SECURITIES AND EXCHANGE COMMISSION
                      Washington, DC 20549

                            FORM 10-K


[X]  ANNUAL  REPORT  PURSUANT  TO SECTION  13  OR  15(D)  OF  THE
     SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the fiscal year ending     December 31, 1998

                               OR

[ ]  TRANSITION  REPORT PURSUANT TO SECTION 13 OR  15(D)  OF  THE
     SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from ________ to ________

Commission file No.  0-19761

              OP-TECH Environmental Services, Inc.
     (Exact name of registrant as specified in its charter)

                
         Delaware                          91-1528142
(State or other jurisdiction of         (I.R.S. Employee
incorporation or organization)          Identification No.)

    6392 Deere Road, Syracuse, NY            13206
   (Address of principal executive office)  (Zip Code)

                   (315) 463-1643
       Registrant's telephone number, including area code

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

Title  of  each  class          Name or each  exchange  on  which
registered
        None

   Securities registered pursuant to Section 12(g) of the Act:
                  Common Stock, $.01 par value
                        (Title of Class)

      Indicate by check mark whether the registrant (1) has filed
all  reports required to be filed by Section 13 or 15 (d) of  the
Securities Exchange Act of  1934 during the preceding  12  months
(or  for such shorter period that the registrant was required  to
file  such  reports),  and (2) has been subject  to  such  filing
requirements for the past 90 days.

                     Yes   X   or No

      Indicate  by check mark if disclosure of delinquent  filers
pursuant to item 405 of regulation S-K (Section 229.405  of  this
chapter)  is not contained herein, and will not be contained,  to
the  best  of  registrant's knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part  III  of
this Form 10-K or any amendment to this Form 10-K [X].

      The aggregate market value of the voting stock held by non-
affiliates  of  the Company as of March 15, 1999  was  $3,249,110
based  upon the average bid and ask price of such stock  on  such
day.

             APPLICABLE ONLY TO CORPORATE ISSUERS:
      Indicate  the number of shares outstanding of each  of  the
Company's classes of common stock, as of March 15, 1999.   Common
stock, $.01 par value.  11,603,963



                             PART I

SPECIAL NOTICE REGARDING FORWARD-LOOKING STATEMENTS

     The Company is including the following cautionary statement in
this Form 10-K to make applicable and take advantage of the "safe
harbor" provisions of the Private Securities Litigation Reform Act
of 1995 for any forward-looking statement made by, or on behalf of,
the Company.  This 10-K, press releases issued by the Company, and
certain information provided periodically in writing and orally by
the Company's designated officers and agents contain statements
which constitute forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the 
Securities Act of 1934.  The words expect, believe, goal, plan,
intend, estimate, and similar exressions and variations thereof
used are intended to specifically identify forward-looking
statements.  Where any such forward-looking statement includes a
statement of the assumptions or basis underlying such forward-
looking statement, the Company cautions that, while it believes such
assumptions or basis to be reasonable and makes them in good faith,
assumed facts or basis almost always vary from actual results, and
the differences between assumed facts or basis and actual results
can be material, depending on the circumstances.  Where, in any
forward-looking statement, the Company, or its management,
expresses an expectation or belief as to future results, such 
expectation or belief is expressed in good faith and believed to 
have a reasonable basis, but there can be no assurance that the
statement of expectation or belief will result or be achieved or
accomplished.

ITEM 1. BUSINESS

General

      OP-TECH Environmental Services, Inc. and Subsidiaries  (the
"Company"),   a   Delaware  corporation,  provides  comprehensive
environmental  services predominately in  Upstate,  Central,  and
Eastern  New  York, Massachusetts, Pennsylvania, and New  Jersey.
The   Company   performs  industrial  cleaning  of  non-hazardous
materials  and  provides  varying  services  relating  to   plant
facility closure, including interior and exterior demolition  and
asbestos  removal.  In addition, the Company provides remediation
services  for  sites  contaminated  by  hazardous  materials  and
provides 24-hour emergency spill response services.  The majority
of  the  Company's revenues are derived from industrial companies
and municipalities facing complex environmental clean-up problems
associated with hazardous and non-hazardous materials as required
by various governmental agencies.  The Company's services include
assessing the regulatory, technical, and construction aspects  of
the environmental issue, and performing the necessary remediation
activities.   The  Company  seeks to  provide  its  clients  with
remedial  solutions  which integrate the  various  aspects  of  a
project  and are well-documented, practical, cost effective,  and
acceptable  to  regulatory agencies and the  public.   Through  a
shareholder,  O'Brien  &  Gere  Limited,  Inc.  and  Subsidiaries
("Limited"), the Company has an available resource of experienced
engineers, scientists, construction professionals, and attorneys.

SERVICES

Asbestos Abatement

     The Company provides asbestos abatement contracting services
to  both  the  public  and  private  sectors.   The  Company  has
expertise  in all types of asbestos abatement including  removal,
disposal  and enclosure, and encapsulation.  Asbestos removal  is
performed  in  commercial buildings, industrial  facilities,  and
governmental buildings.
     
Interior Demolition/Structural Dismantling

      The  Company provides interior demolition services such  as
removing walls, ceilings, and flooring.  In addition, the Company
offers  structural  dismantling services and  has  experience  in
razing  concrete, wood and steel structures, concrete  and  brick
chimneys, and concrete piers and foundations.

On-Site Industrial and Waste Management Services

      The  Company provides on-site industrial cleaning and waste
management  services.   Specialized services  for  the  handling,
processing  and  disposal of hazardous wastes  are  performed  by
vacuuming, soda blasting, hydroblasting, dredging, dewatering and
sludge  processing, sludge pumping, chemical cleaning,  and  tank
cleaning.

Tank Installation Services

      The  Company  provides  aboveground  and  underground  tank
installation  services  for  gasoline  stations,  municipalities,
chemical  companies, and manufacturing facilities.  The Company's
affiliation with the Petroleum Equipment Institute (PEI)  ensures
quality  tank  installations with the highest quality  tanks  and
appurtenances.

Transportation and Disposal Services

      The  Company provides transportation of hazardous and  non-
hazardous  wastes  from  customer  sites  to  customer-designated
landfills,  disposal  facilities, and the Company's  own  aqueous
treatment facility.  The Company also provides liquid tank  truck
transports equipped with vacuum pumps.

Excavation and Site Remediation Services

      The  Company provides excavation and soil blending services
for treatment of contaminated soil using heavy equipment such  as
excavators,  loaders,  and  a large soil  blender.   The  Company
primarily provides on-site soil blending to public utilities  and
municipal customers.

Hydrogeological/Drilling Services

      The  Company provides hydrogeological services to petroleum
companies, engineering firms and local and state public  entities
through  the use of qualified subcontractors.  Through performing
hydrogeological    assessments,   the   Company   evaluates   and
determines  the need for ground water remediation  systems,  pump
and treatment systems and sub-surface petroleum product recovery.
In addition, the Company provides air sparging systems, long-term
remediation  system  operations  and  maintenance  as   well   as
monitoring well and recovery well installations.

24-Hour Emergency Spill Response

     The Company undertakes environmental remediation projects on
both  a  planned and emergency basis.  Emergency response actions
may  develop  into  planned remedial action projects  when  soil,
groundwater,    buildings,   or   facilities   are    extensively
contaminated.   The  Company  has established  specially  trained
emergency  response teams.  Many of the Company's decontamination
and  mitigation activities result from a response to an emergency
situation  by  one  of its response teams.  These  incidents  can
result  from  transportation  accidents  involving  chemical   or
petroleum  substances, fires at chemical facilities or  hazardous
waste sites, transformer fires or explosions involving PCBs,  and
other  unanticipated developments.  The substances  involved  may
pose  an  immediate threat to public health or  the  environment,
such  as possible groundwater contamination.  The Company has  an
agreement with the NYSDEC to provide emergency response  services
in  Upstate, Central, and Western New York, payment of  which  is
guaranteed by the NYSDEC.

      Emergency  response projects require trained personnel  who
are  equipped with protective gear and specialized equipment  and
are prepared to respond promptly whenever these situations occur.
The  Company's  health and safety specialists and  other  skilled
personnel  closely supervise these projects during and subsequent
to  the  clean-up process.  The steps performed  by  the  Company
include  rapid  response,  containment  and  control  procedures,
sampling  for  analytical testing and assessment,  neutralization
and treatment, and collection and transportation of the substance
to an appropriate treatment or disposal facility.

Aqueous Treatment Facility

      The  Company operates an aqueous treatment facility at  the
Company's Massena, New York location.  The facility provides  for
the  clean-up  of  contaminated water and its eventual  discharge
into  the  St.  Lawrence River.  The facility services  both  the
Company, its clients, and outside vendors.

Overall   Site  Assessment  and  Implementation  of   Remediation
Services

      Hazardous  Waste:  The Company's hazardous  waste  projects
include  the  design  and construction of on-site  facilities  to
monitor, isolate, or contain hazardous wastes existing in surface
and  subsurface water;  the transport of contaminated soils;  the
decontamination  of  equipment  and  facilities  related  to  the
production  and use of hazardous materials, industrial  cleaning,
building demolition and asbestos removal.  Although the Company's
projects  vary  widely in objective, scope,  and  duration,  each
project  involves  the  Company providing  one  or  more  of  the
services through the use of its own resources or the resources of
selected     subcontractors:     strategic    planning;      site
reconnaissance  and  security;   remedial  evaluation;   clean-up
evaluation;  design, construction, and operation of facilities to
treat,  stabilize,  or  isolate  the  hazardous  materials;   and
closure planning and monitoring.

      Strategic  Planning:  On each of its projects, the  Company
attempts  as early as possible, to formulate a complete  strategy
for  directing  all  efforts toward solving the  hazardous  waste
problem.   The Company's strategic plans are designed to  satisfy
the  demands  of  regulatory agencies and the  public,  sometimes
under  emergency conditions.  Additionally, the Company  attempts
to  balance  the cost of the alternatives against  risks  to  the
client   associated  with  potential  litigation  or  unfavorable
publicity.   Through strategic planning, the Company attempts  to
minimize  expenditures that will not lead appropriate  solutions,
and  to enhance the client's credibility with regulatory agencies
and the public.

      Site  Reconnaissance and Security:  In  conducting  a  site
reconnaissance,  the  Company  makes  a  general  assessment   to
determine the basic characteristics of a site and the limitations
imposed  thereby, climatological considerations and the proximity
and   degree  of  residential  development.   In  providing  site
security,  the Company's services include assessing the hazardous
condition, restricting access to the affected area, assisting  in
the preparation of any necessary evacuation plans, eliminating or
reducing  potential  risks  of fire or explosion,  containing  or
removing  hazardous materials which might pose  additional  risk,
and  implementing  measures  to reduce  or  halt  the  spread  of
hazardous substances into adjacent areas.

      Remedial Evaluation:  A remedial investigation involves the
detailed  assessment of an affected area to determine the  nature
and extent of hazardous materials present.  This is often done at
the  request  of one or more regulatory agencies.  In  conducting
such  investigations, the Company often reviews the  construction
of  a  facility and past storage and handling practices regarding
hazardous materials.  The Company has the capability of  removing
and replacing underground storage tanks.

     Clean-up Evaluation:  A feasibility study addresses measures
which  may be implemented to remove hazardous wastes from a site,
to  treat,  stabilize,  or  contain such  wastes  on-site  or  to
otherwise  mitigate  their  effects.   Such  studies  take   into
account,  among  other  things, available technology,  regulatory
considerations, and the cost-benefit relationship of  alternative
measures.   Additionally,  the Company reviews  the  project  and
alternative  remedial  measures in  light  of  legitimate  public
concerns.

     Construction and Operation of Remedial Facilities:  Based on
the  results of remedial investigations and feasibility  studies,
the   Company   uses   its   expertise   directly,   or   through
subcontractors, to design an appropriate structure or system  for
use  at a particular site, and performs the necessary remediation
activities.  These remediation activities might include such
diverse measures as construction of a slurry wall to contain  the
hazardous materials, construction and operation of a pumping  and
filtration  system to decontaminate surface or subsurface  waters
or construction and operation of an integrated system to excavate
contaminated soil and remove it to a licensed disposal facility.

       Closure   Planning  and  Site  Monitoring:   The  Resource
Conservation  and  Recovery  Act of 1976  ("RCRA")  requires  the
planning  of closure and postclosure monitoring for all  licensed
secure  hazardous  landfills, treatment facilities,  and  on-site
hazardous  waste storage areas.  The Company plans  and  performs
facility  closures  and postclosure monitoring  programs.   While
certain monitoring requirements are mandated by RCRA, many  sites
have,  at  some  time,  contained  hazardous  wastes  which  also
frequently  require monitoring.  The Company provides  monitoring
for sites and the corresponding data management services.

     The Company usually contracts for and manages all aspects of
the  work related to the completion of a particular project.   In
addition,  the  Company  performs all aspects  of  the  work  and
certain   other  specialized  operations,  some  of   which   are
subcontracted  to  other  parties.  The  Company  does,  however,
occasionally,  contract  to perform only  certain  aspects  of  a
particular project.  The Company has submitted a number  of  bids
for projects with other members of Limited.

Technologies Employed

     The Company utilizes a wide variety of physical and chemical
treatment  technologies in performing its remediation activities.
Physical treatment technologies generally involve filtration  and
aeration  techniques and are used to separate  contaminants  from
soils,  slurries,  or  water.   Chemical  treatment  technologies
generally  involve  flocculation,  clarification,  precipitation,
polymer  addition, chemical oxidation, chemical  absorption,  and
stabilization.   Depending on the contaminants  present  and  the
site   characteristics,  these  technologies  are  combined  into
integrated    treatment   systems   which   reduce    contaminant
concentrations  to  levels consistent with prescribed  regulatory
standards.

Regulation

      The  business of the Company and its clients is subject  to
extensive,  stringent, and evolving regulation  by  the  EPA  and
various   other   federal,   state,   and   local   environmental
authorities.   These regulations directly impact the  demand  for
the services offered by the Company.  In addition, the Company is
subject to the Federal Occupational Safety and Health Act,  which
imposes requirements for employee safety and health.  The Company
believes it is in substantial compliance with all federal, state,
and local regulations governing its business.

      RCRA.  The Resources Conservation and Recovery Act of  1976
is  the  principal  federal  statute  governing  hazardous  waste
generation,  treatment,  storage, and disposal.   RCRA,  or  EPA-
approved  state programs may govern any waste handling activities
of  substance classified as "hazardous."  The 1984 amendments  to
RCRA  substantially  expanded its scope by, among  other  things,
providing for the listing of additional wastes as "hazardous" and
providing  of  the  regulation of hazardous wastes  generated  in
lower    quantities   than   previously   had   been   regulated.
Additionally, the amendments impose restrictions on land disposal
of  certain hazardous wastes, prescribe more stringent  standards
for  hazardous  waste  land  disposal sites,  set  standards  for
underground storage tanks and provide for "corrective" action  at
or  near  sites of waste management units.  Under RCRA, liability
and  stringent operating requirements may be imposed on a  person
who  is  either  a  "generator" or a "transporter"  of  hazardous
waste, or an "owner" or "operator" of a waste treatment, storage,
or disposal facility.  The Company does not believe its hazardous
waste  remediation services cause it to fall within any of  these
categories,  although it might be considered an "operator"  of  a
waste management facility or a "generator" of hazardous waste  if
it  were  to control the collection, source, separation, storage,
transportation, processing, treatment, recovery, or  disposal  of
hazardous  wastes,  including operation of a treatment  unit  for
remedial purposes.

      Regulation  of underground storage tanks (UST) legislation,
in  particular  Subtitle I of RCRA, focuses on the regulation  of
underground   tanks  in  which  liquid  petroleum  or   hazardous
substances are stored and provides for the regulatory setting for
the  principal portion of the Company's work.  Subtitle I of RCRA
requires  owners of all existing underground tanks  to  list  the
age, size, type, location, and use of each tank with a designated
state  agency.   The EPA has published performance standards  and
financial  responsibility requirements for storage tanks  over  a
five  year period.  These regulations also require all new  tanks
which are installed to have protection against spills, overflows,
and corrosion.  Subtitle I of RCRA provides civil penalties of up
to $15,000 per violation for each day of non-compliance with tank
requirements and $10,000 for each tank for which notification was
not  given  or  was  falsified.  RCRA  also  imposes  substantial
monitoring  obligations  on  parties which  generate,  transport,
treat, store, or dispose of hazardous waste.

      Superfund  Act.   The Comprehensive Environmental  Response
Compensation   and  Liability  Act  of  1980  ("Superfund   Act")
generally addresses clean-up of inactive sites at which hazardous
waste  treatment, storage, or disposal took place.  The Superfund
Act  assigns joint and several liability for cost of clean-up and
damages to natural resources to any person who, currently, or  at
the  time  of disposal of a hazardous substance who by  contract,
agreement,  or  otherwise arranged for disposal or treatment,  or
arranged with a transporter for transport of hazardous substances
owned or possessed by such person for disposal or treatment;  and
to  any person who accepts hazardous substances for transport  to
disposal or treatment facilities or sites from which there  is  a
release or threatened release.  Among other things, the Superfund
Act  authorized the federal government either to clean  up  these
sites itself or to order persons responsible for the situation to
do so.  The Superfund Act created a fund, financed primarily from
taxes  on  oil and certain chemicals, to be used by  the  federal
government  to pay for the clean-up efforts.  Where  the  federal
government  expends money for remedial activities,  it  may  seek
reimbursement from the Potentially Responsible Parties ("PRPs").

     In October 1986, the Superfund Amendment and Reauthorization
Act   ("SARA")   was  enacted  and  has  increased  environmental
remediation  activities significantly.  SARA  authorizes  federal
expenditures of $8.5 billion over five years, while imposing more
stringent  clean-up  standards and accelerated  timetables.   The
requirements of SARA are expected to add 1,600 to 2,000 sites  to
the national priority list.  Within 36 months of the enactment of
SARA,  remedial investigation and feasibility studies were to  be
conducted for at least 275 national priority list sites, and were
this  not  achieved  for at least 650 sites  within  five  years.
Physical  on-site remedial work was to be commenced for at  least
175  new  sites  in  the  36 months after enactment  and  for  an
additional  200  sites  in the following 24  months.   SARA  also
contains provisions which expand the EPA's enforcement powers and
which  are expected to encourage and facilitate settlements  with
PRPs.   The  Company  believes  that,  even  apart  from  funding
authorized  by  SARA,  industry and  governmental  entities  will
continue to try to resolve hazardous waste problems due to  their
need  to  comply with other statutory and regulatory requirements
and to avoid liabilities to private parties.

      The  liabilities provided by the Superfund Act could, under
certain factual circumstances, apply to a broad range of possible
activities by the Company, including generation of transportation
of   hazardous  substances,  releases  of  hazardous  substances,
failure  to properly design a clean-up, removal or remedial  plan
and  failure to achieve required clean-up standards,  leakage  of
removed  wastes  in  transit or at the final  storage  site,  and
remedial  operations on ground water.  Such  liabilities  can  be
joint and several where other parties are involved.

      Other.   The  Company's operations  are  subject  to  other
federal  laws  protecting the environment,  including  the  Clean
Water Act and the Toxic Substances Control Act.

      Many  states  have  also  enacted statutes  regulating  the
handling  of hazardous substances, some of which are broader  and
more stringent than the federal laws and regulations.

Competitive Conditions

      The  markets  for  environmental remediation,  as  well  as
demolition   and  asbestos  removal,  have  become   increasingly
competitive.   The  Company competes with  many  different  firms
ranging  from small local firms to large national firms, some  of
which  have  greater financial and marketing resources  than  the
Company.  Competition in environmental services is based  largely
on  competitive  pricing and quality of service provided.   Other
competitive  factors  include  geographic  location  as  well  as
reputation.  Management believes the Company is one  of  the  few
firms  based  in  its  market areas throughout  the  Northeastern
United   States  that  offers  a  high  quality  combination   of
environmental  services  at  the  most  competitive  prices.   In
addition, through its wide range of environmental services,  good
reputation,  and  competitive  pricing,  the  Company  hopes   to
maintain   a  competitive  edge  in  the  environmental  services
business.

      The  Company  operates field offices in Syracuse,  Massena,
Rochester, Albany, Plattsburgh, and Buffalo, New York, as well as
Braintree,   Massachusetts,  Edison,  New  Jersey,  and   Athens,
Pennsylvania.  While operations in the Syracuse, Massena, Albany,
Braintree,  and  Athens offices are substantial,  the  Rochester,
Plattsburgh, and Buffalo offices operate on a smaller level.

Seasonality

      Typically  during the first quarter of each  calendar  year
there  is  less demand for environmental remediation due  to  the
cold  weather, particularly in the Northeast and Midwest regions.
In  addition,  factory closings for the year-end holidays  reduce
the  volume of industrial waste generated, which results in lower
volumes  of waste handled by the Company during the first quarter
of the following year.

Customers

      The  Company's  client base includes industrial  companies,
real   estate  developers,  auto  parts  manufacturers,  aluminum
producers,    utility    companies,   waste    disposal    firms,
municipalities, and engineering firms.  During 1998, the  Company
performed  services  for more than 300 clients.   These  projects
ranged  from short-term (three months or less) to projects  which
were  on-going  for  12  months or more.   The  majority  of  the
projects  were  short-term in nature and continue  to  provide  a
substantial amount of revenue for the Company.  During 1998,  the
Company  had  sales  of  approximately $2,537,000  to  a  utility
company  and  sales  of  approximately  $1,528,000  to  a  metal
manufacturing  company,  which combined totaled  37%  of  the   
Company's revenues.

Insurance

     The Company maintains commercial general liability insurance
which  provides  aggregate coverage limits of  $5  million.   The
Company   also  maintains  asbestos  liability  and   contractors
pollution legal liability which provide aggregate coverage limits
of  $5  million.  In addition, the Company also maintains workers
compensation,   comprehensive  automobile,  and   Directors   and
Officers  liability insurance.  The Company's insurance  coverage
is  consistent  with  the  insurance requirements  found  in  the
environmental remediation industry.

Backlog

     As of December 31, 1998, the Company had a backlog of orders
it believed to be firm of approximately $2,700,000.

Employees

      As  of March 15, 1999, the Company had a total of 76  full-
time  employees.  The Company's ability to retain and expand  its
staff  will  be an important factor in determining the  Company's
future success.  The Company maintains employment contracts  with
its  key  managers in its branch offices.  Manager contracts  are
negotiated on an annual basis and encompass items such as salary,
bonuses,  and non-compete clauses.  The Company does not maintain
key-person  insurance for such personnel.  The Company  considers
its  relations with its employees to be good, and the Company has
never had a work stoppage or threat of a work stoppage.

ITEM 2. PROPERTIES

Syracuse, New York Branch and Corporate Headquarters

      The  Company leases approximately 17,000 square feet leased
from O'Brien & Gere Property Development (an affiliated party) at
a  current monthly rate of $6,840, including utilities.  The term
of  the  lease extends through June 30, 2001, and the lease  does
not contain an escalation clause.

Massena, New York Branch

      The Company owns a 13.93 acre parcel of land located in the
Town  of  Massena, St. Lawrence County, New York.   This  parcel,
which  has  approximately  1,300 feet  of  frontage  on  the  St.
Lawrence River, is located in a protected area where the water is
forty-five feet deep.  This provides excellent dockage for  local
ships  and  also  ocean-going ships utilizing  the  St.  Lawrence
Seaway.

      The  land  is improved with a well-maintained concrete  and
creosote timbered dock that extends about 90 feet into the  river
and  about 260 feet along the river bed.  It is equipped with the
necessary  piping,  valves,  and fittings  to  serve  the  former
Metropolitan Oil Petroleum Tank Farm.  The land is improved  with
seven  petroleum  tanks that have a capacity of 472,000  barrels.
There  are four support buildings on the premises, consisting  of
an  office  building, a combination office, shop and boiler  room
building, and two storage sheds.

     The Company is currently pursuing the sale of all or part of
its  Massena property and is currently discussing its  sale  with
several  parties.  On November 5, 1997, the Company entered  into
an option with O'Brien & Gere Property Development (an affiliated
party)  for the sale of the eastern portion of the property,  the
tanks  and  the dock for $2 million.  (See additional  discussion
under ITEM 7 of this report).

      In March of 1997, the Company signed a consent order issued
by  the  New  York State Department of Environmental Conservation
which requires the Company to remediate its Massena, NY property.
As  a  result,  in the second quarter of 1997, the Company  began
digging  test  pits on the property to determine  the  extent  of
ground contamination.  A total of ten test pits were dug.   Eight
of  the pits were found to have no contamination and were closed-
out  by  New  York State.  The remaining two pits had  low  level
indications of contamination.  These areas were excavated late in
the third quarter of 1997.  The Company removed approximately  40
cubic  yards  of contaminated material from the two pits  and  is
currently  awaiting final closure of the site by New York  State.
The  Company  also tested its groundwater monitoring wells  which
were also found to be free of contamination, therefore, posing no
threat  to  the groundwater supply in the area.  The Company  has
spent  approximately  $60,000  to  clean  this  site,  which  was
expensed in 1997.  As of the date of this report, the Company  is
awaiting final closure of the consent order by the New York State
Department  of Environmental Conservation.  The Company  believes
the  extent  of the contamination is minimal and will not  impair
its ability to sell the property.

Braintree, Massachusetts Branch

      The  Company leases approximately 300 square feet of office
space  from O'Brien & Gere Engineers (an affiliated party)  at  a
current rate of $1,200 per month.  The term of the lease is on  a
month-to-month basis.

Athens, Pennsylvania Branch

     The Company leases approximately 4,000 square feet of office
and  garage  space  at a current rate of $1,100  per  month  plus
utilities.  The term of the lease extends through March 1,  2001,
and does not contain an escalation clause.

Albany, New York Branch

      The  Company leases approximately 300 square feet of office
space  from O'Brien & Gere Engineers (an affiliated party)  at  a
current rate of $1,278 per month.  The term of the lease is on  a
month-to-month basis.

Edison, New York Branch

      The  Company leases approximately 300 square feet of office
space  from O'Brien & Gere Engineers (an affiliated party)  at  a
current  rate of $406 per month.  The term of the lease is  on  a
month-to-month basis.

Plattsburgh, New York Branch

      The  Company leases approximately 400 square feet of office
and  garage  space at a current rate of $280 per month  including
utilities.   The  term of the lease extends through  January  31,
2000, and the lease does not contain an escalation clause.

Equipment

       The  Company's  owned  equipment  consists  primarily   of
construction equipment such as vacuum trucks, tankers, excavation
equipment, pumps, generators, and compressors, some of which have
been specially modified for the Company's use.  Chemical trailers
and  other  specialized  equipment for  short-term  projects  are
typically leased from local equipment contractors.

ITEM 3. LEGAL PROCEEDINGS

      With  the  exception  of the New York State  Department  of
Environmental  Conservation consent order  discussed  in  ITEM  2
above,  the  Company  is  not  a  party  to  any  litigation   or
governmental proceedings that management believes could result in
any  judgements or fines against it or that would have a material
adverse   effect  on  the  Company's  cash  flows,   results   of
operations, or its financial condition.

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

     The Company held its annual shareholders meeting on November
18,  1998.   The  shareholders  voted  on  the  ratification   of
PricewaterhouseCoopers  LLP  as the Company's  auditors  and  the
election  of five directors.  The following votes were  cast  for
each:

                                                    For      Against
Ratification of PricewaterhouseCoopers LLP
as the Company's auditors                         10,586,541    -0-

Election of Directors:
John R. Loveland          CEO and Director        10,586,541    -0-
Richard L. Elander        Director                10,586,541    -0-
Cornelius B. Murphy, Jr.  Director                10,586,541    -0-
Steven A. Sanders         Director                10,586,541    -0-
Robert J. Berger          Director                10,586,541    -0-

There  were no other matters submitted to a vote of the Company's
shareholders.

                             PART II

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

     (a)  The shares of the Company's common stock are listed in the
          "Pink Sheets" and on the NASDAQ Bulletin Board under the symbol
          OTES.

     The  high and low bid prices for the shares of the Company's
common stock were as follows:

     Quarter Ended       High Bid        Low Bid

     March 31, 1997        5/8             1/8
     June 30, 1997         5/8             1/8
     September 30, 1997    3/4             1/4
     December 31, 1997     5/8             1/4
     March 15, 1998        5/8             1/4
     June 30, 1998         3/4             7/16
     September 30, 1998    3/4             1/4
     December 31, 1998     1/4             1/4
     March 15, 1999        3/4             1/4

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

     (b)  At March 15, 1999, there were approximately 169 holders of
          record of the Company's common stock.

     (c)  The  Company has never paid any dividends and does  not
          anticipate paying dividends in the foreseeable future.

ITEM 6. SELECTED FINANCIAL DATA

Statement of Operations Data

                              Year Ended December 31

                 1998        1997        1996       1995        1994
                                                               
Project 
 Billings    $10,917,903  $6,993,221  $5,792,548  $7,145,587  $5,143,623
                                                     
Net Income                                                     
 (Loss) from    
 Continuing                          
 Operations     $812,753 ($1,747,543)($1,553,320)  ($847,037)($1,131,139)

Extraordinary  
 Gain             0       $1,000,000      0            0          0
Net Income                                                     
 (Loss) Per 
 Share from                                               
 Continuing                                                
 Operations  
 (Basic &
 Dilutive)       $.07        ($.32)     ($.32)        ($.17)    ($.25)

Balance Sheet Data

                              As of December 31

                  1998       1997       1996        1995        1994
                              (5)                    (4)       (1),(2),
                                                                 & (3)
Total Assets  $6,632,753  $4,776,471  $5,155,409  $5,527,547  $6,269,756
                       
Long-Term        
Obligations   $1,526,560    $228,855    $875,000  $2,326,459  $1,681,686 


(1)  On March 2, 1994, a shareholder of the Company converted its
     $1.0 million long-term obligation to common stock.

(2)  On  March 2, 1994, the Company paid off its subordinate debt
     to a shareholder.

(3)  On  April 6, 1994, the Company sold 170,000 shares of common
     stock for $255,000.

(4)  On November 1, 1995, the Company converted a $500,000 short-
     term note to a long-term obligation.

(5)  On October 14, 1997, the Company entered into an agreement with
     its  two  largest creditors to convert all or  part  of  its
     indebtedness   into  common  stock  of  the  Company.    The
     agreement  included  forgiveness of $1,000,000  of  debt  by
     O'Brien & Gere Limited (a shareholder) and the conversion of
     $540,000  of convertible debentures, plus accrued  interest,
     into  1,080,000  shares of the Company's common  stock.   In
     addition, the Company's then financial institution converted
     $2,811,070  of principal and interest into 5,622,140  shares
     of the Company's common stock.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

      At  December  31,  1998,  the Company  had  cash  and  cash
equivalents  of $122,106 as compared to $81,517 at  December  31,
1997.

      At  December  31, 1998, the Company had a  working  capital
surplus  of  $1,019,312 compared to a working capital deficit  of
$217,156   at  December  31,  1997,  with  a  current  ratio   of
approximately 1.4 to 1 at the end of 1998 compared to .9 to 1  at
the  end  of 1997.  The increase in working capital was primarily
attributable  to the significant increase in accounts  receivable
and the fact that due to the new terms of the Company's revolving
loan,  the  outstanding borrowings are classified as a  long-term
liability at December 31, 1998.

      Cash  used in financing activities was $126,787, which  was
primarily  due  to  the timing of paydowns and  advances  on  the
Company's line of credit.

      Cash  provided  by  operating activities  during  1998  was
$374,993  compared  to  cash  used  in  operating  activities  of
$747,813 during 1997.  The increase in cash provided by operating
activities  in  1998  was  substantially  attributable   to   the
Company's improved profitability during the year.

      Cash  used in investing activities of $207,617 during 1998,
was  primarily attributable to capital expenditures  for  a  dump
truck,  several  utility  vehicles, computer  equipment,  a  high
pressure water truck, and tank installation equipment.

      On  October 14, 1997, the Company entered into a  borrowing
agreement  with  a  new bank that provided for  borrowings  on  a
revolving basis.  On December 31, 1998, the agreement was amended
to  provide borrowings up to $1,500,000.  The revolving  loan  is
subject  to renewal at the Bank's option and is payable on  April
30,  2000. The revolving loan is guaranteed by a shareholder  for
an  amount  not  to  exceed $500,000.  Under  the  terms  of  the
guarantee,  should the Bank be unable to recover the full  amount
of outstanding balances from the Company's collateralized assets,
the  shareholder agrees to purchase the Massena Port Facility for
the  unrecovered balance up to a maximum of $500,000.  Borrowings
against  the  revolving loan aggregated $739,531 at December  31,
1998.

     Effective January 1, 1999, the Company sold its wholly-owned
subsidiary, St. Lawrence Industrial Services, Inc.  The sale  did
not   have  a  significant  impact  on  the  Company's  financial
statements.

YEAR 2000

      The  Company  recognizes the need to ensure its  operations
will  not  be adversely impacted by year 2000 software  failures.
The  Company  is  addressing the risk  to  the  availability  and
integrity of financial systems and the reliability of operational
systems.   The Company is in the process of reviewing  its  major
suppliers  for  year  2000  compliance.   In  1998,  the  Company
upgraded   its  financial  systems  to  comply  with  year   2000
requirements   and  has  also  undertaken  an  upgrade   of   its
headquarters information and decision support systems,  which  is
expected to be complete by September 1999.  The Company has spent
approximately  $40,000  to  date on these  systems  upgrades  and
estimates  spending approximately $15,000 over the next  3  to  9
months.

THE MASSENA PORT FACILITY

     The Massena Port Facility is a former oil tank farm which is
located  on the St. Lawrence River in Massena, NY.  The  property
is  improved  with  several buildings and a  deep  water  docking
facility  for large ocean going ships.  The property is  still  a
viable  location for a petroleum distribution facility and  could
still  function  as  one pending upgrades  of  tanks  and  diking
systems   to   current   state  and  federal   guidelines.    Any
improvements such as these would be treated as a capital  expense
in  the year they were incurred.  Currently, the Company uses the
property  for  its Massena branch office headquarters,  equipment
storage  and  its Aqueous Treatment/360 Facility.  A wholly-owned
subsidiary  of the same shareholder currently has  an  option  to
purchase the Massena Port Facility for $2,000,000.

      In  1996, the Company reclassified the Massena Property  to
Assets  Held for Sale.  The property at that time had a  carrying
value of approximately $1.9 million.  Due to the significance  of
the  carrying value of the property, in March of 1997, management
obtained  an  independent third party appraisal  to  support  its
carrying value.  Such appraisal included an evaluation of similar
sales plus a pending transaction at the time.  The appraisal also
included  an  evaluation of the time frame during  which  a  sale
would  be  expected.   Based upon the  appraisal  report  and  an
estimate   of  the  costs  to  sell,  management  recognized   an
impairment  of  $308,377  on the property  during  1997.   As  of
December  31, 1998, the carrying value, which management believes
is  properly  stated  at  the lower of cost  or  market,  of  the
property is $1,605,427.

CAPITAL RESTRUCTURING & BUSINESS OPERATIONS

     The  Company entered into letters of agreement with its then
two  largest creditors, its then financial institution, OnBank  &
Trust Co. ("OnBank"), and O'Brien & Gere Limited ("OBG Limited"),
a  shareholder,  on October 14, 1997, which were executed  as  of
December  31,  1997,  whereas OnBank and OBG  Limited  agreed  to
convert  all  or  part of their indebtedness,  including  accrued
interest,  into Common Stock of the Company, and to  forgive  the
remaining  balance.   OBG  Limited,  to  which  the  Company  was
indebted  for $1,540,000, including accrued interest of $140,000,
forgave  $1,000,000 of the debt and converted the  balances  into
1,080,000 shares of the Company's Common Stock.  OnBank, to which
the  Company  was  indebted  for  $2,811,070,  including  accrued
interest  of  $75,332, converted their debt and accrued  interest
for  5,622,000 shares of the Company's Common Stock.   The  price
per  share of $.50 was negotiated with the two creditors and  the
Company based on the price of recent sales and their estimates of
future risk.

RESULTS OF OPERATIONS

     This financial review should be read in conjunction with the
accompanying  Consolidated Financial Statements and  accompanying
notes.

FACTORS THAT MAY AFFECT FUTURE RESULTS

      The Company's future operating results may be affected by a
number   of   factors,   including  the  Company's   ability   to
successfully  increase  market  share  in  its  existing  service
territory  while  expanding  its  services  into  other  markets,
realize  benefits from cost reduction programs, sell all or  part
of  the  Massena  Property, and utilize its facilities  and  work
force profitably in the face of intense price competition.

1998 COMPARED TO 1997

Revenues

      During  the  year  ended December 31, 1998,  the  Company's
revenues  increased 56% to $10,917,903 as compared to  $6,993,221
reported  for  the  previous year ended December  31,  1997.  The
increase  in  revenue  was due to several  factors,  including  a
$2,500,000  emergency spill contract for a utility  customer  and
several  large industrial cleaning contracts, which  resulted  in
approximately  $1,500,000.  The Company also saw an  increase  in
revenues  of  approximately $735,000 in underground storage  tank
removal revenues, which is attributable to the Federal Government
deadline  to remove all underground storage tanks ("USTs")  which
are  not  in  compliance with the EPA guidelines for  USTs.   The
deadline to remove out of compliance USTs was December 22,  1998.
The  Company expects to see a continued rise in this service line
during 1999, due to the number of organizations that are not  yet
in  compliance with the Federal Government deadline.  The Company
saw  a  significant increase in the transportation  and  disposal
business as a result of the increased volume of UST jobs.  During
1998,  the  Company's newly expanded geographic  areas  generated
revenue  of  approximately $2,500,000,  all  of  which  was  core
service  revenue resulting from competitive bidding in  both  the
public and private markets.

Project Costs and Gross Profit

     Project costs for the year ended December 31, 1998 increased
53% to $7,596,788 from $4,959,449 for the year ended December 31,
1997.   The  increase  in project costs is  attributable  to  the
significant increase in revenues.  Project costs as a  percentage
of  revenues  remained  consistent at  70%  for  the  year  ended
December 31, 1998 and 71% for the same period in 1997.
       The  gross  profit margin for the year ended December  31,
1998  was  30% versus 29% for the year ended December  31,  1997.
Management  was  able to control the mix of work pursued  by  the
Company,  which  enabled  the Company to  focus  its  efforts  in
service areas that produced a higher gross margin percentage.

Selling, General, and Administrative Expenses

      During  the year ended December 31, 1998, selling, general,
and administrative ("SG&A") expenses decreased 6.6% to $2,399,988
compared  to  $2,569,486 reported for the  previous  year.   SG&A
expenses  were  approximately 22% of sales  for  the  year  ended
December  31, 1998 compared to approximately 37% for the previous
year.   The  decrease in SG&A is due to the Company's ability  to
increase   the   utilization   of  its   existing   staff   while
simultaneously  increasing revenues.  The Company  added  several
project  managers and supervisors during the year and  kept  them
focused  on  bidding  and managing projects.  Additionally,  SG&A
decreased  due to the corporate restructuring of the  Company  in
1997,  which  significantly reduced depreciation and amortization
expenses.   The  Company was also able to  secure  lower  general
business  insurance  rates  as well as  cut  various  other  SG&A
expenses during 1998.

Operating Income

      For  the year ended December 31, 1998, the Company reported
operating income of $921,127 compared to a loss of $1,333,400 for
the  previous year.  The change is primarily attributable to  the
Company's  mix of work during 1998, which produced  a  30%  gross
margin and the overall reduction of SG&A expenses compared to the
prior  year.   In  1997, the Company incurred a  non-cash  charge
$797,686  related to the write down of its Massena  property  and
certain equipment held for use.

Interest Expense

      Interest expense decreased 72% to $111,099 in 1998 compared
to  $402,144  in  1997.   The decrease  in  interest  expense  is
primarily  attributable to the Company's financial  restructuring
in 1997, which significantly reduced the Company's debt.

Net Income

      The  net  income for the year ended December 31,  1998  was
$812,753 ($.07 per share basic & dilutive) compared to a net loss
of  $747,543  ($.14  per  share  basic  and  dilutive)  after  an
extraordinary gain of $1,000,000  in 1997.


1997 COMPARED TO 1996

Revenues

      During  the  year  ended December 31, 1997,  the  Company's
revenues  increased 21% to $6,993,221 as compared  to  $5,792,548
reported  for  the  previous year ended  December  31,  1996.   A
comparison  of revenues by service line between the  current  and
prior  year  shows  the  following:  The asbestos  abatement  and
demolition  business saw an increase in revenues of approximately
$690,000 due to an award of a large asbestos abatement project in
the  fourth  quarter of 1996 that was completed in May  of  1997.
The  Company  also  saw an increase in revenues of  approximately
$325,000  in  underground  storage tank  removal  revenues.   The
increase  is attributable to the Federal deadline to  remove  all
underground  storage tanks ("USTs") which are not  in  compliance
with the EPA guidelines for USTs.  The deadline to remove out  of
compliance USTs is December 22, 1998.  The Company expects to see
a  continued  rise in this service line during 1998.   Industrial
cleaning services remained steady throughout 1997 as the  Company
continued to focus its marketing efforts in this area.  Emergency
Spill  Response  revenue increased approximately $150,000  during
1997.   The  increase was primarily attributable to a  large  oil
spill  in  January of 1997.  Finally, the Company saw an increase
in  the  transportation  and disposal business  of  approximately
$100,000 as a result of the increased volume of UST jobs.

Project Costs and Gross Profit

     Project costs for the year ended December 31, 1997 increased
23% to $4,959,449 from $4,036,846 for the year ended December 31,
1996.  The increase in project costs is attributable to increased
revenues.   The  gross profit margin for the year ended  December
31,  1997  was  29% versus 30.3% for the year ended December  31,
1996.  The decrease in the gross profit margin is attributable to
an  increase in public projects which typically produces a  lower
gross  profit  margin than private projects.   The  Company  also
continues to see increasingly competitive market conditions which
have  forced  the  Company to bid jobs at a  lower  gross  profit
margin than in previous years.

Selling, General, and Administrative Expenses

      During  the year ended December 31, 1997, selling, general,
and  administrative ("SG&A") expenses decreased 1% to  $2,569,486
compared to $2,593,996 reported for the previous year.

Operating Loss

      For  the  year  ended  December  31,  1997,  the  Company's
operating loss increased 13% to $1,333,400 compared to a loss  of
$1,181,190 for the previous year.  The increase in the  operating
loss  is  primarily attributable to a non-cash charge of $797,686
related  to  the write down of its Massena property  and  certain
equipment held for use.  In 1996, the Company incurred a non-cash
charge  $342,896  related to the write down of certain  equipment
and intangible assets.
Interest Expense

      Interest expense increased 13% to $402,144 in 1997 compared
to  $357,173  in  1996.   The increase  in  interest  expense  is
attributable to increased borrowings from O'Brien & Gere  Limited
(a shareholder).

Extraordinary Gain

      In connection with the capital restructuring of the Company
in   1997,  O'Brien  &  Gere  Limited  (a  shareholder)   forgave
$1,000,000 of debt.

Net Loss

      The net loss after an extraordinary gain of $1,000,000  for
the  year  ended December 31, 1997 was $747,543 ($.14  per  share
basic & dilutive) compared to a net loss of $1,553,320 ($.32  per
share  basic and dilutive) in 1996.  As a result of the Company's
net  operating  loss, there was no provision for  federal  income
taxes recorded in 1997.


ITEM 7A. - SEE AUDITED FINANCIAL STATEMENTS

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The consolidated financial statements of the Company and the
report of PricewaterhouseCoopers LLP are submitted under Item  14
of this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
        ACCOUNTING AND FINANCIAL DISCLOSURE

     None

                            PART III

ITEM 10. DIRECTORS AND OFFICERS OF THE COMPANY

     The following table sets forth certain information about the
directors of the Company, all of whom were unanimously elected at
the  Annual Meeting of Stockholders of the registrant on November
18, 1998 for a term of one year.

                  
Name, Age              Year 
Principal              First    
Occupation             Elected      Certain Other Information
                            
Robert J. Berger         1998 Mr. Berger has served in his present
(55)                          position  as Director since  November
Director                      1998.   Mr.  Berger was  employed  in
                              various  positions  for  OnBank  from
                              1978  through  March  31,  1998,  his
                              last  position being Chief  Financial
                              Officer.   From April through  August
                              1998,  he  served  as  consultant  to
                              First Empire State Corp. pursuant  to
                              its   merger   with  OnBank.    Since
                              August  1998, he has been an  Adjunct
                              Professor  and  a  Director  of   the
                              Madden    Institute    of    Business
                              Education   at  LeMoyne  College   in
                              Syracuse, New York.
                            
Richard L. Elander       1991 Mr.  Elander  has  served   in   his
(57)                          present position as a Director  since
Director                      November  of 1991.  He has served  as
                              Vice  President  and General  Manager
                              from June 1994 to December 1996.   He
                              also   served   as  Chief   Executive
                              Officer  from November 1991  to  June
                              1994.   Mr.  Elander  served   as   a
                              Director  of  O'Brien & Gere  Limited
                              from  August  1991 to December  1995.
                              From   1983  to  1996,  Mr.   Elander
                              served  as  President  of  O'Brien  &
                              Gere   Operations.   Currently,   Mr.
                              Elander     operates     his      own
                              construction  management   consulting
                              business.

                            
John R. Loveland        1994  Mr. Loveland  has  served  in   his
(61)                          present  position  since  June  1994.
Chairman of the               He  has been a director of O'Brien  &
Board and Chief               Gere Engineers, Inc. since 1973.   He
Executive Officer             also  served as President of  O'Brien
                              &  Gere Engineers, Inc. from 1980  to
                              December   1992.    He   served    as
                              Chairman  of the Board of  O'Brien  &
                              Gere   Limited  from  1989  to  March
                              1999.
                            
Cornelius B. Murphy,Jr. 1991  Mr.  Murphy has served in his current
(53)                          position  since  December  1996.   He
Director                      previously  served as  the  Company's
                              President from June 1994 to  December
                              1996  and Chariman of the Board  from
                              November  of 1991 to June 1994.   Mr.
                              Murphy   has   been  a  director   of
                              O'Brien  &  Gere Limited  since  1985
                              and  O'Brien  & Gere Engineers,  Inc.
                              from  1992 to 1997.  Prior  to  that,
                              Mr.  Murphy  served  as  Senior  Vice
                              President   of   O'Brien    &    Gere
                              Technical  Service, Inc. since  1992.
                              From  1982 to 1992, Mr. Murphy served
                              as   President  of  O'Brien  &   Gere
                              Technical Services, Inc.  Mr.  Murphy
                              currently  serves as Chief  Scientist
                              of O'Brien & Gere Engineers.
                            
Steven A. Sanders        1991 Mr.  Sanders is a partner in the  law
(53)                          firm   of   Beckman,   Millman,   and
Director                      Sanders.   Mr. Sanders has also  been
                              President   of  the  Law  Office   of
                              Steven  A.  Sanders, PC  since  1992.
                              Prior  to that, he served as  Counsel
                              to  Jacobs,  Persinger & Parker  from
                              1987  to  1992.  Prior  thereto,  Mr.
                              Sanders  served as Senior Partner  of
                              the law firm Sanders and Siercho.


EXECUTIVE OFFICERS OF THE COMPANY

Name                     Age  Position Held
John R. Loveland         61   Chairman of the Board and Chief
                              Executive Officer
Anthony R. Pongonis      45   President
Christopher J. Polimino  33   Vice President and General Manager
Dennis S. Lerner         52   Secretary
Joseph M. McNulty        44   Treasurer

     Mr. Pongonis was hired during the fourth quarter of 1996.
He has over twenty-five years of experience in the environmental
services industry.

     Mr. Polimino was promoted to the position of Vice President
and General Manager during the second quarter of 1998.  He has
been with the Company since December of 1994 and has previously
served as Controller.

     Mr. Lerner has served in his present position since February
of 1994.  Mr. Lerner was Assistant Secretary of O'Brien & Gere
Engineers, Inc., a wholly-owned subsidiary of O'Brien & Gere
Limited, from 1992 to March 1999.  He currently serves as O'Brien
& Gere Engineers' in-house legal counsel and has held this
position since 1990.

     Mr. McNulty has served his current position since February
1993.  Mr. McNulty has served as Vice President of Finance of
O'Brien & Gere Limited from April 1995 to December 1998, and he
is currently the Chief Financial Officer and a director of
O'Brien & Gere Limited, Inc.

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth summary information concerning
compensation paid or accrued by the Company for services rendered
during the last three fiscal years.

Summary Compensation Table

                    Annual Compensation      Long Term Compensation
                                            
                                             Awards    Payments
                                                      
                                  Other                     All
Name and                          Annual                    Other
Principal                         Compen-   # of    LTIP    Compen-
Position            Year  Salary  sation    Options Payouts sation
                                
John R. Loveland    1998  $13,920   -0-       -0-    -0-     -0-
Chairman and        1997  $19,200   -0-     50,000   -0-     -0-
CEO                 1996  $16,800   -0-       -0-    -0-     -0-   
                                                                          
Anthony R. Pongonis 1998  $92,220 $17,500(1)  -0-    -0-     -0-
President                                                  

(1) Includes stock bonus with a market value of $2,500 at the
time of award.

Year End Option Table

The following table sets forth certain information regarding
stock options held as of December 31, 1998 by the named executive
officers.

                                   Number of
                                   Securities       Value of
                                   Underlying       Unexercised
                                   Unexercised      In-the-Money
                                   Options at       Options at
                                   Fiscal Year End  Fiscal Year End
                                                 
                 # Shares                          
                 Acquired          Exercis- Unexer- Exercis- Unexer-
                 on       Value    able     cisable able     cisable
Name             Exercise Realized #        #       #        #
John R. Loveland 50,000   -0-      -0-      -0-     -0-      -0-


Compensation of Directors

     Directors of the Company are paid $500 for each quarter plus
reimbursement for their actual expenses incurred in attending
meetings.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

     The following table sets forth certain information regarding
the beneficial ownership of the company's common stock at March
15, 1999 by persons who, to the knowledge of the Board of
Directors, beneficially own more than five percent of the
outstanding shares of common stock of the Corporation.

     All voting power of the Corporation is vested in its common
stock.  As of the close of business on March 15, 1999,
11,603,963, shares of common stock par value $.01 per share were
outstanding.  Each share of common stock is entitled to one vote.

                           Number of Shares
Name and Address           of Common Stock
Of Beneficial              Beneficially      Percentage       
Owner                      Owned (1)         of Class

M&T Bank                   5,622,140         48.5%
101 S. Salina Street
Syracuse, NY 13202
O'Brien & Gere Limited     3,148,200         27.1%
5000 Brittonfield Parkway
Syracuse, NY 13220
Richard L. Elander           329,565 (4)      2.8%
3486 Melvin Drive North
Baldwinsville, NY 13027
Cornelius B. Murphy, Jr.       1,424 (4)       <1%
Steven A. Sanders              4,799 (2)(4)    <1%
John R. Loveland             127,093 (3)(4)    <1%
All Officers &              (2)(3)(4)         4.2%
Directors as a
Group (9 persons)

(1)  The beneficial owners have sole voting and investment power
     over the shares owned.

(2)  Includes 200 shares, which are owned by Mr. Sanders' wife as
     custodian for his son, as to which Mr. Sanders disclaims
     beneficial ownership.

(3)  Includes 50,000 shares issuable upon exercise of currently
     exercisable options.  Does not include 3,148,200 shares currently
     owned by Limited of which Mr. Loveland is a director.  Includes
     76,659 shares owned by Mr. Loveland's wife as to which Mr.
     Loveland disclaims beneficial ownership.

(4)  Director

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     On July 1, 1995, the Company entered into a lease agreement
with O'Brien & Gere Property Development (an affiliate) to occupy
approximately 17,000 square feet of office and garage space.  The
terms of the lease extend through June 30, 2001.  Total rent
expense incurred in 1998 amounted to approximately 77,000.  The
Company also has several month-to-month office rental agreements
in place with another O'Brien & Gere Limited subsidiary.

     On November 5, 1997, the Company entered into an option with
O'Brien & Gere Property Development (an affiliate) to sell the
eastern portion of the Massena Property, the tanks, and the dock
for $2 million.

     During 1998, the Company provided $283,435 of remediation,
sub-contract support, and project services to subsidiaries
O'Brien & Gere Limited, a shareholder.  Services provided to
O'Brien & Gere Limited subsidiaries were at competitive rates
which were bid on a project by project basis.

     The Company purchases technical, accounting, and consulting
services from subsidiaries of O'Brien & Gere Limited, a
shareholder.  The costs for these services amounted to $325,096
in 1998.

     The Company's revolving loan agreement is guaranteed by
O'Brien & Gere Limited, a shareholder, for an amount not to
exceed $500,000.

     Steven A. Sanders, a director of the Company, a partner of
Beckman, Millman, & Sanders, which provides professional services
to the Company, and it is anticipated that it will continue to do
so.

     On January 1, 1999, the Company sold its wholly-owned
subsidiary, St. Lawrence Industrial Services, Inc., to a director
of the Company.

                             PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K

                                                       Page
(a)  Financial Statements and Exhibits

     (1)  Report of Independent Auditors                F-1
          Consolidated Balance Sheets at 
           December 31, 1998 and 1997                   F-2
          Consolidated Statement of Operations 
           for the years ended December 31, 1998,
           1997, and 1996                               F-3
          Consolidated Statements of Shareholders' 
           Equity (Deficit) for the years ended 
           December 31, 1998, 1997, and 1996            F-4
          Consolidated Statements of Cash Flows 
           for the years ended December 31, 1998,
           1997, and 1996                               F-5
          Notes to Consolidated Financial Statements    F-6
     
     (2)  All schedules for which provision is made in the applicable
          accounting regulation of the Securities and Exchange Commission
          are not required under the related instructions or are
          inapplicable, and therefore have been omitted.

     (3)  Subsidiaries of the Company:
          St. Lawrence Industrial Services, Inc.
          OP-TECH Environmental Services Limited - Ontario,
          Canada

(b)  Reports on Form 8-K
     The Company did not file any Current Reports on Form 8-K
     during the three months ended December 31, 1998.

(c)  Exhibits

10.1 Union and Employment Contracts (1) Incorporated herein by
     reference to the Company's Form 10-K F/Y/E December 31, 1997.
10.2 Voting Agreement (1) Incorporated herein by reference to the
     Company's Form 10-K F/Y/E December 31, 1997.
10.3 Memorandum of Agreement and Exchange (1) Incorporated herein
     by reference to the Company's Form 10-K F/Y/E December 31, 1997.

                           SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the
Securities and Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                          OP-TECH Environmental Services, Inc.
                                (Registrant)

                          By:/s/ John R. Loveland
                             John R. Loveland, Chief Executive Officer

March 31, 1999

     Pursuant to the requirements of the Securities and Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities
indicated on the 31st day of March 1999.

/s/ John R. Loveland          Director and Chairman of the Board
John R. Loveland              (Chief Executive Officer)
                             
/s/ Cornelius B. Murphy, Jr.  Director
Cornelius B. Murphy, Jr.     
                             
/s/ Robert J. Berger          Director
Robert J. Berger             
                             
/s/ Richard L. Elander        Director
Richard L. Elander           
                             
/s/ Steven A. Sanders         Director
Steven A. Sanders            
                             
/s/ Anthony R. Pongonis       President
Anthony R. Pongonis          
                             
/s/ Christopher J. Polimino   Vice President and Chief
Christopher J. Polimino        Accounting Officer
    
/s/ Joseph M. McNulty         Treasurer
Joseph M. McNulty            
                             
/s/ Dennis S. Lerner          Secretary
Dennis S. Lerner             








Report of Independent Accountants



Shareholders and Board of Directors
OP-TECH Environmental Services, Inc. and Subsidiaries


In  our  opinion, the accompanying consolidated balance sheets  and
the  related  consolidated statements  of operations  and 
shareholders'  equity (deficit)  and  cash  flows present fairly,  
in  all  material respects, the financial position of OP-TECH 
Environmental Services,Inc.  and  Subsidiaries  at December 31, 
1998  and  1997,  and  the results  of their operations and their 
cash flows for each  of  the three  years  in the period ended 
December 31, 1998, in  conformity with  generally  accepted 
accounting principles.   These  financial statements are the 
responsibility of the Company's management;  our responsibility  
is  to  express  an  opinion  on  these   financial statements 
based on our audits.  We conducted our audits  of  these statements 
in accordance with generally accepted auditing standards which  
require  that  we  plan  and perform  the  audit  to  obtain 
reasonable  assurance  about whether the financial  statements  are
free  of material misstatement.  An audit includes examining, on  a
test basis, evidence supporting the amounts and disclosures in  the
financial statements, assessing the accounting principles used  and
significant  estimates  made  by  management,  and  evaluating  the
overall  financial  statement presentation.  We  believe  that  our
audits provide a reasonable basis for the opinion expressed above.







Syracuse, New York
March 12, 1999

                             F-1




OP-TECH Environmental Services, Inc. and Subsidiaries

Consolidated Balance Sheets
December 31, 1998 and 1997

               ASSETS                               1998         1997

Current assets:
   Cash and cash equivalents                    $   122,106    $   81,517
   Accounts receivable (net of 
     allowance for doubtful accounts
     of approximately $126,000 in 1998 
     and $119,000 in 1997):
         Unaffiliated parties                     2,847,001     1,948,102
         Affiliated parties                         109,190       126,247
                                                  2,956,191     2,074,349

   Costs on uncompleted projects 
     applicable to future billings                  289,768       132,590
   Prepaid insurance                                157,537       105,792
   Other assets                                     159,345        78,653
      Total current assets                        3,684,947     2,472,901

Property and equipment, net                       1,199,635       622,979
Assets held for sale                              1,605,427     1,675,000
Other assets                                        142,744         5,591

                                                $ 6,632,753   $ 4,776,471


     LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Bank overdraft                               $    45,085   $   224,458
   Notes payable to bank                                          500,000
   Accounts payable:
      Unaffiliated parties                         1,350,204    1,008,236
      Affiliated parties                              51,184      118,159
                                                   1,401,388    1,126,395

   Billings in excess of costs and
     estimated profit on uncompleted 
     contracts                                       569,393      309,927
   Accrued payroll and related liabilities           226,130      272,772
   Accrued expenses and other liabilities             71,888      148,594
   Current portion of long-term debt                 351,751      107,911
      Total current liabilities                    2,665,635    2,690,057

Long-term debt                                     1,174,809      120,944 

Shareholders' equity:
   Common stock, par value $.01 per share; 
     authorized 20,000,000 shares; 
     11,603,963 and 11,555,100 shares
      outstanding as of December 31, 1998 
      and 1997, respectively                         116,040      115,551
   Additional paid-in capital                      7,787,152    7,773,555
   Accumulated deficit                            (5,110,883)  (5,923,636)
                                                   2,792,309    1,965,470

                                                 $ 6,632,753  $ 4,776,471

The accompanying notes are an integral part of the consolidated
financial statements.

                             F-2


OP-TECH Environmental Services, Inc. and Subsidiaries

Consolidated Statements of Operations
Years Ended December 31, 1998, 1997, and 1996


                                   1998           1997         1996

Project billings and services  $ 10,917,903   $ 6,993,221  $ 5,792,548
Project costs                     7,596,788     4,959,449    4,036,846

      Gross margin                3,321,115     2,033,772    1,755,702

Selling, general and 
  administrative expenses         2,399,988     2,569,486    2,593,996
Provision for impairment of 
  long-lived assets                   -           797,686      342,896

      Operating income (loss)       921,127    (1,333,400)  (1,181,190)

Other income and expense:
   Interest expense                (111,099)     (402,144)    (357,173)
   Other income (expense), net       20,925       (11,999)     (14,957)
                                    (90,174)     (414,143)    (372,130)

      Gain (loss) before 
        income taxes and 
        extraordinary item          830,953    (1,747,543)  (1,553,320)

Income taxes                         18,200         -            -  

      Income (loss) before
        extraordinary item          812,753    (1,747,543)  (1,553,320)

Extraordinary gain on 
  forgiveness of debt                 -         1,000,000        -

      NET INCOME (LOSS)             812,753      (747,543)  (1,553,320)




Earnings per common share - 
  basic and dilutive:
   Income (loss) before 
     extraordinary item              $.07          $(.32)      $(.32)
   Extraordinary item                  -             .18          -   

      Net income (loss)              $.07          $(.14)      $(.32)







The accompanying notes are an integral part of the consolidated
financial statements.

                            F-3






OP-TECH Environmental Services, Inc. and Subsidiaries

Consolidated Statements of Shareholders' Equity (Deficit)
Years Ended December 31, 1998, 1997, and 1996


                                     Additional
                            Common   Paid-in       Accumulated
                            Stock    Capital         Deficit      Total       

Balances at 
  December 31, 1995       $  48,500  $ 4,485,157  $(3,622,773)  $  910,884

Issuance of 3,962 shares         35        6,616        -            6,651
Net loss                       -          -        (1,553,320)  (1,553,320)

Balances at 
  December 31, 1996          48,535    4,491,773   (5,176,093)    (635,785)

Conversion of debt to 
  6,702,140 shares           67,021    3,284,049        -        3,351,070
Retirement of 1,537 shares       (5)      (2,267)       -           (2,272)
Net loss                       -          -          (747,543)    (747,543)

Balances at 
  December 31, 1997         115,551    7,773,555   (5,923,636)   1,965,470

Issuance of 48,863 shares       489       13,597                    14,086
Net income                     -          -           812,753      812,753

Balances at 
  December 31, 1998      $  116,040  $ 7,787,152  $(5,110,883)  $2,792,309



























The accompanying notes are an integral part of the consolidated
financial statements.

                              F-4




OP-TECH Environmental Services, Inc. and Subsidiaries

Consolidated Statements of Cash Flows
Years Ended December 31, 1998, 1997, and 1996

                                1998             1997           1996

Operating activities:
 Net income (loss)         $   812,753      $  (747,543)   $  (1,553,320)
 Adjustments to reconcile
  net income (loss) to 
  net cash provided by 
  (used in) operating 
  activities:
    Extraordinary gain on 
     forgiveness of debt         -           (1,000,000)           -
    Provision for loss on 
     accounts receivable       105,350          190,594          131,290
    Depreciation and 
     amortization              161,201          351,812          486,021 
    Provision for impairment 
     of long-lived assets        -              716,710          342,896
    Interest expense converted 
     to common stock             -              166,836            -
    (Increase) decrease in 
     operating assets and
     increase (decrease)in 
     operating liabilities:
       Accounts receivable    (987,192)        (716,225)        (419,049)
       Costs on uncompleted 
        projects applicable 
        to future billings    (157,178)         (31,649)           1,258
       Prepaid expenses and 
        other assets            14,862           84,055            6,209
       Billings and estimated 
        profit in excess of 
        costs on uncompleted 
        contracts              259,466           71,864           88,861
       Accounts payable and
        other accrued 
        expenses               165,731          165,733          469,712
   Net cash provided by 
    (used in) operating 
    activities                 374,993         (747,813)        (446,122)

Investing activities:
   Purchases of property 
    and equipment             (207,617)        (120,488)        (153,953)
   Proceeds from sale of 
    property and equipment       -                7,793            -
   Net cash used in 
    investing activities      (207,617)        (112,695)        (153,953)

Financing activities:
   Cash overdrafts            (179,373)         149,476           74,982
   Proceeds from notes 
    payable to banks and 
    long-term borrowings, 
    net of financing costs   4,792,163          511,904        1,732,000
   Proceeds from notes 
    payable to shareholders      -              525,000          630,000
   Principal payments on 
    current and long-term 
    borrowings              (4,739,577)        (263,432)      (1,856,525)
   Proceeds from issuance 
    of common stock              -                -                6,651
   Net cash (used in) 
    provided by financing 
    activities                (126,787)         922,948          587,108

     Increase (decrease) 
      in cash and cash 
      equivalents               40,589           62,440          (12,967)

Cash and cash equivalents 
 at beginning of year           81,517           19,077           32,044

CASH AND CASH EQUIVALENTS 
 AT END OF YEAR                122,106           81,517           19,077 

Non-cash items:
 Conversion of debt and 
  related accrued interest 
  to equity (including 
  $166,836 of 1997 
  interest expense)         $    -         $  3,351,070        $   -
 Shareholders retirement 
  of common stock                -                2,272            -


The accompanying notes are an integral part of the consolidated
financial statements.

                            F-5





OP-TECH Environmental Services, Inc. and Subsidiaries

Notes to Consolidated Financial Statements
December 31, 1998, 1997, and 1996


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Basis of Presentation
  
  OP-TECH Environmental Services, Inc., a Delaware corporation, and
  Subsidiaries     (the    "Company"),    provides    comprehensive
  environmental services predominately in Upstate and  Central  New
  York.   The Company performs industrial cleaning of non-hazardous
  materials,  provides varying services relating to plant  facility
  closure  including  demolition and  asbestos  services,  provides
  remediation   services  for  sites  contaminated   by   hazardous
  materials  and  provides emergency spill response services.   The
  Company  has two subsidiaries, St. Lawrence Industrial  Services,
  Inc.,  a New York corporation and OP-TECH Environmental Services,
  Ltd., a Canadian subsidiary.
  
  Priniciples of Consolidation
  
  The  accompanying consolidated financial statements  include  the
  accounts  of the Company and its wholly-owned subsidiaries.   All
  significant  intercompany  accounts and  transactions  have  been
  eliminated in consolidation.
  
  Use of Estimates
  
  The  preparation  of  financial  statements  in  conformity  with
  generally  accepted accounting principles requires management  to
  make  estimates and assumptions that affect the reported  amounts
  of assets and liabilities and disclosure of contingent assets and
  liabilities  at the date of the financial statements.   Estimates
  also  affect the reported amounts of revenues and expenses during
  the  reporting  period.  Actual results could differ  from  those
  estimates.
  
  One of the more significant estimates includes the evaluation  of
  impairment  of  the Company's long-lived assets.  As  more  fully
  described  in  Note 5, the Company has had certain property  held
  for   sale  appraised  by  an  independent  third  party.    Such
  appraisals  are dependent upon various assumptions and estimates,
  which  are subject to change over time.  Future changes in  these
  estimates,  or  other  assumptions  utilized  by  management   to
  evaluate the asset carrying value, may have a material effect  on
  the conclusions reached and the determination of impairment.
  
  Cash Equivalents

  The  Company  considers  all  highly liquid  investments  with  a
  maturity  of  three  months or less when  purchased  to  be  cash
  equivalents.   The carrying amount reported in the balance  sheet
  for cash and cash equivalents approximates its fair value.

                         F-6

  
  Project Income Recognition and Unbilled Project Costs
  
  Predominately,  contracts are short-term  in  nature,  less  than
  three months, and revenue is recognized as the costs are incurred
  and  billed.  Income on long-term fixed price contracts,  greater
  than  three months, are recognized on project billings  based  on
  the  percentage-of-completion method utilizing  the  cost-to-cost
  basis.  Project costs are generally billed in the month they  are
  incurred and are shown as current assets.
  
  In  the  event  the interim billings exceed costs  and  estimated
  profit,  the net amount of deferred revenue is shown as a current
  liability.    Estimated  losses  are  recorded   in   full   when
  identified.
  
  Concentration of Business Risk - Significant Customers
  
  Sales  to  one customer, other than an affiliated party, amounted
  to  approximately $2,537,000, $463,000 and $429,000 in 1998, 1997
  and  1996,  respectively.  Accounts receivable  at  December  31,
  1998,  1997,  and 1996 include $157,200, $102,510  and  $164,439,
  respectively, from this customer.
  
  For  the  year  ended December 31, 1998 two individual  customers
  generated  approximately  $4,065,000, or  37%  of  the  Company's
  revenues.
  
  Property and Equipment
  
  Property  and  equipment  are stated at cost.   Expenditures  for
  repairs  and  maintenance  are charged to  expense  as  incurred.
  Depreciation and amortization of assets including those  recorded
  under  capital  leases  is provided for using  the  straight-line
  method.
  
  Assets Held for Sale
  
  Assets  held for sale are stated at the lower of carrying  amount
  or  fair value, determined by an independent appraisal, less cost
  to sell.
  
  Long and Short-Term Debt
  
  The  carrying  amounts  of the Company's short-term  secured  and
  unsecured  borrowing and non-traded variable-rate long-term  debt
  agreements  approximate  fair value.   The  fair  values  of  the
  Company's  non-traded  fixed-rate long-term  debt  are  estimated
  using  discounted  cash flow analysis, based upon  the  Company's
  current   incremental  borrowing  rates  for  similar  types   of
  borrowing agreements.

                           F-7
  
  Income Taxes
  
  The  Company  provides for income taxes in  accordance  with  the
  liability   method  as  set  forth  in  Statement  of   Financial
  Accounting  Standards  No.  109 "Accounting  for  Income  Taxes."
  Under  the  liability method, deferred tax assets and liabilities
  are  determined  based  on the difference between  the  financial
  statement  and  tax  basis  of assets  and  liabilities  and  are
  measured  using  the enacted tax rates and laws that  may  be  in
  effect  in  the  years in which the differences are  expected  to
  reverse.
  
  Earnings Per Share
  
  Basic earnings per  share is  computed  by  dividing income by 
  the weighted average  shares actually outstanding for the period.  
  Diluted earnings per  share includes the potentially dilutive 
  effect of shares issuable under the employee  stock purchase and 
  incentive stock  option  plans. Due  to the losses incurred by the 
  Company in 1997 and 1996,  the impact of the outstanding options 
  and warrants are anti-dilutive and therefore their impact has not 
  been included in the dilutive earnings per share disclosure.


2.   CAPITAL RESTRUCTURING
  
  In  December 1997, the Company executed agreements with its  then
  two  largest creditors.  The Company's then financial institution
  and  a  shareholder creditor, agreed to convert all  or  part  of
  their indebtedness, including accrued interest, into common stock
  of  the  Company,  and  to  forgive the remaining  balance.   The
  shareholder,  to  which the Company was indebted for  $1,540,000,
  including accrued interest of $140,000, forgave $1,000,000 of the
  debt  and  converted  the balance into 1,080,000  shares  of  the
  Company's  common stock.  The financial institution to which  the
  Company  was indebted for $2,811,070, including accrued  interest
  of  $75,332,  converted  their  debt  and  accrued  interest into
  5,622,000  shares of the Company's common stock.  The  price  per
  share,  of  $.50, was negotiated with the two creditors  and  the
  Company based on the price of recent sales and their estimates of
  future risk.

                           F-8

3.   RELATED PARTY TRANSACTIONS
  
  The  Company  purchased  technical,  accounting,  and  consulting
  services  and  rented certain office and warehouse space  from  a
  shareholder  and  its affiliates.  The cost  for  these  services
  amounted to approximately $325,000, $97,000 and $151,000 in 1998,
  1997 and 1996, respectively.
  
  Additionally,   the  Company  provided  approximately   $283,000,
  $1,507,000  and  $1,110,000 of remediation, sub-contract  support
  and  project services to a shareholder and its affiliates for the
  years ending December 31, 1998, 1997 and 1996, respectively.
  
  Interest  expense  on  an  unsecured  line  of  credit   with   a
  stockholder  was approximately $94,000 and $59,500  in  1997  and
  1996, respectively.

4.   PROPERTY, PLANT AND EQUIPMENT
  
  Property,  plant  and  equipment consisted of  the  following  at
  December 31:
  
                                          1998             1997

  Furniture and fixtures             $    35,033      $    35,033
  Office machines                         75,052           44,399
  Utility vehicles                       101,140          101,140
  Field equipment                      1,947,551        1,244,601
  Aqueous treatment system               100,002          100,002

                                       2,258,778        1,525,175

  Less: Accumulated depreciation       1,059,143          902,196
                                     $ 1,199,635      $   622,979  

  
  Depreciation expense approximated $157,000, $282,000 and $448,000
  for 1998, 1997, and 1996, respectively.

                          F-9

5.   IMPAIRMENT OF LONG-LIVED ASSETS
  
  Assets Held for Sale
  
  The Company is actively pursuing the disposal of its  Massena
  Port  Facility ("Facility"), which was acquired in 1991  
  for  the  purpose of developing a large  aqueous  treatment
  facility.  Management's estimation of fair value is based upon an
  evaluation of existing facts and circumstances, including current
  real  estate market conditions;  the 1997 independent  appraisal;
  a  discount  related to an estimated period of time to consummate
  the  sale of the Facility;  and certain other factors, less costs
  of  disposal.   In  addition,  a  wholly-owned  subsidiary  of  a
  shareholder of the Company currently has an option to purchase 
  the Massena  Port  Facility  for $2,000,000.  Management has 
  continued its efforts to market the Facility or to find 
  alternative uses.  Based upon management's evaluation, as of
  December  31,  1998,  the  carrying  value  of  the  Facility  is
  approximately stated at the lower of cost or market.
  
  The components of Assets Held for Sale consist of the following:
  
   Massena Port Facility, net of write down        $  1,605,427
  
  During  1998 the Company reclassified equipment with  a  carrying
  value  of $69,573 from assets held for sale to equipment, as  the
  equipment is being utilized in the operations of the Company.
  

6. DEBT AND LEASE OBLIGATIONS
  
  Long-term debt is summarized as follows at December 31, 1998:
  
   Revolving loan, see (a)                        $     739,531
   Various equipment and other installment 
    obligations, due in aggregate monthly 
    installment payments of approximately
    $34,400, including interest with rates 
    between 6.95% and 15%, collateralized  
    by equipment with a carrying value of
    $714,481.                                           787,029
  
                                                      1,526,560
  Less: Current portion                                (351,751)
                                                  $   1,174,809
  
  
                          F-10

  (a)  The Company has a renewable borrowing agreement that provides
     borrowings up to $1,500,000 on a revolving basis, collateralized by
     all accounts receivable, inventory and equipment now owned  or
     acquired later.  In addition, the agreement includes a material
     adverse change clause which permits the financial institution to
     call its debt in the event of a material adverse change in the
     business.  Management does not anticipate any  adverse changes
     in the next twelve months,  however, there can be no assurances.
     The revolving loan, which is due on April 30, 2000, is guaranteed
     by a shareholder for an amount not-to-exceed $500,000.  
  
     Borrowings  against the revolving loan aggregated $739,531  at
     December 31, 1998.  Interest is charged at prime plus 1.5%, or
     9.25%  at  December 31, 1998.  The weighted average  borrowing
     rates under short-term credit facilities were 9.72% and 10%  at
     December 31, 1998 and 1997, respectively.
  
  Interest  paid amounted to approximately $115,000,  $235,000  and
  $326,000 in 1998, 1997 and 1996, respectively.
  
  Scheduled principal payments on long-term debt for the next  five
  years are as follows:
  
          1999                          $    351,751
          2000                             1,048,251
          2001                               119,041
          2002                                 7,517
                                        $  1,526,560
  
  Office facilities, a portion of which is with an affiliate of the
  Company's  shareholder, are leased under noncancelable  operating
  leases  expiring  at  various dates through 2001.   Rent  expense
  incurred  amounted to approximately $77,000, $89,000 and $120,000
  in  1998,  1997  and  1996, respectively.  Future  minimum  lease
  payments  under  noncancelable operating leases are  as  follows:
  1999 - $169,400, 2000 - $167,200, 2001 - $93,700, 2002 - $33,200,
  2003 - $15,600.
  
  The  Company incurred non-cash debt and capital lease obligations
  of  $456,413 and $47,500 in 1998 and 1997, respectively, for  the
  acquisition of equipment.  In addition, during 1998, the  Company
  financed   its   three-year  insurance  premium   obligation   of
  approximately $288,000.

                            F-11

7.   SHAREHOLDERS' EQUITY
  
  The  Company maintains a stock option plan permitting the issuance
  of  up  to  500,000 shares of common stock.  The purpose  of  the
  Plan,  which is more fully defined by the Plan document, provides
  various directors, officers, and employees ("Eligible Employees")
  of  the Company the opportunity to acquire stake in the growth of
  the  Company,  as  well  as  a means of  promoting  the  Eligible
  Employee's  maximum  effort and continued  association  with  the
  Company.
  
  Stock  options granted under the Plan allow the Eligible Employee
  to  purchase  the  Company's common stock, for a  period  not  to
  exceed  three years, at the price established at the grant  date.
  Options granted under the Plan must specify option periods ending
  not  more  than ten years from the date of grant.  The  following
  table  summarizes option activity of the Plan during  1998,  1997
  and 1996:
  
                                           Weighted     No. of
                                           Average      Shares
                                           Exercise     Under
                                           Price        Options
  
  Balance at December 31, 1995              $2.50       250,000
   Options granted                            -            -
   Options forfeited                          -            -
  Balance at December 31, 1996               2.50       250,000
   Options granted                           1.50        50,000
   Options expired                          (2.50)     (250,000)
  Balance at December 31, 1997               1.50        50,000
   Options granted                            -            -
   Options expired                            -            -
  Balance at December 31, 1998              $1.50        50,000
  
  
  The  Company has elected to follow APB Opinion No. 25 and related
  interpretations in accounting for the options granted  under  the
  Plan.   Under APB Opinion No. 25, because the exercise  price  of
  the  stock  option  is above the market price of  the  underlying
  stock  on  the  date  of  the grant, no compensation  expense  is
  recognized.  Under SFAS No. 123, rights to acquire company  stock
  are  to  be  valued under the fair value method and the  proforma
  effect of such value on reported earnings and earnings per  share
  are to be disclosed in the notes to the financial statements.  As
  the  fair  value  of  these  options is  not  material, pro forma
  and related disclosures are not presented.
  
  In 1994,  the  Company  issued  warrants  to a financial advisor
  to purchase 271,250 shares of common stock at a price of $1.65 
  per share.  These warrants were expired and reissued in 1998 at a
  price of $1.65 and expire in 2000.
  
                           F-12

  As  of  December 31, 1998, the Company has reserved  a  total  of
  321,250  shares of common stock for issuance under the agreements
  discussed above.  No options or warrants have been exercised.
  
  During 1998, the Company granted stock awards of 48,863 shares of
  its common stock to certain of its employees.  As a result, a non-
  cash compensation expense of $14,086, the fair value of the stock
  on the grant date, was recognized.  During 1997 certain directors
  returned  500  shares  of common stock  to  the  Company  for  no
  consideration. 
  
  
8. INCOME TAXES
  
  The following summarizes the income tax expense at December 31,
  1998:
  
    Federal                                            $  15,000
    State                                                  3,200
    Deferred                                                -
                                                       $  18,200
  
  The  difference between the expected tax provision resulting from
  the  application of the federal statutory income tax rate to pre-
  tax   income,  for  1998,  is  due  to  the  Company's  continued
  recognition of a deferred tax valuation allowance and the  impact
  of  current  tax  obligations based on AMT tax rates  subject  to
  certain limitation provisions.
  
  The   Company   has  federal  net  operating  loss  ("NOL")   and
  alternative   minimum   tax  ("AMT")  credit   carryforwards   of
  approximately  $4,883,000 and $15,000, for income  tax  purposes.
  The  federal net operating loss carryforward expires  at  various
  times  through  the  year ending December 31, 2012.   Alternative
  minimum tax credit carryforwards do not expire.  Income taxes and
  franchise taxes paid were approximately $18,200 and $366 in  1998
  and 1997, respectively.
  
  Deferred  income  taxes reflect the net tax effect  of  temporary
  differences   between  the  carrying  amounts   of   assets   and
  liabilities for financial reporting purposes and the amounts used
  for  income  tax  purposes.   For financial  reporting  purposes
  the Company decreased its valuation  allowance  in  1998  due to
  utilization of its net operating loss carryforwards based  on 
  taxable income generated in the current year.  In 1997, the
  Company increased its valuation allowance by $118,408, due to
  the  uncertainty of realizing the deferred tax assets  in  future
  years.  The Company has recorded a valuation allowance, amounting
  to  the entire net deferred tax asset, due to the uncertainty  as
  to the ultimate recovery of the assets.
  
                             F-13  

  Significant  components of the Company's deferred tax liabilities
  and assets as of December 31, 1998 and 1997 are as follows:
  
                                             1998          1997                
   Deferred tax liabilities:
    Tax over book depreciation           $    76,021    $    60,218
     
   Deferred tax assets:
    Net operating loss carryforward      $ 1,660,144    $ 1,844,768
    Accounts receivable reserve               42,826         24,602
    Other                                     84,559          6,289
    AMT tax credits                           15,000           -
     Total deferred tax assets             1,802,529      1,875,659
   Valuation allowance for     
    deferred assets                       (1,726,508)    (1,815,441)
     Deferred tax assets                 $    76,021    $    60,218
     Net deferred taxes                  $         0    $         0


9.   EMPLOYEE BENEFIT PLAN
  
  The Company maintains  an  employee retirement  plan which covers 
  substantially all  employees.  The Plan is funded by voluntary 
  employee contributions  which are matched by the Company at a 
  designated percentage, and additional contributions by the Company 
  at the discretion of the  Board  of Directors.  There were matching 
  contributions to the plan of approximately $11,500, $9,100 and 
  $12,000 in 1998, 1997 and 1996, respectively, by the Company.  The
  Company did not make discretionary contributions to the Plan in 
  1998, 1997 and 1996.


10.  COMMITMENT AND CONTINGENCIES
  
  The  Company  is  subject  to various federal,  state  and  local
  regulations  relating  to environmental matters,  including  laws
  which  require the investigation and, in some cases,  remediation
  of  environmental  contamination.  The  Company's  policy  is  to
  accrue  and charge to operations environmental investigation  and
  remediation  expenses when it is probable that  a  liability  has
  been incurred and an amount is reasonably estimable.
  
  The  Company is a party to various proceedings arising  from  the
  normal  course  of  business.   Based  on  information  currently
  available,  management  believes adverse  decisions  relating  to
  litigation   and  contingencies  in  the  aggregate   would   not
  materially affect the Company's results of operations, cash flows
  or financial condition.

                               F-14