UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-KSB

(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
    EXCHANGE ACT OF 1934.

                  For the fiscal year ended December 31, 1998.

                              WOLF INDUSTRIES INC.
                 (Name of Small Business Issuer in its Charter)

          Nevada                                  E.I.N. 98-0171619
--------------------------------------------------------------------------------
(State or other jurisdiction             (I.R.S. Employer Identification No.)
of incorporation or organization) 


404 - 110 Cambie Street, Vancouver, British Columbia, Canada       V6B 2M8
--------------------------------------------------------------------------------
      (Address of principal executive office)                  (Zip/Postal Code)


                  Registrant's telephone number: (604) 688-6306

SECURITIES REGISTERED UNDER SECTION 12 (b) OF THE ACT:   NONE.

SECURITIES REGISTERED UNDER SECTION 12 (g) OF THE ACT:

Title of each class      Name of each exchange on which each class is registered
--------------------------------------------------------------------------------
  Common Stock                             OTC Electronic Bulletin Board


Indicate  by check  mark  whether  the  Registrant:  (1) has filed  all  reports
required  to be filed by  Section  13 or 15(d) of the  Exchange  Act  during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports),  and (2) has been subject to such filing requirements for
the past ninety (90) days.
                    YES ( X ) NO ( )

Check here if there is no disclosure  of  delinquent  filers in response to Item
405 of Regulation SB is not  contained in this form,  and no disclosure  will be
contained,  to the best of the  registrant's  knowledge,  in definitive proxy of
information statements  incorporated by reference in Part III of the Form 10-KSB
or any amendment to this Form 10-KSB. ( X )

Issuer's  operational  revenues for its most recent fiscal year ending  December
31, 1998 were $286,347. This represents sales by the Company's former subsidiary
until June 30, 1998 when it was sold as described below.  Issuer's Common Shares
outstanding at March 31, 1999 was 11,684,648.  The aggregate  market value based
on the voting stock held by  non-affiliates  as of March 31, 1999 was $1,101,544
(based on 6,884,648 shares and on an average of bid and asked prices of $0.16).

Except for the historical information contained herein, the matters set forth in
this Form 10-KSB are forward looking  statements within the meaning of the "Safe
Harbor" provision of the Private Securities Litigation Reform Act of 1995. These
forward-looking  statements are subject to risk and uncertainties that may cause
actual results to differ materially. These forward-looking statements speak only
as of the date  hereof and the Company  disclaims  any intent or  obligation  to
update these forward-looking statements.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                Certain exhibits

                                        1


<PAGE>


ITEM 1.  DESCRIPTION OF BUSINESS

    (a)  BUSINESS DEVELOPMENT

Wolf  Industries  Inc.  ("the  Company") was  incorporated  on January 24, 1996,
pursuant  to the laws of the  State of Nevada  under the name Wolf  Exploration,
Inc. with a business plan to acquire property for precious metal  exploration in
the western United States.  However after considering  several  properties,  the
Company  determined  that the properties  identified  were not suitable to fully
implement an exploration and development project in the United States. In August
1996 the Company changed management and developed a new business plan.

In October 1996,  the Company  entered into an agreement to acquire two numbered
companies that were combined with 714674  Alberta Ltd.  continuing in operation.
The business operated as Calgary Chemical,  selling chemical products to the oil
and gas industry.

In March 1997, the Company's name was changed to Wolf Industries Inc. to reflect
these developments.

Effective  June 30, 1998, the Company sold its  subsidiary,  714674 Alberta Ltd.
("Calgary  Chemical") to Gorda Technology  Holdings Limited,  a Turks and Cacios
Islands corporation ("Gorda"). The terms of the sale were as follows:

(a)  forgiveness  of the inter  company  debt owed by  Calgary  Chemical  to the
     Company in the amount of $82,289 (Canadian);

(b)  Payment by Gorda to the  Company of fifteen  percent of Calgary  Chemical's
     after-tax   profit  (as   determined  by  generally   accepted   accounting
     principles)  for the fiscal  year ended  December  31,  1998  payable on or
     before  March  31,  1999  and  completion  of an  audit  of  the  financial
     statements of Calgary Chemical for such period;

(c)  Indemnification  by  Gorda to hold the  Company  harmless  from any and all
     liability arising from the debt guarantees of Calgary Chemical;

(d)  Agreement  by Gorda to hire Mr.  Blair  Coady as the  President  and  Chief
     Executive Officer of Calgary Chemical; and

(e)  Receipt by the Company from Mr. Coady of his  resignation  as President and
     Chief  Executive  Officer,  Secretary,  and Director of the Company and the
     surrender of Mr. Coady's options to acquire 700,000 shares of the Company's
     common stock.

This agreement is  incorporated by reference from the Company's 10QSB filing for
the quarter ended March 31, 1998.

The sale of Calgary  Chemical was subject to approval of the shareholders of the
Company,  which was received at the Company's annual general meeting of July 24,
1998.

                                        2


<PAGE>






On April 8, 1998,  the  Company  entered  into a License  agreement  with Andrew
Engineering Inc. ("Andrew") a British Columbia corporation, Andrew Rawicz Ph.D.,
and Ivan Melnyk,  Ph.D.,  whereby the Company  acquired a world-wide  license to
manufacture  and  market a patent  pending  device  for the  color  matching  of
dentures to a dental patient's existing tooth color. Drs. Rawicz and Melnyk hold
the patent pending for the color analyzer and Andrew  developed  and/or acquired
the  techniques and other  proprietary  information  related to the device.  The
License agreement required the Company and Andrew to develop a business plan for
manufacturing  and  marketing  the  device,  including  obtaining  financing  of
$1,500,000 US. The license agreement required the issuance of 4.8 million shares
of  restricted  stock to Andrew  with  registration  rights on  600,000 of those
shares,  and also required that Mr. Patrick  McGowan be appointed  President and
Chief  Executive  Officer.  Mr. McGowan  signed a management  agreement with the
Company,  and at a meeting of the Company's Board of Directors held on April 16,
1998, Mr.  McGowan and Mr. A. Schwabe were  appointed to the Company's  Board of
Directors.  They were also appointed  interim  President and CEO, and Secretary,
Treasurer  respectively,  pending the approval of the  shareholders of the Gorda
transaction  wherein Mr. Coady would resign from all  positions.  The  agreement
also  provided  for the  Company to pay a royalty to Andrew in the amount of ten
percent (10%) of gross profit on sales if the Company  manufactures  the product
itself or a Royalty of seven percent (7%) of gross revenue if  manufacturing  is
done by an independent third party.

This agreement is  incorporated by reference from the Company's 10QSB filing for
the quarter ended March 31, 1998.

Upon approval by the  shareholders  of the sale of Calgary  Chemical at the 1998
annual general meeting,  Mr. P. McGowan,  Mr. A. Schwabe and Dr. David Gane were
elected directors,  and Messrs. McGowan and Schwabe were appointed President and
CEO, and Secretary, Treasurer respectively.

In September  1998,  4.8 million  shares of the  Company's  stock were issued to
Andrew in accordance with that agreement.

    (b)  BUSINESS OF THE ISSUER

         DENTAL COLOR ANALYZER

During  1998,  the Company sold  Calgary  Chemical  and  acquired the  worldwide
manufacturing  and marketing  rights to a dental color analyzer ("the product").
This  technology was developed to assist the dental  industry in determining the
shades and colors of dental  materials  used in replacement  and/or  restorative
work, by precisely matching these shades to the original teeth of patients.  The
dental color analyzer  discriminates  between the minutest  differences in tooth
shading and  determines  the best shade  match for partial or total  restorative
material.  It does so by  taking  into  account  the  differences  in  color  of
spectrally  unmatched  materials when  illuminated  with different light sources
such as sunlight, incandescent lamps, and fluorescent lamps.

Since  acquiring  the rights in April  1998,  the  Company's  efforts  have been
directed towards research,  development and business plans for manufacturing and
marketing the product.  This has involved  manufacturing a small quantity of the
product for testing and demonstration  purposes;  engaging technical experts and
firms to evaluate the product;  attendance  at dental  conventions  and shows to
demonstrate the product;  attendance at various dental firms and laboratories to
demonstrate  and evaluate the product;  and work on both the product and related
software to perfect its  operation.  The Company has also engaged the assistance
of consultants to develop marketing plans for the product.  This has resulted in
the Company incurring  substantial research and development  expenditures in the
year 1998.

The  Company  has  also  held  discussions   with  companies   involved  in  the
distribution  of dental  products  in  Canada,  the  United  States  and  Europe
regarding marketing of the product.

The Company has developed preliminary business plans to proceed with manufacture
and sale of the units, but has been delayed in proceeding  pending completion of
this research and development,  and by the action brought against the Company by
AEI Trucolor (see Item 3 - Legal Proceedings).

                                        3


<PAGE>


         CALGARY CHEMICAL

The Company owned and operated its  subsidiary,  714674  Alberta Ltd. until June
30, 1998, when it was sold as described previously.  As a result, the Company is
no longer involved in the manufacturing and sale of chemical products.

ITEM 2.  DESCRIPTION OF PROPERTY

As a result of the change of  management  and  business  direction,  the Company
relocated its head offices from Calgary, Alberta to Vancouver, British Columbia.
Its Vancouver  office is shared with other  companies,  and the Company pays for
its share of rent and office expenses under month-to-month arrangements with the
other companies.  The Company  occupies  approx.  1,000 square feet of space and
paid $38,073 in the year 1998 for its share of office rent.

ITEM 3.  LEGAL PROCEEDINGS

AEI  Trucolor    
-----------------
An action has been  brought by AEI  Trucolor  Inc.  ("AEI") in British  Columbia
Supreme Court against Wolf Industries  Inc.,  Andrew  Engineering Inc. and other
parties to the Licence Agreement. AEI has made a claim against the defendants as
follows:

(a)  Declaration  that AEI holds all ownership rights and interest in the dental
     color analyzer;
(b)  An injunction  against the  Defendants  from  continuing  the commercial or
     other development of the dental color analyzer;
(c)  An  injunction  against  the  Defendants  from  disposing  of or in any way
     dealing with the dental color analyzer;
(d)  An order that the dental  color  analyzer  be  delivered  forthwith  to the
     Plaintiff;
(e)  An accounting of all monies,  profits and benefits made and received by the
     Defendants for and on account of AEI Trucolor Inc.;
(f)  General damages; and
(g)  Punitive damages

The  Corporation  has filed an Appearance and is currently  preparing a response
denying the allegations and requesting that the claim be dismissed.

Harvey Productions Inc.
-----------------------
The Company is presently in litigation in the Los Angeles County Superior Court,
West District,  Santa Monica,  California,  concerning the approximately $55,000
demand of the  complaint  purportedly  due and owing by the Company to plaintiff
Harvey Productions Inc. for public relations services allegedly rendered but not
paid.  The  Company  has denied  these  allegations.  The matter is still in the
discovery stage and has not been set for trial.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were  submitted for a vote of security  holders of the Company during
the fourth quarter of the fiscal year ended December 31, 1998.

                                        4


<PAGE>



                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTER

         (a)      MARKET INFORMATION

Since December 15, 1997, the Company's stock has been listed for sale on the OTC
Electronic  Bulletin  Board.  As of December 31, 1998 there were thirteen  stock
brokerage firms making a market in the Company's  common stock. The high ask and
low bid prices of the Common Stock of the Company have been as follows:

Quarter Ending:              High ask per share:        Low bid per share:
---------------              -------------------        ------------------
March 31, 1998                        $1.01                     $0.47
June 30, 1998                         $0.99                     $0.50
September 30, 1998                    $0.91                     $0.18
December 31, 1998                     $0.49                     $0.27



The above  quotations  reflect  inter-dealer  prices,  without  retail  mark-up,
markdown, or commission and may not necessarily represent actual transactions.

         (b) HOLDERS

There were 38 holders of the  Company's  common  stock as of December  31, 1998.
This  includes four holders of 4,825,001  shares of the  Company's  common stock
whose  certificates are restricted.  25,001 of the restricted shares were issued
in December  1997 and  4,800,000  were issued in September  1998.  The holder of
4,800,000 shares is an affiliate of the Company.

         (c) DIVIDENDS

The  Company  has paid no  dividends  to date on its common  stock.  The Company
reserves the right to declare a dividend when operations merit.

ITEM 6. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

The following should be read in conjunction with the Selected Financial Data and
the Consolidated  Financial  Statements and notes thereto appearing elsewhere in
this report.

Revenue and expense  transactions  in Canadian funds are converted to US dollars
at the  average  rates in  effect  when the  transactions  occurred.  Asset  and
liability  accounts are converted at year-end closing rates,  which were $0.6522
U.S. for one Canadian dollar at December 31, 1998; $0.6991 at December 31, 1997;
and $0.7301 at December 31, 1996.

         (a) Results of Operations

As a result of the sale of 714674 Alberta Ltd. (Calgary Chemical) effective June
30, 1998,  the Company has  reflected the  operations  of Calgary  Chemical as a
discontinued operation.  Revenue from sales during the six months until the sale
was  $286,347,  compared to $444,192 for the year 1997 and $145,889 for the year
1996 (from  acquisition in September 30, 1996).  Cost of goods sold was $147,496
in 1998, $227,240 in 1997, and $75,723 in 1996.

                                        5


<PAGE>


General and administrative  expenses for the fiscal year ended December 31, 1998
were  $769,790.  This reflects the change of business  direction of the Company,
including substantial costs for staff, legal,  accounting,  consulting,  travel,
and general office  expenditures.  Similar expenditures were $8,078 in 1997, and
$5,383  in  1996,  but are not  comparable,  as the  Company's  operations  were
conducted by its former  subsidiary,  Calgary Chemical,  which was sold in 1998.
The Company  incurred  $590,118 of research and  development  costs in 1998, all
related to the dental color  analyzer.  These costs include the manufacture of a
quantity of the product for demonstration and testing purposes,  and services of
consultants  and technical  firms in testing,  evaluating,  and  perfecting  the
product.

In 1998, the Company  recorded a loss from  discontinued  operations of $14,350,
and a loss from the sale of the subsidiary of $273,099.

         (b)  Capital Resources

The Company had a working  capital  deficiency of $840,987 at December 31, 1998.
The AEI  Trucolor  matter  (see  Item 3 - Legal  Proceedings)  has  delayed  the
company's plans to raise capital through the issuance of shares until the matter
is resolved.  In the meantime,  the Company is meeting its  obligations  through
funds loaned by a shareholder, and has issued capital stock for certain services
rendered to the  Company in  accordance  with an S-8  registration  filing.  The
company  anticipates that it will be able to raise funds through share issuances
once the legal matter has been resolved in favor of the Company.

The Company has made no commitments  for capital  expenditures,  but anticipates
further requirements to expend funds on research and development on the product.

         (c)  Liquidity

The Company is illiquid at the present time and is dependent  upon a shareholder
to provide  funds to maintain  its  activities,  pending  resolution  of the AEI
Trucolor legal matter whereupon it expects to be able to raise funds through the
issuance of shares.

         (d)  Year 2000 Computer Issue

The Year 2000 Issue  arises  because  many  computerized  systems use two digits
rather than four to identify a year.  Date-sensitive  systems may  recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
the year 2000 date is processed. In addition, similar problems may arise in some
systems  which use certain  dates in 1999 to  represent  something  other than a
date. The effects of the Year 2000 Issue may be experienced before, on, or after
January 1, 2000 and if not  addressed,  the impact on  operations  and financial
reporting may range from minor errors to significant  system failure which could
affect an entity's  ability to conduct  normal  business  operations.  It is not
possible  to be certain  that all aspects of the Year 2000 Issue  affecting  the
entity, including those related to the efforts of customers, suppliers, or other
third parties, will be fully resolved.

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated  financial statements of the Company are filed under this Item,
and are included herein by reference.

                                        6


<PAGE>



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

There have been no  disagreements  on accounting and financial  disclosures from
the  inception  of the  Company  through  to the date of this Form  10-KSB.  The
principal  accountants'  report on the financial  statements of the fiscal years
1998, 1997, and 1996 contained no adverse opinions, nor a disclaimer of opinion,
nor qualified as to uncertainty, audit scope, or accounting principles.

Effective  September 3, 1998,  Dick Cook  Schulli,  Chartered  Accountants,  the
Registrant's   Certifying  Accountant  for  the  past  two  fiscal  years,  were
dismissed. On September 3, 1998, Morgan & Company,  Chartered Accountants,  were
engaged to serve as the  Registrant's  new  auditors.  The selection of Morgan &
Company  was  approved  by the  Registrant's  Board of  Directors.  There was no
consultation  regarding  accounting  policy or procedures  with Morgan & Company
prior to their engagement.

Dick Cook  Schulli's  report on the  financial  statements  for the fiscal years
ended  December  31,  1996 and 1997 did not  contain  an  explanatory  paragraph
regarding the  Registrant's  ability to continue as a going  concern.  Dick Cook
Schulli's  reports  have not  contained an adverse  opinion or a  disclaimer  of
opinion,  or were  qualified  or modified as to  uncertainty,  audit  scope,  or
accounting  principles.  Nor has  there  been any  disagreement  with  Dick Cook
Schulli on any matter of accounting principles or practices, financial statement
disclosure  or auditing  scope or  procedure  during the  Registrant's  two most
recent fiscal years and from  December 31, 1997 to the date of  dismissal.  Dick
Cook Schulli has not advised the Registrant that the internal controls necessary
for the Registrant to develop  reliable  financial  statements do not exist. Nor
has Dick Cook Schulli advised the Registrant that  information has come to their
attention  that  has led  them  to no  longer  be  able to rely on  management's
representations,  or that has made  them  unwilling  to be  associated  with the
financial  statements prepared by management.  Dick Cook Schulli has not advised
the Registrant of the need to expand  significantly the scope of their audit, or
that  information has come to their attention that if further  investigated  may
materially  impact the fairness or  reliability of either:  a previously  issued
audit report or the underlying financial statements; or the financial statements
issued or to be issued covering the fiscal  period(s)  subsequent to the date of
the most  recent  financial  statements  covered by an audit  report  (including
information that may prevent them from rendering an unqualified  audit report on
those  financial  statements  ),  or  cause  them  to be  unwilling  to  rely on
management's  representations  or be associated with the Registrant's  financial
statements.  Nor has Dick Cook Schulli  advised the Registrant that in formation
has come to their  attention  that they have  concluded  materially  impacts the
fairness or  reliability  of either (i) a previously  issued audit report or the
underlying financial  statements,  or (ii) the financial statements issued or to
be issued  covering  the  fiscal  period(s)  subsequent  to the date of the most
recent financial  statements  covered by an audit report (including  information
that,  unless resolved to the accountant's  satisfaction,  would prevent it from
rendering an unqualified  audit report on those financial  statements).  Nor has
Dick Cook Schulli advised the Registrant of any other reportable event.

The  Registrant  provided  Dick  Cook  Schulli  with  a copy  of the  disclosure
contained  herein and requested  that Dick Cook Schulli  provide the  Registrant
with a letter addressed to the U.S.  Securities and Exchange  Commission stating
whether  they agree  with the  disclosure.  Dick Cook  Schulli  provided  such a
letter, which was attached as an Exhibit to the Report on Form 8-K.

                                        7


<PAGE>




                                    PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The  following are the names,  positions,  and  municipalities  of residence and
relevant backgrounds of key personnel of the Corporation:

PATRICK A. McGOWAN - (Age 60). 
         President, C.E.O. and Director, Coquitlam, British Columbia.
         President of the Company since April 16, 1998.  September 1996 to April
         1999, president of Consolidated Ewing Industries Inc., Vancouver, B.C.,
         a  company  formerly  engaged  in oil and  gas  exploration,  which  is
         publicly traded on the Vancouver  Stock Exchange.  November 1997 to the
         present,  President of American Hunter Exploration,  Vancouver, B.C., a
         privately held Nevada  corporation  engaged in oil and gas exploration.
         February  1998 to the  present,  President  and Director of U.S Diamond
         Corp.,   Vancouver,   B.C.,  the  parent  company  of  American  Hunter
         Exploration, a public company involved in natural resources, and traded
         on  the  Vancouver  Stock  Exchange.  August  1997  to  December  1997,
         President and Director of Globenet Resources Inc.,  Vancouver,  B.C., a
         public traded company traded on the Vancouver Stock  Exchange,  engaged
         in  natural  resource  exploration  and  development.  October  1992  -
         September 1996,  President and Director of The Indisposibles,  Burnaby,
         B.C., a manufacturer  and  distributor of infant wear,  incontinent and
         feminine hygiene products throughout North America and Europe.  January
         1988 to September  1992,  Executive  Vice  President  of Pacific  Paper
         Products,  Burnaby,  B.C., a manufacturer and distributor of paperboard
         products in British Columbia and Alberta.  Graduated from University of
         Western  Ontario  with  Masters  of  Business  Administration  in 1965,
         graduated  University of Oregon with  Bachelor of Science,  Finance and
         Economics in 1963.

ALLEN SCHWABE (Age 42).  
         Secretary, Treasurer and Director, Delta, British Columbia.
         Secretary,  Treasurer since April 16, 1998.  Since 1982 to the present,
         President and owner of Buellex Holdings,  Inc., Delta,  B.C., a company
         engaged in investing  for its own account.  January 1996 to present,  a
         Consultant to Pacific Insight Electronics  Corporation,  Nelson,  B.C.,
         Canada  providing  investment  advice  with  respect to current  market
         conditions  for a variety  of  investment  options.  March  1996 to the
         present, Director of Porcher Island Gold Corporation,  Vancouver, B.C.,
         a precious metal  exploration  company publicly traded on the Vancouver
         Stock  Exchange.   March  1991  to  June  1995,  Director  of  Cyberion
         Networking Corp., a publicly held company traded on the Vancouver Stock
         Exchange.  March  1995 to June  1996,  Director  of East West  Resource
         Corp.,  a publicly held mining  company  traded on the Vancouver  Stock
         Exchange.  May 1996 to  September  1997,  Director of G.F.M.  Resources
         Ltd., a publicly  held mining  company  traded on the  Vancouver  Stock
         Exchange.

DR. DAVID GANE - (Age 44).  
          Director,  White Rock, British Columbia.  Director since May 1998. Dr.
          Gane has  practiced  restorative  dentistry for 17 years and currently
          maintains  a part time  dental  practice  limited to  restorative  and
          appearance related dentistry in White Rock, British Columbia.  1998 to
          present,  President and  co-founder of Source  Dental  Imaging,  Inc.,
          White Rock, B.C.,  Canada,  a company  specializing in the development
          and sales of Dental Imaging Software. 1995 to present,  Co-founder and
          advisor to FX Software Solutions,  White Rock, B.C., Canada, a company
          specializing  in the  development  and sale of  Imaging  Solutions  to
          Dentist and  Physicians.  1993 to 1995,  president  and  co-founder of
          Pro-Dentec  Canada,  Langley,  B.C.,  Canada, a dental supply business
          headquartered  in  Datesville,  Arkansas.  Dr Gane  graduated from the
          University  of  Western  Ontario in 1977 with a B.Sc.  with  honors in
          Physiology  and  Pharmacology  and  obtained  his DDS degree  from the
          University of Western  Ontario in 1981.  Since September 1998 Dr. Gane
          has been Program Director since of Program  Technologies for Experdent
          Centers of Dental Excellence, Richmond B.C. Dr. Gane has made numerous
          lecture   presentations  and  has  published  articles  and  texts  on
          restorative and esthetic dentistry.

                                        8

<PAGE>


ITEM 10. EXECUTIVE COMPENSATION

         (a)  SUMMARY COMPENSATION TABLE (OMITTED FOR SIMPLICITY)

A private  company  wholly-owned  by Mr. McGowan  received or was due a total of
$63,000  of  compensation  in the  fiscal  year  ended  December  31,  1998,  in
accordance with a management  agreement approved by the directors in April, 1998
at a rate of $7,000 per month.

Mr.  Schwabe  was owed  $4,900 at  December  31,  1998 for  consulting  services
provided to the Company.

         (b)  OPTIONS/SAR GRANTS IN LAST FISCAL YEAR (INDIVIDUAL GRANTS)

The Company has a Directors and Officers  Stock Option Plan, and a Key Personnel
Compensation Plan, as described below. There have been no other options granted,
except in accordance with these plans.

          (c)  AGGREGATED  OPTION/SAR  EXERCISES  IN THE  LAST  FISCAL  YEAR AND
               FISCAL YEAR-END OPTION/SAR VALUES

There were no exercises of options in the last fiscal year.

         (d)  LONG-TERM INCENTIVE PLANS - AWARDS IN THE LAST FISCAL YEAR

In November 1996, the Company adopted the Wolf  Exploration  Inc. 1996 Directors
and Officers Stock Option Plan,  ("the Plan") for its officers,  directors,  key
personnel and  consultants to the Company.  In 1996 and 1997, a total of 960,000
options to purchase shares were granted under this plan. As a result of the sale
of  Calgary  Chemical,  and  change of  management,  the  960,000  options  were
cancelled in 1998.  By  resolution of the directors of the Company dated May 28,
1998,  the Company  reserved an additional one million shares of common stock of
the Company for the Plan  bringing  the total shares  reserved to 2,000,000  and
renamed the Plan "The Wolf  Industries  Inc. 1998  Directors and Officers  Stock
Option Plan" ("the  Revised  Plan") with all other terms and  conditions  of the
Plan remaining in full force and effect.

In September  1998, the Company by resolution of the directors,  established the
"1998 Key Personnel  Compensation Plan" ("Key Plan") whereby 1,000,000 shares of
the Company's  stock was reserved for  issuance.  By resolution of the directors
dated November,  1998, a further 1,000,000 shares of common stock was authorized
to be reserved for issuance,  bringing the total  issuable under the Key Plan to
2,000,000 shares of common stock.

During 1998, under the terms of the Revised Plan, a total of 1,050,000 option to
purchase  common  shares of the  Company  were  granted  to three  officers  and
directors of the Company at $0.25 per share for a five-year period.

During 1998, under the terms of the Key Plan,  options to purchase 75,000 shares
of the common  stock of the  Company  was  granted to an  employee  at $0.25 per
share, for a five-year period.  Also under the terms of the Key Plan,  1,973,026
shares of common stock of the Company were issued at a deemed price of $0.25 per
share,  and 1,000,000 shares of common stock of the Company at a deemed price of
$0.20 per share for services rendered by key personnel to the Company.

         (e)  COMPENSATION OF DIRECTORS

                           1. Standard Arrangements

The  members of the  Company's  Board of  Directors  are  reimbursed  for actual
expenses incurred in attending Board meetings.

                           2. Other Arrangements

There are no other arrangements.

                                       9

<PAGE>


          (f)  EMPLOYMENT  CONTRACTS AND  TERMINATION OF  EMPLOYMENT,  CHANGE IN
               CONTROL ARRANGEMENTS

As a result of the sale of Calgary  Chemical (Item 1(a)),  Mr. Coady resigned at
President and Chief Executive Officer,  Secretary,  and Director of the Company.
There was no  additional  cost to the Company  for  severance  or  vacation  pay
resulting from this termination.

Mr. Patrick McGowan was appointed  President and Chief Executive  Officer of the
Company in April 1998, at an annual fee of $84,000.  In 1998,  Andrea  Resources
Ltd.  a company  wholly-owned  by Mr.  McGowan  received  or was owed a total of
$63,000 for services under this agreement.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following  table sets forth  certain  information  regarding the  beneficial
ownership of Common Stock by each  director and nominee and by all directors and
officers of the  Company as a group and of certain  other  beneficial  owners of
more than 5% of any class of the Company's voting  securities as of December 31,
1998 unless otherwise noted. The number of shares  beneficially  owned is deemed
to include  shares of Common Stock which  directors of officers  have a right to
acquire  pursuant to the  exercise of options  within sixty days of December 31,
1998.  Each such person has sole voting and  dispositive  power with  respect to
such securities, except as otherwise indicated.

         (a)  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.

Name and Address              Number               Percentage
                             of Shares              of Class
--------------------------------------------------------------------------------
Andrew Engineering Inc.
7218 Hewitt Street
Burnaby, B.C.
V5A 3M2                      4,800,000                38.5%



         (b)  SECURITY OWNERSHIP OF MANAGEMENT.

Name and Address              Number               Percentage
                             Of Shares               of Class
--------------------------------------------------------------------------------
Patrick A. McGowan
211 - 1148 Westwood Street
Coquitlam, B.C.
V3B 4S4                          650.000    (1)        5.2%

Allen Schwabe
1730 Beach Grove Drive
Delta, B.C.                      200,000    (1)        1.6%
V4L 1P3

Dr. David Gane
202 - 15047 Marine Drive
White Rock, B.C.                 200,000    (1)        1.6%
V4B 1C5


(1)  Consists  entirely  of options to  purchase  shares at a price of $0.25 per
share.

                                       10


<PAGE>


         (c)  CHANGES IN CONTROL

Changes in control occurred in April 1998, when Patrick A. McGowan was appointed
the President and C.E.O. of the Company and Mr. Schwabe was appointed Secretary,
Treasurer  and members of the Board of  Directors.  All of the former  directors
resigned at that time and were replaced by the current directors,  consisting of
Mr. McGowan, Mr. Schwabe, and Dr. Gane.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Mr. McGowan is the sole  shareholder of Andrea  Resources Ltd., which billed the
Company  a total  of  $63,000  during  1998  for  services  rendered  under  the
management agreement (Item 10(f)). Buellex Holdings Inc., a company wholly owned
by Mr. Schwabe,  billed the Company $4,900 during 1998 for consulting  services.
Also during  1998,  Dr. Gane was paid $7,126 for  consulting  fees and a company
partially  owned  by Dr  Gane,  Image  FX Inc.  was  paid or was owed a total of
$24,553 for technical work in evaluating and testing the product.

The Company's By-laws include a provision  regarding Related Party  Transactions
which requires that each  participant to such a transaction  identify all direct
and indirect  interest to be derived as a result of the Company's  entering into
the related transaction. A majority of the disinterested members of the board of
directors must approve any Related Party Transaction

ITEM 13.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES & REPORTS ON FORM 8-K

The following documents are filed as part of this report under Part II, Item 8:

Audited Financial Statements and notes thereto   Pages F-1 to F-13

Exhibits as required by Item 601 of Regulation S-B

<TABLE>
<CAPTION>


Exhibit Number       Description                                          Incorporated by Reference to
-------------------------------------------------------------------------------------------------------

<S>                  <C>                                                  <C>
(3) (1)              Articles of Incorporation as amended                 Registrant's Report on Form 10SB12G
                                                                          dated June 19, 1997.

(3) (2)              Bylaws                                               Registrant's Report on Form 10SB12G 
                                                                          dated June 19, 1997.

(10) (1)             Sale agreement between Wolf Industries Inc.          Registrant's Quarterly Report on 
                     and Gorda Technology Holdings Limited                Form 10QSB for the quarter ended 
                                                                          March 31, 1998.

(10) (2)             License agreement between Wolf Industries Inc.,      Registrant's Quarterlyd Report on 
                     Andrew Engineering Inc., Andrew Rawicz Ph.D.         Form10QSB for the quarter ended 
                     and Ivan Melnyk Ph.D.                                March 31, 1998.


</TABLE>


                                       11


<PAGE>











                              WOLF INDUSTRIES INC.

                        Consolidated Financial Statements
                           (Expressed in U.S. Dollars)

                 For the years ended December 31, 1998 and 1997


















                                       12


<PAGE>

                                          


                                                                MORGAN & COMPANY
                                                           Chartered Accountants
                                                  P.O. Box 10007, Pacific Centre
                                           Suite 1730 - 700 West Georgia Street,
                                                         Vancouver, B.C. V7Y 1A1
                                                        Telephone (604) 687-5841
                                                              Fax (604) 687-0075

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of Wolf Industries Inc.
------------------------------------------------------------------

We have audited the  consolidated  balance sheet of Wolf  Industries  Inc. as at
December  31,  1998 and the  consolidated  statements  of  income  and  retained
earnings,  stockholders'  equity and cash flows for the year then  ended.  These
consolidated  financial  statements are the  responsibility of the corporation's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

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

In our opinion,  these  financial  statements  present  fairly,  in all material
respects,  the financial position of Wolf Industries Inc as at December 31, 1998
and the  results  of its  operations  and cash  flows for the year then ended in
accordance with general accepted accounting principles.

Without  qualifying  our  opinion  we draw  attention  to  Notes 1 and 11 to the
financial statements.  The Company has incurred a net loss of $1,798,830 for the
year  ended  December  31,  1998  and as at that  date,  the  Company's  current
liabilities  exceeded  its  current  assets by  $840,987.  These  factors  raise
substantial doubt that the Company will be able to continue as a going concern.

The  financial  statements  as at December  31, 1997 and for the year then ended
were audited by other auditors who expressed an opinion,  without qualification,
on March 12, 1998.



Vancouver, Canada                                    "Morgan & Company"
April 16, 1999                                       Chartered Accountants




Comments by Auditors on United States - Canada reporting difference
-------------------------------------------------------------------

In Canada,  reporting  standards  for  auditors do not permit the addition of an
explanatory  paragraph  (following the opinion  paragraph) when the consolidated
financial statements are affected by conditions and events that cast substantial
doubt on the  Company's  ability to continue as a going  concern.  Although  our
audit was conducted in accordance with both United States and Canadian generally
accepted auditing standards, our report to the stockholders dated April 16, 1999
is expressed in accordance with United States reporting  standards which require
a reference to such conditions and events in the Auditor's Report.



Vancouver, Canada                              "Morgan & Company"
April 16, 1999                                 Chartered Accountants



                                       13


<PAGE>





                              WOLF INDUSTRIES INC.

                           Consolidated Balance Sheet
                           (Expressed in U.S. Dollars)

                               As at December 31,

 
<TABLE>
<CAPTION>
                                                                        1998                        1997
<S>                                                              <C>                       <C>
Assets                                                              ---------------            ---------------
Current
    Accounts receivable                                          $      27,858              $       62,951
    Inventory                                                              --                       55,926
    Prepaid expenses                                                     25,000                      1,736
                                                                    ---------------            ---------------
                                                                         52,858                    120,613

Capital Assets (Note 3)                                                     --                     277,562

Excess of cost over net identifiable assets acquired (Note 4)               --                     227,714

Intangible Asset (Net of Amortization) (Note 10)                        1,293,600                      --
                                                                    ---------------            ---------------
                                                                 $      1,346,458           $      625,889
                                                                    ===============            ===============
Liabilities
Current
    Bank indebtedness (Note 5)                                   $       11,716             $       63,489
    Accounts payable and accrued liabilities                            882,129                    121,978
    Current portion of long-term debt (Note 6)                              --                      33,522
                                                                    ---------------            ---------------
                                                                        893,845                    218,989


Long-term debt (Note 6)                                                     --                     135,805
                                                                    ---------------            ---------------
                                                                        893,845                    354,794
                                                                    ---------------            ---------------
Stockholders' Equity

Common stock (Note 7)                                                 2,342,973                    354,367

Unrealized foreign exchange gain                                            --                       8,258

     
Retained earnings (deficit)                                          (1,890,360)                   (91,530)
                                                                    ---------------            ---------------

                                                                        452,613                    271,095
                                                                    ---------------            ---------------

                                                                 $      1,346,458           $      625,889
                                                                    ================           ================

</TABLE>


                                       15


<PAGE>

<TABLE>
<CAPTION>

                              WOLF INDUSTRIES INC.

          Consolidated Statement of Income (Loss) and Retained Earnings
                           (Expressed in U.S. Dollars)

                        For the years ended December 31,

                                                          1998                      1997                   1996
                                                    ---------------------     ---------------------     ---------------------
<S>                                                  <C>                       <C>                      <C>    
Expenses                                     
    Administration                                   $   769,790               $   8,078                 $  5,383
    Amortization                                          50,400
    Executive compensation                                63,000                      --                       --
    Rent                                                  38,073                      --                       --
    Research and development                             590,118                      --                       --
                                                       1,511,381                   8,078                    5,383

Net Loss for the year, before undernoted              (1,511,381)                 (8,078)                  (5,383)

Income (loss) from discontinued operations
    (Note 9)                                             (14,350)                 (88,308)                 10,239

Loss on sale of subsidiary company (Note 9)             (273,099)                     --                       --
 
Net Income (Loss) for the year                        (1,798,830)                 (96,386)                  4,856

Retained Earnings (Deficit), beginning of year           (91,530)                   4,856                      --


Retained Earnings (Deficit), end of year             $(1,890,360)              $ (91,530)               $   4,856
                                                    =====================     =====================     =====================

Income (Loss) per share                                       (0.19)              (0.01)                        0.01
                                                    =====================     =====================     =====================
</TABLE>


                                       16


<PAGE>

<TABLE>
<CAPTION>

                              WOLF INDUSTRIES INC.

                      Consolidated Statement of Cash Flows
                           (Expressed in U.S. Dollars)

                        For the years ended December 31,

                                                1998                        1997                     1996
                                          -----------------           -----------------       -----------------            
<S>                                     <C>                        <C>                       <C>    
Cash provided by (used for):
Operating activities
Net income (loss) from                      
    continuing operations
                                        $   (1,511,381)            $    (8,078)              $     (5,383)

Items not affecting cash
   Amortization                                 50,400                      --                        --
                                          -----------------           -----------------       -----------------
                                             1,460,981                  (8,078)                    (5,383)

   Changes in working capital:
         Accounts receivable                   (27,858)                     --                        --
         Prepaid expenses                      (25,000)                     --                        --
         Accounts payable                      850,977                  24,171                      6,982
                                          -----------------           -----------------       -----------------
                                              (662,862)                 16,093                      1,599

Discontinued operations                         17,698                (132,913)                  (250,304)
                                          -----------------           -----------------       -----------------
                                              (645,164)               (116,820)                  (248,705)
                                          -----------------           -----------------       -----------------
Financing activities

   Issue of common shares                      644,606                 101,449                    348,650
   Share issue costs                                --                 (54,412)                   (41,320)
                                          -----------------           -----------------       -----------------
                                               644,606                  47,037                    307,330
                                          -----------------           -----------------       -----------------

Increase (decrease) in cash                       (558)                (69,783)                    58,625

Cash (bank indebtedness),                            
      beginning of year
                                               (11,158)                 58,625                        --
                                          -----------------           -----------------       -----------------
Cash (Bank indebtedness),
    end of year                         $      (11,716)             $  (11,158)             $      58,625
                                          =================           =================       =================

</TABLE>



                                       17


<PAGE>


                              WOLF INDUSTRIES INC.

                 Consolidated Statement of Stockholders' Equity
                           (Expressed in U.S. Dollars)

                        For the years ended December 31,

<TABLE>
<CAPTION>

                                        Common Shares              Additonal          Retained          Foreign              
                              --------------------------------     Paid-In            Earnings          Exchange
                                   Shares           Amount         Capital            (Deficit)         Gains            Total
------------------------------------------------------------------------------------------------------------------------------------


1998

<S>                           <C>               <C>           <C>                 <C>                <C>            <C>        
Balance, beginning of year    $ 10,684,716      $ 10,684      $  343,683          $    (91,530)      $   8,258      $   271,095

Stock Reverse Split 3:1         (7,123,094)           --              --                    --              --             --

Common shares issued             7,773,026            --       1,988,606                    --              --        1,988,606

Share issue costs                       --            --              --                    --              --             --

Net loss                                --            --              --            (1,798,830)             --       (1,798,830)

Unrealized foreign
    Exchange gain                       --            --              --                    --          (8,258)          (8,258)
                                ------------    ------------  ------------        -------------      ------------   ------------

Balance, end of year          $ 11,334,648      $ 10,684      $2,332,289          $ (1,890,360)      $      --      $   452,613
                                ============    ============  ============        =============      ============   ============ 
1997

Balance, beginning of year      10,497,300      $ 10,497      $  296,833          $      4,856       $      --      $   312,186

Common shares issued           187,416,000           187         101,262                    --              --          101,449

Share issue costs                       --            --         (54,412)                   --              --          (54,412)

Net loss                                --            --              --               (96,386)             --          (96,386)

Unrealized foreign
    Exchange gain                       --            --              --                    --           8,258            8,258
                                ------------    ------------  ------------        -------------      ------------   ------------

Balance, end of year            10,684,716      $ 10,684      $  343,683          $    (91,530)      $   8,258      $   271,095
                                ============    ============  ============        =============      ============   ============ 
1996

Common shares issued            10,497,300      $ 10,497      $  338,453          $         --       $      --      $   348,650

Share issue costs                       --            --         (41,320)                   --              --          (41,320)

Net income                              --            --              --                 4,856              --            4,856
                                ------------    ------------  ------------        -------------      ------------   ------------

Balance, end of year            $ 10,497,300    $ 10,497      $  296,833          $      4,856       $      --      $   312,186
                                ============    ============  ============        =============      ============   ============ 

</TABLE>



                                       18


<PAGE>





                              WOLF INDUSTRIES INC.

                   Notes to Consolidated Financial Statements
                           (Expressed in U.S. Dollars)

                 For the years ended December 31, 1998 and 1997

1.       Operations

          Wolf Exploration Inc. was incorporated  under corporate charter of the
          State of Nevada on January 4, 1996.  Active  operations  commenced  on
          July 10, 1996. On March 17, 1997, Wolf  Exploration  Inc.  changed its
          name to Wolf Industries Inc. The  Corporation's  business  offices are
          located in Vancouver, British Columbia, Canada.

          In April  1998,  the  Corporation  acquired  an  exclusive  license to
          develop and market a dental color  analyzer.  (Note 10). The Company's
          primary  business  activity  since  that  date  has  been  to  conduct
          research,  development and marketing plans to manufacture and sell the
          product. Prior to this acquisition, the Corporation's primary business
          activity was the blending of chemicals for use in oilfield  production
          from a wholly owned  subsidiary's plant in Calgary,  Alberta,  Canada.
          The  subsidiary  714674 Alberta Ltd. was sold effective June 30, 1998.
          (Note 9)

          The consolidated  financial statements of the corporation are prepared
          in accordance with U.S. generally accepted accounting principles.

2.       Significant Accounting Policies

         (a)   Consolidation (Discontinued Operations)

               The Corporation sold its wholly owned subsidiary,  714674 Alberta
               Ltd. (o/a Calgary Chemical) effective June 30, 1998. (Note 9) The
               presentation of the  consolidated  financial  statements for this
               and prior years has been changed to reflect the  subsidiary  as a
               discontinued operation.

         (b)   Excess of Cost over Net Identifiable Assets Acquired

               The  excess of cost over net  identifiable  assets  acquired  was
               amortized on a straight-line over ten years.

         (c)   Capital Assets

               Capital assets are recorded at cost.  Amortization is provided to
               apportion  the assets over their  estimated  useful  lives at the
               following annual rates:

               Equipment                           30% declining balance
               Processing equipment                10% declining balance
               Furniture and fixtures              20% declining balance
               Leasehold improvements              5 years straight-line


         (d)   Intangible Asset

               Intangible asset, license and patent rights, are recorded at cost
               less  accumulated  amortization.  Amortization  is  provided on a
               straight  line basis  over a term of twenty  years.  Pursuant  to
               Statement of Financial  Accounting  Standards No 121,  long lived
               assets  held by the  Company  must  be  reviewed  for  impairment
               whenever events or circumstances  indicate the carrying amount of
               the  asset  may  not  be  recoverable.   An  impairment  loss  is
               recognized in the period it is determined.


                                                       19


<PAGE>





                              WOLF INDUSTRIES INC.

                   Notes to Consolidated Financial Statements
                           (Expressed in U.S. Dollars)

                 For the years ended December 31, 1998 and 1997

2.       Significant Accounting Policies, continued

         (e)   Revenue Recognition

               Revenue  earned  by  714674  Alberta  Ltd.  in  the  blending  of
               chemicals was recorded on the completed contract basis.

         (f)   Foreign Currency Translation

               The  Company's  functional  currency is the  Canadian  Dollar and
               reporting  currency is the United States dollar.  Monetary assets
               and  liabilities are translated at the exchange rate in effect at
               the balance sheet date and non-monetary assets and liabilities at
               the rate in  effect  on the  dates of the  related  transactions.
               Revenues  and  expenses  are  translated  at rates  approximating
               exchange rates in effect at the time of the  transactions.  Gains
               or losses arising on conversion of foreign currency  transactions
               are included in income in the period they occur.

         (g)   Income Taxes

               The Company uses the liability  method of  accounting  for income
               taxes pursuant to SFAS No. 109. The only  significant  tax assets
               the Company has are the accumulated  non-capital losses which are
               available  to  offset  future  taxable   income.   The  Company's
               operations  have no income  subject to income taxes and cannot be
               determined  that such tax assets will be  realized.  Accordingly,
               the Company would  eliminate the effect of the recognition of any
               of these tax assets by the  recording  of a  valuation  allowance
               equal to the value of the tax assets.

         (h)   Use of Estimates

               The  preparation  of financial  statements,  in  conformity  with
               generally accepted accounting principles,  required management to
               make estimates and  assumptions  that reflect the reported amount
               of  assets,   liabilities,   revenues,   expenses   and   related
               disclosures. Actual results could differ from those estimates.

3.       Capital Assets

                                              1998                 1997
                                         ---------------------------------------
                                         Net Book Value         Net Book Value
                                         -----------------   -------------------
Equipment                                     --                   21,780
Processing equipment                          --                   232,572
Furniture and fixtures                        --                   11,353
Leasehold improvements                        --                   11,857
                                       ------------------    -------------------
                                        $     --             $     277,562
                                       ==================    ===================


                                       20


<PAGE>



                              WOLF INDUSTRIES INC.

                   Notes to Consolidated Financial Statements
                           (Expressed in U.S. Dollars)

                 For the years ended December 31, 1998 and 1997


4.   Excess of Cost over Net Identifiable Assets Acquired


                                               1998                     1997
     Excess of cost over net identifiable 
     assets acquired in acquisition of
     714674 Alberta Ltd. (
     o/a Calgary Chemicals)

                                            $      --               $ 257,647

     Less accumulated amortization                 --                 (29,933)
                                           ------------             ------------

                                            $      --               $ 227,714
                                           ============             ============
5.   Bank Indebtedness

     Bank indebtedness consists of:            1998                     1997
                                           ------------             ------------
     Bank overdraft                         $  11,716                $ 11,158
     Demand operating loan                         --                  52,331
                                           ------------             ------------
                                            $  11,716                $ 63,489
                                           ============             ============
6.   Long-Term Debt

                                                 1998                    1997
                                           ------------             ------------
     Term bank loan  requiring  monthly  
     payments of $2,796 plus interest
     at Canadian bankers acceptance 
     rate plus 4.14%, secured by a 
     first charge on all assets

                                            $      --                $  169,327

     Less current portion                          --                    33,522
                                           ------------             ------------
                                            $      --                $  135,805
                                           ============             ============

     During  1997,  at the option of the  vendor,  $46,449  of the  vendor  loan
     payable was converted into 77,416 common shares.

                                       21


<PAGE>


                                               WOLF INDUSTRIES INC.

                                    Notes to Consolidated Financial Statements
                                            (Expressed in U.S. Dollars)

                                  For the years ended December 31, 1998 and 1997

7.  Common Stock

Authorized:   200,000,000 common shares, par value $0.001 each.

<TABLE>
<CAPTION>
                                                 1998                                    1997

                                     Number              Amount               Number            Amount
                                 --------------      --------------        --------------   --------------
<S>                              <C>                 <C>                   <C>              <C>    
Issued and outstanding
    
Balance beginning of year        $  10,684,716       $    354,367          $  10,497,300    $   307,330

3:1 Reverse Stock Split             (7,123,094)                --

Private Placements                          --                 --                 85,000         42,500

Conversion of Vendor Loan                   --                 --                 77,416         46,449

Acquisition of licences              4,800,000                 --                     --             --

For services                         2,973,026          1,988,606                 25,000         12,500

                                                                              10,684,716        408,779
Less share issue costs                      --                 --                     --        (54,412)

                                 --------------      --------------        --------------   --------------
                                 $  11,334,648       $  2,342,973          $  10,684,716       $354,367
                                 ==============      ==============        ==============   ==============
Represented by:
Common shares at par value                                10,684                            $    10,684
Additional paid in capital                                2,332,289                             343,683
                                                     --------------                         --------------
                                                     $    2,342,973                         $   354,367
                                                     ==============                         ==============  
</TABLE>

     At December 31, 1998,  options providing for the issue of additional common
     shares are outstanding as follows:

      Number               Price                 Expiry Date

    1,050,000              $0.25               August 17, 2003
      75,000               $0.25               October 1, 2003



                                       22


<PAGE>


                              WOLF INDUSTRIES INC.

                   Notes to Consolidated Financial Statements
                           (Expressed in U.S. Dollars)

                 For the years ended December 31, 1998 and 1997

7.   Common Stock, continued

     The Company  accounts for options  granted using the intrinsic value method
     and in accordance with the accounting  prescribed in Accounting  Principles
     Board Opinion No 25 ("APB 25"). Under APB 25, because the exercise price of
     the  Company's  employee  stock  options  equals  the  market  price of the
     underlying  stock  on  the  date  of  grant,  no  compensation  expense  is
     recognized. An alternative method is the fair value accounting provided for
     under FASB  statement  No. 123 ("SFAS No 123"),  which  required the use of
     option valuation  models.  Pro forma  information  regarding net income and
     earnings per share is required by SFAS No. 123, and has been  determined as
     if the Company had accounted  for its options  granted under the fair value
     method of that Statement. The fair value for these options was estimated at
     the date of the grant using a  Black-Scholes  option pricing model with the
     following weighted average  assumptions for 1998, 1997, and 1996; risk free
     rate of 5.25%; no dividends,  volatility factor of the expected life of the
     Company's common stock of 163%; and a weighted average expected life of the
     options granted in each year of five years. The pro forma effect of SFAS No
     123 is as follows:

                                             Pro Forma
                                             ---------
          December 31, 1998

Net loss for the period        $     2,074,046
Loss per share                 $         0.221


     No fair value  estimate was made for 1997 and 1996 as the  Company's  stock
     was not publicly traded.

8.   Related Parties

     (i)  During the year,  the company paid or accrued  $63,000 for  management
          fees to a company wholly owned by a director.

     (ii) A total of $31,679 was paid or accrued to a director  and to a company
          owned by a director for consulting and technical services rendered.

     (iii)Accounts  payable includes $4,900 payable to a company wholly owned by
          a director for consulting fees.


                                       24


<PAGE>


                              WOLF INDUSTRIES INC.

                   Notes to Consolidated Financial Statements
                           (Expressed in U.S. Dollars)

                 For the years ended December 31, 1998 and 1997

9.   Sale of 714674 Alberta Ltd. (o/a Calgary Chemical)

     The  Corporation  disposed of its wholly owned  subsidiary,  714674 Alberta
     Ltd.  (o/a  Calgary  Chemical)  effective  June 30, 1998 to an arm's length
     corporation.  The  consideration  for the sale was:  a payment  of  fifteen
     percent of the  subsidiary's  audited  after-tax profit for the fiscal year
     1998; indemnification of the Corporation from Calgary Chemical's bank debt;
     a  release  of the  employment  contract  of the  former  president  of the
     Corporation;  cancellation of options to purchase shares of the Corporation
     held by the former president; and forgiveness by the Corporation of $59,735
     owed by the subsidiary to the Corporation.

     As a result of the sale of 714674 Alberta Ltd. (Calgary Chemical) effective
     June 30, 1998, the company has reflected the operations of Calgary Chemical
     as a discontinued operation. Revenue from sales during the six months until
     the sale was  $286,347  compared to $444,192 for the year 1997 and $145,889
     for the year 1996 (from acquisition September 30, 1996). Cost of goods sold
     was $147,496 in 1998, $227,240 in 1997 and $75, 723 in 1996.

10.  Intangible Asset

     On April 8, 1998,  the  Corporation  entered into a License  Agreement with
     Andrew Engineering Inc.,  ("Andrew") an arm's length  corporation,  whereby
     the  Corporation  acquired a worldwide  license to manufacture and market a
     patented  device for the color  matching of  dentures to a patient's  tooth
     color. The license agreement requires the Corporation and Andrew to develop
     a business plan for  manufacturing  and marketing of the device,  including
     obtaining of financing; issuance of 4.8 million shares of the Corporation's
     stock to Andrew;  and provides for the  Corporation to pay a royalty of 10%
     of the gross profit of sales if the  Corporation  manufactures  the product
     itself,  or 7% of gross profit if  manufacturing  is done by an independent
     third  party.  The 4.8 million  shares  were  issued  during the year for a
     deemed value of $1,344,000.

11.  Contingencies

     (i) An action has been  brought by AEI  Trucolor  Inc. in British  Columbia
     Supreme Court against Wolf Industries  Inc.,  Andrew  Engineering  Inc. and
     other parties to the Licence  Agreement as described  above. AEI has made a
     claim against the defendants as follows:

     (a)  Declaration  that AEI Trucolor  Inc.  holds all  ownership  rights and
          interest in the dental color analyzer;

     (b)  An injunction against the Defendants from continuing the commercial or
          other development of the dental color analyzer;

     (c)  An injunction  against the Defendants  from disposing of or in any way
          dealing with the dental color analyzer;

     (d)  An order that the dental color analyzer be delivered  forthwith to the
          Plaintiff;

     (e)  An accounting of all monies, profits and benefits made and received by
          the Defendants for and on account of AEI Trucolor Inc.;

     (f)  General damages

     (g)  Punitive damages

     The  Corporation  has filed an  Appearance  and is  currently  preparing  a
     response   denying  the  allegations  and  requesting  that  the  claim  be
     dismissed.

                                       24


<PAGE>


                                               WOLF INDUSTRIES INC.

                                    Notes to Consolidated Financial Statements
                                            (Expressed in U.S. Dollars)

                              For the years ended December 31, 1998 and 1997

11.  Contingencies, continued

     (ii) The Company is  presently  in  litigation  in the Los  Angeles  County
          Superior Court, West District,  Santa Monica,  California,  concerning
          the approximately  $55,000 demand of the complaint purportedly due and
          owing by the Company to Plaintiff  Harvey  Productions Inc. for public
          relations  services  allegedly  rendered but not paid. The Company has
          denied these  allegations.  The matter is still in the discovery stage
          and has not been set for trial.

12.  Uncertainty Due to the Year 2000 Issue:

     The Year 2000 Issue arises because many computerized systems use two digits
     rather than four to identify a year.  Date-sensitive  systems may recognize
     the  year  2000 as 1900  or some  other  date,  resulting  in  errors  when
     information  using the year 2000 date is  processed.  In addition,  similar
     problems  may  arise in some  systems  which use  certain  dates in 1999 to
     represent  something  other than a date. The effects of the Year 2000 Issue
     may be  experienced  before,  on,  or  after  January  1,  2000  and if not
     addressed,  the impact on operations and financial reporting may range from
     minor errors to  significant  system failure which could affect an entity's
     ability to conduct  normal  business  operations.  It is not possible to be
     certain  that all  aspects of the Year 2000  Issue  affecting  the  entity,
     including  those related to the efforts of customers,  suppliers,  or other
     third parties, will be fully resolved.










                                       25


<PAGE>





                                   SIGNATURES

Pursuant to the  requirements  of Section 12 of the Securities Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities set forth below on the dates indicated.

Date:  May 11, 1999
---------------------------------

Wolf Industries Inc.

By /s/ Patrick A. McGowan
---------------------------------
Patrick A. McGowan, Title:  President, Chief Executive Officer, and Director

By /s/ Allen Schwabe
---------------------------------
Allen Schwabe, Title:  Director

By /s/ David Gane
---------------------------------
David Gane, Title:  Director



                                       26


<PAGE>