U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-KSB

            [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 0-2882

                             ESCO TRANSPORTATION CO.
                 (Name of small business issuer in its charter)

                Delaware                           55-0257510
                --------                           ----------
   (State or other jurisdiction of              (I.R.S. Employer
    incorporation or organization)             Identification No.)

                               6505 Homestead Road
                              Houston, Texas 77028
                              --------------------
                    (Address of principal executive offices)

            Registrant's telephone number_________(713) 635-1008____
                                         ---------------------------

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

                                      NONE

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

                     Common Stock, $.001 par value per share
                                (Title of class)

Check  whether  the issuer (1) filed all reports required to be filed by Section
13  or  15(d) of the Exchange Act during the past 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 .
                                                                  ---   ----

Check  if  disclosure of delinquent filers in response to Item 405 of Regulation
S-B  is  not contained in this form, and no disclosure will 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-KSB or any amendment to
this  Form  10-KSB.  [X]

State  issuer's  revenues  for  its  most  recent  fiscal  year.  $27,236,456
                                                                  -----------

The  aggregate  market  value  of  the voting stock held by nonaffiliates of the
registrant was $3,633,007 as of September 20, 1999.  Such aggregate market value
was  computed  by  reference  to  the average bid and asked prices of the common
stock,  as  of  September  17,  1999.

The  number  of  shares  outstanding  of the common Stock, .001 par value, as of
December  31,  1998  was  12,527,612.

Transitional  Small  Business Disclosure Format (Check one):  Yes    .  No  X .
                                                                  ---      ---


<PAGE>
                                     PART I

ITEM  1.     DESCRIPTION  OF  BUSINESS

(a)     Business  Development

ESCO  Transportation Co., a Delaware corporation ("ESCO" or the "Company"), is a
short  haul  contractor  of  freight  for  major shipping companies as well as a
national  freight  hauling and freight brokering company.  The Company also owns
certain  oil  and  gas properties, which constitute an immaterial portion of the
Company's  assets  and generate an immaterial portion of the Company's revenues.

The  Company  was  incorporated  in  1916  under  the laws of the West Virginia.
Effective  May  20,  1992,  the  Company  was  reincorporated  as  a  Delaware
corporation.  Until  December  1993,  the  Company  was engaged primarily in the
business  of  exploration  for,  production of and sale of crude oil and natural
gas.  On October 11, 1994, the Company changed its name from "Power Oil Company"
to  "ESCO  Transportation  Co."  Unless  otherwise indicated, the information in
this  Annual  Report  is  adjusted  to  reflect the one-for-four and one-for-ten
reverse  stock  split  of  the  outstanding shares of the Company's common stock
effected  in  November  1996.

(b)     Business  of  Issuer

The  principal  business  of  the  Company  is  providing  contract transporting
services  to major shipping companies, primarily inter-connecting short hauls of
container  shipments.  Most of this business consists of rail to rail or rail to
port  shipments.  In  performing  its  services,  the  Company leases trucks and
trailers,  with the individual truck owners providing the drivers.  The owner of
the  truck  generally  receives  70%  to  75%  of the revenue generated from the
shipment  as  compensation  for providing the truck and the driver.  The Company
operates  out  of  facilities located in Houston, Texas; Dallas, Texas; Ontario,
California;  Memphis,  Tennessee;  and  Springdale,  Arkansas.  The  Company's
corporate  offices  are  located  in  Houston,  Texas.  The  Company's  freight
brokerage  operations  pursue  a  cost  plus  strategy  in dispatching loads for
various  shippers  in  the  southeastern  United  States.

The Company is operating in an industry that is highly competitive.  The Company
currently  competes  directly  and  indirectly  with  a large number of contract
carriers.  Many  of  the Company's competitors are larger and have significantly
greater  resources than the Company.  The Company competes on the basis of price
and  service.

Freight  activity is typically somewhat stronger in the second half of the year,
with peak months in August, September and October.  In addition, bad weather and
holidays  generally affect business activity, due to the fact that the Company's
business  is  concentrated  in  temperate  regions  of the country; however, its
operations  have  not  been  historically  seasonal  to  any  material  degree.

The Company believes that its current business operations are in compliance with
all  applicable  federal,  state  and  local regulations governing its business.

The  Company employs approximately 155 employees, all of whom are full time.  In
addition,  the  Company  has  approximately  183  owner/operators as independent
contractors  of  the  trucks  used  in  the  Company's  operations.


                                        2
<PAGE>
ITEM  2.     DESCRIPTION  OF  PROPERTIES

The  Company  leases  the  following land and buildings now being used to in its
operations.

1.     A  facility  consisting  of  5,000  square feet of office space and eight
acres  of  paved truck parking space in Houston, Texas.  The facility is used to
house  the  Houston  drayage  operations  and  the  corporate  offices.

2.     Land  and  building  located  in  Memphis,  Tennessee  consisting  of
approximately  3,000  square  feet  of  office  space and fifteen acres of truck
parking  and  container storage space.  These facilities are used to operate the
Memphis  drayage  facilities  and  the  Memphis  container  yard  facilities.

3.     A  facility consisting of approximately 2,000 square feet of office space
located  in  Ontario,  California.  These  facilities  are  used  to  house  the
Company's  Ontario,  California  drayage  operations.

4.     A  facility  totaling approximately 5,000 square feet of office space and
eight acres of truck parking in Springdale, Arkansas.  These facilities are used
to  house  the  over-the-road  division  located  in  Springdale,  Arkansas.

The  Company  also has a note payable on approximately five acres of undeveloped
land in Springdale, Arkansas, which it currently has for sale and a note payable
on  approximately  4,000  square  feet  of  office  space and two acres of truck
parking  in  Memphis, Tennessee.  In addition, the Company has a note payable on
ten  acres of Houston, Texas property originally purchased to be used as the new
site  for  the Houston, Texas operations and corporate offices.  The Company has
been  attempting  to sell this property and closed on the sale in September 1999
at  a  profit  to  the  Company.

The  Company  also  owns  producing  and non-producing oil and gas leases in the
United  States,  which are located in Louisiana, New Mexico, Texas, and Wyoming.


                                        3
<PAGE>
ITEM  3.     LEGAL  PROCEEDINGS

The  Company  is  a  party  to  routine  litigation  incidental to its business,
primarily involving claims for personal injuries and property damage incurred in
the  transportation  of  freight.  The Company maintains insurance coverage that
covers the liability resulting from such claims.  Adverse results in one or more
of  these  cases  would  not  have  a  material  adverse effect on the financial
position  of  the  Company.

As  of  the  date  of  filing  hereof,  October 18, 1999, ESCO Transportation is
involved  in  the  following  litigation:

Case  No.  EDVC 98-22ORT (VAPx); Intercargo Insurance Co. v. Burlington Northern
Santa  Fe  Railroad,  it  al.;  In  the U.S. District Court, Central District of
California.

Intercargo  Insurance  Company  is  suing  multiple defendants because a load it
insured  was  misdelivered at the railyard to persons who stole the merchandise.
Defendant  Burlington  Northern  &  Santa  Fe  Railway has cross-claimed against
multiple  other  defendants, including ESCO Transportation, for indemnity.  ESCO
Transportation  never  had  custody  or control of the stolen merchandise.  ESCO
Transportation  has  answered  both  Intercargo's  claim  and  Burlington's
cross-claim.  ESCO  Transportation  seeks  its  reasonable and necessary defense
costs  by  asserting that the actions were not brought with reasonable cause and
in the good faith belief that there is a justifiable controversy under the facts
and  law.  ESCO  Transportation is seeking a dismissal of the claims against it.
There  is  currently a mandatory settlement conference scheduled for October 18,
1999  at  which  Company  management  will  be  present.

The  Company's  management  does  not believe that this litigation will have any
material  impact  on  the  Company's  business.

Case  No.  98-0840-1;  Pacific  Business Capital Corp v. ESCO Transportation Co.
and  Michael  Till,  Individually;  in  the Chancery Court of Shelby, Tennessee.

Pacific Business sued ESCO Transportation and Mike Till in an attempt to enforce
a  security interest it holds in some property of Intermodal Logistics Co.  ESCO
Transportation  took  over  the  operations  of  Intermodal, which is more fully
described  in the 1997 10K previously filed with the SEC.  The security interest
granted  Pacific  Business  by  Intermodal  concerns  chattel  paper,  mainly
receivables and right to receivables.  The agreement between ESCO Transportation
and Intermodal specifically excludes receivables due and owing prior to the date
of the agreement, and Intermodal retained all rights to those funds.  It is ESCO
Transportation's  and  Mike  Till's  position  that  they  have not violated any
security  interest  Pacific Business may have; ESCO Transportation and Mike Till
seek  dismissal  as  expeditiously  as  possible.

The  Company's  management  does  not believe that this litigation will have any
material  impact  on  the  Company's  business.


                                        4
<PAGE>
ITEM  4.     SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

There were no matters submitted to a vote of the security holders of the Company
through  the  solicitation  of proxies or otherwise during the fourth quarter of
the  fiscal  year  ending  December  31,  1998.


                                        5
<PAGE>
                                     PART II

ITEM  5.     MARKET  FOR  COMMON  EQUITY  AND  RELATED  STOCKHOLDER  MATTERS

The  Company's  common  stock  is  traded on the NASDAQ Bulletin Board under the
symbol  "ETCO."  The  following table sets forth the high and low bid prices for
the  common  stock  for  the  periods  indicated,  as  quoted  by  NASDAQ:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31, 1997:   HIGH    LOW
<S>                                   <C>     <C>
     First Quarter                    $ 3.00  $.3125
     Second Quarter                     2.75    1.50
     Third Quarter                     2.755   .5625
     Fourth Quarter                     1.18    .375
</TABLE>


<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31, 1998:  HIGH   LOW
<S>                                   <C>    <C>
     First Quarter                    $ .53  $.27
     Second Quarter                     .62   .34
     Third Quarter                      .90   .37
     Fourth Quarter                     .52   .32
</TABLE>

The  listed  quotations  reflect  interdealer  prices,  without  retail mark-up,
mark-down or commissions, and may not necessarily represent actual transactions.

As  of  December  31,  1998,  there were 1111 holders of record of the Company's
common  stock.

The  Company  has  not  paid  dividends on its common stock during the last five
years.  The  Company presently intends to retain earnings as working capital and
to  finance the expansion of its business and, therefore, does not expect to pay
any  cash  dividends  in  the  foreseeable  future.  Any determination as to the
payment  of  cash  dividends  will  depend  upon the Company's earnings, general
financial  condition,  capital  needs  and other factors deemed pertinent by the
Board  of  Directors, as well as any limitations imposed by lenders under credit
facilities.


                                        6
<PAGE>
ITEM  6.     MANAGEMENT'S  DISCUSSION,  ANALYSIS,  AND  PLAN  OF  OPERATION

OVERVIEW
--------

ESCO  Transportation  continued  to  show  growth  of  nearly 20% in its overall
revenues  and  a  net  margin from operations of 2.6%.  Its cost of freight as a
percentage  of  revenue  declined  from 1997 primarily due to reductions in fuel
costs  and  improved efficiencies in its over-the-road division.  Administrative
costs  increased by 31% over 1997, with most of the growth coming from increased
personnel  at  all  locations  necessary  to  handle  the  increased  volumes of
business.  Part  of  this  increase  was  necessary as an overall infrastructure
increase;  however,  the  Company's  management  anticipates  the  present
infrastructure will handle additional business increases without a proportionate
additional  increase  in  personnel  and  related  costs.

The  most  significant  increase  in  costs is directly related to the Company's
financing costs, with a substantial amount of that relating to the total balance
outstanding  to  its  factor  under  the  factoring  arrangement with Commercial
Billing  Services (Compass Bank).  During the year the Company found the need to
increase its outstanding balance in factored receivables partially due to a need
to  generate  the  cash  required to maintain current on the Company's long-term
debt.  Net  income  before  depreciation  increased  from  $739,000  in  1997 to
$1,019,000  in  1998  but  did  not increase in sufficient amounts to handle the
annual  debt  service  on its long-term debt, which is approximately $1,800,000.
The  cost of financing through the factoring arrangement is substantially higher
than  the  cost  of  its  long-term debt, resulting in the increase in the total
interest  costs  for  the  year.

Since  1993,  the Company's revenues have grown from a little over $3,000,000 to
$27,000,000  in  1998.  This  level  of  growth  has required financing which is
typically  considered  riskier,  and  accordingly,  resulted in higher financing
costs  for  the  Company  in  spite  of  the improved factoring arrangement with
Commercial  Building  Services.

In  addition,  the  Company  determined  in  1998  that its billing systems were
resulting  in  excessive  write-offs due to billing errors that cost the Company
over  $600,000  in  write-offs  for  the  year.

STRATEGY  FOR  1999
-------------------

In  early  1999,  the  Company  formulated  a  new management team to return the
company  to profitability and move the Company forward to place it in a position
to show substantial growth in 1999, 2000, and beyond.  The Company has taken the
following  steps  to  accomplish  these  objectives:

     Effective March 1, 1999, the Company implemented a new management team with
Robert  Weaver as President and Robert Darilek, CPA, as Chief Financial Officer,
and  has  expanded the management team to incorporate a new Corporate Controller
and a new Vice President of Operations.   The new team's goals are to return the
Company  to  a  fully  reporting  status  with  the  SEC and to use the business
relationships  of  Mr.  Weaver to expand Company business in all of its existing
locations.  The  Company is also actively pursuing candidates for acquisition or
merger  with  the Company to facilitate future growth.  In addition, the Company
is  actively  pursuing  capital funds to improve its working capital in 1999 and
future  years  for  such  acquisition  or  merger  plans.

                                        7
<PAGE>
ITEM 6.     MANAGEMENT'S DISCUSSION, ANALYSIS, AND PLAN OF OPERATION (CONTINUED)


STRATEGY  FOR  1999  (CONTINUED)
--------------------------------

     The  Company  has  also taken an active approach to bring trade receivables
within  terms  of  all  of  its  customers  and has hired a manager in charge of
accounts  receivable  collections  to  oversee  this  operation  and  to  pursue
collections  on  a  day-to-day  basis.

     The  Company  has  also  implemented  processes  during  1999  to  identify
processing  and billing problems and has implemented procedures to eliminate the
high  write-offs  that  existed in 1998.  This should add substantial additional
profits  to  the  net  income  of  the  Company  and  improve  cash  flow.

     The  Company  has  established  a  budget  for  1999  and  has  outlined an
organizational  chart  that  more  clearly  defines  roles  of  authority  and
responsibility  to  the terminal managers at all locations of the Company.  This
processing has placed a higher level of accountability for all terminal managers
and  should  facilitate the Company's efforts to turn a profitable year in 1999.

OTHER  MAJOR  DEVELOPMENTS
--------------------------

Effective  September  10, 1999, the Company signed a letter of intent to acquire
the  assets  and  business  operations  of  Panther  Lines,  Inc.  and  Value
Distribution, located in Los Angeles and Stockton, California.   These companies
represent  a  revenue  stream of approximately $6,000,000 consisting of regional
line  hauls, warehousing activity, and shuttle operations for major customers in
the  Stockton and Los Angeles, California areas.  The purchase price consists of
$300,000 in cash and 1,000,000 shares of common stock of the Company contributed
by  a major stockholder.  The Panther/Value purchase should contribute in excess
of  $500,000 of net annual income to the Company based on historical performance
and  projected  future  operations.

The  Company  is  actively  discussing  potential  mergers  with  four  other
intermodal/drayage  companies  located  throughout  the  United  States.

In  August  1999, the Company completed financing of fifteen new Peterbilt Power
Units  for  the  over-the-road  Springdale  operations  totaling $1,616,291.  In
addition,  in  June  and  July  1999, the Company executed two leases to acquire
thirty-two  (32)  new  trailers  under  a  capital  lease  arrangement  totaling
$632,350.  All  units are for use in its Springdale over-the-road division.  The
fifteen  new  power  units  primarily  represent  replacement  units of existing
vehicles  and  the  trailers  add  to  the existing fleet of trailers to provide
opportunities  to  new customers and new markets in the lanes established by the
Company.


                                        8
<PAGE>
ITEM 6.     MANAGEMENT'S DISCUSSION, ANALYSIS, AND PLAN OF OPERATION (CONTINUED)


YEAR  2000  ISSUE
-----------------

The  Year  2000 issue is the result of date coding within computer programs that
were  written  using  just  two  digits  rather  than  four digits to define the
applicable  year.  If  not  corrected, these date codes could cause computers to
fail to calculate dates beyond 1999 and as a result, computer applications could
fail  or  create  erroneous  results  by  or  at  the  Year  2000.

The  Company,  together  with  outside vendors engaged by the Company, have made
assessments  of  the  Company's  potential  Year  2000  exposure  related to its
computerized  information  systems.  Because  of  the  nature  of  the Company's
operations,  many  of  its  computerized information systems will be required to
process information which includes post-year 2000 date coding well in advance of
January 1, 2000.  The Company has substantially completed its overall assessment
of Year 2000 issues associated with its current systems and is currently engaged
in  efforts  to  remediate  potential  year  2000 exposure with respect to those
systems,  including the identification, selection, and implementation of a major
new  Year  2000 compliant software system.  Following the remediation phase, the
Company  engages  in  testing  of the applicable systems in order to verify Year
2000  compliance.  The  Company  utilizes  a  variety of remediation and testing
methods  in  connection  with  its  Year  2000  compliance  efforts.  Management
believes  that  the Company's compliance plan is progressing such that Year 2000
exposures  will  be mitigated prior to any critical dates.  To date, no material
information  technology projects of the Company have been delayed as a result of
the  Company's  Year  2000  compliance  efforts.

The  Company  has  also  made  assessments  of  the potential Year 2000 exposure
associated  with  its  embedded  technology  systems, such as telephone systems,
freight  hauling tracking systems, and accounting and payment systems.  Based on
such assessments, the Company does not believe that it has significant Year 2000
exposure  with  respect  to  such  embedded  technology  systems.

The  Company  is  currently  involved  in  discussion  with important suppliers,
business partners, customers, and other third parties to determine the extend to
which  the Company may be vulnerable to the failure of these parties to identify
and  correct their own Year 2000 issues.  In the ongoing acquisition of software
and  hardware  installations,  the  Company  generally requires that its vendors
certify  the  Year  2000  compliance of acquired products.  The Company believes
that  its  own  software  vendors  are  Year  2000  compliant.

The Company is utilizing and will continue to utilize both internal and external
resources to reprogram or replace its computer systems such that the systems can
be  expected  to be Year 2000 compliant in advance of respective critical dates.
The  Company  capitalized  $29,310  with  respect  to new software purchases and
installations which are Year 2000 compliant.  The total estimated remaining cost
of  modification  of  existing  software  and new Year 2000 compliant systems is
$300,000  which  includes  costs  attributable  to  the  planned  purchase  and
implementation  of  a  new accounting and dispatch system.  The cost of this new
software  is  being capitalized.  The level of expense anticipated in connection
with Year 2000 issues is not expected to have a material effect on the Company's
result  of  operations.  The costs of the Company's Year 2000 compliance efforts
are expected to be funded out of both operating cash flow and outside financing.


                                        9
<PAGE>
ITEM 6.     MANAGEMENT'S DISCUSSION, ANALYSIS, AND PLAN OF OPERATION (CONTINUED)


YEAR  2000  ISSUE  (CONTINUED)
------------------------------

The Company continues to implement its Year 2000 plan.  The progress made was in
accordance with the plan, including progress on the new system which is expected
to  go  online  on  or before December 1999.  There was no new information which
came  to  management's  attention  that  would  indicate that the plan should be
altered significantly or that the plan would not be successful in the time frame
prescribed  by  the  plan.

The  dates  of  expected  completion  and  the  costs of the Company's Year 2000
remediation  efforts  are  based  on  management's  estimates, which are derived
utilizing  assumptions  of  future events, including the availability of certain
resources,  third  party  remediation plans, and other factors.  There can be no
guarantee  that  these  estimates will be achieved, and if the actual timing and
costs  for  the  Company's  Year 2000 remediation program differ materially from
those anticipated, the Company's financial results and financial condition could
be  significantly  affected.  Additionally,  despite testing by the Company, the
Company's  systems may contain undetected errors or defects associated with Year
2000 issues for remediation or to complete its Year 2000 remediation and testing
efforts  prior  to  respective  critical  dates, as well as the failure of third
parties  with  whom  the  Company  has  an  important  relationship to identify,
remediate,  and  test  their  own  Year 2000 issues and the resulting disruption
which  could  occur  in  the  Company's  systems and could have material adverse
effects  on  the  Company's  business,  results  of  operations,  cash flow, and
financial  condition.

FUTURE  PLANS
-------------

The Company anticipates a profitable year for the fiscal year ended December 31,
1999  based  on  its  operations  through  the  second quarter of 1999.  Its new
management  team  is  actively pursuing opportunities to improve working capital
and  is  developing  a  five  year  plan  to  improve processes, expand existing
markets, and evaluate future acquisitions.  During 1999, the Company implemented
a  budgeting  process and a financial accountability procedure for all divisions
of  the  Company.  The  Company's management anticipates this accountability and
desegregation  of  responsibility  will  provide  more direct incentives for the
managers  to  increase  revenues and profits at each location and also provide a
tool  to  monitor  progress  according to plan on a monthly and quarterly basis.

Management  is  presently  conducting  discussions  with  financing companies to
establish  an  equipment  line  of  credit  to finance future power units of the
Company.  Management  anticipates  during  the  latter part of 1999 and into the
year  2000 that its existing fleet will need major repairs or replacement and is
establishing  the  required line of credit to handle this growth and finance the
new  equipment.  The Company's management anticipates the financing arrangements
will  improve  the current financing interest rates and payments of its existing
fleet.

Management  is  actively  pursuing  several financing companies to assist with a
mezzanine  financing  to  provide the Company additional working capital in 1999
and  future years.  Management anticipates this working capital will be utilized
to  improve  cash  flow on the short-term and provide additional cash to finance
the  potential  mergers  and  Company  expansion  sought  by  management.


                                       10
<PAGE>
ITEM 6.     MANAGEMENT'S DISCUSSION, ANALYSIS, AND PLAN OF OPERATION (CONTINUED)

FUTURE  PLANS  (CONTINUED)
--------------------------

Management is also attempting to sell nonperforming assets and has closed on the
sale  of  its  land  in  Houston,  Texas  in  September  1999.

SAFE  HARBOR
------------

This report on Form 10-Q or 10-QSB (the Report) contains certain forward-looking
statements  within  the meaning of Section 27A of the Securities Act of 1933, as
amended,  and  Section  21E  of the Securities Exchange Act of 1934, as amended,
which are intended to be covered by the safe harbors created thereby.  Investors
are  cautioned that all forward-looking statements necessarily involve risks and
uncertainty,  including,  without  limitation, the risk of a significant natural
disaster,  the  expansion  or  contraction in its various lines of business, the
impact  of inflation, the impact of Year 2000 issues, the ability of the Company
to  meet its debt obligation, changing licensing requirements and regulations in
the  United  States  pertinent  to  its  business, the ability of the Company to
expand  its  businesses, the effect of pending or future acquisitions as well as
acquisitions  which  have  recently been consummated, general market conditions,
competition,  licensing  and  pricing.  All statements, other than statements of
historical  facts,  included  or  incorporated  by  reference in the Report that
address  activities,  events  or  developments  that  the  Company  expects  or
anticipates will or may occur in the future, including, without limitation, such
things as future capital expenditures (including the amount and nature thereof),
business  strategy  and  measures  to  implement  such  strategy,  competitive
strengths,  goals,  expansion,  and  growth  of  the  Company's  businesses  and
operations,  plans,  references  to  future success, as well as other statements
which  includes  words  such  as  "anticipate,"  "believe,""plan,"  "estimate,"
"expect," and "intend" and other similar expressions, constitute forward-looking
statements.  Although  the  Company believes that the assumptions underlying the
forward-looking  statements  contained  herein  are  reasonable,  any  of  the
assumptions  could over time prove to be inaccurate and, therefore, there can be
no  assurance  that  the forward-looking statements included in this Report will
themselves  prove  to  be  accurate.  In  light of the significant uncertainties
inherent  in  the  forward-looking  statements included herein, the inclusion of
such  information  should  not be regarded as a representation by the Company or
any  other person that the objectives and plans of the Company will be achieved.

INFLATION  AND  CHANGES  IN  PRICES
-----------------------------------

The  Company does not anticipate future changes in prices or inflation levels to
have  a  significant  impact  on  the  operations  of  the  Company.


                                       11
<PAGE>
ITEM 6.     MANAGEMENT'S DISCUSSION, ANALYSIS, AND PLAN OF OPERATION (CONTINUED)


SUMMATION
---------

The Company's management believes that is has taken a positive turn in 1999 with
new  efforts and a new direction to improve increased financial position and its
financial  growth  over  the  upcoming  years.  The  new  management  team  sees
opportunities for substantial profits and improved margins in the latter part of
1999  and  into the year 2000 and beyond.  The Company intends to become a major
force  within  the  intermodal  transportation industry, as well as the trucking
industry  as  a  whole.

ITEM  7.     FINANCIAL  STATEMENTS

The  Company's  financial  statements and supplementary disclosures are included
herein  on  pages  18  through  38.

ITEM  8.     CHANGES  IN  AND  DISAGREEMENTS  WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL  DISCLOSURE

In  1995,  the  Company  filed Form 15 with the SEC to become non-reporting.  In
1998,  the  Company  returned  to  reporting status when it hired Null & Lairson
P.C.,  (formerly  Lairson,  Stephens  and Reimer, P.C.) to perform audits of the
1995  and  1996  financial  statements.  During  1998,  the Company hired Fitts,
Roberts  and  Company  to complete the audit of its 1998 financial statements to
again  become  fully  reporting.  Effective through the reporting period of June
30,  1999,  the Company has completed all filings and has implemented procedures
to  ensure  future  filings  are  maintained  timely.

During  the  period  that  Null & Lairson, P.C. was the Company's auditor, there
were  no  disagreements  on  any  matter  of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure or any reportable
events.  Null  &  Lairson,  P.C.'s  report  on  the financial statements for the
Company  contained  no  adverse  opinion  or  disclaimer  of opinion and was not
qualified  or modified as to uncertainty, audit scope, or accounting principles.
The  Company  has  requested  Null  &  Lairson, P.C. to furnish it with a letter
addressed  to  the  Securities and Exchange Commission stating whether or not it
agrees  with  the statements made by the Company herein and, if not, stating the
respects  in  which it does not agree.  Any copy of this letter will be attached
as  an  exhibit  to  a  later  report  of  Form  8-K/A.


                                       12
<PAGE>
                                    PART III

ITEM  9.     DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS  AND  CONTROL  PERSONS;
             COMPLIANCE  WITH  SECTION  16(a)  OF  THE  EXCHANGE  ACT

<TABLE>
<CAPTION>
Name                                        Position with Registrant
<S>                  <C>
Edwis L. Selph, Sr.  Chief Executive Officer and Chairman of the Board
Robert Weaver        President and Chief Operating Officer and Director (Effective 03/01/99)
Robert F. Darilek    Chief Financial Officer and Director (Effective 03/01/99)
Edwis L. Selph, Jr.  Vice President and Director
</TABLE>

Each  director shall hold office until his/her successor shall have been elected
and  qualified  or  until  resignation  or  removal by the Board of Directors in
accordance  with  the  By-laws  of  the  Company.

The  officers of the Registrant are elected by the Board of Directors.  The term
of  each  officer  is  until  voluntary resignation or replacement.  There is no
arrangement  or  understanding  between  any  directors  pursuant  to selection.

Edwis  L.  Selph,  Sr.  has  served as a Director of the Company since April 29,
----------------------
1986.  He served as Chairman of the Board, President and Chief Executive Officer
from  February  27, 1987 until February 1, 1990 when he resigned these positions
and  was  elected  Vice-Chairman.  He  was  reinstated as Chairman of the Board,
President and Chief Executive Officer on December 31, 1990.  Mr. Selph has other
business  interests.  His  investments  include  real  estate holdings and small
business  interests.  Mr.  Selph  owned  ESCO  Transportation  Inc. prior to its
acquisition  by  the  Company  on  December  14,  1993.

Robert  J. Weaver comes to ESCO from the position of President of HUB City Texas
-----------------
based  in  Houston,  Texas.  Mr.  Weaver began his career in Houston in 1993 and
brought  the  operations  of HUB City Texas (originally HUB City Houston) from a
heavily  debt  position  to  a  profitable  operation with revenues in excess of
$100,000,000.  Mr.  Weaver  has  been in the transportation industry for over of
twenty-two  years  and brings a tremendous level of stability and opportunity to
ESCO  through  his  relationships  with the Hub Group and other companies in the
transportation  industry.

Robert  F.  Darilek,  C.P.A  was hired by the Company as Chief Financial Officer
---------------------------
because  of  his  experience  in with working with Mr. Robert Weaver at HUB City
Texas and his ability to in resolving operational problems.  Mr. Darilek manages
a profitable accounting practice in San Antonio, Texas and continues to maintain
that  responsibility  while  operating  as Chief Financial Officer for ESCO. Mr.
Darilek  has  been  in  the  transportation  industry since 1984 through various
relationships  through  the  HUB  Group,  and  brings  a high level of financial
reporting  and  internal  control  expertise  to  the  Company.  Mr.  Darilek is
responsible for overseeing all financial operations, financial reporting, and is
assisting  in  evaluating  refinancing and merger opportunities for the Company.


                                       13
<PAGE>
ITEM  9.     DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS  AND  CONTROL  PERSONS;
             COMPLIANCE WITH SECTION  16(A)  OF  THE  EXCHANGE  ACT  (CONTINUED)


Edwis  L.  Selph,  Jr.  has  served  as  Secretary/Treasurer and Director of the
----------------------
Company  since  September  21,  1994.  Mr.  Selph has continually worked for the
Company  in  various  capacities.  Edwis  L.  Selph,  Jr. is the son of Edwis L.
Selph,  Sr., Chairman of the Board, President and Chief Executive Officer of the
Company.  Mr.  Selph was appointed Vice-President in 1995 with unanimous consent
of  the  board  after the resignations of Mr. Cox and Mr. Bible during that same
year.

ITEM  10.     EXECUTIVE  COMPENSATION

The following table sets forth the compensation paid by the Company to its Chief
Executive  Officers  for  the  fiscal  years  ended  December 31, 1998 and 1997.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
Name and                                              Other
Principal                                             Annual                  All Other
Position                  Year   Salary   Bonus    Compensation   Options   Compensation
<S>                       <C>   <C>       <C>     <C>             <C>       <C>


Edwis L. Selph, Sr., CEO  1998  $205,000  $    0  $    9,375 (1)  $      0  $           0
                          1997  $150,000  $    0  $           0   $      0  $           0

Edwis L. Selph, Jr.       1998  $ 97,000  $    0  $    9,375 (1)  $      0  $           0
                          1997  $ 66,350  $    0  $           0   $      0  $          0_
<FN>
(1)   This  compensation consists of 25,000 shares of stock issued as a bonus on 01/01/98
each  to  Edwis  Selph,  Sr.  and  Edwis  Selph,  Jr.  valued  at  $0.375  per  share.
</TABLE>

The  Company  has  no  defined  benefit  or  actuarial  plan.

Directors  of  the  Company  currently  serve without any compensation for their
service  as  directors.

Subsequent to December 31, 1998, 1,200,000 shares of common stock were issued to
a  new  executive  pursuant  to  an employment agreement subject to a three year
vesting  arrangement.  The  vesting causes the executive to forfeit a portion of
the  stock  previously  issued  in  the  event  of termination of employment for
reasons  stated  in  the  contract.

Subsequent  to  December  31,  1998,  the  Company agreed to grant a key officer
225,000  shares  of  stock  which is earned at management's discretion through a
series  of  five  milestones  relating  to  restructuring  debt  operations  and
profitability.


                                       14
<PAGE>
ITEM  11.     SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT

The  following  table  sets forth certain information regarding the ownership of
Common  Stock as of December 31, 1998 by (i) each director and executive officer
of  the  Company, (ii) all directors and officers of the Company as a group, and
(iii)  each other person known by the Company to be the beneficial owner of more
than  5%  of  the  outstanding  Common  Stock  as  of  December  31,  1998.

<TABLE>
<CAPTION>
                                      # of Shares and Nature of
Name and address of Beneficial Owner      Beneficial Owner       Percent of Outstanding Shares
<S>                                   <C>                        <C>
Edwis L. Selph, Sr.                                   9,077,310                          72.50%
6505 Homestead Rd
Houston, Texas 77028
------------------------------------
Edwis L. Selph, Jr.                                      30,000                           2.40%
6505 Homestead Rd.
Houston, Texas 77028
------------------------------------
Total                                                 9,107,310                          74.90%
------------------------------------  -------------------------  ------------------------------
</TABLE>

ITEM  12.     CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

Edwis  L.  Selph,  Sr.,  Chairman  of  the  Board, President and Chief Executive
Officer  of the Company, owned 100% of the stock of ESCO Transportation Inc. and
received  875,000  shares  of the Company's common stock in exchange for 100% of
the  common stock of ESCO Transportation Inc.  Prior to ESCO Transportation Inc.
becoming a wholly-owned subsidiary of the Company, Mr. Selph owned approximately
15.67%  of  the  Company's  outstanding  common  stock.  Immediately  after  the
transaction,  Mr.  Selph  owned  approximately  86.18%  of  the  Registrant's
outstanding  common  stock.

The  Company  advanced  funds  and  issued stock to a shareholder and his family
members as discussed below.  At December 31, 1998, $464,867 remained owed to the
Company  evidenced by two notes.  The notes receivable signed December 31, 1998,
including  7%  interest,  are payable in full on or before December 31, 1999 and
are  secured  by  ESCO  common  stock.  No interest was paid or accrued on these
notes  in  1998.

In  May  1998,  the  Company  purchased 4,000,000 shares of the Company's common
stock for $1,198,000 or 29.95 cents per share, from a related party, in exchange
for  a  note,  including interest, to be paid over eight years.  On December 31,
1998,  the  chief  executive  officer  and  majority  stockholder of the Company
assumed  the  promissory  note,  which  then  had  a balance due of $960,000, in
exchange  for  3,200,000  shares  of  the Company's common stock.  An additional
800,000  shares  was  also  issued  to  the  same individual at the same time in
exchange  for  a  note  receivable back to the Company for $265,991.  Additional
loans  from  the  Company  to  this shareholder and his immediate family members
totaled  $469,156,  less  $70,319  owed to the shareholder of which $200,150 was
repaid  during 1998, resulting in an ending balance receivable by the Company of
$464,678 at December 31, 1998.  $413,385, which is related to the stock purchase
is  shown  as  a  reduction  in  shareholders'  equity.


                                       15
<PAGE>
ITEM  13.     EXHIBITS  AND  REPORTS  ON  FORM  8-K

a.   Exhibits
     1.     Material  contracts
     2.     Letter  on  change  in  certifying  accountant

b.   Reports  on  Forms  8-K  -  NONE


                                       16
<PAGE>
SIGNATURES


In  accordance  with Section 13 or 15(d) of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly  authorized.

                              ESCO  TRANSPORTATION,  CO.


                              -----------------------------
                              Edwis  L.  Selph,  Sr.,
                              Chief  Executive  Officer
                              and  Chairman  of  the  Board


                              Date:  ________________

In  accordance  with  the  Exchange  Act,  this  report  has  been signed by the
following  persons  on behalf of the registrant and in the capacities and on the
dates  indicated.

                                                     Date:
----------------------------                               --------
Edwis L. Selph, Sr.
(Chief Executive Officer and
Chairman of the Board)


                                                     Date:
----------------------------                               --------
Edwis L. Selph, Jr.
(Secretary/Treasurer)


                                       17
<PAGE>
                               INDEX TO FINANICALS


                                                                            Page

Independent  Auditor's  Report                                                20

Balance  Sheets                                                            21-22

Statements  of  Income                                                        23

Statement  of  Changes  in  Stockholders'  Equity                             24

Statements  of  Cash  Flows                                                25-26

Notes  to  Financial  Statements                                           26-38


                                       18
<PAGE>





                          AUDITED FINANCIAL STATEMENTS


                             ESCO TRANSPORTATION CO.


                           DECEMBER 31, 1998 AND 1997







                                       19
<PAGE>
                          INDEPENDENT AUDITOR'S REPORT


To  the  Board  of  Directors
ESCO  Transportation  Co.
Houston,  Texas


We  have audited the accompanying balance sheet of ESCO Transportation Co. as of
December  31, 1998, and the related statements of income, retained earnings, and
cash  flows  for  the  year  then  ended.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion  on  these  financial  statements  based  on  our  audit.  The financial
statements  of ESCO Transportation Co. for the year ended December 31, 1997 were
audited  by  other auditors whose report, dated May 15, 1998, on those financial
statements  included  an  explanatory paragraph that expressed substantial doubt
about  the  Company's  ability  to  continue  as  a  going  concern.

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  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  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 1998 financial statements referred to above present fairly,
in  all  material respects, the financial position of ESCO Transportation Co. as
of  December  31, 1998, and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

As  discussed  in  Note  B  to  the  financial  statements,  the Company adopted
Statement  of  Financial Accounting Standards No. 131, Disclosure about Segments
of  an  Enterprise and Related Information, in 1998.  We audited the adjustments
necessary  to  restate  the 1997 segment information provided in Note P.  In our
opinion,  such  adjustments  are  appropriate  and  have  been properly applied.

                                                          "Fitts, Roberts & Co."

Houston, Texas
June 17, 1999
                                       20
<PAGE>

<TABLE>
<CAPTION>

BALANCE  SHEETS
ESCO  TRANSPORTATION  CO.
December  31,  1998  and  1997

                                     ASSETS


                                                     1998          1997
                                                 ------------  ------------
<S>                                              <C>           <C>
CURRENT ASSETS
   Cash and cash equivalents (pledged - Note C)  $    25,833   $    22,678
   Accounts receivable - net (Note C)              5,755,857     2,282,893
   Truck maintenance supplies                        106,058             -
   Employee advances and driver loans                122,697        53,680
   Notes receivable - shareholders (Note D)           51,293        20,000
   Prepaid license fees                               28,307             -
   Prepaid use taxes                                  22,825             -
   Other prepaid expenses                             70,608             -
   Prepaid insurance                                  36,597        36,597
   Deposits                                            6,000         6,000
   Surety bonds                                            -        20,000
   Escrow - treasury stock                                 -       124,780
                                                 ------------  ------------
               TOTAL CURRENT ASSETS                6,226,075     2,566,628
                                                 ------------  ------------

PROPERTY AND EQUIPMENT
   Land                                              706,370       385,019
   Buildings                                          13,554       323,228
   Office equipment                                  300,007       210,338
   Communications equipment                          356,869       353,281
   Furniture and fixtures                             30,133        29,483
   Trucks, tractors and trailers                   9,099,802     9,145,654
   Yard equipment                                    397,539       164,534
                                                 ------------  ------------
                                                  10,904,274    10,611,537
   Less accumulated depreciation                  (2,785,694)   (1,511,048)
                                                 ------------  ------------
                                                   8,118,580     9,100,489
                                                 ------------  ------------

OTHER ASSETS
   Oil and gas properties - net (Note B)              28,717        34,692
   Prepaid insurance - net of current portion         64,500       101,097
   Covenant not to compete, net (Note E)             104,373             -
                                                 ------------  ------------
                                                     197,590       135,789
                                                 ------------  ------------

               TOTAL ASSETS                      $14,542,245   $11,802,906
                                                 ============  ============

</TABLE>

The  accompanying  notes  are  an  integral  part
   of  these  financial  statements.


                                       21
<PAGE>
<TABLE>
<CAPTION>
                                 LIABILITIES AND
                              STOCKHOLDERS' EQUITY


                                                       1998          1997
                                                   ------------  ------------
<S>                                                <C>           <C>
CURRENT LIABILITIES
   Notes payable to stockholders (Note F)          $         -   $    70,319
   Accounts payable - trade                            756,895       375,213
   Bank overdrafts                                           -       280,715
   Accrued payroll and other                           263,960       382,962
   Driver escrow                                        49,933        39,916
   Amounts due factor (Note C)                       6,434,481     1,262,094
   Current portion of long-term debt (Note F)        1,860,814     1,807,738
                                                   ------------  ------------
               TOTAL CURRENT LIABILITIES             9,366,083     4,218,957
                                                   ------------  ------------

LONG-TERM DEBT - net of current
   portion (Note F)                                  4,978,916     6,645,188
                                                   ------------  ------------

DEFERRED INCOME TAXES (Note H)

COMMITMENTS (Note G)

STOCKHOLDERS' EQUITY
   Common stock, $.0001 par value;
      20,000,000 shares authorized; issued and
      outstanding - 12,527,612 in 1998 and
      12,176,760 in 1997                                 1,569         1,218
   Additional paid in capital                          931,906       863,818
   Retained earnings (deficit)                        (318,844)       77,725
                                                   ------------  ------------
                                                       614,631       942,761
   Less treasury stock, at cost                         (4,000)       (4,000)
                                                   ------------  ------------
                                                       610,631       938,761
   Less note receivable from shareholder (Note M)     (413,385)            -
                                                   ------------  ------------
                                                       197,246       938,761
                                                   ------------  ------------


               TOTAL LIABILITIES AND
                  STOCKHOLDERS' EQUITY             $14,542,245   $11,802,906
                                                   ============  ============
</TABLE>

The  accompanying  notes  are  an  integral  part
   of  these  financial  statements.


                                       22
<PAGE>
<TABLE>
<CAPTION>

STATEMENTS  OF  INCOME
ESCO  TRANSPORTATION  CO.
Years  ended  December  31,




                                              1998          1997
                                          ------------  ------------
<S>                                       <C>           <C>
REVENUE
   Freight revenue                        $27,231,313   $22,733,933
   Oil and gas revenue                          5,143         8,055
                                          ------------  ------------
              TOTAL REVENUE                27,236,456    22,741,988
                                          ------------  ------------

EXPENSES
   Cost of freight revenue                 18,405,735    15,916,496
   General administrative expenses          6,719,839     5,146,071
   Depreciation and depletion               1,415,866     1,064,098
                                          ------------  ------------
TOTAL EXPENSES                             26,541,440    22,126,665
                                          ------------  ------------
             OPERATING INCOME                 695,016       615,323

OTHER INCOME (EXPENSE)
   Interest income                              8,350         1,713
   Other income                                11,700        16,303
   Interest expense                        (1,265,704)     (938,961)
  Gain (loss) on sale of assets               154,069       (18,724)
                                          ------------  ------------
                                           (1,091,585)     (939,669)
                                          ------------  ------------
               NET INCOME (LOSS) BEFORE
                  INCOME TAXES               (396,569)     (324,346)

Income tax benefit (expenses)                       0             0
Deferred Current                                    0        96,241
                                          ------------  ------------

               NET (LOSS)                 $  (396,569)  $  (228,105)
                                          ============  ============


Net (loss) per common share               $     (0.03)  $     (0.02)
                                          ============  ============


Weighted average number of shares
   outstanding                             12,495,694    11,938,736
</TABLE>

The  accompanying  notes  are  an  integral  part
   of  these  financial  statements.


                                       23
<PAGE>
<TABLE>
<CAPTION>
STATEMENT  OF  CHANGES  IN  STOCKHOLDERS'  EQUITY
ESCO  TRANSPORTATION  CO.
Year  ended  December  31,  1998  and  1997


                                                                                        Note
                              Common Stock       Additional    Retained              Receivable
                        ----------------------    Paid-In      Earnings   Treasury     from
                           Shares      Amount     Capital     (Deficit)    Stock     Shareholder     Total
                        ------------  --------  ------------  ----------  --------  -------------  ----------
<S>                     <C>           <C>       <C>           <C>         <C>       <C>            <C>
BALANCE AT
   DECEMBER 31,
   1996                    1,092,676  $  1,093  $   363,943   $ 305,830   $(4,000)                 $ 666,866

Ten (10) for one (1)
   stock split             9,834,084
Issuance of common
   stock                   1,250,000       125      499,875                                          500,000
Net (loss)                                                     (228,105)                            (228,105)
                        ------------  --------  ------------  ----------  --------                 ----------
      BALANCE AT
         DECEMBER 31,
         1997             12,176,760     1,218      863,818      77,725    (4,000)                   938,761

Correction                   174,352       174         (174)
Issuance of common
   stock                     176,500       177       68,262                                           68,439
Issuance of note
   receivable from
   shareholder                                                                      $   (413,385)   (413,385)
Net (loss)                                                     (396,569)                            (396,569)
                        ------------  --------  ------------  ----------  --------  -------------  ----------

      BALANCE AT
         DECEMBER 31,
         1998             12,527,612  $  1,569  $   931,906   $(318,844)  $(4,000)  $   (413,385)  $ 197,246
                        ============  ========  ============  ==========  ========  =============  ==========
</TABLE>

The  accompanying  notes  are  an  integral  part
   of  these  financial  statements.


                                       24
<PAGE>
<TABLE>
<CAPTION>

STATEMENTS  OF  CASH  FLOWS
ESCO  TRANSPORTATION  CO.
Years  ended  December  31,



                                                         1998             1997
                                                    ---------------  ---------------
<S>                                                 <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net (loss)                                       $     (396,569)  $     (228,105)
  Adjustments to reconcile net (loss) to net cash
      provided by operating activities:
         Depreciation, and depletion                     1,415,866        1,064,098
        Allowance for bad debt expense                      (8,855)         324,100
        (Gain) loss on sale of equipment                  (154,069)          18,724
  Deferred Income Taxes                                          0                0
  Changes in operating assets and liabilities:
      (Increase) decrease in accounts receivable           251,338         (163,523)
      (Increase) in supplies inventory                    (106,057)               -
     Decrease (increase) in prepaid expenses               (84,314)          (7,855)
     Decrease (increase) in other assets                   144,780         (224,460)
      (Decrease) increase in accounts payable and
         accrued expenses                                  271,868          312,775
     (Decrease) in federal income tax payable                    -          (54,806)
     (Decrease) in deferred income taxes payable                 -          (41,435)
                                                    ---------------  ---------------
               NET CASH PROVIDED BY OPERATING
                  ACTIVITIES                             1,333,988          999,513
                                                    ---------------  ---------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Advances to contract haulers                            (69,017)               -
  Loans made to shareholders                              (735,147)               -
  Payments received from shareholders                      220,150           25,015
  Covenant not to compete                                 (156,560)               -
  Purchases of property and equipment                     (920,817)        (255,827)
  Sale of property and equipment                           699,090           59,802
                                                    ---------------  ---------------
               NET CASH (USED) BY INVESTING
                  ACTIVITIES                        $     (962,301)  $     (171,010)
                                                    ---------------  ---------------
</TABLE>

The  accompanying  notes  are  an  integral  part
   of  these  financial  statements.


                                       25
<PAGE>
<TABLE>
<CAPTION>

STATEMENTS  OF  CASH  FLOWS  -  continued
ESCO  TRANSPORTATION  CO.
Years  ended  December  31,



                                                       1998          1997
                                                   ------------  ------------
<S>                                                <C>           <C>
CASH FLOWS FROM FINANCING ACTIVITIES
   Financing of operations from bank overdraft
      (repayment)                                     (280,715)       19,245
  Advances from factor, net of collections           1,456,940             -
  Proceeds from long-term debt and notes payable
      to stockholder                                   490,000             0
  Payments on long-term debt and notes payable
      to stockholders                               (2,103,196)   (1,345,520)
  Issuance of common stock                              68,439       500,000
                                                   ------------  ------------
               NET CASH FLOWS (USED) BY
                  FINANCING ACTIVITIES                (368,532)     (826,275)
                                                   ------------  ------------

               NET INCREASE IN CASH AND
                  CASH EQUIVALENTS                       3,155         2,228

Cash and cash equivalents balance at beginning
   of year                                              22,678        20,450
                                                   ------------  ------------

               CASH AND CASH EQUIVALENTS
                  BALANCE AT END OF PERIOD         $    25,833   $    22,678
                                                   ============  ============



Supplemental schedule of non-cash investing and
   financing activities:
      Debt incurred to purchase property and
         equipment                                               $ 4,932,154
                                                                 ============
</TABLE>

The  accompanying  notes  are  an  integral  part
   of  these  financial  statements.


                                       26
<PAGE>
NOTES  TO  FINANCIAL  STATEMENTS
ESCO  TRANSPORTATION  CO.



NOTE  A.   ORGANIZATION

ESCO  Transportation  Co.,  (the  "Company")  was incorporated under the name of
Power  Oil  Company  in  1916  in  West  Virginia.  In  1992,  the  Company  was
reincorporated  as  a  Delaware  corporation.  The Company changed its name from
"Power  Oil  Company"  to  "ESCO  Trans-  portation  Co."  in  1994.

ESCO  Transportation,  Inc.,  a  wholly-owned subsidiary of  ESCO Transportation
Co.,  was  incorporated on May 26, 1993 and acquired certain assets, liabilities
and  transportation  contracts from ESCO Transportation (a Proprietorship) as of
May  31,  1993.

On  October  20, 1993, the Company's Board of Directors authorized a one-for-ten
reverse stock split for all outstanding shares of its common stock.  On December
14,  1993,  Power  Oil  Company  acquired  all of the outstanding shares of ESCO
Transportation,  Inc.  (ESCO)  in exchange for the issuance of 875,000 shares of
common  stock.  The stock of ESCO Transportation, Inc. was acquired as described
in  the plan and agreement of reorganization dated October 20, 1993 and was held
as  a  wholly-owned subsidiary.  For accounting purposes, ESCO was the acquiror.
Accordingly,  the  merger  was accounted for as a reverse acquisition on the "as
if"  pooling  of  interest  basis.  On  November 14, 1994 the Company's Board of
Directors  voted to (1) change the name of the company from Power Oil Company to
ESCO  Transportation Co. and (2) institute a one-for-four reverse stock split on
the  Company's  common  stock.

The  Company  maintains  two  divisions  with  distinct  transportation services
offered  by  each.  The  Company's Intermodal division primarily hauls container
and piggyback shipments between shipping locations and railroads or ports.  This
division  operates  out  of  facilities  in Houston, Texas; Ontario, California;
Memphis,  Tennessee  and  Dallas,  Texas.  The  company  also  maintains  an
Over-The-Road  division  that performs long haul services for numerous customers
within  the  United  States.  The  main  office  for this division is located in
Springdale,  Arkansas.  The  Company's  corporate  office is located in Houston,
Texas.




NOTE  B.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

Basis  of  Accounting
---------------------

Income  and  expenses  are  recorded  on  the  accrual  method of accounting for
financial  and  federal  income  tax  reporting  purposes.


                                       27
<PAGE>
NOTES  TO  FINANCIAL  STATEMENTS  -  continued
ESCO  TRANSPORTATION  CO.



NOTE  B.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  -  CONTINUED

Use  of  Estimates
------------------

The  preparation  of  financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect  reported  amounts  and related disclosures.  Actual results could differ
from  these  estimates.  Management  believes that the estimates are reasonable.

Revenue  Recognition
--------------------

Revenue  and  direct  costs  are  recognized  when  the  shipment  is completed.

Cash  and  Cash  Equivalents
----------------------------

For  purposes of the statements of cash flows, the Company considers all cash on
hand,  cash  in bank (demand deposits), savings accounts, cash held in brokerage
accounts  and  highly liquid debt instruments purchased with a maturity of three
months  or  less  to  be  cash  and  cash  equivalents.

Property  and  Equipment
------------------------

Property,  plant  and equipment are carried at cost.  Depreciation for financial
reporting  purposes  has  been  computed  on  the  straight-line method over the
estimated  useful  lives  of  the assets which range from three to twenty years.

Accelerated  methods  of  depreciation  are used for computation of depreciation
expense  for  income  tax  reporting  purposes.

Depreciation  expense  for  the  years  ended  December  31,  1998  and 1997 was
$1,409,891  and  $1,058,114,  respectively.

Oil  and  Gas  Properties
-------------------------

The  Company accounts for its oil and gas exploration and development activities
using  the  successful  efforts  method.  Under  this  method  of  accounting,
exploratory  drilling costs which result in the discovery of proved reserves are
capitalized.  All  other exploratory costs, including geological and geophysical
costs,  are  expensed when incurred.  Developmental costs, including development
of  dry  holes,  are  capitalized  when  incurred.



                                       28
<PAGE>
NOTES  TO  FINANCIAL  STATEMENTS  -  continued
ESCO  TRANSPORTATION  CO.



NOTE  B.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  -  CONTINUED

Depletion  of  capitalized  costs  on  producing  properties  is  computed  on a
property-by-property  basis  utilizing the unit-of-production method.  Depletion
expense  was  $5,975  for  1998  and  $5,984  for  1997.

Lease  acquisition costs are capitalized when incurred.  Leasehold impairment is
recognized  through  a  charge  to operations if the lease expires or management
decides  to  abandon  the  Company's  interest.

When  assets  are retired, abandoned or otherwise disposed of, the related costs
and  accumulated depreciation are removed from the accounts, and gain or loss is
included  in  income.

Income  Taxes
-------------

The Company uses the liability method of accounting for income taxes under which
deferred  tax  assets  and  liabilities  are recognized for deductible temporary
differences.  Temporary  differences  are  the  differences between the reported
amounts  of assets and liabilities and their tax bases.  Deferred tax assets are
reduced  by a valuation allowance when, in the opinion of management, it is more
likely  than not that some portion or all of the deferred tax assets will not be
realized.  Deferred  tax  assets and liabilities are adjusted for the effects of
changes  in  tax  laws  and  rates  on  the  date  of  enactment.

Net  Income  Per  Share
-----------------------

Net  income  per  common share is based on the weighted average number of shares
outstanding during the year.  All share and per share amounts have been adjusted
to  reflect  the  stock  splits.

Concentrations  of  Credit  Risk
--------------------------------

Financial  instruments that potentially subject the Company to concentrations of
credit  risk  consist  principally  of trade accounts receivable.  In the normal
course  of  business  the Company grants credit without collateral to customers.
Consequently, the Company's ability to collect the amounts due from customers is
affected  by  economic  conditions.

Fair  Value  of  Financial  Instruments
---------------------------------------

The  Company  has  a number of financial instruments, none of which are held for
trading  purposes.  The  Company  estimates that the fair value of all financial
instruments  at  December 31, 1998 does not differ materially from the aggregate
carrying  values  of  its  financial  instruments  recorded  in the accompanying
balance  sheet.  The  estimated  fair  value amounts have been determined by the

                                       29
<PAGE>
NOTES  TO  FINANCIAL  STATEMENTS  -  continued
ESCO  TRANSPORTATION  CO.



NOTE  B.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  -  CONTINUED

Company  using  available  market  information  and  appropriate  valuation
methodologies.  Consid-  erable judgment is necessarily required in interpreting
market  data  to  develop  the  estimates  of  fair  value and, accordingly, the
estimates  are  not necessarily indicative of the amounts that the Company could
realize  in  a  current  market  exchange.

Restatements
------------

Certain  reclassifications  of amounts reported in the prior year have been made
to  conform  to  the  current  year  presentation.

New  Accounting  Standard
-------------------------

Effective  January  1,  1998,  the  Company  adopted  FASB  Statement  No.  131,
Disclosures  about Segments of an Enterprise and Related Information.  Statement
No.  131 superseded FASB Statement No. 14, Financial Reporting for Segments of a
Business  Enterprise.  Statement  No. 131 establishes standards for the way that
public  business  enterprises  report  information  about  operating segments in
annual  financial statements and requires that those enterprises report selected
information  about  operating  segments in interim financial reports.  Statement
No.  131  also  establishes standards for related disclosures about products and
services,  geographic areas, and major customers.  The adoption of Statement No.
131  did  not  affect  results  of  operations  or  financial  position.




NOTE  C.   ACCOUNTS  RECEIVABLE

Accounts  receivable  are  comprised  of  the  following:

<TABLE>
<CAPTION>
                                        December 31,
                                  ------------------------
                                      1998        1997
                                  -----------  -----------
<S>                               <C>          <C>
Receivables assigned to factor    $5,423,273   $1,473,656
Unfactored accounts receivable       670,165    1,063,617
Accrued unbilled revenue             132,167      226,128
Other                                  2,505          600
Allowances for doubtful accounts    (472,253)    (481,108)
                                  -----------  -----------

                                  $5,755,857   $2,282,893
                                  ===========  ===========

Amounts due factor                $6,434,481   $1,262,094
                                  ===========  ===========
</TABLE>


                                       30
<PAGE>
NOTES  TO  FINANCIAL  STATEMENTS  -  continued
ESCO  TRANSPORTATION  CO.



NOTE  C.   ACCOUNTS  RECEIVABLE  -  CONTINUED

Pursuant  to  a  factoring  agreement,  the  Company factors all of its accounts
receivables.  The  Company  repurchases all factored accounts receivable over 90
days  old.  The  factor  withholds  a  reserve  of  10%  of  the uncollected and
unrepurchased  accounts.  Some  payments are made directly to the Company rather
than  the factor which become an obligation due the factor.  Included in amounts
due  factor  are  payments received directly by ESCO from customers amounting to
$1,456,940 at December 31, 1998.  The factor has a security interest in accounts
receivable  purchased  by the factor.  The Company's obligation to the factor is
guaranteed  by  the  majority  shareholder,  who is also an officer, and another
officer of the Company.  Approximately $294,729 in cash deposits with the factor
at  December  31, 1998 were also subject to the security interest of the factor.
Due  primarily to the repurchase feature of the factoring agreement, the Company
accounts for the factored accounts receivable as a secured borrowing rather than
a  sale.  Many  receivables  are  not  collected  within  90 days and have to be
repurchased  by  the  Company.




NOTE  D.   NOTES  RECEIVABLE  -  SHAREHOLDERS

The  Company  advanced  funds  and  issued stock to a shareholder and his family
members  as  discussed  in  Note M, Related Party Transactions.  At December 31,
1998,  $464,678  remained owed to the Company evidenced by two notes.  The notes
receivable  signed December 31, 1998, including 7% interest, are payable in full
on  or  before  December  31,  1999  and  are  secured by ESCO common stock.  No
interest  was  paid  or  accrued  on  these  notes  in  1998.




NOTE  E.   COVENANT  NOT  TO  COMPETE

On  April  22,  1998,  the  Company  acquired  most  of the assets of Intermodal
Logistics  Company,  Inc.  ("ILC") for approximately $337,900, of which $156,560
was  payment  for  a  two  year  agreement  not  to  compete  to  ILC's majority
shareholder.  Amortization  expense  for  1998  was $52,187 on the straight-line
basis  for  24 months prorated for 1998.  The remainder of the purchase cost was
for  equipment  and  supplies.



                                       31
<PAGE>
NOTES  TO  FINANCIAL  STATEMENTS  -  continued
ESCO  TRANSPORTATION  CO.



NOTE  F.   LONG-TERM  DEBT

The Company's long-term debt was acquired to purchase property and equipment and
consists  of  the  following  major  classes:

Stockholder  Notes  Payables
----------------------------

In  1997  loans from stockholders were obtained to meet short-term needs.  These
notes  were  non-interest  bearing  and  unsecured.

Notes  Payables
---------------

Loans  from  banks and finance companies for the purchase of equipment.  Most of
these  notes  bear  interest  rates between 9.5% to 11.5% and are secured by the
equipment  purchased  with  them.

Capital  Leases  Payables
-------------------------

The  Company  has  entered  into  several lease agreements for equipment.  These
leases  are  classified  as capital leases and the equipment is recognized under
property  and  equipment  and  depreciated by the Company in accordance with its
depreciation  policy.  The  interest  rate  under these leases are between 7% to
12.3%.  The  leases  are  secured  by  the  equipment  acquired  by  them.

Mortgages  Payable
------------------

The  Company has acquired two (2) pieces of property in Springdale, Arkansas and
Houston,  Texas.  The  interest  rates  for these properties are between 8.0% to
10.5%.  Each  mortgage  is  secured  by  the  property.

The  following  schedule  summarizes  the  Company's  long-term  debt:

<TABLE>
<CAPTION>
                                               1998         1997
                                            ----------  ----------
<S>                                         <C>         <C>
Stockholder notes payable                   $        -  $   70,319
Notes payable                                5,748,826   7,320,290
Capital leases payable (net present value)     513,680     639,664
Mortgages payable                              577,224     492,972
                                            ----------  ----------

                                            $6,839,730  $8,523,245
                                            ==========  ==========
</TABLE>


                                       32
<PAGE>
NOTES  TO  FINANCIAL  STATEMENTS  -  continued
ESCO  TRANSPORTATION  CO.



NOTE  F.   LONG-TERM  DEBT  -  CONTINUED

Maturities  of  long-term  debt  are  as  follows:

<TABLE>
<CAPTION>
<S>         <C>
1999        $1,860,814
2000         2,056,029
2001         1,880,777
2002           618,134
2003            11,563
Thereafter     412,413
            ----------

            $6,839,730
            ==========
</TABLE>

NOTE  G.   CONTRACTS  AND  COMMITMENTS

The  Company  leases  equipment  under  noncancelable  operating  leases.  Lease
expense incurred for 1998 and 1997 was $380,234 and $404,525, respectively.  The
Company's minimum rental commitments under this noncancelable operating lease as
of  December  31,  1998  were  as  follows:

<TABLE>
<CAPTION>
<S>    <C>
1999   $453,377
2000    391,474
2001    202,028
2002    185,742
2003    140,742
Later    63,828
</TABLE>

NOTE  H.   FEDERAL  INCOME  TAXES

At  December  31,  1998  and  1997,  the  Company  had  net operating loss (NOL)
carryforwards  for  federal  income tax purposes of approximately $2,987,000 and
$2,084,000,  which  expire  in  years  2001  through  2018.



                                       33
<PAGE>
NOTES  TO  FINANCIAL  STATEMENTS  -  continued
ESCO  TRANSPORTATION  CO.



NOTE  H.   FEDERAL  INCOME  TAXES  -  CONTINUED

Management  believes  that  previous  changes  in stock ownership resulted in an
ownership  change  as defined in Section 382 of the Internal Revenue Code (IRC),
as  amended.  The  net operating loss carryforwards generated in the years prior
to  the  ownership  change  which  are  subject to Section 382 limitations total
$195,000.  Management  believes these operating loss carryforwards are available
to  offset  future  taxable  income  of  the  Company in each year following the
change,  but  the offsets will be limited under the provisions of Section 382 of
the  IRC.  The amount of such limitation is expected to be approximately $35,000
each year.  The Company's NOL carryforwards generated after the ownership change
in  the  amount  of  $2,792,000  are  available  to offset future taxable income
through  the  dates  of  expiration  without  the  limitations  of  Section 382.

The  Company  has  not  reported  benefits  from  NOL  carryforwards  because of
uncertainties  concerning  realization  of  the loss carryforwards.  A valuation
allowance  has  been  provided  for  the  full  amount of the deferred tax asset
arising  from  such  net operating loss carryforwards.  The effective income tax
rate  varies  from the statutory federal income tax rate due to certain expenses
which  primarily  are  not  deductible  for  tax  purposes.




NOTE  I.   MAJOR  CUSTOMERS

Sales  to  major  customers  were  as  follows:

<TABLE>
<CAPTION>
Customer              1998  1997
--------------------  ----  ----
<S>                   <C>   <C>
      A                17%   17%
      B                11%   12%
      C                10%    9%
      D                 6%   17%
      E                 5%    2%
      F                 5%    6%
                      ----  ----

               TOTAL  54%    63%
                      ====  ====
</TABLE>


                                       34
<PAGE>
NOTES  TO  FINANCIAL  STATEMENTS  -  continued
ESCO  TRANSPORTATION  CO.



NOTE  J.   SUPPLEMENTAL  DISCLOSURES  OF  CASH  FLOW  INFORMATION

Supplemental  cash  flow  information:

<TABLE>
<CAPTION>
                   December  31,
               --------------------
                  1998       1997
               ----------  --------
<S>            <C>         <C>
Interest paid  $1,294,323  $870,836
</TABLE>

NOTE  K.   CONTINGENT  LIABILITIES

Due  to  the  nature  of  the  Company's  business, it is a defendant in various
lawsuits.  Some  of  the  matters  discussed  below  are  covered  by insurance.

Pacific Business Capital Corporation, a secured creditor of Intermodal Logistics
Co. ("ILC") (Note E), has sued the Company and an employee of the Company in the
Chancery  Court  of  Shelby  County,  Tennessee,  asserting  a  violation of the
security  interest  in  certain  accounts  receivable  of  ILC.

Intercargo  Insurance  Company  is  suing  numerous  defendants,  including  the
Company,  over  misdelivering a load it insured.  The Company is also subject to
cross-claims  by some of the other defendants.  The suit and counter-claims were
filed  in  United  States  District  Court,  Central  District  of  California.

A  former  cleaning  person  for the Company's leased premises in California has
sued the Company and others in the Superior Court of the State of California for
the  County  of  San  Bernadino  for alleged injuries on the Company's premises.

While  it  is not possible to predict with certainty the outcome of these cases,
it  is  the  opinion  of  management that these lawsuits, claims and proceedings
which  are  pending  against  the  Company  are without merit or will not have a
material  adverse  effect  on  the  Company's  operating  results,  liquidity or
financial  position.


                                       35
<PAGE>
NOTES  TO  FINANCIAL  STATEMENTS  -  continued
ESCO  TRANSPORTATION  CO.



NOTE  L.   FINANCIAL  RESULTS  AND  LIQUIDITY

The  Company  has  incurred  net losses and working capital deficits in 1997 and
1998.  To  address these problems, management plans to increase profitability by
implementing  budgetary  controls,  accountability  procedures,  and  improving
billing.  Management also plans to improve cash flows through better collections
of  accounts receivable and reduce short-term debt.  In addition, management has
obtained  written  assurance  from  its  factoring source to continue to provide
working  capital  financing  through  December  31,  1999.




NOTE  M.   RELATED  PARTY  TRANSACTIONS

In  May  1998,  the  Company  purchased 4,000,000 shares of the Company's common
stock for $1,198,000 or 29.95 cents per share, from a related party, in exchange
for  a  note,  including interest, to be paid over eight years.  On December 31,
1998,  the  chief  executive  officer  and  majority  stockholder of the Company
assumed  the  promissory  note,  which  then  had  a balance due of $960,000, in
exchange  for  3,200,000  shares  of  the Company's common stock.  An additional
800,000  shares  was  also  issued  to  the  same individual at the same time in
exchange  for  a  note  receivable back to the Company for $265,991.  Additional
loans  from  the  Company  to  this shareholder and his immediate family members
totaled  $469,156,  less  $70,319  owed to the shareholder of which $200,150 was
repaid  during 1998, resulting in an ending balance receivable by the Company of
$464,678 at December 31, 1998.  $413,385, which is related to the stock purchase
is  shown  as  a  reduction  in  shareholders'  equity.

A manager of the Company provided computer consulting services to the Company in
1998  and  was  paid  approximately  $102,000 for these services, which included
sales  of  hardware  to  the  Company.




NOTE  N.  EMPLOYEE  BENEFITS  PLAN

The  Company  established  a  defined  contribution  profit sharing plan for the
benefit  of  its  employees in 1998.  There were no Company contributions, which
are  voluntary,  in  1998.


                                       36
<PAGE>
NOTES  TO  FINANCIAL  STATEMENTS  -  continued
ESCO  TRANSPORTATION  CO.



NOTE  O.   SUBSEQUENT  EVENTS

Subsequent  to  year end, the Company agreed to grant to a key employee a series
of  five  stock  options ranging from 25,000 shares to 50,000 shares at $.25 per
share  contingent  on  the  accomplishment  of  certain  milestones  relating to
restructuring  debt  and  profitability.  Each  option will be granted within 30
days  of  the accomplishment of the event and exercisable within one year of the
issuance  date.  Options  for  225,000  shares  could  be  granted  under  this
agreement.

At  management's  discretion,  a  stock  bonus was awarded on January 1, 1999 of
126,500  shares  to  employees with two years of service based on their position
with  the  Company.  Individual  awards ranged from 25,000 shares to 500 shares.

In  January  1999,  the  Board of Directors of the Company authorized changes to
bylaws  which, among other things, increased the authorized capital stock of the
Company  to  $35,000  consisting  of  20  million  shares of common stock and 15
million  shares  of  preferred  stock  at  a  par  value  of  $.001  per  share.

In  February  1999,  1,200,000  shares  of  common  stock  were  issued to a new
executive  pursuant  to  an employment agreement subject to a three year vesting
arrangement  which  causes  the  executive  to  forfeit  a  portion of the stock
previously issued in the event of termination of employment for certain reasons.
The  agreement also obligates the Company to pay the executive's base salary for
three  years  as  long  as  the  agreement  is  in  effect.




NOTE  P.  SEGMENT  INFORMATION  -  ENTERPRISE  WIDE  DISCLOSURES

The  following  table  presents 1998 revenue from external customers for each of
the  Company's  groups  of  services.  In  1997,  the  Company  did not maintain
summarized  internal  records of revenue by service to external customers and it
would  be  impractical  to  reconstruct  this  information.

<TABLE>
<CAPTION>
<S>            <C>
Intermodal     $14,031,980
Over-The-Road   11,325,768
Other            1,878,708
               -----------

               $27,236,456
               ===========
</TABLE>


                                       37
<PAGE>
NOTES  TO  FINANCIAL  STATEMENTS  -  continued
ESCO  TRANSPORTATION  CO.



NOTE  P.  SEGMENT  INFORMATION  -  ENTERPRISE  WIDE  DISCLOSURES  -  CONTINUED


The following table presents information about the Company's revenue (attributed
to  countries  based  on  the location of the customer) and long-lived assets by
geographic  area:

<TABLE>
<CAPTION>
                         1998                      1997
               ------------------------  ------------------------
                            Long-Lived                Long-Lived
                 Revenue      Assets       Revenue      Assets
               -----------  -----------  -----------  -----------
<S>            <C>          <C>          <C>          <C>
United States  $27,236,456  $ 8,586,565  $22,741,988  $ 9,298,875
               ===========  ===========  ===========  ===========
</TABLE>

Customers  providing  revenue  of  10  percent  or  more  were:

<TABLE>
<CAPTION>
               1998        1997
            ----------  ----------
<S>         <C>         <C>
Customer A  $5,087,384  $3,870,000
Customer B   3,099,813   3,870,000
Customer C   2,817,415   2,729,000
</TABLE>


                                       38
<PAGE>