U. S. SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C. 20549
                                     FORM 10-KSB

 Annual report pursuant to Section 13 or 15(d) of the
 Securities and Exchange Act of 1934

 For the fiscal year ended November 30, 1997

 Commission file number 0-3492

                          RESERVE INDUSTRIES CORPORATION
                   (Name of Small Business Issuer in its charter)

             NEW MEXICO                       85-0128783       
 (State or other jurisdiction of    (I.R.S. Employer Identification No.)
  Incorporation or Organization)

 20 First Plaza, Suite 308, Albuquerque, New Mexico         87102
    (Address of principal executive offices)             (Zip Code)

                            505-247-2384
             Issuer's telephone number, including area code

  Securities registered pursuant to Section 12(b) of the Act: none
  Securities registered pursuant to Section 12(g) of the Act:  

                       Common stock, $1.00 Par Value
                           Title of each class

Check whether the issuer: (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 and (2) has been subject
to such filing requirements for the past 90 days.

  Yes      X        No                 

Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B 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 10KSB. X

State the issuer's revenues from continuing operations for
its most recent fiscal year.  $3.6 million

State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the
stock was sold, or the average bid and asked prices of such
stock, as of a specified date within the past 60 days.  As of
February 19, 1998  $221,462.

State the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest practicable
date.  As of February 19, 1998,  3,203,763   $1.00 Par Value
<PAGE>
                                   PART I

Item 1.  Description of Business

(a)       Business Development.  Reserve Industries Corporation,
          a New Mexico Corporation incorporated in 1957, (the "Registrant")
          is engaged in the mining and sale of  silica sand.  The
          Registrant conducts these operations in the USA.  In addition,
          the Registrant holds several properties with mineral potential
          and has equity interests in operations that supply services and
          products to the steel industry and in operations in the Far East
          that process waste slag from the smelting of copper into various
          abrasive products used by the ship repair industry.

               The Registrant mines and processes silica sand, through its
          wholly owned subsidiary Reserve Silica Corporation (Reserve
          Silica), located in Ravensdale, Washington, southeast of Seattle,
          .   The mine run sand is extracted from open pit mines located on
          Reserve Silica's land and is transported to an adjacent sand
          processing plant.  The wet plant crushes, washes and separates
          the clay from the mine run sand and classifies the sand into
          several products.  The wet sand products are marketed to the
          cement industry and to golf courses for sand traps.  The facility
          also incorporates a drying plant, which further processes the wet
          sand into  a dried silica sand for the glass container industry.
          Reserve Silica is working to develop other silica sand products
          to serve other markets.  For the past two years, Reserve Silica
          has been upgrading and replacing the equipment in  both the wet
          plant and drying plant.  All of the equipment for the wet plant
          upgrade was purchased and installed during 1996.  The new dust
          control and air handling equipment to upgrade the drying plant
          was installed during  1997. 

               The Registrant, through its wholly owned subsidiaries
          Reserve Rossborough  Corporation (Reserve Rossborough) and
          Reserve Rossborough Ventures Corporation (Reserve Rossborough
          Ventures), owns an equity interest in Rossborough Manufacturing
          Co. L.P. (Rossborough), of Avon Lake, Ohio.  A description of
          ownership is described in footnote 5 of the notes to the
          consolidated financial statements.  Rossborough provides products
          and services to the primary steel industry and is a major
          supplier of  magnesium based reagent compounds used to externally
          desulfurize hot iron metal.  External desulfurization of hot
          metal iron is its primary business segment of the Partnership.
          Rossborough has a magnesium grinding facility located near
          Walkerton, Indiana that processes both magnesium ingots and
          secondary magnesium granules into a size suitable for use in iron
          desulfurization.  The  magnesium granules are blended at both
          Avon Lake and Walkerton with other materials to make the finished
          desulfurization reagents.  Rossborough is one of the three
          primary suppliers of desulfurization services in North America.
          It has been working to expand its international operations and is
          currently operating internationally through joint ventures in
          Japan, Slovakia and Belgium.<PAGE>






               Rossborough's other business segments include the
          manufacture of special refractory lances and slag skimmers used
          in desulfurizing operations; the manufacture of  custom
          desulfurizing reagent injection equipment; the manufacture of  
          molten metal samplers and thermocouples; the exclusive
          distribution of Bimac Inc. ladle powders and slag conditioning
          agents; and the distribution of selected other purchased
          products.   Rossborough is certified under ISO 9001 and 9002

               The Registrant owns a 20% stock interest in JPL Industries
          Pte. Ltd.,  (JPL) a Singapore company organized in 1990.  The
          other shareholders are a subsidiary of Jurong Shipyards Ltd., a
          Singapore company and two Japanese companies, Nippon Mining &
          Metals Company, Ltd. and Mitsui & Company, Ltd. JPL is in the
          waste management business.   JPL operates as a collection and
          treatment center for wastes generated by other industries.  It
          identifies wastes which have the potential to be recycled,
          develops processes to recycle the wastes and coverts the wastes
          into value added products.

               JPL is also in the business of selling processed and
          unprocessed copper slags that are used for abrasive blasting
          purposes.  It has a  recycling facility that processes used
          copper slag abrasives generated by the  Singapore ship repairing
          industry.  The plant mechanically and hydraulically separates
          contaminates from used abrasives.  The recycled abrasives are
          segregated into a coarse size fraction and a fine slag size
          fraction.   The coarse size fraction is combined with new copper
          slag abrasives to make blasting abrasives.  The fine slag
          fraction is used as a raw material in other products such as
          interlocking concrete pavers and as a partial replacement for
          sand and aggregates in ready-mix concrete.  

               During the fall of 1995, JPL authorized the issuance of
          S$12.5 million (Singapore dollars) of interest bearing redeemable
          convertible unsecured loan stocks.  All of these convertible loan
          stocks were subscribed by the first quarter of 1996.  The loan
          was used to finance the second stage of the copper slag
          processing and recycle facility and to expand the concrete paver
          plant.  If the all of the convertible loans are converted into
          common stock, the Registrant's interest will be reduced to
          approximately 7%.

               The Registrant has a number of mineral interests that it
          deals in the normal course of business and below is description
          of the properties currently held.

               The Registrant, through its wholly-owned subsidiary Reserve
          Minerals Corporation (Reserve Minerals), has retained economic
          interests in three uranium joint ventures located in northern
          Saskatchewan, Canada.  The retained interests in the Waterbury
          Lake Joint Venture and the Dawn Lake Joint Venture are net profit
          interests of approximately 0.75% and 1.5%, respectively.  The<PAGE>

          Registrant owns a 1% royalty on its former 9.063% interest on all
          minerals produced in the McArthur River Joint Venture.  Some or
          all of the retained net profits and royalty interests may become
          earning assets in the future.

               The Waterbury Lake Joint Venture includes the Cigar Lake
          deposit, which contains approximately 1.0 million tons of uranium
          mineralization at a grade of 14% and an additional 1.1 million
          tons of uranium mineralization at a grade of 4.5%.  This equates
          to approximately 385 million pounds of uranium concentrate, U3O8.
          The deposit covers an area of approximately 40 acres.  The Cigar
          Lake Mining Corporation, formed by the Waterbury Lake Joint
          Venture, has the responsibility of developing the Cigar Lake
          property.  A special  underground remote mining and transport
          method, which surpasses prevailing safety standards, has been
          developed and successfully tested within the deposit.  The
          venture has made arrangements to have the ore processed at the
          McClean Lake mill currently under construction and located
          approximately 60 kilometers from the orebody.  In 1995, an
          environmental impact statement was submitted for review.  The
          report has been review and was tentatively approved subject to
          certain conditions.  Revisions have been submitted.  Mining is
          dependent on the successful completion of the permitting process
          and the development of favorable markets, which could occur
          before the end of the century.

               The McArthur River Joint Venture continued exploration work
          on the uranium deposit discovered in 1988.  As a result of
          underground exploration drilling, the geologic reserves in the
          property have been increased to 416 million pounds of  U3O8 at an
          average grade of  15% U3O8.  The operator of the property has
          successfully completed the permitting process and has received a
          construction license in August 1997.  Construction is expected to
          continue until October 1999. The mine would replace production
          from the Key Lake deposit and the Key Lake processing mill will
          be used to process the ore.

               The Dawn Lake Joint Venture has a uranium deposit containing
          755,900 tons of uranium mineralization at an average grade of
          1.97%.  This equates to approximately 29.8 million pounds of
          uranium.  

               The Registrant holds various non-producing mineral
          properties in the United States.  In New Mexico it owns the
          mineral rights in a 57,000 acre tract and an 8-1/3%
          non-participating royalty on all the minerals in a 60,000 acre
          tract.  Prior drilling has located some uranium mineralization on
          these tracts.  

               L-Bar Products Incorporated (L-Bar Products),  a
          wholly-owned subsidiary of the Registrant, operated a magnesium
          recovery plant located at Chewelah, Washington, north of Spokane.
          The plant was closed in December 1991.  In March 1995 L-Bar
          Products was placed in Chapter 7 liquidation and a trustee was<PAGE>





          appointed.  Matters pertaining to the L-Bar Products bankruptcy
          case are more fully discussed below (reference Item 3. Legal
          Proceedings).<PAGE>

          (b)  Business of Issuer. The business of the issuer is as
          follows:

              1. The Registrant primarily produces and sells silica sand
                 to the glass, cement and golf course industries.  Further
                 descriptions of the businesses are contained in Item 1.
                 (a) above.

              2. In the majority of cases, the Registrant distributes its
                 products directly to its customers by truck or rail.
                 Some of the golf course bunker sand is sold to
                 distributors.

              3. The Registrant has not publicly announced any new
                 products or services.

              4. For the silica sand operation numerous competitors exist,
                 however competition is limited to regions by the cost of
                 shipping.  The Registrant competes on the basis of
                 keeping prices in line with the competition and
                 maintaining the quality and consistency of the products.

              5. The Registrant acquires the raw materials for the silica
                 sand operation from a silica sand deposit owned by the
                 Registrant and the mine is operated to provide mine run
                 sand as required by operations.  

              6. The Registrant deals with relatively few customers.  For
                 the silica sand business, approximately two-thirds of the
                 sales are made to two long term customers.

              7. There are no patents or trademarks of material importance
                 to the Registrant's business.  Mining claims, leases and
                 crown grants are believed to be held under valid
                 contracts or other evidence of title.

              8. The Registrant does not currently require any new
                 government approval in order to conduct its business.

              9. As with all small and large businesses, the existing and
                 probable governmental regulations are a significant
                 burden, and the cumulative effects are potentially
                 detrimental to business expansion. 

             10. The Registrant has not spent a material amount of funds
                 on research and development.

             11. Federal, state and local laws and regulations relating to
                 protection of the environment effect the Registrant in
                 many areas of its operations.  Except for L-Bar Products,
                 the cost and effects of these laws, in the opinion of
                 management, are currently contained in the Registrant's
                 financial statements.  The State of Washington Department
                 of Ecology (WDOE) (Reference Item 3. Legal Proceedings)
                 requested that L-Bar Products provide financial assurance
                 that the residue pile, accumulated at the Chewelah plant
                 by the previous owners of the plant, can be removed from
                 the site.  L-Bar Products is currently in Chapter 7
                 bankruptcy liquidation, and this matter is currently
                 unresolved.  It is management's opinion that the Company
                 will not be liable for this matter, and in any event any
                 liability can not be estimated, therefore, no amounts
                 have been accrued for this matter in the accompanying
                 financial statements.  The Registrant has also been sued
                 by Northwest Alloys, the generator of the material at the
                 Chewelah plant, to provide reimbursement for its costs
                 for the site remediation that Northwest Alloys has agreed
                 to perform (Reference Item 3. Legal Proceedings). 

             12. The Registrant has 19 full time employees and 1 part time
                 employee.

               Item 2.  Description of Properties

               (a)  Information as to the location of the principal plants
          is forth under Item l. above.  The silica sand mine and
          processing facility is situated on approximately 340 acres and  
          is owned by Reserve Silica.  The mineral property interests are
          described in the table below.

                           RESERVE INDUSTRIES CORPORATION
                                 MINERAL INTERESTS 

                                    Gross         %      Net   Type of
          Location and Mineral      Acres      Interest  Acres Interest
          New Mexico - Uranium
           L-Bar Ranch
           Reserve Tract         57,000      100.00%  57,000(1) Mineral deed
           Exxon Tract           60,000        8.33%   5,000    Royalty
          Other                     552      50-100%     312   Mineral deed
                                117,552               62,312

          Saskatchewan Canada *
            Waterbury Lake Project  234,300 (2)
            Dawn Lake Project       386,800 (2)
            McArthur River Project  211,400 (2)

          * Approximate
          (1) Subject to a 1/24 royalty interest
          (2) The company's interest in these projects is described in  
          Item 1.

               (b)  Investment Policies.  In the normal course of business,
          the Registrant currently does not deal in investments in real
          estate or real estate mortgages.

               (c)  Description of Real Estate and Operating Data.  The
          Registrant does not deal in Real Estate investments and a
          description of its operating properties is contained above.  The
          Registrant believes that its operating properties are adequately
          insured.

          Item 3.  Legal Proceedings

               (a)  Pending legal proceedings

          Northwest Alloys Inc. vs. Reserve Industries Corporation

               On April 28, 1994, a complaint for monetary and declaratory
          relief was filed in the United States District Court for the
          Eastern District of Washington by Northwest Alloys, a wholly
          owned subsidiary of Alcoa, Inc. against the Registrant.<PAGE>

               The complaint alleges causes of action for monetary and
          declaratory relief for breach of contract and statutory
          contribution under the Washington Model Toxics Control Act
          (MTCA).  For its breach of contract claim, Northwest Alloys seeks
          to rely upon an August 2, 1990 guaranty signed by the Registrant,
          which Northwest Alloys claims guarantees payment of the greater
          of (i) up to $2,000,000 for environmental cleanup at the
          Chewelah, Washington site owned and operated by L-Bar Products,
          or (ii) certain loan funds in excess of $2.5 million, plus
          interest, related to L-Bar Products' alleged obligation to repay
          certain loans from Northwest Alloys (estimated by Northwest
          Alloys to be $1,291,481 plus accrued and accruing interest).  For
          the statutory contribution action under the MTCA, Northwest
          Alloys seeks contribution for ongoing remedial costs for alleged
          soil and ground water contamination at the L-Bar Products site in
          Chewelah, Washington.  Contribution is sought from the Registrant
          for past and present costs incurred, and future costs to be
          incurred, by Northwest Alloys to address the alleged soil and
          ground water contamination at the L-Bar Products site.

               The Registrant denies any and all liability alleged in the
          complaint and is contesting the claims.  On June 17, 1994, the
          Registrant filed a counterclaim against Northwest Alloys seeking
          damages for breach of contract, breach of fiduciary duty, and
          declaratory relief regarding environmental cleanup costs at the
          site.

               Northwest Alloys filed a motion for summary judgment to
          enforce the August 2, 1990 guaranty.  The motion was heard before
          the Court on October 4, 1994 and Northwest Alloys' motion was
          denied.  On December 6, 1994 an order was entered staying all
          further proceedings pending the completion of adversary
          proceedings involving the Registrant in L-Bar Product's
          bankruptcy proceedings (see below).

          L-Bar Products Inc. Bankruptcy Proceedings

               On December 13, 1991 L-Bar Products was notified that a
          petition was filed against it for an order of relief under
          Chapter 7 of the United States Bankruptcy Code, in the United
          States Bankruptcy Court for the Eastern District of Washington.
          This petition was filed on behalf of three creditors that had
          performed work on the capital improvements at the L-Bar Products
          plant, prior to plant closure.  On July 13, 1992 L-Bar Products
          filed a reorganization petition under Chapter 11 of the U.S.
          Bankruptcy Code.  The case was consolidated in the Bankruptcy
          Court for the Eastern District of Washington.  On March 15, 1995,
          the bankruptcy was converted to Chapter 7 and a trustee was
          appointed.

               L-Bar Products is continuing to pursue resolution of certain
          claims against Northwest Alloys (see below). 

          L-Bar Products, Inc. vs. Northwest Alloys Inc.

               On August 31, 1994, L-Bar Products filed a complaint for
          breach of contract, breach of fiduciary duty, equitable
          subordination, declaratory relief and recovery of environmental
          cleanup costs against Northwest Alloys.  The complaint was filed
          in the United States Bankruptcy Court for the Eastern District of
          Washington.  On October 21, 1994 Northwest Alloys filed a third
          party claim against the Registrant seeking the same relief as
          requested in the case described above.  On December 30, 1994, the
          Registrant filed a counterclaim against Northwest Alloys seeking
          relief similar to that contained in its counterclaim in the case
          described above.  Because the District Court has stayed all
          proceedings in that action, matters involving claims by and
          against the Registrant, L-Bar Products and Northwest Alloys are
          proceeding in the United States District Court for the Eastern
          District of Washington.  Pre-trial discovery has been underway
          since early 1996 and is expected to be completed in 1998.  The
          trial is scheduled to begin in April 1999.   The court has
          required that each party file its estimate of damages, which are
          subject to further modification.  Northwest Alloys has filed a
          damage claim of approximately $3.4 million for the loan guarantee
          and $4.8 million for environmental cleanup expenses expended
          through December 31, 1997.  The Registrant has filed a damage
          claim for approximately $850,000 and L-Bar Products has filed a
          damage claim in the amount of approximately $22.5 million plus
          punitive damages.  The amount of damages will ultimately be
          determined by the decision of the Court.

               (b)  Pending governmental legal proceedings

          WDOE Proceedings

               The `Washington Department of Ecology (WDOE) named the
          Registrant and L-Bar Products as potentially liable persons (PLP)
          for part of the cleanup related to the Chewelah site.  The basis
          for naming L-Bar Products was its status as site owner/operator.
          The basis for naming the Registrant is the alleged responsibility
          of the parent corporation.  It is management's opinion that the
          Registrant was a separate entity from L-Bar Products and is not
          responsible as a PLP for site contamination. 

               The WDOE has entered into an administrative order with
          Northwest Alloys under which Northwest Alloys has agreed to
          undertake testing at the Chewelah site and prepare a proposed
          remedial plan for cleanup.  L-Bar Products has petitioned the
          Bankruptcy Court for approval to agree to the same order in order
          to cooperate with WDOE.  The WDOE objected to L-Bar's motion and
          no further action has been taken.  The Registrant has declined to
          enter into the order due to its insistence that it is not a PLP
          under the MTCA.

          Item 4.  Submission of Matters to a Vote of Security Holders<PAGE>

               The was no submission to the shareholders during the fourth
          quarter.

                                       PART II

          Item 5.  Market For Common Equity and Related Shareholders
          Matters.

          (a)  Market Information.  The Registrant's common stock is
          currently not publicly traded because the Registrant has elected
          to forgo an audit in order to conserve capital for necessary
          plant improvements and legal fees.  Once the Registrant is in a
          position to do so, it plans to file audited financial statements.
          Prior to August 1992, the Registrant was listed on the NASDAQ
          National Over-the-Counter Market.  Since the Registrant's stock
          is not quoted, the Registrant can not list current prices for its
          stock. 

          (b)  Holders.  On February 19, 1998, the Registrant had
          approximately 800 shareholders. 

          (c)  Dividends.  The Registrant has never paid a dividend.  There
          are currently no restrictions or covenants to limit the ability
          to pay a dividend.

          Item 6.  Management's Discussion and Analysis of Financial
          Condition and Results of Operations.

               Results of Operations.  For the year ended November 30,
          1997, the Registrant had revenues of $3,618,847 which resulted in
          net income of $1,030,682 or $0.28 per share.  For the year ended
          November 30, 1997, the Registrant had revenues of $2,688,392
          which resulted in net income of $207,463 or $0.06 per share.

               The revenues in 1997 increased from 1996 as a result of
          increased equity earnings and a gain on the sale of stock.  The
          sales at the Registrant's silica sand operation decreased by
          $33,696.  The renovation of the sand plant was begun in mid-1995
          and the wet plant was completed during 1997.  The plant
          renovation has improved the efficiency of the wet and dry plant.
          In 1997, approximately $460,000 of the income is attributable to
          reversal of the LIFO inventory valuation  by an affiliate (see
          footnote 5 of the notes to the consolidated financial
          statements).

               Liquidity and Capital Resources.  The Registrant's net cash
          (used) provided by operating activities was $1,218,822 and
          $(7,875) in 1997 and 1996, respectively.  The net cash used by
          investing activities was $373,029 and $300,629 1996 and 1996,
          respectively.  Most of the cash used by investing activities in
          1997 and 1996 was for capital improvements to the sand project.
          The Registrant reduced its debt by $207,219 in 1997 and increased
          its debt by $287,453 1996.<PAGE>

               The Registrant had working capital deficits of approximately
          $3.0 million and $2.4 million in 1997 and 1996, respectively.  As
          part of the Registrant's program to conserve cash, part of the
          salaries due to the officers of the Registrant, all of the
          deferred compensation due to the deceased chairman's spouse and
          the part of the interest due on certain loans were accrued but
          not paid in 1997 and 1996.  As of November 30, 1997, these
          accruals (salaries, deferred compensation and deferred interest)
          exceeded $1.9 million.<PAGE>

          Item 7.  Financial Statements.

               The following Consolidated Financial Statements of the
          Registrant and its subsidiaries are filed as a part of the report
          and are attached:

               Consolidated Balance Sheets as of November 30, 1997 and 1996

               Consolidated Statements of Operations for the Years Ended
               November 30, 1997 and 1996

               Consolidated Statements of Stockholders' Investment for the
               Years Ended November 30, 1997 and 1996

               Consolidated Statements of Cash Flows for the Years Ended
               November 30, 1997 and 1996

               Notes to Consolidated Financial Statements 

               Because the financial statements are not audited there is no
               report of independent accountants. 

               All other schedules are omitted, as the required information
          is not required, or the information is presented in the financial
          statements or related notes.

          Item 8.  Changes in and Disagreements With Accountants on
          Accounting and Financial Disclosure.

               Because of the Registrant's program to conserve cash, it was
          not able to retain an independent accountant to audit the
          financial statements for the fiscal years of 1997, 1996, 1995,
          1994, 1993, 1992 and 1991.  The Registrant has previously used
          Arthur Andersen & Co. and may retain them in the future.

               While the Registrant has not used an independent accountant
          for the fiscal years listed above, the Registrant is not aware of
          any disagreements with accountants as contemplated by item 304 of
          SEC Regulation S-B.

                                      PART III

          Item 9.  Directors, Executives Officers, Promoters and Control
          Persons; Compliance With Section 16(c) of the Exchange Act.

               (a)  Identify Directors and Executive Officers. 

               The following paragraphs list the names, ages and business
          experience of the directors, each of whom is an executive officer
          of the Registrant.

               James J. Melfi, Jr., age 69, is Chairman of the Board of the
          Registrant.  Mr. Melfi was elected Chairman of the Board in April.
          1985, and he was President from December 1975 to December 1985.
          He has been a director of the Registrant since 1970.

               Frank C. Melfi, age 61, is President of the Registrant, a
          position he has held since December 1985.  From 1976 through
          December 1985, he was Executive Vice President of the Registrant.
          He has been a director of the Registrant since April 1985. 

               William J. Melfi, age 55, is Vice President of Finance and
          Administration of the Registrant, a position he has held since
          December 1985.  He is also Treasurer of the Registrant, a
          position he assumed in July 1995.  For more than five years prior
          to 1985, he was manager of operations.  He has been a director of
          the Registrant since January 1993.

               All of these directors have been with the Registrant for
          several years and are knowledgeable about the Registrant's
          operations, problems and opportunities.

               The executive officers of the Registrant are elected
          annually and serve until such time as their respective successors
          are elected and qualified.

          (b)  Identification of certain significant employees.  Not
          applicable.

          (c)  Family Relationships.  James J. Melfi, Jr., Frank C. Melfi
          and William J. Melfi are brothers.

          (d)  Involvement in certain legal proceedings.  See Legal
          Proceedings.

               (1)  Frank C. Melfi and William J. Melfi were executive
          officers of  L-Bar Products, a wholly owned subsidiary, which in
          currently in Chapter 7 bankruptcy liquidation as described in
          Legal Proceedings.

               (2), (3), and (4).  Not applicable.

               Based solely on a review of applicable forms provided to the
          Registrant, the Registrant believes that the officers, directors
          and beneficial owners of the Registrant were all in timely
          compliance with Section 16(a) of the Exchange Act.

          Item 10.  Executive Compensation

          (a)  General.  The following text and tables provide information
          on the compensation of the Chief Executive Officer and those
          officers whose salary and bonus compensation equaled or exceeded
          $100,000 for the fiscal years ended November 30, 1997, 1996, and
          1995.

          (b)  Summary Compensation Table.
<TABLE>

                             Summary Compensation Table

                                Annual                   Long-term
                             Compensation              Compensation      All
                                        Other   Restrict                  Other
                                        Annual  Stock   Options/ LTIP    Compen
Name and Principal  Year Salary  Bonus  Compe   Awards   Sars    Payouts sation
<S>                 <C>  <C>     <C>    <C>     <C>      <C>     <C>     <C>
Position                   $     $      $       $        #       $       $
Frank C. Melfi      1997 135,000 27,000  752    -        -       -       -
CEO                 1996 135,000 27,000  635    -        -       -       -
                    1995 135,000 27,000  674    -        -       -       -   
James J. Melfi,Jr   1997 135,000 27,000  517    -        -       -       -
Chairman            1996 135,000 27,000  520    -        -       -       -
                    1995 135,000 27,000  635    -        -       -       -
William J. Melfi    1997 100,000 20,000 2,385   -        -       -       -
Vice President      1996 100,000 20,000 2,165   -        -       -       -
                    1995 100,000 20,000 1,663   -        -       -       -
</TABLE>
               The amounts of salary and bonus stated for Mr. Frank C.
          Melfi, Mr. James J. Melfi, Jr. and Mr. William J. Melfi represent
          the amounts due to them and accrued by the Registrant during the
          year.  As part of the Registrant's program to conserve cash, all
          three individuals accrued part of their annual compensation.  Mr.
          Frank C. Melfi, Mr. James J. Melfi, Jr. and Mr. William J. Melfi
          were paid $73,992, $66,757 and $67,887, respectively  of the
          annual compensation  due them in 1997.
           
          (c)  Option/SAR Grants Table.  This table is omitted because
          there was no activity in the 1997 fiscal year.

          (d)  Aggregated Option/SAR Exercises and Fiscal Year-End
          Option/SAR Value Table.
<TABLE>
<CAPTION>
  Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Value Table.

                                                              Value of
                                               Number of      Unexercisde
                         Shares               Unexercised    in-the Money
                         Acquired   Value     Options/SARs   Options/SARs
                           on       Realized  at FY-End       at FY-end
      Name              Excercise     ($)     Excercisable    Excercisable/
                          (#)                 Unexcercisable  Unexcercisable
                                              Excer/  Unexcer
</CAPTION>
    <S>                  <C>         <C>      <C>             <C>
    Frank C. Melfi       -           -        7,500 / 0        -
      CEO
   James J. Melfi, Jr    -           -        7,500 / 0        -
      Chairman
   William J. Melfi      -           -        6,500 / 0        -
      Vice President
</TABLE>
               The Registrant has two active stock option plans, which are
          described in footnote 7 of the notes to the consolidated
          financial statements.

          (e)  Long-term Incentive Plans.  This table is omitted because
          the Registrant currently does not have a long-
          term incentive plan.

          (f)  Compensation of Directors.  The Registrant did not pay any
          fees to directors, as such, as it does not have any directors who
          are not employees of the Registrant. 

          (g)  Employment Contracts and Termination of Employment, and
          Change-in-Control Arrangements.  N/A.

          (h)  Report on Repricing of Options/SARs.  During 1997, none of
          the outstanding Options were repriced.

          Item 11.  Security  Ownership of Certain Beneficial Owners and
          Management.

               (a)  Security Ownership of Certain Beneficial Owners.  The
          following tabulation sets forth the number of shares of Common<PAGE>





          Stock held by each person who owned of record, or is known by the
          Registrant to own beneficially, five percent (5%) or more of the
          Registrant's Common Stock.  Included in the table for certain
          individuals are the maximum number of shares of the Registrant's
          Common Stock which might be deemed to be beneficially owned under
          the rules of the Securities and Exchange Commission by those
          individuals.  The number of shares beneficially owned by those
          individuals includes shares subject to option to purchase, and
          the computation of the percentage owned assumes exercise of such
          options  The information is as of February 19, 1998:
<TABLE>
<CAPTION>
                                   Amount and Nature of           Percent
          Name and Address         Beneficial Ownership          of Class
</CAPTION>
          <S>                                <C>                  <C>
          Northwest Alloys Inc.              Direct
          P.O. Box 115                       500,000               15.6%
          Addy, Washington 99101

          Melfi Corporation                  Direct      
          Suite 308, 20 First Plaza          198,500                6.2%
          Albuquerque, New Mexico 87102

          James J. Melfi, Jr. (1)            Direct, Indirect and Option
          Suite 308, 20 first Plaza          287,049                8.9%
          Albuquerque, New Mexico 87102
               
          Frank C. Melfi (2)                 Direct, Indirect and Option
          Suite 308, 20 First Plaza          299,169                9.3%
          Albuquerque, New Mexico 87102

          William J. Melfi (3)               Direct, Indirect and Option
          Suite 308 20 First Plaza           168,849                5.2%
          Albuquerque, New Mexico 87102
</TABLE>
               To the best of the Registrant's knowledge, the principal
          shareholders listed have sole voting and investment power with
          respect to the shares of the Registrant's Common Stock owned by
          such shareholders, except as noted below.

          (1)  Included in the number of shares opposite Mr. James J.
          Melfi, Jr.'s name in the table above are 7,500 shares subject to
          purchase under an option held by him and 26,700 shares owned by
          his wife, for which beneficial ownership is disclaimed.  Mr.
          Melfi has sole voting and investment power with respect to the
          shares owned by him.  James J. Melfi, Jr. and members of his
          immediate family own 25 percent of the issued and outstanding
          stock of Melfi Corporation, which owns 198,500 shares of Common
          Stock of the Registrant, for which he may be deemed to share
          voting and investment power.   James J. Melfi, Jr. is also an
          officer and director of Melfi Corporation.

          (2)  Included in the number of shares opposite Mr. Frank C.
          Melfi's name in the table above are 7,500 shares subject to
          purchase under an option held by him.  Mr. Melfi has sole voting
          and investment power with respect to the shares owned by him.
          Frank C. Melfi and members of his immediate family own 25 percent
          of the issued and outstanding stock of Melfi Corporation, which
          owns 198,500 shares of Common Stock of the Registrant, for which
          he may be deemed to share voting and investment power.  Frank C.
          Melfi is also an officer and director of Melfi Corporation.

          (3)  Included in the number of shares opposite Mr. William J.
          Melfi's name in the table above are 6,500 shares subject to
          purchase under an option held by him, 7,790 shares owned by his
          wife for which beneficial ownership is disclaimed.  Mr. Melfi has
          sole voting and investment power with respect to the shares owned
          by him.  William J. Melfi and members of his immediate family own
          25 percent of the issued and outstanding stock of Melfi
          Corporation, which owns 198,500 shares of Common Stock of the
          Registrant, for which he may be deemed to share voting and
          investment power.   William J. Melfi is also an officer and
          director of Melfi Corporation.

               (b)  Security Ownership of Management.  The ownership of
          Common Stock by officers and directors is set forth in  the table
          below.  Included in the table are the maximum number of shares of
          the Registrant's Common Stock which might be deemed to be
          beneficially owned under the rules of the Securities and Exchange
          Commission by each nominee and director and by the officers and
          the directors of the Registrant as a group.  The number of shares
          beneficially owned by each individual and each group includes
          shares subject to option to purchase and the computation of the
          percentage owned assumes exercise of such options.  The text
          below the table sets forth certain information as to the extent
          to which beneficial ownership consists of the right to acquire
          the Registrant's Common Stock.  The information is as of February
          19, 1998.
<TABLE>
<CAPTION>
                                   Amount and Nature of         Percent 
          Name and Address         Beneficial Ownership         of Class
</CAPTION>
          <S>                       <C>                           <C>
          James J. Melfi, Jr. (1)   Direct, Indirect and Option
          Suite 308, 20 first Plaza  287,049                       8.9%
          Albuquerque, New Mexico 87102
               
          Frank C. Melfi (2)        Direct, Indirect and Option
          Suite 308, 20 First Plaza  299,169                       9.3%
          Albuquerque, New Mexico 87102

          William J. Melfi(3)        Direct, Indirect and Option
          Suite 308 20 First Plaza   168,849                       5.2%
          Albuquerque, New Mexico 87102

          Officers and Directors     Direct, Indirect and Option
          as a group (4)             755,067                      23.2%
</TABLE>
          (1)  Reference is made to "Security Ownership of Certain
          Beneficial Owners" herein for information regarding the shares of
          Common Stock of the Registrant beneficially owned by James J.
          Melfi, Jr.

          (2)  Reference is made to "Security Ownership of Certain
          Beneficial Owners" herein for information regarding the shares of
          Common Stock of the Registrant beneficially owned by Frank C.
          Melfi.

          (3)  Reference is made to "Security Ownership of Certain
          Beneficial Owners" herein for information regarding the shares of
          Common Stock of the Registrant beneficially owned by William J.
          Melfi.

          (4)  Included in the number of shares owned by officers and
          directors as a group in the table above are 21,500 shares subject
          to purchase under options.  

               (c)  Changes in control.  Not applicable.

          Item 12.  Certain Relationships and Related Transactions.

               (a)  Transactions with management and others.  The Melfi
          Family Trust, which is part of the estate of Mr. James J. Melfi,
          Sr., loaned the Registrant $695,000 in 1991.  These funds were
          used by the Registrant to purchase 20% of the stock in JPL
          Industries Pte. Ltd., a Singapore company organized in 1991.  The
          terms of the agreement between the Melfi Family Trust and the
          Registrant call for a five year note at 10% interest, which was
          prime plus 0.5% at the time of the loan, and a warrant to
          purchase 60,000 shares of the common stock of the Registrant.  In
          addition, several times during 1991, Ruth Ann Melfi, deceased,
          the wife of the Registrant's former Chairman James J. Melfi, Sr.,
          lent the Registrant working capital.  In order to conserve cash
          the Registrant has not fully repaid this loan.  The outstanding
          balance of the loan at November 30, 1997 was $145,000, interest
          was paid through November 30, 1996.  The interest rate on this
          loan is 10% per annum.  Both of these loans are secured by the
          stock in JPL Industries, Reserve Minerals Corporation, Reserve
          Rossborough Corporation, Reserve Rossborough Ventures Corporation
          and Industrial Mineral Products (Phil), Inc., the Registrant's
          wholly owned Philippine subsidiary.

               One of the Registrant's subsidiaries, L-Bar Products, Inc.,
          which is currently in Chapter 7 bankruptcy liquidation, had a
          supply arrangement with Northwest Alloys, Inc., to process and
          market certain waste products from Northwest Alloys' magnesium
          plant in Addy Washington.  Northwest Alloys lent funds to L-Bar
          for the rehabilitation of L-Bar's Chewelah Washington facility.
          At November 30, 1997, L-Bar Products owed Northwest Alloys $3.7
          million plus accrued interest (before any adjustments related to
          the bankruptcy).

               (b)  Pursuant to certain promissory notes to the Registrant,
          James J. Melfi, Jr., Frank C. Melfi and William J. Melfi have
          borrowed $102,745, $214,640 and $131,900, respectively.

               (c)  Parents of Registrant.  Not applicable

               (d)  Transactions with promoters.  Not applicable.

          Item 13.  Exhibits and Reports on Form 8-K.

               (a)  Exhibits.  See the attached Index to Exhibits. 

               (b)  Reports on Form 8K.  There were no reports on Form 8K
          filed during the last quarter.
<PAGE>


                                     SIGNATURES


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

                           RESERVE INDUSTRIES CORPORATION
                                    (Registrant)

          By     /s/  William J. Melfi
             ---------------------------
              William J. Melfi,  Vice President Finance and Administration
              (Principal Financial Officer)

          Date   February 19, 1998

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

          Date   February 19, 1998  By   /s/ James J. Melfi, Jr.
                                      ---------------------------
                                         James J. Melfi, Jr. Director,
                                         Chairman of the Board

          Date   February 19, 1998 By    /s/ Frank C. Melfi
                                     --------------------------------
                                     Frank C. Melfi, Director and President
                                     (Principal Executive Officer)


          Date   February 19, 1998 By     /s/ William J. Melfi
                                     --------------------------------
                                    William J. Melfi,  Director and Vice
                                    President Finance and Administration
                                    (Principal Financial Officer)
<PAGE>

                       RESERVE INDUSTRIES CORPORATION
                                    EXHIBIT INDEX

          Exhibit
          Number         Description


          3.l            Articles of Incorporation**
                         August 28, l957

          3.2            By-Laws of Reserve Industries Corporation as amended
                         on June 8, l987**

          4.1            Loan Agreement with the Key Bank of Puget Sound
                         (formerly the Seattle Trust & Savings Bank) dated
                         February 28, 1986**
           
          4.2            Amendment No. 4 to the Loan Agreement with the Key
                         Bank of Puget Sound dated June 15, 1987**

          4.3            Loan Agreement between Northwest Alloys, Inc. and
                         L-Bar Products dated August 2, 1990**

          4.4            Stock Purchase Agreement with Northwest Alloys,
                         Inc. dated October 28, 1991**

          4.5            Loan Agreement with the Melfi Family Trust dated
                         October 31, 1991**

          4.6            Supplemental Security Agreement with the Melfi
                         Family Trust dated January 31, 1994**

          4.7            Second Supplemental Security Agreement with the
                         Melfi Family Trust dated May  6, 1996**

          9              Not Applicable

          10.1           Sohio Agreement (Settlement) dated September 9,l982**

          10.2           Amendment to Employment Agreement, J. J. Melfi, Sr.
                         dated June 20, l978**

          10.3           l977 Stock Option Plan**

          10.4           Agreement between Central Electricity Generating
                         Board Exploration (Canada) Limited and Registrant
                         dated March 23, 1984**
               
          10.5           Agreement between Cogema and Registrant dated
                         May 17, 1984**

          10.6           Agreement between 413418 Ontario Limited and
                         Registrant dated August 31, 1984**

          10.7           Agreement to purchase the assets of Industrial
                         Mineral Products, Incorporated dated March 3, 1986**

          10.8           Agreement with Northwest Alloys dated January 1,1985**

          10.9           Agreement with Meridian Minerals Company dated
                         July 1, 1987**

          10.10          Agreement and Plan of Acquisition of Interest of
                         Rossborough Manufacturing Company dated
                         August 11, 1987**

          10.11          Sales agreement between L-Bar Product, Incorporated
                         and La Porte Metal Processing Venture dated
                         September 1, 1987, subject to confidential treatment**

          10.12          1987 Incentive Stock Option Plan**

          10.13          1987 Nonqualified Stock Option Plan**

          10.14          Sales agreement between Rossborough Manufacturing
                         Company and La Porte Metal Processing Venture
                         dated September 1, 1987, subject to
                         confidential treatment**

          10.15          Grinding Joint Venture Agreement between L-Bar
                         Grinding Corporation and La Porte Metal
                         Processing Company dated September 1, 1987**

          10.16          Agreement between L-Bar Canada, Inc. and Norsk
                         Hydro Canada, Inc. dated March 23, 1989**

          10.17          Dispute Resolution Agreement between Reserve
                         Industries Corporation and Rossborough et al,
                         dated October 11, 1993**

          10.18          Settlement and Release Agreement between L-Bar
                         Products, Inc. and La Porte Metal Processing Venture
                         et al, dated September 1, 1993**

          11.            Not Applicable

          12.            Not Applicable

          13.            Not Applicable

          16.            Not Applicable

          18.            Not Applicable

          19.            Not Applicable

          21.            List of Subsidiaries*

          22.            Not Applicable

          23.            Not Applicable

          24.            Not Applicable

          25.            Not Applicable

          28.            Not Applicable

          29.            Not Applicable

          *    These exhibits are filed electronically with the report.

          **   These exhibits were filed as indicated below and are
          incorporated herein by this reference thereto:

          3.1            1982 10K - Exhibit  3.1
          3.2            1987 10K - Exhibit  3.2
          4.1            1986 10K - Exhibit  4.1
          4.2            1987 10K - Exhibit  4.2
          4.3            8K filed August 1990
          4.4            1991 10K - Exhibit  4.4
          4.5            1992 10K - Exhibit  4.5
          10.1           1982 10K - Exhibit 10.6
          10.2           1982 10K - Exhibit 10.7
          10.3           l976 Proxy Statement
          10.4           1984 10K - Exhibit 10.13
          10.5           1984 10K - Exhibit 10.14
          10.6           1984 10K - Exhibit 10.15
          10.7           1986 10k - Exhibit 10.7
          10.8           1986 10k - Exhibit 10.8
          10.9           1987 10K - Exhibit 10.9
          10.10          1987 10K - Exhibit 10.10
          10.11          1987 10K - Exhibit 10.11
          10.12          1987 10K - Exhibit 10.12
          10.12          1986 Proxy Statement
          10.13          1986 Proxy Statement
          10.14          1987 10K - Exhibit 10.14
          10.15          1987 10K - Exhibit 10.15
          10.16          1989 10K - Exhibit 10.16
          10.17          1993 10KSB - Exhibit 10.17
          10.18          1993 10KSB - Exhibit 10.18
<PAGE>

                   RESERVE INDUSTRIES CORPORATION AND SUBSIDIARIES
              INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES


                                                                     Page

          Consolidated Balance Sheets - November 30, 1997 and 1996     1

          Consolidated Statements of Income - For the years ended
             November 30, 1997 and 1996                                2

          Consolidated Statements of Stockholders' Investment -
            For the years ended November 30, 1997 and 1996             3

          Consolidated Statements of Cash Flows - For the years ended
            November 30, 1997 and 1996                                 4

          Notes to Consolidated Financial Statements                5-13

          All other schedules are omitted as the required information is
          not applicable or the information is presented in the
          accompanying consolidated financial statements or related notes.
<PAGE>
<TABLE>
<CAPTION>
                RESERVE INDUSTRIES CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           NOVEMBER 30, 1997 AND 1996
</CAPTION>

<S>                                               <C>           <C>
ASSETS                                            1997          1996
CURRENT ASSETS:                                         
Cash and cash equivalents (Note 2)                $   653,906   $    15,332
Receivables, less allowance for doubtful
accounts of $46,332 in 1997 and $45,582 in 1996       159,751       202,819
Receivables from affiliates and
 related parties (Note 12)                            516,430       464,655
Inventories (Notes 1 and 3)                            99,493        92,573
Prepaid expenses and deposits                          28,048        28,481
                                                  -----------   -----------
     Total current assets                           1,457,628       803,860

PROPERTY, PLANT AND EQUIPMENT,
at cost (Notes 1 and 4)                             4,119,171      3,772,373
Less accumulated depreciation and depletion        (1,252,112)    (1,053,114)
                                                  -----------   ------------
                                                    2,867,059      2,719,259

INVESTMENT IN UNCONSOLIDATED AFFILIATES (Note 5)    5,377,316      4,864,179
OTHER ASSETS                                             -            55,710
                                                  -----------   ------------
     Total assets                                 $ 9,702,003   $  8,443,008

LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Short-term debt related party                     $   145,000   $    145,000
Short-term debt                                        47,581         47,581
Current portion of long-term debt (Note 10)           943,979        237,463
Trade accounts payable                                396,985        267,863
Deferred obligations to related parties (Note 12)   2,340,310      2,046,358
Other current liabilities (Note 9)                    593,560        547,101
                                                  -----------   ------------
     Total current liabilities                      4,467,415      3,291,366

LONG-TERM DEBT, less current portion (Note 10)        269,464      1,183,199
DISCONTINUED OPERATIONS - L-Bar Products (Note 6)     973,246        973,246

STOCKHOLDERS' INVESTMENT:
Common stock,$1.00 par value. Authorized 
 6,000,000 shares, issued and outstanding
 3,203,763 shares in 1997 and 1996 (Note 7)         3,203,763      3,203,763
Additional paid-in capital                          7,458,718      7,458,718
Accumulated deficit                                (6,670,603)    (7,667,284)
                                                  -----------   ------------
    Total stockholders' investment                  3,991,878      2,995,197

Total liabilities and stockholders' investment    $ 9,702,003   $  8,443,008

          The accompanying notes are an integral part of these consolidated
          statements. The 1997 and 1996 financial information is unaudited.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                 RESERVE INDUSTRIES CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  FOR THE YEARS ENDED NOVEMBER 30, 1997 AND 1996

                                                    1997            1996
REVENUES:
</CAPTION>
<S>                                              <C>            <C>
Sales                                            $ 1,492,238    $ 1,525,934
Investment income                                     12,396          8,800
Gain on sales:
  Stock                                              408,245           -
  Property and equipment                               1,510            200
Income from affiliates:
  Interest income                                     18,827         28,320
  Equity in earnings                               1,625,515      1,055,106
  Consulting fees                                     60,000         60,000
Other                                                    116         10,032
                                                 -----------    -----------
  Total revenues                                   3,618,847      2,688,392

COSTS AND EXPENSES:
Cost of sales                                      1,310,268      1,148,404
General and administration                           891,396        895,945
Interest                                             161,272        168,652
Depreciation and amortization                        225,229        217,928
Abandonment                                             -            50,000
                                                 -----------    -----------
    Total costs and expenses                       2,588,165      2,480,929

  Income from continuing operations (Note 6)       1,030,682        207,463

PROVISION FOR INCOME TAXES:                          130,000           -
  Income before extraordinary item                   900,682        207,463

EXTRAORDINARY ITEM:
  Reduction of income taxes from net operating
   loss carryforward                                 96,000            -
                                                -----------    -----------
     Net income                                 $   996,682    $   207,463

EARNINGS PER SHARE:
  Income before extraordinary item              $      0.28    $      0.06
  Extraordinary item                                   0.04            -
                                                -----------    ----------- 
     Net income per share                       $      0.31    $      0.06

Weighted Average Number of Shares of
 Common Stock Outstanding                         3,203,763      3,192,219

          The accompanying notes are an integral part of these consolidated
          statements. The 1997 and 1996 financial information is unaudited.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
          RESERVE INDUSTRIES CORPORATION AND SUBSIDIARIES
          CONSOLIDATED STATEMENTS OF CASH FLOWS
          FOR THE YEARS ENDED NOVEMBER 30, 1997 AND 1996
</CAPTION>
                                                      1997          1996
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                               <C>          <C>
 Net income from continuing operations            $   996,682  $   207,463
 Adjustments to reconcile net income from
  continuing operations to net cash provided by
  operating activities:
   Partial abandonment Philippine assets                 -          50,000
   Depreciation and amortization                      225,229      217,928
   Equity in (earnings) of affiliates              (1,625,515)  (1,055,106)
   (Increase) in interest receivable from affiliate      -         (28,320)
   Cash distribution from affiliates                1,112,377      389,974
   Changes in assets and liabilities:
    (Increase) in receivables                          (8,707)     (84,836)
    (Increase) in inventories                          (6,920)     (30,022)
    Decrease in other current assets                      433        2,492
    Decrease in other investment                       55,710         -
    Increase (decrease) in trade accounts payable     129,122     (182,922)
    Increase in accrued officer salaries              293,952      394,821
    Increase in other current liabilities              46,459      110,653
                                                  -----------  -----------
     Total adjustments                                222,140     (215,338)

Net cash provided (used) by operating activities  $ 1,218,822  $    (7,875)

CASH FLOWS FROM INVESTING ACTIVITIES:
 Capital expenditures - Net                       $  (373,029) $ ( 300,806)
 Discontinued operations -L-Bar Products                 -             177
                                                  -----------  -----------
     Net cash (used) by investing activities      $  (373,029) $  (300,629)

CASH FLOWS FROM FINANCING ACTIVITIES:
 Increase in common stock issued                  $      -     $    46,430
 (Decrease) increase in long-term debt               (207,219)     241,023
                                                  -----------  -----------
    Net cash (used) provided by
     financing activities                         $  (207,219)  $  287,453

    Net increase (decrease) in cash
     and cash equivalents                         $   638,574   $  (21,051)

Cash and cash equivalents at the
 beginning of the year                                 15,332       36,383

Cash and cash equivalents at the
 end of the year                                  $   653,906   $   15,332

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
 Cash paid during the year for interest           $    61,662   $   70,426
 Common stock issued during the year for interest $      -      $   46,430
</TABLE>
    The accompanying notes are an integral part of these consolidated
    statements.  The 1997 and 1996 financial information is unaudited.
<PAGE>
<TABLE>
<CAPTION>
 
         RESERVE INDUSTRIES CORPORATION AND SUBSIDIARIES
        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
         FOR THE YEARS ENDED NOVEMBER 30, 1997, 1996 AND 1995

                                Common Stock            Additional
                               $1 Par Value               Paid-In   Accumulated
                                Shares      Amount        Capital    Deficit     Total
</CAPTION>
<S>                            <C>        <C>          <C>          <C>           <C>
BALANCES: November 30, 1995    3,157,333  $ 3,157,333  $ 7,458,718  $ (7,874,747  $ 2,741,304
Common stock issued during 
 1996:  (Note 12)
 For deferred compensation       46,430        46,430         -             -            -
 Net income                        -             -            -          207,463      207,463

BALANCES: November 30, 1996    3,203,763  $ 3,203,763  $ 7,458,718  $ (7,667,284) $ 2,995,197

Common stock issued
 during 1997:  (Note 12)            -            -            -             -            -

 Net income                        -             -            -          996,682      996,682
BALANCES: November 30, 1997   3,203,763   $ 3,203,763  $ 7,458,718  $ (6,670,602) $ 3,991,879

     The accompanying notes are an integral part of these consolidated
     statements.  The 1997, 1996 and 1995 financial information is unaudited.
</TABLE>
<PAGE>
                   RESERVE INDUSTRIES CORPORATION AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED NOVEMBER 30, 1997 AND 1996

          (l)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

               Principles of Consolidation

          The accompanying consolidated financial statements include the
          accounts of Reserve Industries Corporation, a New Mexico
          corporation, and its wholly owned subsidiaries, Reserve Silica
          Corporation, Reserve Abrasives Limited, Incorporated, Industrial
          Mineral Products (Phil.), Inc., Reserve Rossborough Corporation,
          Reserve Rossborough Ventures Corporation,  Reserve Minerals
          Corporation , Reserve Trisal, Inc., L-Bar Canada Inc., and L-Bar
          Products Incorporated, (collectively "the Company").

          All significant intercompany accounts and transactions have been
          eliminated in the accompanying consolidated financial statements.
          Investments in unconsolidated affiliates are accounted for by the
          equity method (see Note 5) and are stated at cost plus equity in
          undistributed earnings.

               Marketable Securities

          Marketable securities are stated at the lower of aggregate cost
          or market value.  The cost of securities sold is determined using
          the specific identification method.

               Inventories

          Inventories, consisting principally of raw materials, finished
          products and supplies, are valued using the average cost method
          at the lower of cost or market value.  Production costs included
          in inventories represent actual operating labor, raw materials
          and supply costs. 

               Property, Plant and Equipment

          Property, plant and equipment is recorded at cost.  Betterment's,
          renewals and extraordinary repairs that extend the life of the
          asset are capitalized; other repair and maintenance costs are
          expensed.  The cost and accumulated depreciation applicable to
          assets sold or retired are removed from the accounts, and the
          related gain or loss on disposition is recognized in operations.

               Mineral Properties

          Mineral properties, acquisition costs and all subsequent direct
          costs incurred in retaining, exploring and developing the
          properties are capitalized in property, plant and equipment until
          production is attained.  If management determines that
          development and production are not economically feasible, or that
          capitalized costs exceed net realizable values, such costs are
          charged to operations in the period such determination is made.

               Depreciation, Depletion, and Amortization

          The cost of machinery, equipment and buildings is depreciated
          over the estimated useful lives of the assets using the
          straight-line method.  Organization costs and goodwill are
          amortized using the straight-line method over 60 months and 120
          months, respectively.  As reflected in note 6, operations at
          L-Bar Products, Inc. (L-Bar Products) were suspended in December
          1991 and L-Bar Products was  determined in November 1992 to be a
          discontinued operation.

                Income Taxes

          The Company and its domestic subsidiaries file a consolidated
          income tax return.  Separate tax returns are filed for the
          Company's foreign subsidiaries and the corporate entities in
          which the Company has equity interests.

          Deferred taxes, which result from the effect of temporary
          differences in reporting transactions for financial and tax
          reporting purposes, will be provided when the Company exhausts
          its net operating loss carryforwards.

               Earnings (loss) per share

          Earnings (loss) per share were computed using the weighted
          average number of shares outstanding during each fiscal year.
          Shares issuable upon the exercise of options have not been
          included in the computation because they would not have a
          material impact on earnings (loss) per share.

               Business Segments

          The Company operates in two different industry segments; the
          corporate operations segment and the industrial products segment
          which contains silica sand operations.  The silica sand
          industrial products operation produces various sand products for
          use by the glass, concrete and golf course industries.  The
          corporate segment includes partnership and equity income.  

               Statement of Cash Flows

          For purposes of the statement of cash flows, the Company
          considers all highly liquid debt instruments purchased with a
          maturity of three months or less to be cash equivalents.

               Reclassifications

          Certain reclassifications have been made to prior year balances
          to conform to current year financial statement presentation.

          (2)  CASH AND CASH EQUIVALENTS:

          At November 30, 1997 and 1996, the Company had on deposit in a
          foreign country $10,177, which is restricted from transfer out of
          the country to the extent of the foreign subsidiary's retained
          earnings.  Cash transfers out of the foreign country are subject
          to a withholding tax.

          (3)  INVENTORIES:

          Inventories consist of the following at November 30:

                                                   1997              1996
            Raw materials                      $      101       $      101
            Finished products                      62,327           50,255
            Supplies and packaging                 37,065           42,217
                                               ----------       ----------
                                               $   99,493       $   92,573

          (4)  PROPERTY, PLANT AND EQUIPMENT:

          Property, plant and equipment consist of the following a November 30:

                                                   1997             1996
               
           Machinery and equipment            $ 2,212,769      $ 2,055,530
           Mineral properties                   1,906,402        1,716,843
                                              -----------      -----------
                                              $ 4,119,171      $ 3,772,373

          (5)  INVESTMENT IN UNCONSOLIDATED AFFILIATES:

               Rossborough Manufacturing Company and Rossborough Manufacturing
          Co. L. P. The Company owns a 40% stock interest in Rossborough
          Manufacturing Company (Rossborough Co.), through its wholly owned
          subsidiary, Reserve Rossborough Corporation and a 20% limited
          partnership interest in Rossborough Manufacturing Co. L.P.
          (Rossborough L.P.) , through its wholly owned subsidiary, Reserve
          Rossborough Ventures Corporation.  Rossborough Co. is the general
          partner of and owns 60% of Rossborough L.P.  Rossborough L.P. is
          in the business of providing products and services to the steel
          and foundry industries.

          Investment in unconsolidated affiliates includes equity in
          undistributed earnings and long-term interest bearing notes
          receivable from Rossborough L.P.  Such notes receivable, which
          were paid in 1997, amounted to $186,000 and $189,000 at November
          30, 1996 and the accrued interest receivable on these notes
          amounted to $212,125.  Included in the Company's earnings are
          equity in earnings of affiliates and consulting income and the
          Company plans to reinvest its undistributed equity earnings in
          those affiliates.  At November 30, 1997 and 1996 the Company had
          $3,359,537 and $2,838,692 of undistributed earnings of
          Rossborough Co. and Rossborough L.P. included in retained
          earnings, respectively.  The equity in undistributed earnings of
          Rossborough Co. and Rossborough L.P. recorded by the Company are
          based on financial statements audited by independent public
          accountants.

          For the year ended November 30, 1994, Rossborough L.P. changed
          its method of determining the cost of certain raw material
          inventory from the first-in, first-out (FIFO) to the last-in,
          first-out (LIFO) method to more appropriately reflect the
          inflationary cost increases of certain products.  The effect of
          the change in 1997 and 1996 was to increase (reduce) the carrying
          value of inventory and net income by approximately $1,045,000 and
          ($19,000), respectively.  At November 30, 1997 and 1996, 78% and
          77%, respectively, of the inventory is valued using the LIFO
          method of accounting.

          The  financial information of Rossborough L.P. is summarized
          below for the periods ended November 30:

                                                   1997           1996
               
            Net sales                        $ 56,072,769     $ 63,216,650
            Gross profit                     $ 10,722,902     $  9,735,322
                                             ------------     ------------
            Net partnership Income           $  3,672,875     $  3,210,377

            Total current assets             $ 20,282,759     $ 17,686,945
            Fixed and other assets              6,147,480        6,601,460
                                             ------------     ------------
            Total assets                     $ 26,430,439     $ 24,288,405

            Current liabilities              $ 11,425,644     $ 11,445,292
            Total long-term liabilities         6,030,289        5,776,156
            Minority Interest                     865,468          615,385
            Total partnership capital           8,109,038        6,451,572
                                             ------------     ------------
            Total liabilities and
             partnership capital            $  26,430,439     $ 24,288,405

               JPL Industries Pte. Ltd.

          The Company owns a 20% stock interest in JPL Industries Pte. Ltd.
          (JPL), a Singapore company organized in 1991.  The Company's
          investment is $692,239 and is included in investment in
          unconsolidated affiliates. 

          (6)  DISCONTINUED OPERATIONS:

               Plant Closure

          On December 6, 1991 L-Bar Products suspended operations at its
          Chewelah, Washington facility because L-Bar lacked the necessary
          funds to continue operation.  In November 1992, it was determined
          to discontinue the operations of L-Bar Products.

               Litigation

          On December 13, 1991, L-Bar Products was notified that a petition
          was filed against it for an order of relief under Chapter 7 of
          the United States Bankruptcy Code, in the United States
          Bankruptcy Court for the Eastern District of Washington.  This
          petition was filed on behalf of three creditors that had
          performed work on the capital improvements at the L-Bar Products
          plant, prior to plant closure.  On July 13, 1992 L-Bar Products
          filed a reorganization petition under Chapter 11 of the U.S.
          Bankruptcy Code.  The case was consolidated in the Bankruptcy
          Court for the Eastern District of Washington.  On March 15, 1995,
          the bankruptcy was converted to Chapter 7 and a trustee was
          appointed.

          On August 31, 1994, L-Bar Products filed a complaint for breach
          of contract, breach of fiduciary duty, equitable subordination,
          declaratory relief and recovery of environmental cleanup costs
          against Northwest Alloys.  The complaint was filed in the United
          States Bankruptcy Court for the Eastern District of Washington.
          Pre-trial discovery commenced in early 1996 and is expected to be
          completed in 1998.

               Long-term debt

          A term loan with an outstanding amount of $3.77 million plus
          interest is owed to Northwest Alloys by L-Bar Products.  The loan
          is secured by the assets of L-Bar Products and bears interest at
          the prime rate.  The purpose of the loan was to fund certain
          plant improvements in process at the time of the closure of the
          plant, as discussed in Note 12.  As security for the loan,
          Northwest Alloys has a mortgage on all of the assets of L-Bar
          Products.  In addition, the Company, subject to the Loan
          Agreement, signed a guaranty as discussed in Note 12.  The loan
          is subject to certain covenants and restrictions which relate to
          maintenance of working capital, net worth, and accounts payable
          of L-Bar Products.  L-Bar Products has not made any principal or
          interest payments on the loan and is not in compliance with the
          loan covenants.  

          A term loan by L-Bar Products in the amount of  $312,192 plus
          interest at prime was due November 30, 1991.  The loan is secured
          by certain mineral rights of the Company with a book value of
          $1,417,000.  L-Bar Products has numerous other unsecured
          creditors.

               Summary financial information

          The balance sheet of L-Bar Products is summarized below for the
          periods ended November 30:

                                                      1997         1996
               
          Current assets                          $   454,194   $   412,235
          Plant, Property & Equip,
           net of depreciation                      6,082,181     6,593,313
          Contractual rights and other assets         810,956       810,956
                                                  -----------   -----------
                                                  $ 7,347,331   $ 7,816,504

          Current liabilities                     $ 3,342,770   $ 3,741,972
          Long-term debt, less current portion      3,477,807     3,547,778
          Deferred gain on issuance of
           stock for debt                           1,500,000     1,500,000
                                                  -----------   -----------
                                                  $ 8,320,577   $ 8,789,750

          Net liability                           $   973,246   $   973,246
                                                  ===========   ===========     
          (7)  STOCK OPTIONS:

          The Company has two active stock option plans; the 1987 Incentive
          Stock Option Plan (1987 ISO Plan) and the 1987 Non qualified
          Stock Option Plan (1987 Non qualified Plan).  The 1987 ISO Plan
          provides for the issuance of options to key employees to purchase
          up to 90,000 shares in aggregate of the Company's common stock.
          Under the 1987 ISO Plan options for 55,500 shares were
          outstanding at $1.00 to $3.25 per share, all of which are
          exercisable.  The 1987 Non qualified Plan provides for the
          issuance of options to officers and directors, who can not
          participate in the 1987 ISO Plan, to purchase up to 25,000 shares
          in aggregate of the Company's common stock.  Under the 1987 Non
          qualified Plan, at November 30, 1997, options for 21,500 shares
          were outstanding at $1.625 to $3.00 per share, all of which are
          exercisable.  All option plans provide that the option price must
          be equal to or greater than the market price at the date of
          grant.  No options were exercised under the plans during 1997 and
          1996.  

          (8)  INCOME TAXES:

          At November 30, 1997 the Company had net operating loss
          carryforwards of approximately $4.4 million (net of $6.1 million
          related to L-Bar Products) which will expire between 2000 and
          2012.  Certain differences exist between the net operating loss
          carryforwards available for financial statement purposes and for
          Federal income tax return purposes due to differing treatments of
          dividend income, depreciation, exploration and development costs,
          goodwill and deferred compensation.  At November 30, 1997 the
          Company had investment tax and new jobs tax credit carryforwards
          of approximately $8,125 which will expire between 1996 and 2001.

          Due to losses from continuing operations in 1996, there is no tax
          expense computed for that year.  Because of the Company's net
          operating loss carryforward, the Company did not present the net
          tax effect of the losses from discontinued operations.  Due to
          timing differences, the taxable income for 1997 is approximately
          $314,000.  The table below shows the composition of the income
          tax expense (benefit): 

                                                        1997        1996
          Current federal income tax                $  (18.0)     $  (46.0)
          Accrual for wages not yet paid               114.0         147.0
          Partnership income in excess of
           equity income                                  -             -
          Accrual for State Income tax                  34.0            -
          (Reduction) addition to federal
           income tax loss carryforward                (96.0)       (101.0)
                                                   ---------      --------
                                                   $    34.0      $    0

          (9)  OTHER CURRENT LIABILITIES:

          Other current liabilities consist of the following at November 30:

                                                        1997         1996
              
          Accrued interest                         $   380,882   $   314,528
          Other current liabilities                    579,101       232,573
                                                   -----------   -----------
                                                   $   959,986   $   547,101

          (10) DEBT:

          Long-term debt consists of the following at November 30:

                                                        1997         1996
              
          Term loan, due December 31, 1997, with annual
          interest payments at 10% secured by the stock in
          JPL Industries, Reserve Minerals Corporation,
          Reserve Rossborough Corporation, Reserve Rossborough
          Ventures Corporation and Industrial Mineral Products (Phil)
          see Notes 5 and 12.                       $   695,000   $   695,000

          Other notes                                   119,218        68,399
          Capital leases                            $   399,225   $   657,263
                                                    -----------   -----------
                                                      1,213,443     1,420,662
          Less current portion                          943,979       237,463
                                                    -----------   -----------
                                                    $   269,464   $ 1,183,199

          The long-term debt payment schedule consists of the following at
          November 30, 1997:

               1998                                 $   943,979
               1999                                     205,795
               2000 or later                             63,669
                                                    -----------
                                                    $ 1,213,443

          The net book value of the assets leased pursuant to capital lease
          arrangements was $520,931 as of November 30, 1997.

          (11) BUSINESS SEGMENTS:

          The Company operates in the industrial products and corporate
          business segments.  These business segments are described in Note
          1 under Business Segments.  In fiscal year 1997, the Company had
          three customers in the industrial products segment that accounted
          for net sales of 57.9% ($887,036) and 18.2% ($279,572),
          respectively.  In fiscal year 1996, the Company had three
          customers in the industrial products segment that accounted for
          net sales of 53.5% ($833,145) 17.1% ($265,338), and 11.2%
          ($173,789), respectively. 

          Identifiable assets by segment are those assets involved in the
          operation of the segment.  Corporate assets are cash and cash
          equivalents, security investments, mineral properties, equity
          investments and other assets.

          The following tables summarize the operations, identifiable
          assets and capital expenditures by industry segment as of
          November 30:
                                                          1997       1996
      
          Net sales and revenues:
          Industrial Products - Silica sand          $ 1,492,238   $ 1,525,934
          Industrial Products - Abrasives/Other           12,396         8,800
          Corporate                                      428,698        10,232
          Equity in earnings from affiliates           1,685,515     1,143,426
                                                     -----------   -----------
                                                     $ 3,618,847   $ 2,688,392
          Segment operating income:
          Industrial Products - Silica sand          $   181,549   $   377,530
          Industrial Products - Abrasives/Other           12,396         8,800
          Corporate                                      429,119        10,232
           Equity in earnings from affiliates          1,685,515     1,143,426
                                                     -----------   -----------
                                                       2,308,579     1,539,988
          Corporate and other expenses:
           General and administration                    891,396       895,945
           Depreciation and amortization
            - Industrial products                        215,659       210,394
           Depreciation and amortization - Corporate       9,570         7,534
           Interest expense                              161,272       168,652
           Abandonment-Foreign assets                       -           50,000
                                                     -----------   -----------
                                                       1,277,897     1,332,526
          Income from continuing operations          $ 1,030,682   $   207,463

          Identifiable assets - Industrial Products  $ 2,701,224   $ 2,897,529
          Identifiable assets - Corporate              7,000,779     5,545,479
                                                     -----------   -----------
                                                     $ 9,702,003   $ 8,443,008

          Capital expenditures - Industrial Products $   373,029   $   300,806
          Capital expenditures - Corporate                  -             -
                                                     -----------   -----------
                                                     $   373,029   $   300,806

          The following table summarizes financial data by geographic area
          as of November 30:

          Sales:
            United States                            $ 1,492,238   $ 1,525,934
            Far East                                      12,396         8,800
                                                     -----------   -----------
                                                     $ 1,504,634   $ 1,534,734
          Operating profit (loss):
            United States                            $ 2,296,183   $ 1,531,188
            Far East                                      12.396         8,800
                                                     -----------   -----------
                                                     $ 2,308,579   $ 1,539,988
          Identifiable Assets: 
            United States                            $ 8,206,706   $ 7,196,658
            Far East                                   1,495,297     1,495,297
                                                     -----------   -----------
                                                     $ 9,702,003   $ 8,692,009

          (12)  COMMITMENTS AND CONTINGENCIES:

               Environmental Matters

          The WDOE named the Company and L-Bar Products as potentially
          liable persons (PLP) for part of the cleanup related to the
          Chewelah site.  The basis for naming L-Bar Products was its
          status as site owner/operator.  The basis for naming the Company
          is the alleged responsibility of the parent corporation.  It is
          management's opinion that the Company was a separate entity from
          L-Bar Products and is not responsible as a PLP for site
          contamination. 

          The WDOE has entered into an administrative order with Northwest
          Alloys under which Northwest Alloys has agreed to undertake
          testing at the Chewelah site and prepare a proposed remedial plan
          for cleanup.  L-Bar Products has petitioned the Bankruptcy Court
          for approval to agree to the same order in order to cooperate
          with WDOE.  The WDOE objected to L-Bar's motion and no further
          action has been taken.  The Registrant has declined to enter into
          the order due to its insistence that it is not a PLP under the
          MTCA.

          It is management's opinion that the Company will not be liable
          for the matter discussed above, and in any event, any liability
          can not be estimated.  Therefore no amounts have been accrued for
          this matter in the accompanying financial statements.

               Northwest Alloys Inc. vs. Reserve Industries Corporation

          On April 28, 1994, a complaint for monetary and declaratory
          relief was filed in the United States District Court for the
          Eastern District of Washington by Northwest Alloys, a wholly
          owned subsidiary of Alcoa Inc., against the Company.

          The complaint alleges causes of action for monetary and
          declaratory relief for breach of contract and statutory
          contribution under the Washington Model Toxics Control Act
          (MTCA).  For its breach of contract claim, Northwest Alloys seeks
          to rely upon  an August 2, 1990 guaranty signed by the Company
          which Northwest Alloys claims guarantees payment of the greater
          of (i) up to $2,000,000 for environmental cleanup at the
          Chewelah, Washington site owned and operated by L-Bar Products,
          or (ii) certain loan funds in excess of $2.5 million, plus
          interest, related to L-Bar Products' alleged obligation to repay
          certain loans from Northwest Alloys (estimated by Northwest
          Alloys to be $1,291,481 plus accrued and accruing interest).  For
          the statutory contribution action under the MTCA, Northwest
          Alloys seeks contribution for ongoing remedial costs for alleged
          soil and ground water contamination at the L-Bar Products site in
          Chewelah, Washington.  Contribution is sought from the Company
          for past and present costs incurred, and future costs to be
          incurred, by Northwest Alloys to address the alleged soil and
          ground water contamination at the L-Bar Products site.

          A further description of the litigation is contained in Item 3 of
          the Company's annual report 10KSB.

               Deferred Compensation

          The Company has a deferred compensation plan for its deceased
          chairman's spouse.  The payment of this benefit is pursuant to a
          management contract which provides for monthly disbursements.
          adjusted annually for inflation.  The obligation, originally
          recorded based on applicable mortality rates, was exhausted
          during the fiscal year ended November 30, 1991.  Payments made in
          excess of the obligation recorded have been expensed when either
          paid or accrued.  

          Amounts due under the plan were accrued, but no payments were
          made in 1997, 1996, 1995, 1993 and 1992 because the Company has
          been  conserving its cash.  In 1997 and 1996, the accrued
          deferred compensation amounted to $285,521 and $199,865,
          respectively.  Subsequent, to the year end the recipient died and
          the plan was terminated as of January 16, 1998.

               Cash Flow Requirements

          The accompanying financial statements have been prepared assuming
          that the Company will continue as a going concern.  The Company
          is generating revenues from its continuing operations and the
          current level of cash flow is sufficient to sustain operations
          and a portion of its general and administrative expenses.  The
          Company is conserving its cash and has not paid all of the
          compensation due to the officers and directors and, as described
          above, has accrued part of the deferred compensation.  In 1997
          and 1996, the accrued compensation due to the officers and
          directors amounted to $2,011,899 and $1,794,781, respectively.

          During 1991, the Company borrowed $695,000 from the Melfi Family
          Trust, which is part of the estate of Mr. James J. Melfi, Sr., in
          order to purchase the equity interest in JPL Industries Pte. Ltd.
          In order to conserve cash. the Company has not paid all of the
          interest due on this loan.  In 1997 and 1996, the accrued
          interest on the loan amounted to $377,087 and $305,307,
          respectively.

          The other Melfi family members have loaned working capital to the
          Company.  The Company currently owes $145,000 plus accrued
          interest on these working capital loans.  In 1997 and 1996, the
          accrued interest on these working capital loans amounted to
          $29,000 and $14,500, respectively.

          Pursuant to promissory notes to the Company, officers have loans
          amounting to $449,285 and $396,985 in 1997 and 1996,
          respectively.

               Other

          During the normal course of business, the Company has other
          commitments, lawsuits, claims and contingent liabilities.
          However, Company management does not expect that any sum it may
          have to pay in connection with any of these matters would have a
          materially adverse effect on the consolidated financial position.<PAGE>
<PAGE>