Calandrella(3)          234,000                 
36.5%
Stock

Common    Charles C. Powell                      -0-                 
0.0%
Stock

Common    Clifford C. Thygesen                 2,000                 
0.3%
Stock

Common    Barbara A. Hamstad                   1,500                 
0.2%
Stock

Common    Windy D. Haddad                      1,500                 
0.2%
Stock

Common    All Officers and                   239,000                 
37.3%
Stock     Directors as a
                  Group (5 Persons)
                                           

1.   Beneficial Owners listed have sole voting and investment power
with respect to the shares unless otherwise indicated.

2.   Voting and investment power with respect to securities held by
D.A. Davidson & Company is exercised by its Board of Directors.

3.   Includes 12,500 shares of common stock held by Aztec Capital
Corp. of which Mr. Calandrella is officer, director and majority
shareholder.



       ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     Notes payable to related parties at December 31, 1997 include 
$6,500 payable to a related party of the Fund's President, which note
is unsecured, carries interest at the rate of twelve percent (12%) per
annum, and is due upon demand.

     The Fund currently holds a 5% ownership interest in Bear Star,
LLC., formerly a wholly owned subsidiary of Columbine Home Sales,
LLC., and therefore Bear Star, LLC. would be considered to be an
affiliated company as a result of the Fund's ownership during 1996. 

     As a result of the Fund's investment during 1997 and/or position
on the entity's Board of Directors, the Fund would, at various times
during fiscal 1997, be considered to have been an affiliate of
American Educational Products, Inc., Guardian Technologies, Inc.,
Global Casinos, Inc., Optimax Industries, Inc., Southshore
Corporation, Cova Technologies, Kinetiks.com and Neco Land Resources,
LLC.

     On October 1, 1995, Mr. Calandrella, the Fund's President and
Director, was elected to serve as Interim President of Global Casinos,
Inc., a portfolio company and affiliate of the Fund.  In consideration
of his services as Interim President of Global Casinos, Inc., Mr.
Calandrella received 9,000 shares in 1996 and has also been granted
Incentive Stock Options under the Global Casinos, Inc. Stock Incentive
Plan, exercisable to purchase, in the aggregate, 15,000 shares of
common stock at an exercise price of $5.00 per share.  Of those
Incentive Stock Options, 5,000 are fully vested, and the remaining
10,000 Incentive Stock Options vest ratably over two (2) years,
subject to Mr. Calandrella's continuing to serve as an executive
officer or key employee of Global Casinos, Inc.  As of March 15, 1997,
Mr. Calandrella has continued to serve as Interim President of Global
Casinos.

     Mr. Calandrella also serves as a member of the Board of Directors
of Global Casinos, Inc.  In consideration of his services as a
director of Global Casinos, Inc., Mr. Calandrella has been granted
Non-Qualified Stock Options exercisable to purchase, in the aggregate,
an additional 15,000 shares of common stock at an exercise price of
$5.00 per share, of which 5,000 Non-Qualified Stock Options are fully
vested, and the remaining 10,000 Non-Qualified Stock Options vest
ratably over two (2) years, subject to Mr. Calandrella's continuing to
serve as a director of that Fund.

     There exists no arrangement or agreement whereby the Fund has any
direct or indirect beneficial interest or pecuniary interest in any of
the securities or other compensation issued to Mr. Calandrella in
consideration of his services as an executive officer or director of
Global Casinos, Inc.<PAGE>
                                PART IV

   ITEM 14.  EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K

EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K.

     a.   1.   Financial Statements.

               Independent Auditors' Report;

               Statements of Assets and Liabilities - December 31,
1997 and 1996;

               Schedules of Investments - December 31, 1997 and 1996;

               Statements of Operations - Years Ended December 31,
1997 and 1996;

               Statements of Stockholders' Equity - Years Ended
                    December 31, 1997 and 1996;

               Statements of Cash Flows - Years Ended December 31,
1997 and 1996;

               Statements of Changes in Net Assets - Years Ended
                    December 31, 1997 and 1996;

               Notes to Financial Statements - December 31, 1997 and
1996

            2. Financial Statement Schedules.

               All schedules for which provision is made in the
applicable accounting regulations of Article 12 of Regulation S-X of
the Securities and Exchange commission have been omitted because
either (I) such schedules are not required under the related
instructions, (ii) the required information is not present or is not
in amounts sufficient to require submission of the schedule, or (iii)
the information required is included in the Financial Statements and
Notes thereto.

     b.   Current Reports on Form 8-K.

          No current reports on Form 8-K were filed during the quarter
          ended December 31, 1997.

     c.   Exhibits.

          The following Exhibits are filed pursuant to Item 601 of
          Regulation S-K:

          Exhibit No. Title
                                                                      
               3      Articles of Incorporation incorporated by
                      reference to Registration Statement on Form N-
                      2, No. 2-86057.

             3(a)     Certificate of Amendment to Articles of
                      Incorporation dated June 2, 1988, incorporated
                      by reference to Form 10-K for the fiscal year
                      ended December 31, 1988.

             3(b)     Bylaws, as amended March 16, 1988, incorporated
                      by reference to Form 10-K for the fiscal year
                      ended December 31, 1987.

             10(a)    Investment Advisory Agreement dated August 23,
                      1983, between Registrant and Galbreath
                      Financial Services Corporation incorporated by
                      reference to Registration Statement on Form N-
                      2, No. 2-86057.

             10(b)    Management Agreement dated August 23, 1983,
                      between Registrant and Galbreath Financial
                      Services corporation incorporated by reference
                      to Registration Statement on Form N-2, No. 2-
                      86057.

             10(c)    Agreement Concerning the Change in Management
                      incorporated by reference to Exhibit A to the
                      Fund's Notification Pursuant to Rule 14f-1.

             10(d)    Subscription Agreement incorporated by
                      reference to Exhibit A to the Fund's
                      Notification Pursuant to Rule 14f-1.
<PAGE>
                              SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
annual report to be signed on its behalf by the undersigned, thereunto
duly authorized.

                    ROCKIES FUND, INC.

Date:                         By:                                     
                              Stephen G. Calandrella, President


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


Signature                     Position            Date



                              President, Director                     
Stephen G. Calandrella                  Chief Executive Officer
          


                              Director                           
Charles M. Powell



                              Director                           
Clifford C. Thygesen
<PAGE>
                              SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
annual report to be signed on its behalf by the undersigned, thereunto
duly authorized.

                    ROCKIES FUND, INC.

Date:          4/15/98             By:  /s/ Stephen G. Calandrella    
                                   Stephen G. Calandrella, President


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


Signature                     Position            Date



/s/ Stephen G. Calandrella              President, Director      
4/15/98        
Stephen G. Calandrella                  Chief Executive Officer
          


/s/ Charles M. Powell                   Director            4/15/98   
     
Charles M. Powell



/s/ Clifford C. Thygesen           Director            4/15/98        
Clifford C. Thygesen