2

                            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, 1998
                                
                               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
                                
       5373 North Union, Colorado Springs, Colorado  80918
      (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, 1998, 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
internet via AOL held by non-affiliates of the Registrant was
$1,762,058.  As of December 31, 1998, 640,256 shares of Common
Stock of the Registrant were outstanding.

              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.

                             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 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, 1998 for a net gain of approximately
$388,000.  In a concurrent transaction structured to qualify as a
tax free exchange for income tax purposes, the Fund, on April 1,
1998, consummated the purchase of 5 acres of undeveloped
commercial real estate, and on September 4, 1998, 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, 1998, undeveloped and developed
commercial real estate purchased on April 1 and September 4,
1998, 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
                                                          
                                       1998         1997       1996
                                                          
Investment Income:                                        
                                                          
      Venture Capital Industry    $    88,145    $ 63,777     36,057
      Real Estate                      94,833      57,890    170,434

Net Investment Income/(Loss):

      Realized Investment                                 
       Income (after tax)             465,180     (51,374) 1,549,196
      Venture Capital Industry       (594,979)    (11,276)  (488,522)
                                                          
      Real Estate                      24,774     (14,520)    59,833

Identifiable Assets:

     Venture Capital Industry       4,742,527   3,322,424  2,733,821
     Real Estate (land and                                     
      construction in progress)       504,058     491,242    736,271


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.

     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 three full time and one part time
employee.  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 basic valuation methods
which are, 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).
     
     In order to be as accurate as possible, the valuation
process undertaken by the Fund's Board of Directors attempts to
take into account all known information about a particular
investment company including but not limited to:
     
     -    Fundamental business performance of an investee company
          and that of its competitors
     -    Market valuation of companies in the same or similar
          industries
     -    Market liquidity of an investee company and its
          competitors
     -    The estimated value in a private sale including the value
          of intangibles
     
     The valuations of the portfolio companies are to represent a
potential transaction between a willing buyer and a willing
seller in an orderly market.  The valuations are not intended to
be for liquidation purposes with a time constraint.  Accordingly,
the portfolio valuations as determined in good faith by the Board
of Directors should be viewed as an indication of reasonable
value and not as a representation of a final sales price.
     


                      PORTFOLIO COMPANIES

     ALTA CALIFORNIA BROADCASTING

     The Fund, at December 31, 1998, held 255,000 shares of Alta
California Broadcasting ("Alta") common stock, which is the
result of a dividend declaration on December 21, 1998.  The
dividend shares are subject to registration with the SEC;
however, there is no assurance that such registration will ever
become affective.  The evidence of ownership is based upon
notification of the dividend declaration by Alta.  The Fund has
been advised by Alta that the Net Tangible Book Value per share
at December 31, 1998 was $1.39.  However, in light of the above
circumstances, the Board of Directors has determined the Fair
Value of Alta to be $1.00 per share or $255,000.

     AMERICAN EDUCATIONAL PRODUCTS, INC.

     The Fund, at December 31, 1998, held 16,500 shares of
American Educational Products, Inc. common stock.  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 $9.50 per share or $156,750.

     ASTEA INTERNATIONAL

     The Fund, at December 31, 1998, held 5,000 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 $1.6875 per share or $8,437.50.

     BIOSOURCE INTERNATIONAL

     The Fund, at December 31, 1998, held 90,000 shares of
Biosource International common stock which stock is unrestricted
as to sale, non-income producing, and has been valued at its
quoted market price of $2.9375 per share or $264,375.

     ECLIPSE fka BEAR STAR, L.L.C. fka COLUMBINE HOME SALES,L.L.C.

     The Fund at December 31, 1998, held 305,000 common shares of
Eclipse kfa Bear Star, L.L.C., which investment is restricted as
to sale, non-income producing, and has been valued by the Board
of Directors at $0.00.  The Fund also holds a note receivable
from Eclipse with remaining amounts due of $5,814.  The note
accrues interest at the rate of 10% per year, and is due on
demand.

     COVA TECHNOLOGIES

     The Fund, at December 31, 1998, 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.

     DAMACH, INC.

     The Fund, at December 31, 1998, 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 March 31, 1997.
An agreement was signed on March 4, 1997; to extend the
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, 1998, held 30,600 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 $.9375 per share or $28,687.50.

     GEORGESON, PHIL

     During 1998, notes owed by Mr. Georgeson were reclassed as
uncollectible and expenses as bad debt.

     GLOBAL CASINOS, INC.

     The Fund, at December 31, 1998, held 17,680 shares of Global
Casinos, Inc. common stock valued at its quoted market price of
$1.1875 per share, or $20,995.  The Fund, at December 31, 1998,
also held 291,667 shares of Global Casinos, Inc. Class C
preferred stock. The Fund accepted the Class C preferred stock
when it agreed to exchange $287,220 principal and $62,780 in
accrued interest due to the Fund on various note receivables.
The stock has been valued at its conversion market price of
$1.1875 per share, or $346,355 which is below cost.  Both
positions are restricted as to sale due to the company being an
affiliate, non-income producing.  The Fund, at December 31, 1998,
also held a note receivable from Global Casinos, Inc. in the
amount of $163,343, which note is unsecured, accrues interest at
the rate of 12% per year, and is due on demand.  Said 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 $11,246,
which note is unsecured, accrues interest at the rate of 9% per
year, is due on demand, and is convertible into Global Casinos
common stock at $5.00 per share.

     GLOBEX MINING ENTERPRISES

     The Fund, at December 31, 1998, held 33,000 shares of Globex
Mining Enterprises common stock, which stock is unrestricted as
to sale, non-income producing and has been valued at its quoted
market price of $.09 per share or $2,970.

     HAMPTON COURT RESOURCES

     The Fund, at December 31, 1998, 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 $.91 per share or $11,375.

     HAWKS INDUSTRIES

     The Fund, at December 31, 1998, held 3,000 shares of Hawks
Industries common stock, which stock is unrestricted as to sale,
non-income producing and has been valued at its quoted market
price of $1.125 per share or $3,375.

     INTERNATIONAL REMOTE IMAGING

     At December 31, 1998, the Fund held 10,000 shares of
International Remote Imaging 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 $7,500.

     J2 COMMUNICATIONS

     The Fund, at December 31, 1998, held 56,134 shares of J2
Communications common stock, after giving effect to a 1-for-3
reverse split.  The stock is unrestricted as to sale, non-income
producing and has been valued at its quoted market price of $2.00
per share or $112,268.

     KINETIKS.COM

     The Fund, at December 31, 1998, held 400,000 shares of
Kinetiks.com common stock, which stock is restricted as to sale
and non-income producing.  Because Kinetiks is in the process of
negotiating a favorable settlement with creditors and is in the
process of filing its past due Forms 10KSB and 10QSB, the stock
has been valued by the Board of Directors at 2/3 its quoted
market price of $.17 per share which is $.11 per share or
$44,000.  The Fund also held warrants to purchase an additional
1,150,000 shares of Kinetiks.com common stock at an exercise
price of $.25 per share.  The Board of Directors has valued the
warrants at $0.  The Fund also held a note receivable in the
amount of $25,000 which note is unsecured, accrues interest at
the rate of 10% per year, and was due on March 30, 1997.  The
note provides for a default interest rate of 18% and additional
50,000 warrants for each 30-day period that it remains unpaid.
The Fund holds a second note receivable from Kinetiks.com in the
amount of $61,476 which note is unsecured, accrues interest at
the rate of 8% per year and is due on demand.

     LAND RESOURCE CORPORATION

     The Fund, at December 31, 1998, 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 per share or $10,000.

     MARCO FOODS, INC.

     The Fund, at December 31, 1998, held a note receivable from
Marco Foods in the amount of $181,526, which note is unsecured,
accrues interest at the rate of 12% per year and is due on
demand.

     MORROW SNOWBOARDS

     The Fund, at December 31, 1998, held 7,000 shares of Morrow
Snowboards common stock, which stock is unrestricted as to sale,
non-income producing and has been valued at its quoted market
price of $.8125 per share or $5,687.50.

     MULTI-LINK TELECOMMUNICATIONS

     The Fund, at December 31, 1998, held 25,000 shares of Multi-
Link Telecommunications common stock, which stock is restricted
as to sale, non-income producing and has been valued at its cost
of $1.00 per share or $25,000.

     ONLINE SYSTEM SERVICES

     At December 31, 1998, the Fund held 8,000 shares of Online
System Services common stock, which stock is unrestricted as to
sale, non-income producing and has been valued at its quoted
market price of $13.00 per share or $104,000.

     PREMIER CONCEPTS

     The Fund, at December 31, 1998, held 35,000 shares of
Premier Concepts common stock, which stock is unrestricted as to
sale, non-income producing and has been valued at its quoted
market price of $.6875 per share or $24,062.50.

     REDWOOD BROADCASTING, INC.

     The Fund, at December 31, 1998, held 30,000 shares of
Redwood Broadcasting common stock, which stock is partially
restricted as to sale, non-income producing, and has been valued
at its quoted market price of $4.00 per share or $120,000.

     REDWOOD ENERGY

     At December 31, 1998, the Fund held 20,000 shares of Redwood
Energy common stock, which stock is unrestricted as to sale, non-
income producing and has been valued at its quoted market price
of $.46 per share or $9,200.

     SOUTHSHORE CORPORATION

     At December 31, 1998, 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 $.03125 per share or $468.75.

     TRAINING DEVICES, INC.

     The Fund, at December 31, 1998, held 20,000 shares of
Training Devices common stock.  The 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, 1998, held 41,250 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 $4.125 or $170,156.

     WEBQUEST

     The Fund, at December 31, 1998, held a note receivable from
Webquest in the amount of $104,676, which is unsecures, accrued
interest at the rate of 8% per year and is due on demand.

     WHITEWING LABS

     The Fund, at December 31, 1998, held 23,500 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 $.625 per share or $14,687.50.

     WORLD CYBERLINK
     
The Fund, at December 31, 1998, held 8,750 shares of World
Cyberlink common stock, which stock is unrestricted as to sale,
non-income producing, and has been valued at its quoted market
price of $2.875 per share or $25,156.


                         ITEM 2.  PROPERTIES


     Real Estate Operations

     During the year ended December 31, 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 proceeds received were utilized to pay approximately
$452,000 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 Internal Revenue Code of
1986, as amended, the Fund, on April 1, 1998, consummated the
purchase of 5 acres of undeveloped commercial real estate located
at 3210 Woodman Road, Colorado Springs, CO (the "Property").  The
Fund plans to undertake a phased development of two commercial
office buildings on the 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.
     
     Real Estate Investment
     
     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 $621,358.  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 to avoid paying current taxes on the
Northpark Building gain. The Fund 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 has
signed a business lease agreement to lease the new Chestnut
Building for 8 months and 9 days expiring on September 1, 1998
for $35,000.  Gerald L. Wiebe and Weebee Properties the "tenant"
agreed 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.  As of December 31, 1998, the tenant was in
default of the Chestnut Building purchase agreement and therefore
paid to the Fund the sum of $45,000 on January 27, 1999 for rent
and fees in addition to extending the purchase agreement to
February 28, 1999.  On February 26, 1999, the tenant paid to the
Fund an additional $15,000 to extend the closing to March 31,
1999 and on April 9, 1999 the tenant paid to the Fund $12,000 to
extend the closing to April 30, 1999.
     
     On March 17, 1998, the Fund sold its 20% investment in the
Plaza Hotel & Apartments in Thermopolis, Wyoming (the "Hotel
Investment").  The hotel, which was purchased on September 24,
1997, was sold for its original purchase price of $200,000, of
that $50,000 was paid in cash and the purchaser assumed a
$150,000 note to Wyoming Resorts, LLC.

     Office Facilities
     
     The Fund, during September of 1998 moved its executive
office space to 5373 North Union, Suite 100, Colorado Springs,
CO., 80918, with a three year contract through September, 2001 at
$9.50 per square foot lease and $4.774 square foot for common
area maintenance ("CAM") charge per year.  The CAM charge will
escalate depending on the actual building maintenance usage
determined for the year.
     
     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.

     Income Taxes

     During the year ended December 31, 1997, The Fund utilized
the remaining net operating loss carryforward.


                   ITEM 3. LEGAL PROCEEDINGS

     Starting in 1994, the Fund received requests for information
from the United States Securities and Exchange Commission ("SEC")
related to investigations begun by the SEC during 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 Fund
was notified by the Commission's Staff that it intended to
request that the Commission commence an administrative proceeding
against the Fund, its President and its directors based upon
certain transactions in securities then included in the Fund's
securities portfolio.  In July 1997, the SEC informed us that the
Staff was planning to recommend an enforcement action against the
Fund's President for certain additional alleged violations of the
federal securities laws.  On June 1998, the Commission issued an
order instituting public administrative proceedings.  From
November 2 through November 6, 1998, an administrative trial was
held at which the Fund, its President and its directors contested
the Staff's allegations, which they believe to be substantially
without merit, and put on extensive defensive evidence.  The
parties are in process of exchanging proposed findings of fact
and conclusions of law and legal briefs.  As its exclusive relief
against the Fund, the Commissions Staff has requested the entry
of an order directing the Fund to cease and desist from
committing the securities law violations alleged by the Staff in
the enforcement proceeding.  In addition, the Staff has requested
entry of such an order against the Fund's President and its
directors along with certain other relief.  No decision has been
rendered and there is no timetable by which a decision must be
made.  Under the circumstances, the Fund cannot predict with any
certainty the outcome of the action or whether the matter will
have a material impact upon the Fund or its President or
directors.  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, 1998.



                            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, 1997
through March 31, 1999:
     
    
                                           Bid           
                                 Low                  High
________________________________________________________________

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                4.375
Second Quarter                   4.375                4.375
Third Quarter                     4.25                4.375
Fourth Quarter                   4.375                4.375
________________________________________________________________
1999                                                 
First Quarter                   4.6875               4.6875
(through March 31, 1999)                             

    The high bid price of the Fund's common stock as of March
31, 1999 was $4.375.  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, 1998, 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 1997 or 1998.
    
                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
___________________________________________________________________________
                   1998         1997        1996         1995         1994
___________________________________________________________________________
                                                                  
Assets                                                            
 Investments   $ 3,150,123  $ 3,148,989 $ 2,154,497  $ 1,400,374  $ 1,699,582
 Cash              241,806       21,890     499,404        1,193       37,081
 Property and                                                     
  equipment,                                                        
  net              517,088      509,669     764,521      714,918      655,556
 Other           1,337,568      133,118      51,670       70,302       30,858
                                                                  
 Total assets   __________    _________  __________   __________   __________
                 5,246,585    3,813,666   3,470,092    2,186,787    2,423,077
Liabilities                                                       
 Long-term                                                        
  debt,current     885,551      899,106     262,821      191,627      195,444
 Payables        1,111,103      164,268     342,107      165,542       65,114
 Accrued                                                          
  Interest                                                        
  payable            1,175        8,565       7,428       19,588       14,628
 Other accrued                                                    
  liabilities       14,552       23,011      33,901       39,697       12,500
 Cashover draft       -0-         8,049        -0-         8,653         -0-
 Deposits,                                                        
  deferred                                                          
  rent and                                                          
  deferred                                
  taxes            191,021       54,334        -0-          -0-          -0-
 Long-term                                                        
  liabilities      393,681      351,531     375,103      454,116      428,352
 Accrued income                                                    
  taxes             91,121         -0-      118,000         -0-          -0-
                                                                  
 Total                                                            
  liabilities    2,668,204    1,508,864   1,139,360      879,223      716,038
                                                                  
    Net assets   2,558,381    2,304,802   2,330,732    1,307,564    1,707,039

 Net assets
  per share                                                         
  (shares                                                         
  issued and                                                        
  outstanding:                                                    
  640,256 in                                                        
  1992 - 1998) $      4.00  $      3.60 $      3.64  $      2.04  $      2.67




             Statement of Operations Data for Years Ended December 31
_____________________________________________________________________________
                     1998       1997       1996          1995        1994
    
_____________________________________________________________________________

Investment Income    $ 182,978  $ 121,667  $ 206,491     $177,536    $166,575
Gain on sale of          
 land and building        -0-     388,476       -0-          -0-         -0-
Less expenses          753,183    535,934    635,180      436,478     531,724
                     _________  _________   ________     ________     _______
Net Investment loss   (570,205)   (25,796)  (428,689)    (258,942)   (365,149)
                                                                     
Net realized gain                                                    
 (loss) from sales                                                    
 and permanent                                                        
 write-downs of                                                       
 securities            465,180    (51,374) 1,549,196       31,889     192,577
                                                                     
Unrealized net                                                       
 appreciation                                                         
 (depreciation) of                                                    
 investments           358,604     51,240    (97,339)    (172,422)    228,025
                     _________  _________  _________     _________   _________
Net increase                                                         
 (decrease) in net                                                    
 assets from                                                         
 investment                                                           
 activities          $ 253,579  $(25,930)  $ 1,023,168   $(399,475)  $ 55,453
                                                                     
Per share amounts:                                                   
                                                                     
Net investment loss  $   (0.89) $   (0.4)  $     (0.67)  $   (0.40)  $  (0.56)
Net realized gains                                                   
 from investments         0.73     (0.08)         2.42        0.05       0.30
Net unrealized                                                       
 appreciation                                                         
 (depreciation )of                                                   
 net investments          0.56      0.08         (0.15)      (0.27)      0.35
                      _________    _________   __________  _________  _________
Net increase                                                         
 (decrease) in net                                                   
 assets per                                                           
 common share from                                                  
 investment                                                         
 activities          $    0.40  $   (0.4)  $      1.60   $    (.62) $    0.09
  
  
 

          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, 1998.

     During the year ended December 31, 1998, the Fund incurred
realized gains from sales of securities which were offset by
unrealized depreciation of investments.  Total assets increased
accordingly:

     Investments increased from $3,148,989 on December 31, 1997
to $3,150,123 on December 31, 1998, an increase of $1,134 or
approximately .04%, primarily due to the sale of Guardian
Technologies, Lone Oak Vineyards, Cusa, Tels, and portions of
American Education Products, Redwood Broadcasting and
Usassurance.  Notes receivable, net of allowances, increased from
$458,158 on December 31, 1997 to $554,582 on December 31, 1998,
an increase of $96,424 or 21.1%.  Global Casinos converted
$350,000 of their note, for 291,667 shares of preferred stock at
$1.20 per share.  Global Casinos as of December 31, 1998, had a
remaining note receivable for $174,589 or 32% of total note
receivables.  Marco Foods comprised 33%, Webquest 19% and
Kinetiks.com 16% of total notes receivable.  The commercial real
estate (Chestnut Building) is under contract for sale,
representing an increase in value of approximately $144,000 as of
December 31, 1998.  The hotel investment was sold during 1998 for
its equal $200,000 which was the Fund's cost.

     Cash increased significantly from $21,890 at December 31,
1997 to $241,806 as of December 31, 1998, an increase of 219,916
or 1,005%, primarily due to security sale proceeds.  Property and
Equipment increased from $509,669 as of December 31, 1997, to
$517,088 as of December 31, 1998, an increase of 7,419 or 1.5%.
Other assets increased significantly from $133,118 as of December
31, 1997 to 1,337,568 as of December 31, 1998, an increase of
$1,204,450 or 905%, primarily due to securities sold yet awaiting
proceeds as of December 31, 1998.
     
     Based on the foregoing, total assets increased from
$3,813,666 as of December 31, 1997, to $5,246,585 as of December
31, 1998, an increase of 1,432,919 or 37.6%.

     Current maturities of long-term debt decreased from $899,106
as of December 31, 1997, to $885,551 as of December 31, 1998 a
decrease of $13,555 or 1.51%. Payables increased significantly
from $164,268 at December 31, 1997 to $1,111,103, an increase of
$946,835 or 576%, due to investment securities purchased as of
December 31, 1998 and funds not settling in accounts by the end
of the year.  The Fund, as of December 31, 1998 paid off a line
of credit for $74,500.  The Fund, as December 31, 1998 incurred
approximately $329,900 in deferred tax liability due to the gain
on the sale of the Northpark building, utilized in a 1031 tax
exchange, and largely due to the Funds unrealized gain for 1998
of $358,604.  The Fund utilized all of its net operating loss
carryforwards in previous tax years and, therefore, accrued
$91,121 of current taxes.

     As a result, total liabilities increased from $1,508,864 at
December 31, 1997 to $2,668,204 on December 31, 1998 an increase
of $1,159,340 or 76.8%.
     
     Net assets increased from $2,304,802 at December 31, 1997 to
$2,558,381 at December 31, 1998 and from $3.60 per share to $4.00
per share, respectively, an increase of $.40 per share or
approximately 11%.

     Other than the 1999 anticipated sale of the Fund's Chestnut
building, 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 - 1998 Compared to 1997 and 1996

     As a direct result of the Fund's acquisition of the
Northpark building in Colorado Springs, Colorado, during the
third quarter of 1993, in addition to the Northpark building
being fully leased in 1997, and sold as of  March 31, 1997, and
the Funds purchase of the Chestnut building as of September, 4,
1997, rental income has varied from  $170,434 in 1996, to $57,890
in 1997, to $94,833 in 1998.  Interest and dividend income
increased significantly from $30,248 in 1996, to $63,777 in 1997,
to $88,145 in 1998, mainly attributable to the increase in
security investments and notes receivable.  Therefore, total
investment income changed form $206,491 in 1996, to $121,667 in
1997, to $182,978 as of December 31, 1998.
     
     Total expenses changed from $635,180 in 1996, to $535,939 in
1997 to $753,183 in 1998.  Contributing to the change in expenses
from 1997 to 1998 was an increase in professional fees of 321%,
due to an increase in legal fees.  Interest expense increased 27%
due to a full years mortgage on the Chestnut Building and
investment expense increased 72% associated with the Funds
increase in investment gains.

     As a result, net investment loss increased to $(570,205) in
1998, compared to $(414,267) in 1997, and $(428,689) in 1996.

     Net realized gain from sale of investments increased
significantly in 1998 to $465,180 after taxes from $(51,374) in
1997 and $1,549,196 in 1996.  The net gain in sales for 1998 are
mainly attributable to the sales of American Education Products,
Global Casinos, Lone Oaks Vineyards, Redwood Broadcasting and
Usassurance.  The net realized gain for 1996 is mainly
attributable to the sale of Shiva Corp. (fka Airsoft) which
increased $1,846,098 in value during 1996. Net unrealized
depreciation of investments increased in 1998 to $358,604 and to
$51,240 in 1997 from $(97,339) in 1996.  As of December 31, 1998
the Fund had a net gain from investments of $823,784 and a net
increase in net assets of $253,579 resulting from operations.
     
     Other than the 1999 anticipated sale of the Funds Chestnut
building , 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 recognized 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

     On February 1, 1999, the client-auditor relationship between
the Company and its principal accountants, Gelfond Hochstadt,
Pangburn & Co., ceased.  The dismissal of Gelfond Hoschstadt
Pangburn & Co., was effective February 1, 1999.  In connection
with the audits of the Company's financials statements for each
of the fiscal years ended December 31, 1997 and 1996, there were
no disagreements with Gelfond Hochstadt Pangburn & Co. on any
matters of accounting principles or practices, financial
statement disclosure, or auditing scope and procedures which, if
not resolved to the satisfaction of Gelfond Hochstadt Pangburn &
Co., would have caused Gelfond Hoschstadt Pangburn & Co. to make
reference to the matter in their report.
     
     The Fund has retained the accounting firm of Gerald R.
Hendricks & Co., P.C. to serve as the Fund's independent
accountant to audit the Fund's financial statements.  This
engagement was effective February 12, 1999.  Prior to its
engagement as the Fund's principal independent accountant, Gerald
R. Hendricks & Co., P.C.. had not been consulted by the Fund
either with respect to the application of accounting principles
to a specified transaction, either completed or proposed, or the
type of audit opinion that might be rendered on the Fund's
financial statements or on any matter which was the subject of
any prior disagreement between the Fund and its previous
certifying accountant.



                     THE ROCKIES FUND, INC.

             YEARS ENDED DECEMBER 31, 1998 AND 1997

                       TABLE OF CONTENTS



                                                         
_________________________________________________________________


Independent auditor's report                               

Independent auditors' report                                

Financial statements:

     Statements of assets and liabilities                

     Schedules of investments                            

     Statements of operations                               

     Statements of shareholders' equity                     

     Statements of cash flows                           

     Statements of changes in net assets                   

Notes to financial statements                            





To the Shareholders
The Rockies Fund, Inc.

Independent Auditor's Report


I have audited the accompanying statement of assets and
liabilities of The Rockies Fund, Inc. (the "Fund") including the
schedule of investments as of December 31, 1998 and the related
statement of operations, stockholders' equity, cash flow, and
changes in net assets for the year then ended.  These financial
statements are the responsibility of the Fund's management.  My
responsibility is to express an opinion on these financial
statements and schedule based on my audit.  The financial
statements of the Fund as of December 31, 1997, were audited by
other auditors whose report dated March 30, 1998, included an
explanatory paragraph that described the dollar amount and
percentage to net assets of securities that were valued by the
Board of Directors without a readily ascertainable market value
as discussed in Note 1 to the financial statements.

I conducted my audit in accordance with generally accepted
auditing standards.  Those standards require that I 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 and schedules.  My procedures included confirmation of
securities owned as of December 31, 1998, by correspondence with
custodian and 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.  I believe that my
audit provides a reasonable basis for my opinion.

In my 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, 1998 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 $696,000 (28% of net assets) at December 31,
1998, whose values have been estimated by the Board of Directors
in the absence of readily ascertainable market values.  I 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, I
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.





Gerald R. Hendricks & Company, P.C.
Westminster, Colorado
March 30, 1999




Independent Auditors' Report


The Shareholders and Directors
The Rockies Fund, Inc.


We have audited the accompanying statement of assets and
liabilities of The Rockies Fund, Inc. (the "Fund") including the
schedule of investments as of December 31, 1997 and the
related statements of operations, shareholders' equity, cash
flows, and changes in net assets for the year 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 audit.

We conducted our audit 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, 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 audit
provides 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
the results of its operations, its cash flows, and
changes in net assets for the year 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



                       THE ROCKIES FUND, INC.
                 Statements of Assets and Liabilities
                     December 31, 1998 and 1997

ASSETS                                     1998           1997
_________________________________________________________________

Investments, at value (cost of                       
$2,760,600 1998 and $3,118,071, 1997):
        Restricted and                 $  1,830,541  $  1,725,831
         unrestricted securities
        Notes receivable                    554,582       458,158
        Real estate                         765,000       965,000
                                          _________    __________
                                          3,150,123     3,148,989
Cash:                                                
Held by related party (Note 6)              232,351            -
Held by others                                9,455        21,890
Investment securities sold (Note 6)       1,204,587        72,011
Accounts receivable                          31,934         7,500
Accrued interest receivable                  52,969        53,045
Prepaid loan payments                        43,678            -
Receivables from investees (Note 6)              -            562
                                          _________    __________
             Total current assets         4,725,097     3,303,997
                                                     
Property and equipment(Notes 2 and 3):               
      Land                                  390,000       390,000
      Automobile                             15,162        15,162
      Furniture and fixtures                  7,939         8,739
      Construction in progress              114,058       101,242
                                            527,159       515,143
                                                     
        Less accumulated depreciation:       10,071         5,474
                                            _______       _______
                                            517,088       509,669
                                                     
Deposits                                      4,400           -
                                                     
              Total assets                5,246,585     3,813,666



                     THE ROCKIES FUND, INC.
        Statements of Assets and Liabilities (Continued)
                   December 31, 1998 and 1997

LIABILITIES                        1998              1997
_____________________________________________________________________

Cash overdraft                                       
Payables:                          $          -      $       8,049
         Trade                           258,394           108,506
         Construction (Note 2)                -             55,762
         Investment securities                       
          purchased (Note 6)             852,709                -
Accrued liabilities:                                 
      Property taxes and other            14,552            23,011
      Income taxes (Note 4)               91,121                -
      Interest payable                     1,175             8,565
Current maturities of long-term
 debt (Note 3):
         Related parties                 231,576           172,374
         Others                          653,975           726,732
Deposits and deferred rent(Note 2)        12,616            41,334
Deferred tax liability (Note 4)          178,405            13,000
                                                     
         Total current liabilities     2,294,523         1,157,333
                                                     
Long term debt, net of current                       
 maturities (Note 3)                     242,176           259,531
Deferred tax liability (Note 4)          151,505            92,000
                                                     
         Total liabilities             2,688,204         1,508,864
                                                     
Commitments and contingencies                        
 (Notes 2 and 5)                             -                 -

Net assets and shareholders equity
 (equivalent to $4.00 per                             
 share for 1998 and $3.60 per                         
 share for 1997)                    $  2,558,381      $  2,304,802
                                                     
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    (2,489,304)       (1,919,099)
   Accumulated net realized gain                     
    from sales of securities           1,750,517         1,285,337
   Unrealized net appreciation of                    
    investments                          389,522            30,918
                                                     
         Total accumulated deficit      (349,265)         (602,844)
                                                     
Net assets                          $  2,558,381      $  2,304,802

<TABLE>
                                         THE ROCKIES FUND, INC.
                                        Schedule of Investments
                                       December 31, 1998 and 1997
<CAPTION>                                                                              Fair            Fair
                                               Initial        **Cost at     value at        value at
                                             investment         Dec 31,      Dec 31,       December 31,
      Company                   Position        date             1998         1998             1997

<S>                       <C>                   <C>      <C>            <C>            <C>
Restricted Securities:                                                                 
                                                                                       
Alta California                                                                        
Broadcasting              255,000 common stock  Dec-98              -       255,000.00            -
                                                                                       
American Educational       16,500 common stock  Sep-96        82,500.00     156,750.00      96,937.50
  Products, Inc.<F1> (1)    3,000 common stock  Sep-96              -             -         17,625.00
                            9,500 common stock  Sep-96              -             -         55,812.50
                            2,000 common stock  Sep-96              -             -         11,750.00
                            5,000 warrants                                             
                            (ex. @ $4.50)       Sep-96              -             -          6,875.00
                           15,000 warrants                                             
                            (ex. @ $4.50)       Sep-96              -             -         20,625.00
                           20,000 warrants                                             
                            (ex. @ $4.50)       Sep-96              -             -         27,500.00
                            5,000 warrants                                             
                            (ex. @ $10.00)      Jun-97              -             -          1,250.00
                            4,000 warrants                                             
                            (ex. @ $10.00)      Jun-97              -             -          1,000.00
                            7,000 warrants                                             
                            (ex. @ $10.00)      Jun-97              -             -          1,750.00
                           15,000 warrants                                             
                            (ex. @ $10.00)      Jun-97              -             -          3,750.00

                                                              82,500.00     156,750.00     244,875.00
                                                                                       
Eclipse(fka)Bear Star,LLC   5% partnership                                             
                             interest           Nov-94             0.00           0.00           0.00
                          305,000 common stock  Jun-96           500.00           0.00             -

                                                                 500.00           0.00           0.00
                                                                                       
COVA Technologies <F1>    917 common stock      Jul-96        20,035.00      20,035.00      20,035.00
                                                                                       
Global Casinos, Inc.      3,800 common stock    Nov-93        76,000.00       4,512.50      13,300.00
<F1> (2)                  4,331 common stock    Jan-94        50,068.21       5,143.06      15,158.50
                          1,724 common stock    Jan-94        19,931.79       2,047.25       6,034.00
                          1,250 common stock    Feb-94        25,000.00       1,484.38       4,375.00
                             75 common stock    Mar-94             0.00          89.06         262.50
                            500 common stock    Oct-94        10,000.00         593.75       1,750.00
                          5,000 common stock    Feb-96        17,207.50       5,937.50      17,500.00
                          1,000 common stock    Mar-96         3,125.00       1,187.50       3,500.00
                          291,667 preferred                                            
                           stock                             350,000.00     346,354.56             -

                                                             551,332.50     367,349.56      61,880.00
                                                                                       
Guardian Technologies,                                                                 
 Inc.<F1> (3)               8,333 common stock  Feb-97              -              -        22,915.75
                           90,533 common stock  Mar-97              -              -       248,965.75
                            5,000 common stock  Jun-97              -              -        13,750.00
                           20,000 common stock  Aug-97              -              -        55,000.00
                            2,500 common stock  Sep-97              -              -         6,875.00
                          137,000 warrants      Mar-97              -              -        42,812.50

                                                                   0.00           0.00     390,319.00
                                                                                       
Hampton Court Resources    12,500 common stock  Sep-97        11,542.00      11,375.00      16,162.50
                                                                                       
Kinetiks.com              100,000 common stock  Feb-98         5,000.00      11,000.00            -
                          100,000 common stock  Jul-98         5,000.00      11,000.00 
                          100,000 common stock  Sep-98         5,000.00      11,000.00 
                          100,000 common stock  Sep-98         5,000.00      11,000.00 
                                                2/97 -                                 
                          1,150,000 warrants    12/98              0.00           0.00           0.00

                                                              20,000.00      44,000.00           0.00
                                                                                       
Land Resource                                                                          
 Corporation <F1>         10,000 common stock   Mar-97        10,000.00      10,000.00      10,000.00
                                                                                       
Lone Oak Vineyards,                                                                    
 Inc.                     35,000 common stock   Feb-97              -              -        93,240.00
                           7,000 common stock   Oct-97              -              -        18,648.00
                           7,000 common stock   Nov-97              -              -        18,648.00

                                                                   0.00           0.00     130,536.00
                                                                                       
Multi-Link                                                                             
 Telecommunications       25,000 common stock   Nov-98        25,000.00      25,000.00            -
                                                                                       
Redwood Broadcasting,                                                                  
 Inc.                      5,000 common stock   Feb-97              -              -         8,750.00
                          200,000 common stock  Dec-97              -              -       350,000.00
                          20,000 common stock   Dec-97              -              -        35,000.00
                          30,000 common stock   Dec-97        36,000.00     120,000.00      52,500.00

                                                              36,000.00     120,000.00     446,250.00
                                                                                       
Training Devices, Inc.    20,000 common stock   Feb-97        25,000.00      40,000.00      40,000.00
                                                                                       
                                                                                       
Total Restricted                                                                       
 Securities                                                  781,909.50   1,049,509.56   1,360,057.50
                                                                                       
Unrestricted Securities:                                                               
                                                                                       
Astea International       10,000 common stock   Feb-97              -              -        18,750.00
                           5,000 common stock   Jun-97        16,354.41       8,437.50       9,375.00

                                                              16,354.41       8,437.50      28,125.00
                                                                                       
Biosource International    7,500 common stock   Sep-98        23,891.05      22,031.25            -
                          25,000 common stock   Oct-98        72,764.20      73,437.50            -
                          20,000 common stock   Dec-98        54,582.10      58,750.00            -
                          37,500 common stock   Dec-98       107,915.95     110,156.25            - 

                                                             259,153.30     264,375.00           0.00
                                                                                       
Cable & Company Worldwide 10,000 common stock   Mar-97              -              -         1,250.00
                          40,000 common stock   Nov-97              -              -         5,000.00

                                                                   0.00           0.00       6,250.00
                                                                                       
Cusa Technologies, Inc.   30,000 common stock   Nov-97              -              -        30,937.50
                                                                                       
Exploration Company, The  30,600 common stock   Oct-97        92,718.00      28,687.50      61,200.00
                             400 common stock   Oct-97              -              -           800.00
                           5,000 common stock   Oct-97              -              -        10,000.00

                                                              92,718.00      28,687.50      72,000.00
                                                                                       
Globex Minining                                                                        
 Enterprises              33,000 common stock   Sep-98         6,535.00       2,970.00            -
                                                                                       
Hawks Industries          1,000 common stock    Nov-98         1,312.50       1,125.00            -
                                                                                       
                          2,000 common stock    Dec-98         2,687.50       2,250.00            -

                                                               4,000.00       3,375.00           0.00
                                                                                       
International Remote                                                                   
 Imaging                  10,0000 common stock  Nov-98        10,828.45       7,500.00            -
                                                                                       
J2 Communications <F1> (3) 6,668 common stock   May-98        20,312.50      13,336.00            -
                           3,333 common stock   Sep-98         6,425.00       6,666.00            -
                           3,333 common stock   Oct-98         6,250.00       6,666.00            -
                           3,333 common stock   Oct-98         6,250.00       6,666.00            -
                           1,667 common stock   Oct-98         2,925.00       3,334.00            -
                          25,500 common stock   Nov-98        35,849.70      51,000.00            -
                          12,300 common stock   Dec-98        21,528.45      24,600.00            - 

                                                              99,540.65     112,268.00           0.00
                                                                                       
Morrow Snowboards         7,000 common stock    Nov-98         8,097.20       5,687.50            -
                                                                                       
Online System Services    8,000 common stock    Dec-98        99,203.45     104,000.00            - 

                                                              99,203.45     104,000.00           0.00
                                                                                       
Optimax Industries, Inc.  115,191 common stock  Jun-94              -              -        18,004.35
                                                                                       
Premier Concepts           35,000 common stock  Oct-98        18,593.75      24,062.50            -
                                                                                       
Premium Cigars                                                                         
 International, Inc.       5,000 common stock   Aug-97              -              -        12,812.50
                                                                                       
Redwood Energy            20,000 common stock   Dec-98         8,377.52       9,200.00            -
                                                                                       
Shiva Corporation          2,630 common stock   Dec-96             0.00            -        22,519.38
                                                                                       
Southshore Corporation    15,000 common stock   Sep-97         7,715.00         468.75       3,750.00
                                                                                       
TELS Corporation          20,000 common stock   Aug-96              -              -         6,250.00
                          10,000 common stock   Sep-96              -              -         3,125.00

                                                                   0.00           0.00       9,375.00
                                                                                       
Usasurance Group          12,000 common stock   Jul-96              -              -        24,000.00
                           3,000 common stock   Jul-96              -              -         6,000.00
                          10,000 common stock   Sep-96              -              -        20,000.00
                           2,500 common stock   Oct-96              -              -         5,000.00
                           6,250 common stock   Dec-96              -              -        12,500.00
                           3,750 common stock   Dec-96              -              -         7,500.00
                           5,750 common stock   Dec-96              -              -        11,500.00
                          14,250 common stock   Dec-96        33,203.50      58,781.25      28,500.00
                           1,500 common stock   Dec-96         3,850.00       6,187.50       3,000.00
                           2,500 common stock   Jan-97         8,750.00      10,312.50       5,000.00
                           4,500 common stock   Jun-97         6,106.25      18,562.50       9,000.00
                           7,500 common stock   Dec-97         7,875.00      30,937.50      15,000.00
                           3,500 common stock   Oct-98        27,619.50      14,437.50            -
                           7,500 common stock   Nov-98        21,256.90      30,937.50            -  

                                                             108,661.15     170,156.25     147,000.00
                                                                                       
Whitewing Labs            15,000 common stock   Jan-97        23,175.00       9,375.00      11,250.00
                           5,000 common stock   Jan-97              -              -         3,750.00
                           8,500 common stock   Dec-98         5,861.50       5,312.50            -

                                                              29,036.50      14,687.50      15,000.00
                                                                                       
World Cyberlink           8,750 common stock    Jun-98         8,750.00      25,156.25            -
                                                                                       
Total Unrestricted                                                                     
 Securities                                                  777,564.38     781,031.75     365,773.73
                                                                                       
Notes Receivable:                                                                      
                                                                                       
Eclipse fka Bear                                                                       
 Star L.L.C.<F1>          Note Receivable, 10%  Dec-95             0.00       5,814.06       5,814.06
                                                                                       
Damach                    Note Receivable,12%,                                         
                           due on demand        Oct-96        32,500.00      32,500.00      32,500.00
                                                                                       
Phil Georgeson            Note Receivable,12%,                                         
                           on demand            Aug-96             0.00           0.00       4,602.13
                          Note Receivable,12%,                                         
                           on demand            Mar-98             0.00           0.00            -

                                                                   0.00           0.00       4,602.13
                                                                                       
Global Casinos, Inc.<F1>  Note Receivable, 8%,                                         
                           due 11/1/98          Nov-96       163,343.13     163,343.13     175,000.00
                          Note Receivable, 9%                                          
                           due on demand        Mar-97        11,245.99      11,245.99      43,904.02
                          Note Receivable, 24%                                         
                           due 4/15/98          Aug-97             0.00           0.00      75,000.00
                          Note Receivable, 12%                                         
                           due on demand        Mar-98             0.00           0.00            -

                                                             174,589.12     174,589.12     293,904.02
                                                                                       
                                                                                       
Kinetiks.com              Note Receivable,                                             
                           10%, (default rate                                           
                           18%) due 3/30/97    Feb-97         25,000.00      25,000.00      25,000.00
                          Note Receivable, 8%,                                         
                           due on demand                      61,476.26      61,476.26            -

                                                              86,476.26      86,476.26      25,000.00
                                                                                       
Marco Foods, Inc.<F1>     Note Receivable, 12%                                         
                           due on demand       Jan-97        181,525.88     181,525.88     127,337.50
                                                                                       
Webquest                  Note Receivable, 8%                                          
                           due on demand       Dec-98        104,676.21     104,676.21            -
                                                                                       
Subtotal Notes Receivable                                    579,767.47     585,581.53     489,157.71
                                                                                       
Allowance for Doubtful                                                                 
 Notes                                                             0.00     (31,000.00)    (31,000.00)
                                                                                       
Net Notes Receivable                                         579,767.47     554,581.53     458,157.71
                                                                                       
Investments in Real Estate:
                                                                                       
Chestnut Property         Land & Building at                                           
                           3515 N. Chestnut    Sep-97        621,358.38     765,000.00     765,000.00
                                                                                       
Thermopolis Property      Building at 116 E.                                           
                           Park St.            Sep-97               -              -       200,000.00
                                                                                       
Total Real Estate                                                                      
 Investments                                                 621,358.38     765,000.00     965,000.00
                                                                                       
Total Investments                                        $ 2,760,599.73 $ 3,150,122.84 $ 3,148,988.94

<FN>                                                                                       
<F1> These entities are considered to be affiliated companies as a result of the
Company's investment and/or position on the entity's Board of Directors
during the last 90 days.

**After permanent write-downs.
                                                                                       
(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
</FN>                                                                                      
See accompanying notes to financial statements.
Restricted Unrestricted and Real Estate                    2,180,832.26   2,595,541.31   2,690,831.23
</TABLE>
                   
                       THE ROCKIES FUND, INC.
                      Statements of Operations
                Years Ended December 31, 1998 and 1997

                                                 1998            1997
                                           ___________________________   
Investment income:                                          
      Rental (Note 2)                        $   94,833      $   57,890
      Consulting and other services                  -           10,822
      Interest and dividends (Note 6)            88,145          52,955
                                                            
                                                182,978         121,667
Expenses:                                                   
       Wages and salaries                       133,037         141,817
       Professional fees                        334,705          79,579
       Directors fees                             4,000           7,000
       Interest                                  80,133          62,907
       Travel and entertainment                  45,624          45,959
       Office                                    76,406         112,449
       Building expenses                         20,526          46,072
       Investment expenses (Note 6)              43,019          25,076
       Donations                                 15,733          15,080
                                                            
                                                753,183         535,939
                                                            
               Investment loss                 (570,205)       (414,272)
                                                            
Gain on sale of land and building (Note 2)          -           388,476
                                                            
               Net investment loss         $   (570,205)    $   (25,796)
                                                            
Realized and unrealized gain (loss) from                    
 investments:
       Net realized gain (loss) from                       
        investments                        $    793,299     $   (51,374)
       Income tax expense (Note 4)             (328,119)             - 
                                                            
                                                465,180         (51,374)
       Net unrealized appreciation                          
        (depreciation) of investments
               Beginning of year                 30,918         (20,322)
               End of year                      389,522          30,918
                                                            
       Net unrealized appreciation of                       
        investments                             358,604          51,240
                                                            
Net gain (loss) from investments                823,784            (134)
                                                            
Net increase (decrease) in net assets                       
       resulting from operations           $    253,579     $   (25,930)
                                                            
Per share amounts:                                          
       Net investment loss                 $      (0.89)    $     (0.04)
       Net realized gain (loss) from                        
        investment                                 0.73           (0.08)
       Net unrealized appreciation of                       
        investments                                0.56            0.08
                                                            
                                           $       0.40     $     (0.04)
                                                            
Weighted average common shares outstanding      640,256         640,256

<TABLE>
                                  THE ROCKIES FUND, INC.
                             Statements of Shareholders' Equity
                           Years Ended December 31,1998 and 1997

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

<S>                   <C>      <C>          <C>           <C>            <C>            <C>
Balances at                                                                             
January 1, 1997       $ 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 gain on                                                                    
 investments                                                   (51,374)                     (51,374)
Unrealized net                                                                          
 appreciation                                                              
(depreciation) 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
                                                                                        
                                                                                        
Net investment loss                           (570,205)                                    (570,205)
Net realized gain on                                                                    
 investments                                                   465,180                      465,180
Unrealized net                                                                          
 appreciation                                                              
 (depreciation) of
 investments                                                               358,604          358,604
                                                                                        
                      _______   __________    __________    __________   __________     __________
Balances at                                                                             
 December 31, 1998    $ 6,403  $ 2,901,243 $ (2,489,304)  $  1,750,517   $ 389,522      $ 2,558,381
</TABLE>

                    THE ROCKIES FUND, INC.
                   Statements of Cash Flows
              Years Ended December 31, 1998 and 1997

            
                                          1998           1997
                      
                                   ______________________________
Cash flows from operating activities:                
  Net investment loss                 $ (570,205)    $  (25,796)
  Net realized gain (loss) from                      
   investments                           465,180        (51,374)
                                                     
                                        (105,025)       (77,170)
  Adjustments to reconcile net                       
   investment loss and net
   realized gain from investments to
   net cash used in operating
   activities:
     Net realized gain from                          
      investments                       (465,180)        51,374
     Gain on sale of land and                        
      building                                -        (388,476)
     Deferred income tax                 224,910             -
     Depreciation expense                  4,597         10,030
     Bad debts                             7,882             -
     Decrease (increase) in                          
      operating assets:
        Accounts receivable              (24,434)            -
        Accrued interest receivable           76        (40,256)
        Receivable from investees            562         22,510
        Investment securities sold                   
         and other assets             (1,132,576)       (63,702)
        Prepaid loan payments            (43,678)            -
     Increase (decrease) in                          
      operating liabilities:
        Payables                         946,835       (177,839)
        Accrued liabilities               75,272       (127,753)
        Deposits and deferred rent       (28,718)        34,080

                                        (434,452)      (680,032)
                                                     
          Net cash used in operating                 
           activities                   (539,477)      (757,202)
                                                     
Cash flows from investing activities:                
     Proceeds from sales of                          
      investments                      7,013,708      2,313,477
     Purchases of investments         (6,348,140)    (2,188,031)
     Proceeds from sale of property                  
      and equipment                          -        1,080,000
     Purchases of property                   -         (390,000)
     Capital expenditures -                          
      construction in progress           (12,816)      (101,242)
     Increase in deposits                 (4,400)            -
                                                     
          Net cash provided by                       
           investing activities          648,352        714,204
                                                     
Cash flows from financing activities:                
     Increase (decrease) in cash                     
     overdraft                            (8,049)         8,049
     Proceeds from long-term debt        393,122             -
     Repayment of long-term debt        (274,032)      (442,565)
                                                     
          Net cash (used in) provided                
           by financing activities       111,041       (434,516)
                                                     
                                   
            
                    THE ROCKIES FUND, INC.
               Statements of Cash Flows (Continued)
              Years Ended December 31, 1998 and 1997



            
                                     1998           1997
            
                                   ______________________________

Net increase (decrease) in cash     219,916        (477,514)
                                                   
Cash at beginning of year            21,890         499,404
                                                   
Cash at end of year              $  241,806     $    21,890
                                                   
Supplemental disclosure of cash                    
flows information, cash paid for                   
interest                         $   78,958     $    61,770

Supplemental disclosures of noncash investing and financing activities:

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.

During 1998, the Fund sold its 20% interest in a Hotel Investment
property for $50,000 cash and the assignment of a $150,000
promissory note payable.

During 1998, the Fund exchanged notes receivable with $287,220 in
principal and $62,780 in accrued interest for 291,667 shares of
Global Casinos, Inc., an affiliate company, Class C preferred
shares.




                          THE ROCKIES FUND, INC.
                    Statements of Changes in Net Assets
                   Years Ended December 31, 1998 and 1997


            
                                      1998           1997
                                   ______________________________

Increase (decrease) in net assets from investment activities:

    Net investment loss           $  (570,205)   $   (25,796)
                                                
    Net realized gain (loss) from               
     investments(net of income tax                   
     expense of $328,119 in 1998)     465,180        (51,374)
                                                
    Net unrealized appreciation of              
     investments                      358,604         51,240
                                                
    Net increase (decrease) in net              
     assets from investment                          
     activities                       253,579        (25,930)
                                                
Net assets at beginning of year     2,304,802      2,330,732
                                                
Net assets at end of year         $ 2,558,381    $ 2,304,802
  
     
                                   
                     THE ROCKIES FUND, INC.
                 NOTES TO FINANCIAL STATEMENTS
              YEARS ENDED DECEMBER 31, 1998 AND 1997


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 risks 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.

     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 for the years ended December
     31, 1998 and 1997.  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 sales price on the exchange where the securities
     are principally traded.  Securities reported on the NASDAQ
     National Market System are valued at the last sales price on
     the valuation date or, absent at last sales price, 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 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, 1998 and 1997
     total approximately $1,049,500 and $1,360,000, respectively.
     The estimated fair value of restricted securities whose
     values have been evaluated by the Board of Directors in the
     absence of readily attainable market value is approximately
     $696,000 and $256,000 at December 31, 1998 and 1997,
     respectively.  There estimated fair value of restricted
     securities comprises 28% and 12% of total net assets at
     December 31, 1998 and 1997, 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.

     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
     amount 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 form those estimates.

     Recently issued accounting pronouncements:

     The Financial Accounting Standard's Board recently issued
     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, 1998.  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.
     
     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,
     and automobile, 5 to 10 years.
     
     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, and impairment loss is recognized,
     based on the difference between the assets' carrying values
     over the estimated fair values.  Based on management's
     annual review, the Fund does not believe that any
     impairments have occurred in 1998.

     Accounting for 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.
     
     Earnings (loss) per share:

     The Company adopted Statement of Financial Accounting
     Standards (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 1998 and 1997.  The adoption of SFAS No.
     128 did not impact previously reported EPS.
     
     Reclassifications:

     Certain 1997 amounts have been reclassified to conform to
     the 1998 presentation.
     
2.   Real estate transactions:

     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.
     
     On April 1, 1997, the Fund purchases five acres of
     undeveloped commercial property located on Colorado Springs,
     Colorado for $390,000.  Through December 31, 1998, the Fund
     incurred approximately $114,000 of land development and
     building design costs.
     
     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 has extended the closing of the purchase
     of this building to April 30, 1999 in order for the
     purchaser to establish a market for a development product.
     In connection with the various extensions granted, the Fund
     received extension and rental fees of approximately $107,000
     for the year ended December 31, 1998.
     
     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 $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, of which $50,000 was received in cash and the
     assumption of the Fund's $150,000 promissory note payable.

     Office lease:
     
     Effective September 1998, the Fund leases office space from
     an unaffiliated third party.  The lease is for a three year
     contract through August, 2001 and requires the Fund to pay
     escalating amounts over the life of the lease.  In addition,
     the Fund is required to pay its portion of common area
     maintenance.  The future minimum lease payments are
     approximately as follows:

                                   1999     57,000
                                   2000     55,000
                                   2001     37,000
                                         $ 149,000

     Rent expense for the years ended December 31, 1998 and 1997
     was $28,423 and $8,100, respectively.


3.   Long-term debt:
                                                     
                                       1998              1997
                                   ______________________________
Related Parties:

Note payable, non-interest                           
bearing,paid in January 1999,                        
unsecured                          $ 150,000         $      -
                                                     
Other, non-interest bearing,                         
unsecured                              1,000                -
                                                     
Notes payable, interest at 8%,                       
due through September 1998,                          
collateralized by the Hotel                          
Investment                                -              150,000
                                                     
Notes payable, interest at 7%-12%                    
unsecured, due on demand               6,500               9,244
                                                     
Note payable, non-interest                           
bearing, paid in March                               
1998, collateralized by certain                      
Fund investments in securities            -               13,130
                                                     
       Total related parties         157,500             172,374

3.      Long-term debt (continued):

Others:

Line of credit, interest at prime
plus 2%, due May 1998,                          
collateralized by certain Fund                  
investments in securities                -                74,500
                                                
Note payable, interest at 8%,                   
principal and interest due in                   
monthly installments of $3,640,                 
due January 2007, collateralized                
bycertain Fund investments           260,824             281,348
                                                
Mortgage note payable, interest at              
prime plus 1.25%                                
(9.75% at December 31, 1998),                   
principal and interest due in                   
monthly installmentsof $4,790,                  
remaining principal and interest                
due in August 2002,collateralized               
by the Chestnut building and an                 
assignment of rents                  488,880             497,528
                                                
Note payable, interest at 8.75%                 
interest and principal             
due in monthly installments of
$322, due by 2001
collateralized by automobile           8,401              11,393

Borrowings on margin accounts,
variable interest rates                         
(8% and 9.5% at December 31, 1998)              
due on demand                        212,122             121,494
                                                
      Total others                   970,227             986,263
                                                
        Total long-term debt       1,127,727           1,158,636
                                                
        Less current maturities     (885,551)           (899,106)
                                                
                                   $ 242,176        $    259,531



Aggregate long-term debt maturities are as follows:
                                       
             1999                      $    885,551
             2000                            40,695
             2001                            42,012
             2002                             6,307
             2003                            32,723
             Thereafter                     120,439
                                       
                                       $  1,127,727

     The weighted average interest rates on all debt was 8% and
     8.8% in 1998 and 1997, respectively.  Interest expense
     incurred on related party debt was $3,115 and $5,362 in 1998
     and 1997, respectively.


4.   Income taxes:
     
     Income tax expense (benefit) consists of the following:

            
     Current:                           1997          1998
            
                                   ______________________________

                   Federal           $ 79,440      $(94,000)
                   State               11,681       (11,000)

                                       91,121      (105,000)
                                                   
      Deferred:                                    
                   Federal            207,388        94,000
                   State               29,610        11,000
                                      236,998       105,000

                                     $328,119      $    _ 


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

            
                                       1998         1997
                                   ______________________________
                                                
 Statutory federal income tax                                  
  expense (benefit 34%)            $ 197,777       $ (9,000)
 State taxes, net of federal                                   
  income tax benefit                  19,196         (1,000)
 Tax on unrealized appreciation                                
  of investment                      111,146             -
 Net operating losses not                       
  utilized                                -          10,000
 Income tax expense                $ 328,119       $     -         

    The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred
tax liabilities at December 31, 1998 and 1997 are as follows:


                                           1998         1997
                                  ________________________________
                                                     
   Deferred tax assets:                              
     Net operating loss carryforwards   $    -       $ (58,000)
                                                     
   Net deferred tax assets                   -         (58,000)
                                                     
   Deferred tax liabilities:                         
                                                     
     Investments, unrealized net gains    178,405       13,000
     Property and equipment deferred                 
      gain                                151,505      150,000
                                                     
     Gross deferred tax liabilities       329,910      163,000
                                                     
                                                     
     Net deferred tax liabilities       $ 329,910    $ 105,000
                                                     
     Less current portion                 178,405       13,000

                                        $ 151,505    $  92,000


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
     due to certain alleged violations of federal securities
     laws.  The SEC invited the Fund to make a submission
     setting forth the Fund's position and arguments 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.  In July
     1997, the SEC informed the Fund that the Staff was planning
     to recommend an enforcement action against the Fund's
     President for certain additional alleged violations of the
     federal securities laws.  In June 1998, the Commission
     issued an order instituting public administrative
     proceedings and in November 1998, an administrative trial
     was held at which the Fund, its President and its directors
     vigorously contested the Staff's allegations and put on
     extensive defensive evidence.

     The parties are in process of exchanging proposed findings
     of fact and conclusions of law and legal briefs.  Management
     will continue to vigorously defend itself, however
     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 1998 and 1997.

6.   Transactions with investees and affiliates:

     Receivables from investees represent reimbursable expenses
     totaling $562 and $-0- at December 1997 and 1998,
     respectively.

     The Fund utilizes a brokerage and trust company as primary
     custodian of its securities.  This company is also a
     majority shareholder in the Fund.  Custodial fees incurred
     in 1998 and 1997 were $8,900 and $13,234, respectively, and
     at December 31, 1998, the Fund has a payable due to this
     affiliate, for investment securities purchased, of
     approximately $852,709.  As of December 31, 1998, the Fund
     has a receivable due from this affiliate for investment
     securities sold of $1,184,337.  Also at December 31, 1998,
     this affiliate held cash on behalf of the Fund in the
     account of $232,251.

     During the year ended December 31, 1998, the Fund pledged as
     collateral, for borrowings by Global Casinos, Inc.,
     ("Global") an affiliated company, its Woodman Property.  The
     Fund received no compensation from Global for this
     transaction.

     In December 1998, the Fund entered into an agreement with
     Global whereby the Fund exchanged various notes receivable
     with $287,220 in principal and $62,780 in accrued interest
     for 291,667 Global Class C Preferred Stock.  The Class C
     Preferred Stock is entitled to receive dividends at the rate
     of 7%.  Any outstanding unpaid dividends bear interest at
     10%.  The Class C Preferred Stock is convertible into common
     shares at the rate of $1.20 per share.

     Additionally, during the year ended December 31, 1998, the
     Fund and Marco Foods, Inc. ("Marco") entered into an
     agreement whereby Marco would reimburse the Fund for rent
     and certain other general and administrative costs that the
     Fund personnel provides to Marco.  The agreement is on a
     year to-year basis and the Fund charged Marco $48,000 for
     rent and services during the year ended December 31, 1998.

7.   Subsequent event:

     On March 30, 1999, the Fund entered into a non-binding
     letter of intent with two unaffiliated third parties to form
     a limited liability company (the "LLC") that would sell bulk
     food in connection with year 2000 readiness.  The non-
     binding agreement calls for the Fund to provide up to
     $200,000 to the LLC.  The non-binding letter of intent is
     subject due diligence by all parties and the execution of a
     definitive agreement.


                           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:
     
     
 Name                    Age  Title                       Officer/
                                                          Director
                                                          Since
____________________________________________________________________

 Stephen G. Calandrella       President, Chief Executive  
                         38   Officer, and Director       1991
                                                          
 Charles C. Powell       45   Director                    1991
                                                          
 Clifford C. Thygesen    64   Director                    1991
                                                          
 Barbara A. Hamstad           Chief  Accounting Officer   
                         33   and Treasurer               1996
 Gina Garcia-Shaw             Chief Administrative        
                         32   Officer and Secretary       1998
________________________


     Stephen G. Calandrella, President and Director.  Mr.
Calandrella has been President and a Director of  The Rockies
Fund, Inc., a Colorado-based business development company, since
February 1991, and Chief Executive Officer since January 30,
1994.  Mr. Calandrella has served as an officer or director of
several public companies.  He currently serves as 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 American Educational Products, a NASDAQ listed
supplier of children's learning tools.  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 as served as a
Director for the Rockies Fund, Inc. since February, 1991.
Mr. Powell is currently Vice Presidnet of Sales for The Baan
Company, a large internet software company providing general
business application software to future 1000 companies.  From
1992 to 1998, 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 Medix Resources.

     Clifford C. Thygesen, Director.  Mr. Thygesen has served as
a Director of the The Rockies Fund Inc. since February, 1991.
Mr. Thygesen has also been a Director of American Educational
Products, Inc. since 1986, and President since January, 1998.
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 Board of Director for Unasurance 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, 1998.
Mrs. Hamstad also serves as Secretary and Treasurer 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.

     Gina Garcia-Shaw, Mrs. Garcia-Shaw joined the Fund on June
1, 1998, as Chief Administrative Officer and Corporate Secretary.
Prior to her arrival, Mrs. Garcia-Shaw worked for Pikes Peak
Regional Development, a division of the SBA, as Administrative
Manager, from April 1996 through April 1998.  Her more specific
skills included monthly financial statement preparation and
reviewing Business Plans for potential SBA loans.  Mrs. Garcia-
Shaw also brings ten years of experience in banking.  October
1988 through April 1996, she was employed by Bank One, which
position began as the Secretary to the Vice President.  The last
year of her tenure Mrs. Garcia-Shaw became an Indirect Lender
approving car loans for the local dealership.  March 1986,
through October 1988, she worked as a Loan Operations Assistant
for Colorado National Bank, formerly known as Central Bank.
     
     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:
     
     (4)  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;
     (4)  been convicted in a criminal proceeding or subject to a
          pending criminal proceeding;

     (4)  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 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
1998, 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 quarter.  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, 1998, 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.


       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, 1998.  See ITEM 13 "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS".
     

                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
                                         Awards                       Payouts
               Annual Compensation                       
_____________________________________________________________________________
                               Other                                
Name                          Annual  Restricted                    
and                           Compen-    Stock              LTIP    All Other
Principal        Salary Bonus   sation Award(s)  Options/  Payouts  Compensa-
Position Year  ($)  ($)    ($)    ($)         SARs(#)         ($)    Tion ($)
___________________________________________________________________________
                                                                        
             1998 $48,000-0- -0- $-0-  -0-     -0-    -0-      -0-     -0-
Stephen G.                                                              
Calandrella, 1997 $48,000-0- -0- $-0-  -0-     -0-    -0-      -0-     -0-
President                                                               
             1996 $48,000-0- -0- $-0-  -0-     -0-    -0-      -0-     -0-
____________________________________________________________________________

     No other executive officer of the Fund received compensation
during the years ended December 31, 1998, 1997 or 1996, in excess
of $100,000.

     Only Mr. Calandrella and Ms. Garcia-Shaw 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 SAR-SEP Plan since inception, nor does
the Fund incur any administrative fees associated with this Plan.
     
     
     Effective June 30, 1998 Ms. Windy Haddad resigned her
position as Chief Administrative Officer and Secretary of the
Fund and was therefore resided by Ms. Gina Garcia-Shaw.  Ms.
Barbara Hamstad, Chief Accounting Officer continued to work part-
time throughout fiscal year 1998.


   ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                         AND MANAGEMENT


     The following table sets forth as of December 31, 1998, 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      of Beneficial           of Class
              Owner              Ownership(1)
_________________________________________________________________
                                                         
Common      D.A Davidson & Co.(2)                              
Stock       8 Third Street, North
            Great Falls, Montana                         
            59401                257,310                 40.2%
                                                         
"           Stephen G.                                   
            Calandrella          234,000                 36.5%
                                                         
"           Charles C. Powell     -0-                     0.0%
                                                         
"           Clifford C. Thygesen  2,000                   0.3%
                                                         
"           Barbara A. Hamstad    1,500                   0.2%
                                                         
"           Gina Garcia-Shaw      -0-                     0.0%
                                                         
"           All Officers and                             
            Directors as a                               
            Group (5 Persons)    237,500                 37.1%


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.


     ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.


     Notes payable to related parties at December 31, 1998
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 Eclipse,
formerly a wholly owned subsidiary of Bear Star, LLC., and
therefore, Eclipse would be considered to be an affiliated
company as a result of the Fund's ownership during 1998.

     As a result of the Fund's investment during 1998 and/or
position on the entity's Board of Directors, the Fund would, at
various times during fiscal 1998, be considered to have been an
affiliate of  American Educational Products, Guardian
Technologies, Inc., Global Casinos, Inc., and Kinetiks.com.

     On October 1, 1995, Mr. Calandrella, the Fund's President
and Director, was elected to serve as President of Global
Casinos, Inc., a portfolio company and affiliate of the Fund.  In
consideration of his services as President of Global Casinos,
Inc., Mr. Calandrella received 9,000 shares in 1998 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.

     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 Global
     
     Mr. Calandrella and the Rockies Fund combined own shares,
options, warrants and convertible notes that if exercised, would
represent 331,027 shares of Global Casinos, or approximately 21%
of Global's outstanding stock.  The Fund in December 1998,
converted $350,000 of its notes receivable from Global for
291,667 shares of Global Class C Preferred Stock.  The Fund also
pledged as collateral without compensation, for the borrowing of
Global, its Woodman Property.
     
     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.
     
     As of April 13, 1999, Mr. Calandrella, certain of his family
members, The Rockies Fund, Inc. and other entities that are
controlled by Mr. Calandrella and his wife, own shares and
warrants that represent 1,073,500 and 1,300,000, respectively of
Kinetiks.com, Inc.  The shares owned represent approximately 32%
of the outstanding shares of Kinetiks.com, Inc.  Of the shares
owned, 900,000 shares were purchased at $.05 per share directly
from the former president and vice president of Kinetiks.com,
Inc. in private transactions.  The remaining shares owned were
purchased in open market transactions.  The warrants were issued
pursuant to a promissory note executed by Kinetiks.com, Inc.
whereby the Fund receives 50,000 warrants for each month that the
promissory note remains in default.  The warrants are exercisable
at the rate of $.25 per share.
     
     During the year ended December 31, 1998, the Rockies Fund,
Inc. and Marco Foods, Inc. ("Marco") entered into an agreement
whereby Marco would reimburse the Fund for rent and certain other
general and administrative costs that the Fund personnel provides
to Marco.  The agreement is on a year-to year basis.  The Rockies
Fund, Inc. charged Marco $48,000 for rent and services during the
year ended December 31, 1998.

     
     
                            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' Reports;

               Statements of Assets and Liabilities -
               December 31, 1998 and 1997;

               Schedules of Investments -
               December 31, 1998 and 1997;

               Statements of Operations -
               Years Ended December 31, 1998 and 1997;

               Statements of Stockholders' Equity -
               Years Ended December 31, 1998 and 1997;

               Statements of Cash Flows -
               Years Ended December 31, 1998 and 1997;

               Statements of Changes in Net Assets -
               Years Ended December 31, 1998 and 1997;

               Notes to Financial Statements -
               December 31, 1998 and 1997

            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, 1998.
          
               On February 1, 1999, the Fund, filed a Form 8-K
               for a change in registrant's certifying
               accountant.  The dismissal of Gelfond Hochstadt
               Pangurn & Co. was effective February 12, 1999 and
               the Fund retained the accounting firm of Gerald R.
               Hendricks & Co., P.C. to service as the Fund's
               independent accountant and to audit the Company's
               financial Statements including December 31, 1998.

     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.


                           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     ___________
                              
                              

Charles M. Powell                    Director             ___________



Clifford C. Thygesen                 Director             ___________



                           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. Calendrella
                           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