================================================================================

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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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                                    FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES  EXCHANGE ACT
OF 1934 {x}

For the quarterly period ended March 31, 1999

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 { }

         For the transition period from ________________________

         Commission File Number: 0-29292


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                               HAGLER BAILLY, INC.
             (Exact name of registrant as specified in its charter)
--------------------------------------------------------------------------------


           Delaware                                                 54-1759180
   (State or other jurisdiction of incorporation or organization)      
   I.R.S. Employer Identification Number

              1530 Wilson Boulevard, Suite 400, Arlington, VA 22209
               (Address of principal executive offices) (Zip Code)


                                  703-351-0300
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing  requirements  for
the past 90 days. {x}Yes { }No

As of April 19, 1999, the  Registrant had 16,523,966  shares of its common stock
outstanding.



<PAGE>



ii

                                        i
                                TABLE OF CONTENTS


                                     PART I


ITEM 1.  FINANCIAL STATEMENTS..................................................1

CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 1999 (UNAUDITED) AND DECEMBER 31,
1998...........................................................................1
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE  MONTHS ENDED MARCH 31,
1999 AND 1998 (UNAUDITED)......................................................2
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE  MONTHS ENDED MARCH 31,
1999 AND 1998 (UNAUDITED)......................................................3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.....................................4


iTEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS..................................6



                                     PART II

ITEM 1.  LEGAL PROCEEDINGS....................................................14


ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS............................14


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.....................................15


SIGNATURES....................................................................19






<PAGE>




                                     PART I

Item 1.  Financial Statements
<TABLE>
<CAPTION>
                               Hagler Bailly, Inc.
                           Consolidated Balance Sheets
                                 (in thousands)

                                                                                        March 31,          December 31,
                                                                                           1999                1998
                                                                                    ------------------- -------------------
                                                                                       (unaudited)
<S>                                                                                          <C>                  <C>
Assets                                                                                 
Current assets:
       Cash & cash equivalents                                                             $    12,334         $    16,165
       Accounts receivable, net of allowance of $3,839 and $3,888
            in 1999 and 1998, respectively                                                      60,189              59,092
       Note receivable                                                                               -                 382
       Prepaid expenses                                                                          3,132               2,620
       Other current assets                                                                        392                 304
                                                                                    ------------------- -------------------
Total current assets                                                                            76,047              78,563
Property and equipment,net                                                                       6,842               6,463
Software development costs, net                                                                    720                 898
Intangible assets, net                                                                          15,268              14,208
Other assets                                                                                     1,209               1,290
                                                                                    =================== ===================
Total assets                                                                                $  100,086          $  101,422
                                                                                    =================== ===================
Liabilities and stockholders' equity
Current liabilities:
       Accounts payable and accrued expenses                                                 $   8,922           $   8,476
       Accrued compensation and benefits                                                         8,566               8,713
       Billings in excess of cost                                                                2,064               2,288
       Current portion of long-term debt                                                           333                 345
       Income taxes payable                                                                        794               2,547
       Deferred income taxes                                                                     1,900               1,900
                                                                                    ------------------- -------------------
Total current liabilities                                                                       22,579              24,269
Long-term debt, net of current portion                                                             670                 681
Minority interest                                                                                  223                 177
Deferred income taxes                                                                              927                 927
Other deferred                                                                                   1,790               1,769
                                                                                    ------------------- -------------------
Total liabilities                                                                               26,189              27,823
Stockholders' equity:
       Common stock,  $0.01 par  value,  50,000  shares  authorized;  16,636 and
           16,483 issued and outstanding at March 31, 1999 and
           December 31, 1998, respectively                                                         166                 165
       Additional capital                                                                       71,486              72,322
       Retained earnings                                                                         2,387               1,206
       Foreign currency translation                                                              (142)                (94)
                                                                                    ------------------- -------------------
Total stockholders' equity                                                                      73,897              73,599
                                                                                    =================== ===================
Total liabilities and stockholders' equity                                                   $ 100,086           $ 101,422
                                                                                    =================== ===================
See accompanying notes.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

                               Hagler Bailly, Inc.
                      Consolidated Statements of Operations
                      (in thousands except per share data)
                                   (Unaudited)

                                                                 Three Months Ended
                                                                      March 31,
                                                               1999               1998
                                                         -----------------  -----------------
<S>                                                             <C>                <C>  
Revenues:
  Consulting revenues                                           $  39,687         $   37,931
  Other revenues                                                      543              1,315
                                                         -----------------  -----------------
Total revenues                                                     40,230             39,246
Cost of services                                                   30,623             28,768
                                                         -----------------  -----------------
Gross profit                                                        9,607             10,478

Merger related and other non-recurring costs                            -                367
Selling, general and administrative expenses                        7,583              4,884

Stock and stock option compensation                                     -              2,165
                                                         -----------------  -----------------
Income from operations                                              2,024              3,062
Other income (expenses), net                                           87               (47)
                                                         -----------------  -----------------
Income before income tax expense and loss from                                               
  equity investment in joint venture                                2,111              3,015
Income tax expense                                                    786              2,074
                                                         -----------------  -----------------
Income before loss from equity investment in joint                                           
   venture                                                          1,325                941
Loss from equity investment in joint venture                        (143)                  -
                                                         -----------------  -----------------
Net income                                                       $  1,182            $   941
                                                         =================  =================

Net income per share:
 Basic                                                           $   0.07           $   0.06
 Diluted                                                         $   0.07           $   0.06

Weighted average shares outstanding:                                         
  Basic                                                            16,552             15,606
  Diluted                                                          17,171             16,417
  
See accompanying notes.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                               Hagler Bailly, Inc.
                      Consolidated Statements of Cash Flows
                                 (in thousands)
                                   (Unaudited)
                                                                              Three Months Ended March 31,
                                                                               1999                  1998
                                                                        -------------------   --------------------
<S>                                                                                <C>                      <C>
Operating activities
Net income                                                                         $ 1,182                 $  941
Adjustments to reconcile net income to net cash used in
  operating activities:
       Depreciation and amortization expense                                         1,317                    958
       Stock and stock option compensation                                               -                  2,165
       Provision for deferred income taxes                                               -                    279
       Provision for accounts receivable                                               313                    215
       Loss on equity investment in  joint venture                                     143                      -
       Minority interest                                                                46                      -
       Changes in operating assets and liabilities:
             Accounts receivable                                                   (1,090)                (2,615)
             Note receivable                                                           382                      -
             Prepaid expenses                                                      (1,361)                (2,205)
             Other current assets                                                     (88)                  (100)
             Other assets                                                             (89)                    290
             Deferred compensation                                                       -                     40
             Accounts payable and accrued expenses                                     389                (1,450)
             Accrued compensation and benefits                                       (409)                (3,713)
             Billings in excess of cost                                              (256)                     17
             Income taxes payable                                                  (1,753)                  (832)
             Other deferred                                                             21                  1,153
                                                                        -------------------   --------------------
Net cash used in operating activities                                              (1,253)                (4,857)
Investing activities
  Acquisition of property and equipment                                              (444)                  (575)
  Amount received in liquidation of subsidiary                                           -                    160
  Sale of investments                                                                    -                  4,247
  Purchase of acquired companies                                                         -                  (440)
                                                                        -------------------   --------------------
Net cash (used in) provided by investing activities                                  (444)                  3,392
Financing activities
  Issuance of common stock - options                                                   106                     21
  Purchase of treasury stock                                                       (2,217)                      -
  Dividends paid by foreign subsidiary                                                   -                  (333)
  Net borrowings from bank line of credit                                                -                  1,706
  Principal payments on debt                                                          (23)                  (191)
                                                                        -------------------   --------------------
Net cash (used in) provided by financing activities                                (2,134)                  1,203

Net decrease in cash and cash equivalents                                          (3,831)                  (262)
Cash and cash equivalents, beginning of period                                      16,165                  5,261
                                                                        -------------------   --------------------
Cash and cash equivalents, end of period                                          $ 12,334                $ 4,999
                                                                        ===================   ====================
See accompanying notes.
</TABLE>

                               HAGLER BAILLY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1.  Basis of Presentation

         The accompanying unaudited interim consolidated financial statements of
Hagler Bailly,  Inc. (the "Company") have been prepared pursuant to the rules of
the Securities  and Exchange  Commission  ("SEC") for quarterly  reports on Form
10-Q and do not include all of the information and note disclosures  required by
generally  accepted  accounting  principles.  The information  furnished  herein
reflects  all  adjustments,  of a normal  recurring  nature,  which are,  in the
opinion of management,  necessary for a fair  presentation  of results for these
interim periods.

         The interim results of operations are not necessarily indicative of the
results to be expected for the entire fiscal year ending December 31, 1999.



Note 2.  Earnings per Share

         Basic  earnings  per share is computed  based on the  weighted  average
number of shares of common  stock  outstanding  during the  respective  periods.
Diluted  earnings per share is inclusive of the dilutive  effect of  unexercised
stock options using the treasury stock method.
<TABLE>
<CAPTION>
                                                          For the three months ended March 31,
                                                               1999               1998
                                                               ----               ----

<S>                                                          <C>               <C>   
Net income                                                   $1,182            $  941
                                                         =================  =================
 
Weighted average shares of common stock  outstanding                                         
during the period                                            16,552            15,606

Effect of dilutive securities:
      Stock options                                             619               811
                                                         -----------------  -----------------

Weighted average shares of common stock and                                                  
 dilutive securities                                         17,171            16,417
                                                         =================  =================
</TABLE>

Note 3. Business Combination

         On February 8, 1999, the Company acquired all of the outstanding  stock
of Lacuna  Consulting  Limited  ("Lacuna"),  a United  Kingdom  corporation,  in
exchange for 65,000 shares of the Company's  common stock.  The  acquisition was
accounted for as a purchase.  Accordingly, the consolidated financial statements
reflect the results of operations of Lacuna since the date of acquisition.  As a
result  of  the  transaction,   the  Company  recorded   intangible   assets  of
approximately $1.3 million.



Note 4. Stock Repurchase Plan

     On March 22,  1999,  the  Company  announced  that its  Board of  Directors
authorized the  repurchase of up to 1.5 million  shares of the Company's  common
stock.  The  purchases  will be made from time to time in the open  market or in
privately  negotiated  transactions.  As of March  31,  1999,  the  Company  had
repurchased 286,000 shares.


Note 5. Components of Comprehensive Income

         Comprehensive  income includes the Company's net earnings  adjusted for
changes, net of tax, of cumulative translation adjustments. Comprehensive income
for the three months ended March 31, 1999 and 1998 is as follows:

<TABLE>
<CAPTION>
                                                                 Three Months Ended
                                                                      March 31,
                                                               1999               1998
                                                               ----               ----
<S>                                                             <C>                 <C>
Comprehensive Income:
  Net Income                                                     $  1,182            $   941
  Foreign translation adjustment                                     (29)               (93)
                                                         -----------------  -----------------
                                                        
Total comprehensive income:                                      $  1,153            $   848
                                                         =================  =================
                                                         
</TABLE>




Note 6.  Subsequent Events

     From April 1, 1999  through  April 19,  1999,  the Company  repurchased  an
additional  112,500  shares of its common  stock  through  its stock  repurchase
program.  As of April  19,  1999,  the  Company  was  authorized  to  repurchase
approximately 1.1 million additional shares.
        


     On April 30, 1999,  the Company  acquired all of the  outstanding  stock of
Washington  International  Energy Group Ltd. , a Washington D.C. based worldwide
provider of energy and environmental  policy consulting  research  services,  in
exchange for cash and shares of the Company's  common stock. The acquisition was
accounted for as a purchase.



<PAGE>



Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

Overview

         Statements   included  in  Management's   Discussion  and  Analysis  of
Financial  Condition  and  Results of  Operations  which are not  historical  in
nature,  are  intended to be, and are hereby  identified  as,  "forward  looking
statements"  for  purposes  of the safe  harbor  provided  by Section 21E of the
Securities   Exchange   Act  of  1934,   as  amended   by  Public  Law   104-67.
Forward-looking  statements may be identified by words  including  "anticipate,"
"believe,"  "estimate," "expect" and similar  expressions.  The Company cautions
readers that  forward-looking  statements,  including without limitation,  those
relating to the Company's future business prospects,  revenues, working capital,
liquidity, and income, are subject to certain risks and uncertainties that would
cause  actual  results  to  differ   materially  from  those  indicated  in  the
forward-looking   statements,   due  to  several   important   factors  such  as
concentration  of the  Company's  revenues from a relatively  limited  number of
public and private clients  involved in the energy and network  industries,  the
Company's ability to attract,  retain and manage professional and administrative
staff, fluctuations in quarterly results, risks related to acquisitions, and the
fact that historical  operations and performance are not necessarily  indicative
of future operations and performance,  among others, and other risks and factors
identified  from  time to time in the  Company's  reports  filed  with  the SEC,
including the risk factors  identified in the Company's  Registration  Statement
(No.  333-22207) on Form S-1, and the  Company's  Annual Report on Form 10-K for
the year ended December 31, 1998.

         The Company,  together  with its wholly owned  subsidiaries  PHB Hagler
Bailly,  Hagler Bailly  Services,  and several of its other domestic and foreign
wholly owned  subsidiaries,  is a leading  provider of professional  services to
corporate  and  government  clients  on  energy,  network  industries,  and  the
environment.  As of March 31, 1999,  Hagler  Bailly  employed a staff of 848, of
which over two-thirds were consulting and technical professionals. The Company's
common stock is quoted on the NASDAQ National Market under the symbol, "HBIX".

     The Company's  revenues consist of consulting  revenues and other revenues.
Consulting  revenues  represent  revenues  associated with  professional  staff,
subcontractors and independent  consultants,  and client reimbursable  expenses.
These  revenues  are derived  from the  Company's  primary  business of offering
corporate clients strategy and business operations consulting,  economic counsel
and litigation support, and market research and survey analysis.  Other revenues
include   those  derived  from   information-based  products  and  services  and
publication of newsletters, reference manuals and data series for the energy and
transportation  industries services. The Company's client base includes both the
public and commercial  rate sector.  Revenue from the commercial  rate sector is
typically  characterized  by higher gross  margins than the public  sector,  yet
generally   requires  a  higher  relative  level  of   infrastructure   support.
Consequently,  the  Company's  operating  performance  is affected by its public
sector / commercial rate sector business mix. Through strategic acquisitions and
internal  growth,  the Company has increased its  commercial  rate sector client
base, and will continue to pursue such opportunities in the future.

         On February 8, 1999, the Company acquired all of the outstanding  stock
of Lacuna  Consulting  Limited,  a United Kingdom  corporation,  in exchange for
65,000 shares of the Company's  common stock.  The acquisition was accounted for
as a purchase method.


Results of Operations

         The following  table presents for the periods  indicated the percentage
of revenues  represented by certain income and expense items, and the percentage
period-to-period increase (decrease) in such items:


<TABLE>
<CAPTION>

                                                                       % period-to-period
                                                                            increase
                                                                          (decrease) in
                                                                             dollars
                                          ------------------------     --------------------
                                           Percentage of revenues         Three months
                                          ------------------------     ended Mar. 31, 1999
                                                                           compared to
                                            Three months ended            three months
                                                 March 31,             ended Mar. 31, 1998

<S>                                              <C>         <C>              <C>
                                                 1999        1998
Revenues:
  Consulting                                    98.6        96.6               4.6
  Other                                          1.4         3.4             (58.7)
    Total revenues                             100.0       100.0               2.5
Cost of services                                76.1        73.3               6.4
Merger related and other non-recurring costs       -         0.9            (100.0)
Selling, general, and administrative
   expenses                                     18.8        12.4              55.3

Stock and stock option compensation               -         5.5            (100.0)

Income from operations                           5.1         7.8             (33.9)
  Other income (expenses), net                   0.2        (0.1)            285.1
Income  before  income tax expense   and
loss from  equity  investment  in  joint
venture                                          5.3         7.7             (30.0)
Income tax expense                               2.0         5.3             (62.1)
Income    before    loss   from   equity
 investment in  joint venture                    3.3         2.4              40.8
Loss from joint venture                         (0.4)          -            (100.0)
Net income                                       2.9         2.4              25.6


</TABLE>

Three months ended March 31,  1999,  compared  with three months ended March 31,
1998

     Revenues  for  the  three  months  ended  March  31,  1999,   increased  by
approximately  $984,000,  or 2.5%,  to $40.2 million from the three months ended
March 31, 1998. An increase of approximately $1.8 million in consulting revenues
was offset by a decrease of approximately $770,000 in other revenues. Consulting
revenues  increased  4.6% for the three months ended March 31, 1999, as compared
to the  comparable  period of the prior year.  This  increase was  primarily the
result of acquisitions and internal growth in the commercial rate sector,  which
was  partially  offset by the sale of  certain  assets of the  Company's  public
sector consulting  practice in September 1998. Other revenues decreased by 58.7%
for the three months ended March 31, 1999, as compared to the comparable  period
of the prior year.  This decrease was the result of the  Company's  decision the
cease operations in its financial advisory services business and also a decrease
in revenues from  information-based  products and services.  In the three months
ended March 31, 1999, approximately 98.6% of the Company's revenues were derived
from consulting revenues, as compared with 96.6% in the three months ended March
31, 1998.

        Cost of services for the three months ended March 31, 1999  increased by
$1.9  million,  or 6.4%,  to $30.6 million from the three months ended March 31,
1998.  Cost of services as a percentage of revenue  increased  from 73.3% in the
three months  ending March 31, 1998,  to 76.1% in the three months  ending March
31,  1999.  This  increase  was the result of an increase  in staffing  costs to
support an anticipated increase of business and an increase in cash compensation
paid to consulting staff.

         Selling,  general and  administrative  expenses  ("SG&A") for the three
months March 31, 1999, increased by $2.7 million, or 55.3%, to $7.6 million from
the three  months  ended March 31,  1998.  Expressed  as a  percentage  of total
revenues, SG&A expenses increased from 12.4% in the three months ended March 31,
1998,  to 18.8% in the three  months  ended  March 31,  1999.  This  increase is
reflective of increased marketing costs, an increase in administrative  staff in
anticipation  of increased  business and  duplication of certain  administrative
costs related to the Company's recent business combinations.

         There  were no merger  related  and other  non-recurring  costs for the
three months ended March 31, 1999,  compared with approximately  $367,000 in the
three months ended March 31, 1998. The majority of these costs in the comparable
period were associated with the Company's business  combination with TB&A Group,
Inc. and its wholly-owned  subsidiary Theodore Barry & Associates  (collectively
"TB&A").

         There  were no stock and stock  option  compensation  expenses  for the
three months ended March 31, 1999,  compared with  approximately $2.2 million in
the three months  ended March 31,  1998.  All of these costs in the prior period
were related to the business  combination  with Putnam,  Hayes & Bartlett,  Inc.
("PHB") which occurred in August 1998 and included non-cash, non-tax  deductible
compensation  based on the difference between the fair market and book values of
PHB common stock issuable under subscriptions  within one year of the companies'
merger.

         Other  income  (expenses),   net  includes  interest  income,  interest
expense,  minority interest and other income and expenses.  For the three months
ended March 31,  1999,  other income  (expenses),  net  increased  approximately
$134,000,  to income of approximately  $87,000 from the three months ended March
31, 1998.

         The Company's effective tax rate decreased to 37.2% in the three months
ended March 31, 1999,  from 68.8% in the three months ended March 31, 1998.  The
effective  tax rate for the  comparable  period was higher than the  provisional
rate as a result of the  non-deductibility  for tax  reporting  purposes  of the
stock compensation charge discussed above.

     Net  income  for the three  months  ended  March  31,  1999,  increased  by
approximately  $241,000, or 25.6%, to approximately $1.2 million, from the three
months ended March 31, 1998, due to reasons discussed above.


Liquidity and Capital Resources

        As of March 31, 1999,  working  capital was $53.5 million as compared to
$54.3 million at December 31, 1998.

        Net cash of approximately $1.3 million was used in operating  activities
during the three months  ended March 31,  1999.  The net use of funds is largely
attributable  to the payment of income  taxes,  along with  increases in prepaid
expenses and accounts receivable for the three months ended March 31, 1999.

         Investment  activities  used  approximately  $444,000  during the three
months  ended March 31,  1999.  The Company used these funds for the purchase of
office  and  computer  related  equipment,  leasehold  improvements  and  other
resources necessary for the growth of the Company.

         Financing  activities  used  approximately  $2.1  million for the three
months ended March 31, 1999.  Substantially all of these funds were used for the
repurchase of 286,000 shares of the Company's  common stock by the Company.  The
Company is authorized to repurchase approximately 1.2 million additional shares.

     The Company's  primary  source of liquidity for the past 12 months has been
funds  generated from  operations  and from sales of common stock,  periodically
supplemented  by borrowings  under a bank line of credit.  During the year ended
December 31, 1998,  the Company  established  $50.0 million in revolving  credit
facilities with  NationsBank.  The amount  available under the line of credit at
March 31, 1999 was $50.0 million.  The Company  believes that current  projected
levels of cash flows and the  availability  of financing,  including  borrowings
under the Company's  credit  facility,  will be adequate to fund its anticipated
cash needs, which may include future  acquisitions of complementary  businesses,
for at  least  the next 12  months  and the  foreseeable  future.  The  Company,
depending  on market  conditions,  may  consider  other  sources  of  financing,
including equity financing.



<PAGE>


Year 2000
               
     The Year 2000  issue is the  result of a  computer  hardware  and  software
design  that  defines  the year  field as two  digits  instead  of four  digits.
Computer  programs  and  systems  with this  problem  will be unable to properly
distinguish  between the year 2000 and the year 1900. As a result,  the programs
could fail or yield incorrect results. The Company's business,  as well of those
of its  principal  suppliers  and  clients,  is  dependent on the ability of its
software and hardware  systems to properly  function.  Failure of one or more of
these systems of the Company or a material  client or supplier could disrupt the
Company's  operations  and cause a  material  adverse  impact  on the  Company's
business, results of operations and financial condition.

The Company's Year 2000 Strategy

     The Company has  established  the Year 2000  Readiness Plan (the "Plan") to
prepare for the Year 2000 issue. This Plan is comprised of the following
elements:

1.       Audit, assessment, remediation, and testing of internal systems.

2.       Obtaining  assurance or information on the state of Year 2000 readiness
         of  our  material  clients  and  suppliers  who  exchange   information
         electronically with us or upon whom our work product may depend.

3. Developing contingency plans, when practical,  to address potential Year 2000
failures.

         Except  where  noted  below,   the   Company's   goal  is  to  complete
implementation of the Plan by September 30, 1999.
<TABLE>
<CAPTION>
                            Audit and            Remediation         Testing            Implementation
                            Assessment
<S>                           <C>                 <C>                 <C>                 <C> 
--------------------------- -------------------- ------------------- ------------------ --------------------
IT - Domestic               80% Complete         In Progress         3rd  Quarter        3rd Quarter
--------------------------- -------------------- ------------------- ------------------ --------------------
IT - International           2nd Quarter           3rd Quarter         3rd Quarter        4th Quarter
--------------------------- -------------------- ------------------- ------------------ --------------------
Business Operations         Complete             Complete             During 2nd and      3rd Quarter
                                                                     3rd Quarter
--------------------------- -------------------- ------------------- ------------------ --------------------
Embedded                    1st  - 3rd Quarter   1st - 3rd Quarter   1st - 3rd           3rd Quarter
                                                                     Quarter
--------------------------- -------------------- ------------------- ------------------ --------------------
3rd Party                   2nd - 3rd Quarter     3rd  - 4th          N/A                 4th Quarter
                                                 Quarter
</TABLE>
Year 2000 Readiness Report

         The  Company  made  several   acquisitions  in  1998.  It  undertook  a
comprehensive  due  diligence  examination  that  identified  general  Year 2000
Readiness issues for itself and the companies it acquired.  The Company recently
formalized  its  efforts by  establishing  a Year 2000  Working  Committee  (the
"Committee") led by its Chief Information  Officer to oversee the integration of
its Year 2000 efforts and to implement the Plan. The Committee includes the CEO,
CFO, General Counsel,  and other Company  executives and outside  consultants as
required. The Company has engaged a consultant to complete the assessment of its
domestic  offices  and to assist in the  assessment  of its major  international
offices.

         The Company's  front office  systems (used for the delivery of services
to clients), both hardware and software, were replaced or significantly upgraded
in 1997 and 1998  and were  manufactured  to be Year  2000  ready  (with  minor,
vendor-identified  problems).  Due to the  release  of new Year 2000  "software"
fixes from  Microsoft,  the  principal  supplier of the  Company's  front office
software,  the Company  currently  expects  that the  process of updating  those
systems  that are not Year 2000 ready will be  performed  in the 3rd  quarter of
1999.

         With some exceptions,  the Company does not employ  significant  custom
programming  in its front office,  work  product,  or back office  systems.  The
Company's  work  product  is  generated  almost  exclusively  with  commercially
available statistical,  econometric, word processing,  spreadsheet, database, or
mathematical  software  for which the Company has obtained  Year 2000  Readiness
assurances.  These software  products have been audited and have been or will be
updated where appropriate. In the cases where the Company has supplemented these
commercially  available  softwares  with  custom  programming,  a team is  being
established  to  assess  the  software.  These  situations  do not  represent  a
significant   percentage  of  the  Company's   work  product.   The  Company  is
implementing  a  software  application  to aide  the  monitoring  of  Year  2000
compliance of new work product and to provide a testing mechanism for the re-use
of models,  spreadsheets,  or  databases.  This  application  is a  commercially
available  Year 2000 audit and  remediation  product  specifically  designed for
Microsoft Windows compliant software applications.

         A  conversion  was  undertaken  in 1998 to  replace a  significant  and
non-compliant analytic system (used to service client analysis needs), including
hardware and software,  with a compliant system.  The implementation is complete
and the  conversion  of  existing  analytic  applications  will be  complete  by
September 30, 1999.

         Back office systems including financial accounting, project accounting,
fixed asset management,  human resources,  payroll, and conflict management have
been  replaced,  updated with vendor  supplied Year 2000 fixes,  or converted to
compliant versions of the software.  During the second quarter 1999, the Company
plans to  undertake a  comprehensive  test of its back office  systems.  Certain
models of personal  computers have been identified as non-compliant  and will be
replaced  in 1999.  The  number of Year 2000  replacements  will not  exceed the
normal annual personal computer turnover.

         The Company is contacting  the vendors of its principal  office systems
in order to obtain proof of Year 2000 readiness.  The Company's  material office
systems include its telephone, communications and networking equipment, security
and facilities systems,  copiers, pagers, voicemail, and faxing systems. Because
the  Company is highly  decentralized  with  21 domestic  and  international
offices, it does not expect the audit and remediation of these office systems to
be complete  before  September  30, 1999.  Some office  systems in the Company's
international  offices  will not be  corrected  by December  31,  1999,  but the
Company does not expect such systems to materially  affect the Company's ability
to complete its engagements.

Clients

         The Company's  clients include  domestic and  international  companies,
private law firms,  the United States and state,  local and foreign  governments
and  governmental  agencies and  government-owned  enterprises.  The Company has
responded to Year 2000 compliance  surveys from over 50 of its major clients and
shared the readiness  information  disclosed  here.  In April 1999,  the Company
initiated  a survey of a cross  section  of its  largest  clients  (measured  by
revenue  generated  for the  Company  in  1998) to  determine  their  Year  2000
readiness.  The Company plans to survey other clients if  circumstances  warrant
and, where practical, to survey new clients upon new engagements.


Material Vendors
 
        The Company performs analytic work on time sensitive  matters.  Certain
vendors have been identified as critical to implementing the Plan. These vendors
include payroll,  credit,  transportation,  information  resources,  and certain
maintenance  providers of mission critical hardware and software. If one or more
of the Company's principal vendors experiences  significant  business disruption
as a result of the Year 2000 issue,  it could have a material  adverse effect on
the Company's  business,  results of operations  and  financial  condition.  For
example, if the Company's principal suppliers of real-time  electricity data are
not functioning properly, the Company may be unable to perform analytic work for
clients.  Similarly,  if hardware used to perform  modeling  cannot be supported
because of a Year 2000 issue at the vendor, the Company's ability to meet client
demands for time sensitive analysis might be jeopardized.  The Committee will be
contacting  the Company's  principal  vendors during the second quarter of 1999.
Based on the responses,  the Committee may need to develop  contingency plans to
replace those vendors whose ability to certify Year 2000  readiness is in doubt.
The Committee  expects that the process of  evaluating  and working with outside
vendors will continue into the third and fourth quarters of 1999.

Contingency Planning

         The  Committee  is  developing a  contingency  plan in the event that a
material system or vendor will not be Year 2000 ready by December 31, 1999. This
contingency  plan is  scheduled to be  substantially  complete by the end of the
third  quarter of 1999,  although it will be reviewed and refined  thereafter as
the  Committee  continues to evaluate  the  Company's  systems and vendors.  The
Company is  considering  other  contingency  initiatives  with respect to office
systems, personnel, and new engagements.

Costs
 
        The Company will budget  $300,000 in each of the next two fiscal years,
1999 and 2000, to cover the costs of  evaluating  systems,  acquiring  Year 2000
remediation  software,  additional  testing of hardware and software,  hiring an
outside  Year  2000  consultant,   and  administrative   costs  associated  with
implementing  the Plan.  Although  the  Company  believes  this  amount  will be
sufficient to meet the costs of the Company's Year 2000 readiness efforts, there
can be no assurance that the costs to implement the Plan will not  significantly
exceed the Company's  current  estimates.  To date,  expenditures  for Year 2000
readiness  have been nominal and  associated  with the rapid  implementation  of
already planned front office and back office systems upgrades.

Risks
 
        At present,  the Company  perceives that its greatest Year 2000 risk is
its dependence on an external  network of information  providers,  vendors,  and
experts to complete its engagements. Even if the Company can satisfy itself that
the systems of its material  suppliers  and partners are Year 2000 ready,  those
suppliers  and partners in turn rely on a myriad of  suppliers to operate  their
businesses.  Year  2000-related  failures  far removed  from the  Company  could
trigger a chain of events that could  materially  harm the  Company's  business.
Certain clients, despite their best efforts, may suffer the effects of Year 2000
failures  of others  and thus  delay,  cancel,  or  substantially  alter work in
progress  resulting  in a  negative  effect on the  operations  of the  Company,
including  the  failure  to  meet  financial  expectations  or the  loss  of key
personnel.  Such a chain of events  could also lead to  litigation  against  the
Company.  The Company also performs work in regions deemed at high risk for Year
2000 disruptions, specifically, Latin America, Eastern Europe, and Asia. Lastly,
the Company  perceives that the stability of technical and critical office staff
is important to the Plan and is considering steps to decrease the risk of losing
critical  resources.  Notwithstanding  these efforts,  there can be no assurance
that Year 2000 problems will not have a material adverse effect on the Company's
business, results of operations, or financial condition.








<PAGE>




                                     PART II


Item 1.  Legal Proceedings

Apogee  Research,  Inc.  ("Apogee"),  a wholly owned  subsidiary of the Company,
received a subpoena in July 1998 from the Office of the Inspector General of the
Environmental  Protection Agency (the "EPA") requesting  records from April 1993
through October 1995 pertaining to a contract between Apogee and the EPA. Apogee
has provided  records in response to the subpoena.  The work under this contract
has  been  completed.  The  subpoena  was  served  in  connection  with  an  EPA
investigation relating to the submission of potential false statements and false
claims  under the  contract.  Hagler  Bailly is unable to determine at this time
what effect,  if any, the  investigation  will have on its  business,  financial
condition or results of operations.

The Company and its  subsidiaries  are from time to time  parties to  litigation
arising in the ordinary  course of business.  Neither the Company nor any of its
subsidiaries is a party to any pending  material  litigation nor are any of them
aware of any pending or threatened litigation that would have a material adverse
effect on the Company or its business.


Item 2.  Changes in Securities and Use of Proceeds

         On February 8, 1999,  the Company  completed the  acquisition of Lacuna
Consulting Limited ("Lacuna"),  a United Kingdom corporation,  and issued 65,000
shares of its common stock to the former  shareholders  of Lacuna in  connection
therewith. The shares of common stock issued in connection with this transaction
were  exempt  from  registration  pursuant  to Rule  506 of the  Securities  and
Exchange  Commission's  Regulation D and Section 4(2) of the  Securities  Act of
1933.






<PAGE>


Item 6. Exhibits and Reports on Form 8-K.
          None filed during the period

(a)      Exhibits


     Exhibit
        No.                                                         Description

     2 Sale  Agreement  between  RCG  International,  Inc.,  and  Hagler  Bailly
Consulting, Inc. (1)
     2.1  Agreement  and Plan of Merger by and among Hagler  Bailly,  Inc.,  PHB
Acquisition Corp. and Putnam, Hayes and Bartlett, Inc., dated as of 6/11/98. (5)
     3.1 By-Laws of the Company, as amended. (6)
     3.2 Amended Restated Certificate of Incorporation of the Company. (7)
     4.0 Specimen Stock Certificates. (1)
     4.1  Registration  Rights  Agreement dated November 18, 1997 by and between
Hagler   Bailly,   Inc.   and   Richard  R.  Mudge,   acting  as   Stockholders'
Representation. (3)
     4.2 Form of Escrow  Agreement  by and among the  Company,  PHB  Acquisition
Corp.,  William E. Dickenson as  Stockholders'  Representative  and State Street
Bank and Trust Company, as Escrow Agent. (5)
     4.3  Registration  Rights  Agreement dated February 23, 1998 by and between
Hagler Bailly, Inc. and Michael J. Beck, acting as Stockholders' Representative.
     4.4  Registration  Rights  Agreement dated November 17, 1998 by and between
Hagler Bailly, Inc. and the stockholders of Fieldston Publications, Inc. and The
Fieldston Company.
        10.2  Form  of  Non-Compete,  Confidentiality  and  Registration  Rights
Agreement between the Company and each stockholder.
                     (1)
     10.3 Lease by and between Wilson Boulevard  Venture and RCG/Hagler  Bailly,
Inc. dated October 25, 1991. (1)
     10.4 First Amendment to Lease by and between Wilson  Boulevard  Venture and
RCG/Hagler Bailly, Inc., dated February 26, 1993. (1)
     10.5 Second Amendment to Lease by and between Wilson Boulevard  Venture and
RCG/Hagler Bailly, Inc., dated December 12, 1994. (1)
     10.6  Lease  by  and  between  Bresta  Futura  V.B.V.   and  Hagler  Bailly
Consulting, Inc. dated May 8, 1996. (1)
     10.7 Lease by and between L.C.  Fulenwider,  Inc., and  RCG/Hagler  Bailly,
Inc. dated December 14, 1994. (1)
     10.8 Lease by and between  University of Research Park Facilities Corp. and
RCG/Hagler Bailly, Inc., dated April 1, 1995. (1)
     10.9 Credit  Agreement by and between  Hagler Bailly  Consulting,  Inc. and
State Street Bank and Trust Company, dated May 17, 1995. (1)
     10.10   Amendment  to  Credit   Agreement  by  and  between  Hagler  Bailly
Consulting,  Inc. and State Street Bank and Trust Company,  dated as of June 20,
1996. (1)
     10.11 Extension Agreement by and between Hagler Bailly Consulting, Inc. and
State Street Bank and Trust Company, dated as of August 1, 1996. (1)
     10.12   Amendment  to  Credit   Agreement  by  and  between  Hagler  Bailly
Consulting,  Inc. and State Street Bank and Trust Company,  dated as of November
12, 1996. (1)
     10.13 Term Note by and between  Hagler Bailly  Consulting,  Inc., and State
Street Bank and Trust Company, dated May 26, 1995. (1)
     10.14 Revolving Credit Note by and between Hagler Bailly  Consulting,  Inc.
and State Street Bank and Trust Company dated May 26, 1995. (1)
     10.15   Amendment  to  Credit   Agreement  by  and  between  Hagler  Bailly
Consulting,  Inc., and State Street Bank and Trust Company, dated as of June 12,
1997. (1)
     10.16 Credit Agreement by and among Hagler Bailly Consulting,  Inc., Hagler
Bailly  Services,  Inc.  and State  Street Bank and Trust  Company,  dated as of
September 30, 1997. (2)
     10.17 Promissory Note by Hagler Bailly  Consulting,  Inc. and Hagler Bailly
Services, Inc. to State Street Bank and Trust Company, dated September 30, 1997.
(2)
     10.18 Security Agreement by and between Hagler Bailly Consulting,  Inc. and
State Street Bank and Trust Company, dated as of September 30, 1997. (2)
     10.19 Security  Agreement by and between Hagler Bailly  Services,  Inc. and
State Street Bank and Trust Company, dated as of September 30, 1997. (2)
     10.20  Guaranties  by Hagler  Bailly,  Inc. to State  Street Bank and Trust
Company, dated September 30, 1997. (2)
     10.21  Guaranties  by HB  Capital,  Inc.  to State  Street  Bank and  Trust
Company, dated September 30, 1997. (2)
     10.22  Subordination  Agreement and Negative  Pledge/Sale  Agreement by and
between Hagler  Bailly,  Inc. and State Street Bank and Trust Company for Hagler
Bailly Consulting, Inc., dated September 30, 1997. (2)
     10.23  Subordination  Agreement and Negative  Pledge/Sale  Agreement by and
between Hagler  Bailly,  Inc. and State Street Bank and Trust Company for Hagler
Bailly Services, Inc., dated September 30, 1997. (2)
     10.24 Guaranty of Monetary  Obligations  to Bresta Futura V.B.V.  by Hagler
Bailly, Inc., dated July 23, 1997. (2)
     10.25   Amendment  to  Credit   Agreement  by  and  between  Hagler  Bailly
Consulting, Inc. and State Street Bank and Trust Company dated May 18, 1998. (6)
     10.26  Sublease  Agreement by and between  Coopers and Lybrand  L.L.P.  and
Hagler Bailly, Inc. dated December 5, 1997. (6)
     10.27 Employment  Agreement between the Company and Henri-Claude A. Bailly,
dated August 27, 1998. (7)
     10.28  Employment  Agreement  between the Company and William E. Dickenson,
dated August 27, 1998. (7)
     10.29  Employment  Agreement  between  the Company and Howard W. Pifer III,
dated June 10, 1998. (7)
     10.30 Hagler  Bailly,  Inc.  Amended and Restated  Employee  Incentive  and
Non-Qualified Stock Option and Restricted Stock Plan. (7)
     10.31 Credit  Agreement by and between Hagler Bailly,  Inc. and The Lenders
From Time to Time a Party  thereto,  as Lenders  and  NationsBank,  N.A.,  dated
November 20, 1998. (8)
     10.32  Revolving Note by and between Hagler Bailly,  Inc. and  NationsBank,
N.A., dated November 20, 1998. (8)
     10.33 Swing Line Note by and between Hagler Bailly,  Inc. and  NationsBank,
N.A., dated November 20, 1998. (8)
     10.34  Subsidiary  Guarantee by and among  Hagler  Bailly  Services,  Inc.,
Hagler Bailly  Consulting,  Inc., HB Capital,  Inc.,  Putnam,  Hayes & Bartlett,
Inc.,  TB&A Group,  Inc.,  Theodore  Barry &  Associates,  Private  Label Energy
Services,  Inc.,  Fieldston  Publications,  Inc. and  NationsBank,  N.A.,  dated
November 20, 1998. (8)
     10.35 Form of Security  Agreement by and between  Hagler  Bailly,  Inc. and
NationsBank, N.A., dated November 20, 1998. (8)
     10.36 Security Agreement by and between Hagler Bailly Consulting,  Inc. and
NationsBank, N.A., dated November 20, 1998. (8)
     10.37 Security  Agreement by and between Hagler Bailly  Services,  Inc. and
NationsBank, N.A., dated November 20, 1998. (8)
     10.38 Security  Agreement by and between HB Capital,  Inc. and NationsBank,
N.A., dated November 20, 1998. (8)
     10.39 Security Agreement by and between Putnam, Hayes & Bartlett,  Inc. and
NationsBank, N.A., dated November 20, 1998. (8)
     10.40 Security  Agreement by and between TB&A Group,  Inc. and NationsBank,
N.A., dated November 20, 1998. (8)
     10.41  Security  Agreement by and between  Theodore  Barry & Associates and
NationsBank, N.A., dated November 20, 1998. (8)
     10.42  Security  Agreement  by and  between  PHB Hagler  Bailly,  Inc.  and
NationsBank, N.A., dated February 22, 1999. (8)
     10.43 Security Agreement by and between Private Label Energy Services, Inc.
and NationsBank, N.A., dated November 20, 1998. (8)
     10.44 Security  Agreement by and between Fieldston  Publications,  Inc. and
NationsBank, N.A., dated November 20, 1998. (8)
     10.45 Lease by and between  One  Memorial  Drive  Limited  Partnership  and
Putnam, Hayes & Bartlett, Inc. dated January 1, 1998. (8)
     10.46 Lease by and between  George H.  Beuchert,  Jr.,  Trustee,  Thomas J.
Egan, Trustee,  Oliver T. Carr, Jr., Trustee,  William Joseph H. Smith, Trustee,
and the Kiplinger  Washington  Editors,  Inc.,  Trustee,  acting collectively as
trustee on behalf of the beneficial  owner, The Greystone Square 127 Associates,
and Putnam, Hayes & Bartlett, Inc. dated March 31, 1997. (8)
     10.47 First Amendment to Lease by and between  Greystone Square 127 Limited
Liability Company, as successor in interest collectively to The Greystone Square
127  Associates,  and  George  H.  Beuchert,  Jr.,  Trustee,  and The  Kiplinger
Washington Editors,  Inc., Trustee, the owners of record who held legal title to
the Building as trustees on behalf of the Greystone  Square 127 Associates,  the
former beneficial  owners of the Building,  and Putnam,  Hayes & Bartlett,  Inc.
dated February 10, 1998. (8)
     10.48 Employment agreement between the Company and Jasjeet S. Cheema, dated
February 2, 1999
     10.49 First amendment to revolving credit agreement  between Hagler Bailly,
Inc, the lenders from time to time a party thereto, as lenders, and NationsBank,
N.A., dated as of March 22, 1999.
     10.50 Hagler  Bailly,  Inc.  Amended and Restated  Employee  Incentive  and
Non-Qualified  Stock Option and Restricted  Stock Plan,  amended as of March 31,
1999.
     21 Subsidiaries (8)
     24 Powers of Attorney (included on Signature Pages) (1)
     27.1 Financial Data Schedule - March 31, 1999


--------------------------------------------------------------------------------
     (1)  Included  in the  Company's  Registration  Statement  on Form S-1 (No.
          333-22207) and incorporated herein by reference thereto.
     (2)  Included  in the  Company's  Quarterly  Report  on Form  10-Q  for the
          quarter ended September 30, 1997 and incorporated  herein by reference
          thereto.
     (3)  Included in the Company's Current Report on Form 8-K filed on December
          16, 1997 and incorporated herein by reference thereto.
     (4)  Included  in the  Company's  Annual  Report  on Form 10-K for the year
          ended December 31, 1997 and incorporated herein by reference thereto.
     (5)  Included in the  Company's  Proxy  Statement  for  Special  Meeting of
          Stockholders  dated  July 24,  1998 on Form  DEF 14A and  incorporated
          herein by reference thereto.
     (6)  Included  in the  Company's  Quarterly  Report  on Form  10-Q  for the
          quarter  ended  June 30,  1998 and  incorporated  herein by  reference
          thereto.
     (7)  Included  in the  Company's  Quarterly  Report  on Form  10-Q  for the
          quarter ended September 30, 1998 and incorporated  herein by reference
          thereto.
     (8)  Included  in the  Company's  Annual  Report  on Form 10-K for the year
          ended December 31, 1998 and incorporated herein by reference thereto.







<PAGE>


                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.




                                 ---------------------------------------
Date:  May 14, 1999              William E. Dickenson
                                 President and Chief Executive Officer
                                 /s/William E. Dickenson


                                 ---------------------------------------
Date: May 14, 1999               Glenn J. Dozier
                                 Senior Vice President, Chief Financial Officer,
                                 Treasurer and Secretary
                                 /s/ Glenn J. Dozier