Mobley Environmental Services Inc – ‘10KSB’ for 12/31/98

As of:  Wednesday, 3/31/99   ·   For:  12/31/98   ·   Accession #:  1047469-99-13053   ·   File #:  0-19497

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Annual Report — Small Business   —   Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Annual Report -- Small Business                       41    218K 
 2: EX-23       Consent of Experts or Counsel                          1      6K 
 3: EX-27       Financial Data Schedule (Pre-XBRL)                     2      9K 

10KSB   —   Annual Report — Small Business
Document Table of Contents

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 FORM 10-KSB

 FOR ANNUAL AND TRANSITION REPORTS
 PURSUANT TO SECTIONS 13 OR 15(d) OF THE
 SECURITIES EXCHANGE ACT OF 1934

[ X ]    ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES        
EXCHANGE ACT OF 1934                                          
For the Fiscal Year Ended December 31, 1998                   

                                  OR

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES    
EXCHANGE ACT OF 1934                                          
For the transition period from __________ to __________       

COMMISSION FILE NUMBER 0-19497

 MOBLEY ENVIRONMENTAL SERVICES, INC.
(Name of Small Business Issuer in Its Charter)

DELAWARE                                  75-2242963
(State or Other jurisdiction of         (I.R.S. Employer Identification No.)
Incorporation or Organization)                                              

c/o 111 CONGRESS AVENUE, SUITE 1400                         
               AUSTIN, TEXAS                                   78701
   (Address of Principal Executive Offices)                   (Zip Code)

ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE: NONE

 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

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

 SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
CLASS A COMMON STOCK, $.01 PAR VALUE PER SHARE
(Title of Class)  

Check whether the issuer (1) filed all reports required to be filed by Section  
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports), 
and (2) has been subject to such filing requirements for the past 90 days.      
Yes  X      No                                                                  
-----       -----                                                         

Check if there is no disclosure of delinquent filers in response to Item 405 of 
Regulation S-B contained in this form, and no disclosure will be contained, to  
the best of registrant's knowledge, in definitive proxy or other information    
statements incorporated by reference in Part III of this Form 10-KSB or any     
amendment to this Form 10-KSB. [ ]                                              

State issuer's revenues for the most recent fiscal year: $ -0-                  

The aggregate market value of the voting and non-voting common entity (Class A  
Common Stock) held by non-affiliates computed by reference to the average bid   
and asked price of such common equity as reported by the OTC Bulletin Board as  
of March 1, 1999 was estimated to be $795,947.                                  

The number of shares outstanding of the issuer's common stock, as of March 1,   
1999 was 4,259,650 shares of Class A Common Stock, $.01 par value and 4,575,643 
shares of Class B Common Stock, $.01 par value.                                 

Transitional Small Business Disclosure Format:  Yes       No  X                 
                                    -----    -----

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   FORM 10-KSB INDEX

    PART I

                                                                [Download Table]

                                                                         Page Number
                                                                         -----------
                                                                                    
Item 1.  Business................................................................  1

Item 2.  Properties..............................................................  4

Item 3.  Legal Proceedings.......................................................  4

Item 4.  Submission of Matters to a Vote of Security Holders.....................  6

                                      PART II                                       

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters...  6

Item 6.  Management's Discussion and Analysis....................................  7

Item 7.  Financial Statements.................................................... 11

Item 8.  Changes in and Disagreements with Accountants on Accounting and            
           Financial Disclosure.................................................. 11

                                      PART III                                      

Item 9.  Directors and Executive Officers; Compliance with Section 16(a)            
           of the Exchange Act................................................... 11

Item 10. Executive Compensation.................................................. 13

Item 11. Security Ownership of Certain Beneficial Owners and Management.......... 14

Item 12. Certain Relationships and Related Transactions.......................... 15

                                      PART IV                                       

Item 13. Exhibits List and Reports on Form 8-K................................... 16

         Signatures.............................................................. 18

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    PART I

ITEM 1.   BUSINESS                                                              

GENERAL                                                                         

    Prior to May 29, 1997, Mobley Environmental Services, Inc. (the "Company")
provided diverse environmental and field-related services to industrial,        
governmental and commercial markets, and specialized in the collection,         
transportation, treatment, recycling, and management of a wide variety of       
non-hazardous liquid hydrocarbons, oil filters, absorbents, and related         
materials. Prior to January 20, 1997, the Company also provided oilfield        
services, including transporting, marketing, storing, and disposing of various  
liquid materials used or produced as waste throughout the lifecycle of oil and  
gas wells.                                                                      

The Company was formed in July 1991 for the purpose of combining the  
businesses of Gibraltar Chemical Resources, Inc. ("Gibraltar"), Mobley Company, 
Inc. ("Mobley Co."), and Mobley Group, Inc. which had been under common         
management since their inception. Shareholders of the predecessor companies     
received shares of the Company's Class B Common Stock in exchange for their     
shares of common stock of these companies, and certain of the principal         
shareholders of the Company sold to the Company for cash certain assets used in 
the businesses of the predecessor companies. As a result of the foregoing       
transactions, Gibraltar and Mobley Co. became wholly-owned subsidiaries of the  
Company and Mobley Group, Inc. was merged into the Company.                     

   The Company's oilfield services business was founded in 1943, and in 1980
the Company expanded into the hazardous waste treatment and disposal business.  
However, the Company completed the sale of Gibraltar on December 31, 1994; and  
since that time, the Company has not been involved in the commercial management 
of hazardous wastes.                                                            

   In 1987, the Company expanded its waste management services activities to
include the collection and treatment of non-hazardous, hydrocarbon-laden wastes 
for customers outside the oil and gas industry. In 1995, the Company, through a 
newly-formed subsidiary, Hydrocarbon Technologies, Inc., broadened its          
hydrocarbon recycling and recovery activities to include the collection and     
marketing of used oil and oil filters through the acquisition of the assets of a
group of three related recycling companies. Additionally, during 1996, the      
Company completed construction of two new facilities for the recycling of used  
motor oil and fuel mixtures into higher-value finished products for sale and the
processing and recycling of used oil filters, absorbents and related materials. 

As further discussed below (see "Business Strategy and Background of  
Disposition Transactions") on January 20, 1997, the Company completed the sale  
of the assets used in its oilfield services business to Dawson Production       
Services, Inc. ("Dawson"). Thereafter, the Company completed the sale (the      
"Transaction") of its hydrocarbon recycling and recovery assets to the United   
States Filter Corporation ("U.S. Filter") on May 29, 1997.                      

RESTRUCTURING AND DIVESTITURE OF HAZARDOUS WASTE OPERATIONS                     

    In late 1993, the Company determined that the divestiture of its hazardous
waste business conducted by Gibraltar was in the best interests of the Company  
and its shareholders. On May 10, 1994 the Company entered into a definitive     
agreement (the "Stock Purchase Agreement") for the sale of all of the           
outstanding shares of common stock of Gibraltar to American Ecology Corporation 
("AEC"), and such sale was completed effective December 31, 1994. See Note 3 of 
Notes to Consolidated Financial Statements set forth in Item 7 herein. The      
Company made extensive warranties and representations in the Stock Purchase     

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Agreement, including the absence of any liabilities arising prior to closing    
other than those disclosed to AEC. The Company is required to indemnify AEC for 
all losses resulting from breaches of warranties and representations and pending
or future claims or proceedings resulting from circumstances existing prior to  
closing through June 30, 1996 (or in the case of tax, environmental and ERISA   
claims, through June 30, 1998). However, the Company and AEC executed a Tolling 
Agreement dated July 30, 1997, pursuant to which the statute of limitations     
period for certain potential claims by either party against the other was tolled
from July 30, 1997 through July 30, 2000. The maximum liability of the Company  
under such indemnity with respect to undisclosed claims is $3.0 million; there  
is no limit with respect to disclosed liabilities. See Note 14 of Notes to      
Consolidated Financial Statements set forth in Item 7 herein for further        
information regarding certain obligations and contingent liabilities relating to
Gibraltar.                                                                      

BUSINESS STRATEGY AND BACKGROUND OF DISPOSITION TRANSACTIONS                    

    Having exited the hazardous waste industry with the sale of Gibraltar, the
Company focused on the continued growth and development of its non-hazardous    
hydrocarbon recycling and recovery business. The Company's Board of Directors   
and management believed that its core skills in managing liquid hydrocarbon     
wastes, combined with its experience in processing industrial oily wastes,      
formed a solid foundation for a business expansion into more advanced           
hydrocarbon recycling and recovery technologies. Specific plans were made for   
the engineering and construction of a distillate fuels production facility and  
oil filter recycling facility. The filter recycling facility began operations in
April, 1996, and the distillate fuels production facility began full-scale      
operations in August, 1996.                                                     

In October 1995, the Company engaged Cureton and Co., Incorporated    
("Cureton & Co."), an investment banking and business advisory firm, to assist  
it with the investigation and possible financing of other business combination  
opportunities that had come to the Company's attention. With the assistance of  
Cureton & Co., the Company investigated possible relationships or affiliations  
with a variety of entities whose operations might be a feasible expansion of, or
complementary to, the Company's existing operations or those contemplated under 
its strategic plan. Of the discussions undertaken by management, PORI           
International, Inc. ("PORI"), based in Baltimore, Maryland, emerged as a        
candidate for serious consideration. On March 11, 1996, the Company's           
discussions with PORI culminated in a letter of intent to acquire substantially 
all of PORI's assets with completion of the transaction subject to, among other 
things, the Company's ability to secure the necessary financing.                

     Operating losses sustained by the Company in early 1996, coupled with the
capital spending program associated with the execution of its growth strategy,  
significantly weakened the Company's liquidity over the first half of 1996. As a
result of the Company's deteriorated financial condition and unfavorable results
of operations, bank debt financing was effectively eliminated as a viable source
of funds for the continued execution of its strategic plan. Through Cureton &   
Co., the Company contacted numerous persons during the summer of 1996 to discuss
the possibilities of a private investment in the Company or other strategic     
alliance. Through an exhaustive process, U.S. Filter emerged as the most viable 
party interested in pursuing a specific transaction with the Company. After     
lengthy discussions, it became clear that U.S. Filter was not interested in     
joint ownership and would only proceed with negotiations on the basis of        
purchasing, with shares of U.S. Filter common stock as consideration, the       
Company's entire interest in its hydrocarbon recycling and oil/water processing 
business.                                                                       

     On October 9, 1996, the Company's Board of Directors authorized the Company
to enter into a letter of intent to sell to U.S. Filter the net assets of the   
Company's hydrocarbon recycling and recovery business in consideration for U.S. 
Filter common stock having an aggregate exchange value of $8.0 million, plus the
right to receive additional shares of U.S. Filter common stock with an exchange 
value of up to $4.0 million upon the attainment of certain financial performance
goals by the business in the two-year period following the                      

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sale. The Company executed a letter of intent with U.S. Filter on October 30,   
1996, and thereafter, on April 25, 1997, the parties executed a definitive Asset
Purchase Agreement (the "Agreement"). In conjunction with this decision, the    
Company abandoned its plans to acquire the assets of PORI; such assets were     
subsequently acquired by U.S. Filter in February 1997.                          

WASTE MANAGEMENT SERVICES                                                       

 Since the divestiture of Gibraltar at year-end 1994 through the May 29,
1997 disposition of the Company's remaining operating assets, the waste         
management services provided by the Company consisted of the collection,        
transportation, treatment, recycling, and management of non-hazardous liquid    
industrial hydrocarbons, off-specification motor fuels, used oils, oil filters, 
absorbents and related materials. These activities are collectively referred to 
herein as "hydrocarbon recycling and recovery". These activities are no longer  
conducted by the Company.                                                       

OILFIELD SERVICES                                                               

 This business segment consisted of the transportation, management and
disposal of various liquids which are used or produced as waste in the drilling,
completion, and production operations of oil and gas wells. In light of its     
decision to sell the assets of its hydrocarbon recycling and recovery business, 
the Company's Board of Directors evaluated the remainder of the Company's       
business activities, being its oilfield services business. Given the relatively 
high administrative costs of operating a business as small as the oilfield      
services business on a stand-alone basis, and the rather limited growth         
opportunities available to the Company for this business, the Board of Directors
concluded that a sale of the business was in the best interest of the Company.  
On January 20, 1997, the Company completed the sale of substantially all of its 
oilfield services assets to Dawson. See Note 2 of Notes to Consolidated         
Financial Statements set forth in Item 7 herein for related information         
regarding this segment of the Company's business.                               

INSURANCE                                                                       

Since the sale of the Company's operating assets, the Company has   
maintained directors and officers liability and general liability insurance     
policies.                                                                       

EMPLOYEES                                                                       

The Company currently has no employees.                               

INVESTMENT SECURITIES HELD BY THE COMPANY                                       

 All of the U.S. Filter common stock received at the time of the closing
of the sale of its waste management services assets (in May 1997) has been      
sold. Cash from the U.S. Filter stock sale, along with the proceeds from the    
sale of the oilfield services assets, were used to pay bank indebtedness,       
transaction expenses, and current liabilities. Remaining proceeds were used     
to purchase investment grade fixed term securities. Such securities include     
U.S. Treasury and corporate bonds. However, the Company currently holds         
28,294 shares of U.S. Filter common stock received, pursuant to the earnout     
provisions of the Agreement, in connection with the results of operations of    
the business by U.S. Filter during the first year of operations after the       
Transaction. See Consolidated Financial Statements set forth in Item 7 herein.  

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CURRENT STATUS AND FUTURE PLANS OF THE COMPANY                                  

The Company has had no operating assets since the sale of its oilfield
services business and hydrocarbon recovery and recycling business in 1997.      
Because of its indemnity obligations related to the sale of Gibraltar, as well  
as potential indemnification responsibilities with respect to the sale of its   
operating assets, and considering ongoing litigation (see "LEGAL PROCEEDINGS"   
set forth in Item 3 herein and Note 14 of Notes to Consolidated Financial       
Statements set forth in Item 7 herein), the Company will remain in existence for
the foreseeable future.                                                         

    The litigation involving the Company is in varying stages, with some cases
in the early phases of discovery, while others are awaiting trial. The claims   
are unliquidated; and the Company's potential liability, even after available   
insurance coverage, could exceed the amount of its assets. Accordingly, based on
consultation with legal counsel, the Company's Board of Directors believes that 
they are required by applicable law to hold the Company's assets as a fiduciary 
for potential creditors as well as the shareholders. No steps will be taken to  
reduce the corporate corpus of the Company by paying liquidating or other       
dividends to shareholders until these claims are resolved or more nearly        
quantified. In light of the nature and complexity of the litigation, the Company
expects that it may take a period of up to several years to resolve these       
matters.                                                                        

As circumstances change or additional information with respect to the 
Company's potential indemnity obligations and litigation exposure becomes       
available, the Board of Directors will continue to evaluate various uses of the 
Company's funds. The Company has no plans to conduct any kind of operating      
business at any time in the future.                                             

ITEM 2.   PROPERTIES                                                            

  The Company's previous corporate office in Kilgore, Texas, consisting of
land and approximately 10,000 square feet of office space, is still owned by the
Company and is currently leased-out. With the sales of its oilfield services and
hydrocarbon recycling and recovery businesses in 1997, the Company disposed of  
substantially all other real properties.                                        

   The Company's current mailing address is c/o Howard V. Rose, 111 Congress
Avenue, Suite 1400, Austin, Texas 78701.                                        

ITEM 3.   LEGAL PROCEEDINGS                                                     

LITIGATION AND VARIOUS OTHER CLAIMS. The Company previously filed a   
complaint against National Union Fire Insurance Company of Pittsburgh, Pa.      
("National Union") seeking declaratory judgment that National Union is obligated
to indemnify the Company under three pollution legal liability insurance        
policies issued by National Union and that certain claims previously made by the
Company with respect to such policies are not "related claims" covered by a     
single policy as was alleged by National Union in notice correspondence directed
to the Company. Previously, National Union had issued three pollution liability 
policies to the Company, each covering a different time period and each         
containing a provision that all claims arising out of related or continuous acts
would be considered a single loss and be deemed first reported during the policy
period in which the initial claim was first reported. The Company sought a      
declaratory judgement establishing that the foregoing provision was not         
applicable to claims that might arise under various lawsuits in which the       
Company is a defendant (see "Claims and Legal Proceedings Against Gibraltar"    
below). This case was dismissed in 1997; however, the issues raised in this     
action have not yet been resolved by the parties.                               

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Additionally, in connection with its prior ownership of Gibraltar, the
Company is a party to lawsuits styled WILLIAMS V. GIBRALTAR CHEMICAL RESOURCES, 
INC., ADAMS V. GIBRALTAR CHEMICAL RESOURCES, INC. and DANIELS V. GIBRALTAR      
CHEMICAL RESOURCES, INC. to which Gibraltar is also a party. These lawsuits are 
described below.                                                                

     CLAIMS AND LEGAL PROCEEDINGS AGAINST GIBRALTAR. In connection with the sale
of Gibraltar discussed in Note 3 of Notes to Consolidated Financial Statements  
set forth in Item 7 herein, the Company is obligated to indemnify AEC for       
certain claims against Gibraltar, including various legal claims and proceedings
disclosed to AEC, arising from circumstances existing on or prior to the date of
the sale of Gibraltar. The following items constitute material legal claims and 
proceedings for which the Company is obligated to indemnify AEC:                

On October 18, 1993, a suit styled WILLIAMS V. GIBRALTAR CHEMICAL     
RESOURCES, INC. was filed against the Company, Gibraltar, Mobley Co. and certain
individuals, former customers of Gibraltar and other entities. This case is     
currently pending in the State District Court of Smith County, Texas. The named 
plaintiffs are certain individuals residing in Smith County, and are seeking    
monetary damages for themselves and on behalf of all other persons similarly    
situated. The petition alleges various acts of negligence, fraudulent           
concealment, nuisance, trespass, and various others resulting from operations of
Gibraltar's hazardous waste facility. On May 12, 1997, plaintiffs' claims were  
dismissed with prejudice by the Court. However, the Court's decision has been   
appealed to the Court of Appeals.                                               

  A suit styled DANIELS V. GIBRALTAR CHEMICAL RESOURCES, INC. was filed on
August 31, 1995 in the State District Court of Dallas County, Texas against the 
Company, Mobley Co., Gibraltar, and certain individuals, former customers of    
Gibraltar and other entities by certain residents of Smith County, Texas. The   
plaintiffs claim that they have experienced personal injury and property damage 
which are alleged to have been caused by the operation of the Company's former  
subsidiary, Gibraltar. The plaintiffs demand recovery of unspecified monetary   
damages based on various legal grounds, including fraudulent concealment,       
negligence, and assault & battery. This case has been set for trial in April    
1999. While the Company disputes the material allegations of the plaintiffs'    
suit and is vigorously defending the litigation, it is unable to determine the  
likelihood of an unfavorable outcome at this time.                              

 A suit styled GLAZER V. GIBRALTAR CHEMICAL RESOURCES, INC. was filed on
September 6, 1994, in the United States District Court for the Eastern District 
of Texas, Tyler Division against Gibraltar by an individual and Mothers         
Organized to Stop Environmental Sins ("MOSES"), under the citizens' suit        
provisions of the Clean Air Act and the Resource Conservation and Recovery Act. 
The suit alleges repeated and continuing violations of these federal            
environmental protection statutes by Gibraltar and an imminent and substantial  
endangerment to public health and the environment caused by Gibraltar's alleged 
improper transportation, storage, treatment and disposal of solid and hazardous 
wastes. The plaintiffs' request that Gibraltar's hazardous waste facility be    
permanently closed, civil penalties be imposed, and plaintiffs' costs of        
litigation be awarded. This case has been suspended by the court pending closure
of the plant site pursuant to TNRCC regulations and approvals; the closure      
process for the facility is ongoing.                                            

     A suit styled ADAMS V. AMERICAN ECOLOGY ENVIRONMENTAL SERVICES CORPORATION,
F/K/A GIBRALTAR CHEMICAL RESOURCES, INC. was filed on August 7, 1996 in the     
State District Court of Tarrant County, Texas against Gibraltar by approximately
600 individuals. The plaintiffs claim that they have experienced personal injury
and property damage which are alleged to have been caused by the operation of   
Gibraltar. The plaintiffs demand recovery of unspecified monetary damages and   
injunctive relief based on various legal grounds including negligence, assault  
and battery, and intentional infliction of emotional distress. Discovery is     
ongoing in this case. Neither the defense costs nor the damages, if any, arising
from this action are covered by any insurance policies the Company currently has
or had at the time of the alleged activities. However,                          

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the Company may be obligated to indemnify the purchaser of Gibraltar for certain
losses resulting from the claims asserted by the plaintiffs. While the Company  
disputes the material allegations of the plaintiffs suit and intends to         
vigorously defend the litigation, it is unable to determine the likelihood of an
unfavorable outcome at this time.                                               

The Company is currently not able to reasonably estimate its potential
exposure with respect to the foregoing matters. The Company's future            
financial condition, results of operations, and liquidity could be materially   
adversely impacted as the nature and scope of the Company's ultimate            
liability arising from Gibraltar's operations and sale become better defined.   
Notwithstanding the sale of its oilfield services business to Dawson and its    
hydrocarbon recycling and recovery business to U.S. Filter, all                 
responsibility for the foregoing matters will be retained by the Company. To    
the extent the Company is held liable for these matters, it anticipates         
paying for any such obligations not covered by insurance with funds retained    
from the net proceeds of such sales. See Note 14 of Notes to Consolidated       
Financial Statements set forth in Item 7 herein for related information.        

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

  On October 20, 1998, the Company held its Annual Meeting of Shareholders
("Annual Meeting") for which the Company solicited proxies on behalf of the     
Board of Directors of the Company. At the Annual Meeting, two proposals were    
submitted to a vote of the shareholders: (i) election of three members of the   
Board of Directors, and (ii) ratification of the appointment of KPMG LLP as the 
Company's independent auditor for the year ending December 31, 1999. The number 
of votes cast for, against or withheld, as well as the number of abstentions and
broker nonvotes, as to each of the matters voted on at the Annual Meeting are as
follows:                                                                        

                                                                [Download Table]

                                              Results of Voting                 
                                              -----------------                 

                                For     Against   Withheld   Abstained  Nonvotes
                                                                                
Election of Directors                                                           
  Class A Director                                                              
  ----------------                                                              
     Stewart Cureton, Jr.*   3,043,414  148,412      --          --        --   

  Class B Directors                                                             
  -----------------                                                             
     John Mobley             3,981,590    --         --          --        --   
     T.M. Mobley             3,981,590    --         --          --        --   

Ratification of Auditor     43,004,426    3,300      --          --        --   

* In March 1999, Mr. Cureton resigned his position as a Class A Director for    
the Company.                                                                

     PART II

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

     Prior to May 23, 1996, the Company's Class A Common Stock was traded on the
National Market System of the National Association of Securities Dealers, Inc.  
Automated Quotation System under the symbol "MBLYA". Since that date, the       
Company's Class A Common Stock has been quoted for trading on the OTC Bulletin  
Board under the same symbol. The following table presents the range of reported 
high and low bid quotations for the Company's Class A Common Stock for 1997 and 
1998 as reported by the OTC Bulletin                                            

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Board. Such over-the-counter market quotations reflect inter-dealer prices,     
without retail mark-up, markdown or commission and may not necessarily represent
actual transactions.                                                            

                                                                [Download Table]


Quarter Ended                  1997                    1998         
-------------          ---------------------    --------------------
                         High       Low          High        Low    
                         ----       ---          ----        ---    
                                                                    
March 31               $ 0 3/16   $ 0 9/32      $ 0 3/8    $ 0 7/32 
June 30                  0 7/32     0 19/64       0 3/8      0 7/32 
September 30             0 7/32     0 19/64       0 3/8      0 13/64
December 31              0 7/32     0  1/4        0 5/16     0 1/8  

   At March 1, 1999, there were approximately 1,100 beneficial owners of the
Company's Class A Common Stock, and 36 stockholders of record of the Company's  
Class B Common Stock.                                                           

   The Company has not paid any cash dividends on its Common Stock since its
initial public offering in September 1991 and has no immediate plans to make any
distributions to its shareholders (see "BUSINESS--Future Plans of the Company"  
set forth in Item 1 herein).                                                    

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS                                  

   THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE COMPANY'S
AUDITED CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1998 AND 1997, AND THE   
RELATED CONSOLIDATED STATEMENTS OF OPERATIONS, STOCKHOLDERS' EQUITY, AND CASH   
FLOWS FOR EACH OF THE YEARS THEN ENDED ("CONSOLIDATED FINANCIAL STATEMENTS") AND
RELATED NOTES THERETO SET FORTH AT PAGES F-1 TO F-21 ATTACHED HERETO.           

GENERAL                                                                         

  Prior to May 29, 1997, the Company's business involved providing diverse
environmental and field-related services to industrial, governmental, and       
commercial markets, specializing in the collection, transportation, treatment,  
recycling and management of a wide variety of non-hazardous liquid hydrocarbons,
oil filters, absorbents and related materials. Additionally, prior to January   
20, 1997, through its oilfield services segment, the Company provided services  
for managing liquids used or produced during the life cycle of oil and gas      
wells.                                                                          

    The following discussion is designed to assist in the understanding of the
Company's financial condition as of December 31, 1998, as well as the Company's 
operating results for the year ended December 31, 1998. Certain material events 
affecting the business of the Company are discussed in Item 1 herein. The Notes 
to Consolidated Financial Statements contain additional information that should 
be read in conjunction with this discussion.                                    

1997 ASSET SALES AND DISCONTINUED OPERATIONS                                    

  On January 20, 1997 and May 29, 1997, the Company completed transactions
pursuant to which it sold substantially all of its operating assets in two      
separate transactions (see Note 2 of Notes to Consolidated Financial            
Statements). Because of these sales, results of operations of the Company's two 
business segments for the years ended December 31, 1998 and 1997, have been     
accounted for as discontinued operations in the accompanying consolidated       
financial statements. The transactions and their impact on the consolidated     
financial statements are described in the following paragraphs.                 

SALE OF WASTE MANAGEMENT SERVICES, ASSETS & DISCONTINUANCE OF BUSINESS
SEGMENT. On May 29, 1997, the Company sold substantially all of the assets      
related to its waste management services activities to United                   

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States Filter Corporation ("U.S. Filter"). As a result of that transaction, the 
Company received $8.0 million in shares of U.S. Filter common stock (registered 
with the Securities and Exchange Commission) in exchange for such assets, and   
can earn up to an additional $4.0 million in U.S. Filter common stock based on  
the performance of the business during the two years following its sale.        
Additionally, U.S. Filter assumed certain liabilities (accounts payable and     
accrued expenses) as part of the transaction. The net assets which were the     
subject of this transaction have been removed from the consolidated balance     
sheet as of December 31, 1997. Such assets had a net book value (net of assumed 
liabilities) of approximately $14,965,060.                                      

   During the year ended December 31, 1996, the Company recorded a charge of
$7,621,000 (net of a deferred income tax benefit of $698,000), representing the 
estimated loss on the disposal of the business segment. The Company's waste     
management services segment incurred a net loss of approximately $405,000 during
the period from January 1, 1997 until May 29, 1997, the date of closing of the  
sale, which was in excess of the amounts previously accrued. The majority of the
loss was created by additional charges related to automobile liability insurance
claims and medical claims which were not included in the accruals established at
December 31, 1996.                                                              

     In 1995, the Company acquired certain assets of a group of three affiliated
companies, including Romero Brothers Oil Exchange, Inc., Environmental Petroleum
Products Co./EPPCO, and Environmental Insight, Inc. (the "Romero Acquisition"). 
The principals of the acquired companies had the right to earn shares in the    
Company based on the profitability of the acquired companies. This right was    
suspended due to the sale of the waste management services segment. In order to 
settle this obligation and to offer the principals of the acquired companies an 
incentive to remain with the business to maximize the Company's earnout         
provision with U.S. Filter, the Company paid the principals of the acquired     
companies approximately $115,000 in June 1998. This payment had not been accrued
and was recorded as a loss from discontinued operations. In addition, the       
principals of the acquired companies are to receive a percentage of the         
Company's earnout with U.S. Filter. Approximately $72,500 was paid to the       
principals of the acquired companies during the third quarter of 1998 resulting 
from the earnout with U.S. Filter that was achieved as of May 29, 1998 for the  
first year of operations subsequent to closing the sale of the waste management 
services segment. The payment has been reported as a loss from discontinued     
operations.                                                                     

     SALE OF OILFIELD SERVICES ASSETS AND DISCONTINUANCE OF BUSINESS SEGMENT. On
January 20, 1997, the Company sold substantially all of the assets related to   
its oilfield services business to Dawson Production Services, Inc. ("Dawson").  
As a result of that transaction, the Company received approximately $4,917,000  
and a subordinated note in the amount of $500,000 due in January 2002 in        
exchange for such assets. The assets which were the subject of the sale had a   
net book value, based on historical cost adjusted for accumulated depreciation  
and amortization, of approximately $2,354,000. The results of operations        
associated with the discontinued segment through the disposal date, after       
allocation of certain overhead and interest costs, did not result in a loss. The
Company's oilfield services segment generated net income of approximately       
$120,000 during the period October 1, 1996 to January, 21, 1997. The Company    
recognized a gain upon completion of the sale, after transaction costs of       
approximately $261,000, amounting to approximately $2,802,000 in January 1997.  
The $500,000 note was paid in full during the fourth quarter of 1998.           

RESULTS OF OPERATIONS                                                           

   General and administrative expenses amounted to $704,000 and $759,000 for
the year ended December 31, 1998 and 1997, respectively. These costs represent  
the ongoing administrative costs of the Company after disposing all of its      
operating assets. Interest income of $330,000 and $158,000 was earned during the
year ended December 31, 1998 and 1997, respectively, on the investments         
available for sale and note receivable. The increase resulted because the       
investment securities were not received until May 29, 1997 as a result of       

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the sale of the waste management services business segment. In addition, a gain 
on the sale of U.S. Filter shares in the amount of $556,000 was recorded during 
the year ended December 31, 1997, as substantially all of the U.S. Filter stock 
was sold.                                                                       

 Income from discontinued operations amounted to $2,397,000 for the year
ended December 31, 1997. The $607,000 in income from discontinued operations for
the year ended December 31, 1998 is comprised of the $794,000 in U.S. Filter    
stock received and approximately $187,500 cash paid to satisfy obligations of   
the Company owed to the principals of the acquired companies of the Romero      
Acquisition.                                                                    

CAPITAL RESOURCES AND LIQUIDITY                                                 

     All of the $8.0 million in U.S. filter common stock received at the time of
the closing of the sale of its waste management services assets has been sold.  
Cash from the U.S. Filter stock sale, along with the proceeds from the sale of  
the oilfield services assets, resulted in net proceeds totaling approximately   
$8.2 million after repayments of the outstanding bank indebtedness and          
transaction expenses. Such net proceeds were used to fund the current           
liabilities retained by the Company following the sales, with the remaining     
surplus cash deployed in investment securities. General and administrative      
expenses incurred for the year ended December 31, 1998 were $704,000. The       
Company anticipates that ongoing general and administrative expenses will be    
approximately $540,000 annually, exclusive of any litigation costs, and expects 
earnings from investments to partially offset such costs. The amounts described 
herein are approximate and based on the Company's current estimates.            
Furthermore, there can be no assurance that such amounts will actually be       
realized.                                                                       

  In addition to the aforementioned proceeds, under the terms of the asset
purchase agreement with U.S. Filter, the Company may receive up to $4.0 million 
in U.S. Filter common stock during the two-year period following the sale based 
on the performance of the hydrocarbon recycling business. As of May 29, 1998,   
approximately 20% of the earnout was achieved and 28,294 shares of U.S. Filter  
stock was received for the first year of operations subsequent to closing the   
sale. The fair value of the 28,294 shares at June 30, 1998 was approximately    
$794,000, which was reported as a gain from discontinued operations during the  
period ended June 30, 1998. As of December 31, 1998, the fair value of the stock
had declined to approximately $647,000 resulting in a recorded unrealized loss  
of approximately $147,000. Additionally, in connection with the sale of the     
oilfield services business, the Company received a $500,000 subordinated note   
receivable from Dawson, bearing interest at 8.5%, which was to mature on January
4, 2002. This note was paid in full during the fourth quarter of 1998.          

   In connection with the sale of assets to U.S. Filter, 10% of the proceeds
of such transaction (approximately $825,000) were required to be maintained in  
escrow for a period of one year from the closing of the transaction to satisfy  
indemnification obligations of the Company to U.S. Filter. On May 29, 1998,     
approximately $500,000 were released from escrow and paid to the Company. In an 
agreement between the Company and U.S. Filter dated September 25, 1998, an      
additional $55,000 was released from escrow and paid to the Company with all    
other funds being remitted to U.S. Filter.                                      

Because of its indemnification obligations related to the sale of     
Gibraltar, as well as potential indemnity obligations with respect to the asset 
sales to U.S. Filter and Dawson, and in light of the ongoing litigation,        

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the Company, based on consultation with legal counsel, does not currently       
anticipate making a distribution to its stockholders in the foreseeable future. 
As circumstances change or additional information with respect to the extent of 
the Company's potential indemnity obligations becomes available, the Board of   
Directors will continue to evaluate various uses of the Company's funds. The    
Company has no plans to conduct any kind of operating business at any time in   
the future.                                                                     

MANAGEMENT'S RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS           

     The Consolidated Financial Statements of the Company are the responsibility
of management. They have been prepared in accordance with generally accepted    
accounting principles and include estimates and judgments made by management. To
meet the responsibility for reliable financial data, management maintains a     
system of internal accounting controls which is designed to provide reasonable  
assurance that transactions are executed as authorized and are accurately       
recorded and that assets are properly safeguarded. Although accounting controls 
are designed to achieve this objective, it must be recognized that errors or    
irregularities may occur. In addition, it is necessary to assess and balance the
relative costs and the expected benefits of the internal accounting controls.   

     The Company's independent auditors, KPMG LLP, have audited the Consolidated
Financial Statements in accordance with generally accepted auditing standards,  
which include a review of the system of internal accounting controls only to the
extent necessary to determine audit procedures required to express their        
opinion.                                                                        

CERTAIN TRENDS AND UNCERTAINTIES                                                

    As a cautionary note to investors, the Company and its representatives may
make oral or written statements from time to time that are "forward-looking     
statements" within the meaning of the United States federal securities laws,    
including information contained herein which is not historical. There are a     
number of important factors which could cause actual results and consequences to
differ materially from those anticipated. Such factors include, but are not     
limited to, those set forth below.                                              

   RESOLUTION OF INDEMNIFICATION OBLIGATIONS AND PENDING LITIGATION. As more
fully discussed in "LEGAL PROCEEDINGS" set forth in Item 3 herein and Note 14 of
Notes to Consolidated Financial Statements set forth in Item 7 herein, the      
Company has various outstanding contractual indemnification obligations and is a
defendant in various pending litigation matters. These matters raise difficult  
and complex factual and legal issues, including but not limited to, the nature  
and amount of the Company's liability, if any. The Company, based on            
consultation with its legal counsel, believes that it is probable that the      
Company will continue to incur expenses associated with the foregoing matters   
and the Company has made an accrual for estimated out-of-pocket costs associated
with the ongoing administrative management of existing legal matters. However,  
the Company is currently unable to reasonably estimate its potential exposure   
for defending such matters, any indemnity obligations resulting therefrom, and  
any corresponding insurance reimbursement. The Company's future financial       
condition, results of operations, and liquidity could be materially adversely   
impacted as the nature and scope of the Company's ultimate liability arising    
from Gibraltar's operations and sale become better defined.                     

   FUTURE PLANS OF THE COMPANY. For reasons described elsewhere in this Form
10-KSB (see "BUSINESS--Future Plans of the Company" set forth in Item 1 herein),
the Company does not currently anticipate making a distribution to its          
shareholders in the foreseeable future. As circumstances change or additional   
information with respect to the extent of the Company's potential indemnity     
obligations becomes available, the Board of Directors will continue to evaluate 
various uses for the Company's funds. The Company anticipates that its ongoing  
general and administrative expenses will be approximately $540,000              

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annually. This amount is based on current estimates and actual amounts could    
differ from this estimate.                                                      

INVESTMENT SECURITIES OF THE COMPANY. As of December 31, 1998, the    
Company's assets included $4,954,000 in investment securities available for     
sale. Such securities are interest-bearing investment grade bonds and similar   
securities, in addition to 28,294 shares of U.S. Filter common stock with a     
market value of $647,225 as of December 31, 1998. However, the future value or  
quality of such securities is subject to market fluctuation and their           
performance is not guaranteed.                                                  

ITEM 7.   FINANCIAL STATEMENTS                                                  

The following consolidated financial statements of the Company and its
subsidiaries are incorporated by reference in response to this item:            

                                                                  Page

Independent Auditors' Report                                            F-1     

Consolidated Balance Sheets                                                     
December 31, 1998 and 1997                                              F-2     

Consolidated Statements of Operations                                           
Years ended December 31, 1998 and 1997                                  F-3     

Consolidated Statements of Stockholders' Equity                                 
Years ended December 31, 1998 and 1997                                  F-4     

Consolidated Statements of Cash Flows                                           
Years ended December 31, 1998 and 1997                                  F-5     

Notes to Consolidated Financial Statements                      F-6 to F-21     

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

Not Applicable.                                                       

PART III  

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

DIRECTORS                                                                       

Set forth below is certain information regarding each of the two (2)  
persons currently serving as Class B directors of the Company. In March 1999,   
Stewart Cureton, Jr., the Company's Class A Director, resigned from such        
position. The Company is currently conducting a search for a Class A Director   
nominee.                                                                        

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                                                                [Download Table]

Name                      Age             Director Since
----                      ---             --------------
                                                        
John Mobley                68                  1991     

T.M. Mobley                63                  1991     

JOHN MOBLEY has been Chairman of the Board of the Company since its   
organization. From the time of the Company's organization through November 1993,
Mr. Mobley served as Chief Executive Officer. Prior to the organization of the  
Company, Mr. Mobley held various senior management positions with the Company's 
predecessors. Mr. Mobley was President of Tiger Corporation, a solid-waste      
disposal company, from 1971 until it was sold to a national solid-waste disposal
company in 1986. Upon the sale of substantially all of the Company's operating  
assets, Mr. Mobley became President, Chief Financial Officer and Secretary of   
the Company.                                                                    

T.M. MOBLEY has been Vice Chairman of the Board since November 1992.  
Previously Mr. Mobley had served as President and Chief Operating Officer of the
Company from the time of its organization until November 1992 and had held      
various senior management positions with the Company's predecessors since 1961. 
Mr. Mobley joined Gibraltar Chemical Resources, Inc. ("Gibraltar") as President 
in 1985 and served in that capacity until 1991. Mr. Mobley served as President  
of Mobley Company, Inc. ("Mobley Co.") from 1965 until 1989. Upon the sale of   
substantially all of the Company's operating assets, Mr. Mobley became Vice     
President and Treasurer of the Company.                                         

John Mobley and T.M. Mobley are brothers.                             

EXECUTIVE OFFICERS                                                              

The following persons are the Company's current executive officers.   

                                                                [Download Table]

NAME             POSITION                                        
                                                                 
John Mobley      President, Chief Financial Officer and Secretary
T.M. Mobley      Vice President and Treasurer                    

  Officers are elected annually by the Board of Directors and serve at the
discretion of the Board.                                                        

SECTION 16 REQUIREMENTS                                                         

    Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and officers, and persons who own more than 10% of a    
registered class of the Company's equity securities, to file initial reports of 
ownership and reports of changes in ownership with the Securities and Exchange  
Commission (the "SEC"). Such persons are required by SEC regulations to furnish 
the Company with copies of all Section 16(a) forms they file. Based solely on   
its review of the copies of such forms received by it with respect to fiscal    
year 1998, or written representations from certain reporting persons, except as 
set forth below, the Company believes that all filing requirements applicable to
its directors, officers, and persons who own more than 10% of a registered class
of the Company's equity securities have been complied with: John Mobley is      
delinquent in the filing of one Form 4 for transactions that occurred during    
1998.                                                                           

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ITEM 10.  EXECUTIVE COMPENSATION                                                

SUMMARY COMPENSATION TABLE                                                      

   The following table sets forth certain information regarding compensation
paid to the Company's chief executive officer during the Company's last two     
fiscal years (no other executive officer of the Company earned in excess of     
$100,000 during 1998). Mr. Mobley was not an executive officer of the Company   
during 1996.                                                                    

                                                        [Enlarge/Download Table]

                                                                        Long-Term Compensation                    
                                                                 ----------------------------------               
                                     Annual Compensation                  Awards           Pay-outs               
                              ---------------------------------  ------------------------  --------               
         (a)            (b)      (c)          (d)        (e)        (f)           (g)        (h)          (i)     
---------------------  -----  ----------   ---------  ---------  ----------   -----------  --------  -------------
                                                        Other                 Securities                          
                                                       Annual    Restricted   Underlying     LTIP      All Other  
 Name and Principal             Salary       Bonus    Compensa-    Stock       Options/    Pay-outs  Compensation 
      Position         Year      ($)          ($)     tion ($)   Awards ($)    SARs (#)      ($)          ($)     
---------------------  -----  ----------   ---------  ---------  ----------   -----------  --------  -------------
                                                                                                                  

John Mobley             1998         --         --         --         --            --          --          --    
PRESIDENT, CHIEF        1997         --         --      6,000*        --            --          --          --    
FINANCIAL OFFICER AND                                                                                             
SECRETARY                                                                                                         

--------------------                                                            
*    Consists of car allowance.                                                 

AGGREGATED OPTION/SAR EXERCISES IN 1998 FISCAL YEAR AND DECEMBER 31, 1998       
OPTION/SAR VALUES                                                               

  All stock options previously granted to the Company's executive officers
had terminated unexercised prior to 1998.                                       

COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS                                

  During 1998, the Company did not have any employees; and, therefore, did
not pay any compensation for that year. Accordingly, the Compensation Committee 
of the Board of Directors, which was comprised of Stewart Cureton, Jr., John    
Mobley, and T.M. Mobley (all of which are non-employee directors of the         
Company), did not meet or have any other responsibilities in that capacity.     

   In the past, to enable the Company to provide its executive and other key
officers with an additional incentive to maximize shareholder value by giving   
them a proprietary interest in the Company through the ownership of stock, the  
Compensation Committee concluded that the grant of restricted shares of Class A 
Common Stock was in the best interests of the Company and its shareholders.     
Consequently, the Board of Directors adopted the 1995 Employee Restricted Stock 
Plan effective January 1, 1995. In light of the sale of assets to U.S. Filter,  
certain individual grant agreements were amended such that the deferred         
compensation costs associated with the unvested shares will be earned by the    
Company's two executive officers and two other officers only in the event and to
the extent that the Company receives additional shares of U.S. Filter common    
stock pursuant to an "earnout" provision in the definitive asset acquisition    
agreement (see "BUSINESS--Business Strategy and Background of the Transaction"  
set forth in Item 1 herein).                                                    

COMPENSATION OF DIRECTORS                                                       

During 1998, each director received a payment of $250.00.             

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     SUMMARY OF COMPENSATION PLANS

  Prior to the disposition of substantially all of the Company's remaining
operating assets on May 29, 1997, the Company maintained several employee       
compensation plans. During 1998, the Company had no employees; accordingly, no  
employees participated in any such plans. The Company does not anticipate that  
any employees will participate in any such plans at any time in the future.     

ITEM 11.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS                    
AND MANAGEMENT                                        

     The following table sets forth, as of March 15, 1999, the shares of Class A
and Class B Stock beneficially owned by (i) each person known to the Company to 
be the beneficial owner of more than five percent of the issued and outstanding 
shares of the Company's Class A or Class B Stock, (ii) each director, (iii) the 
Company's Chief Executive Officer, and (iv) the directors and executive officers
as a group. This information is based on public filings made with the Securities
and Exchange Commission through May 1998, and certain information supplied to   
the Company by the persons listed below.                                        

                                                        [Enlarge/Download Table]

                                                     CLASS A STOCK(1)                   CLASS B STOCK(1)          
                                                                 Percent of                          Percent of   
       Name of Beneficial Owner (2)               Shares           Class            Shares              Class     
-------------------------------------------  ----------------  --------------  -----------------  ----------------
                                                                                                                  
John Mobley                                           --            --              470,277(3)          15.0%     
Lois Ann Mobley                                       --            --              470,277(4)           5.5%     
James A. Mobley(5)                                    --            --              647,517             14.1%     
Steven M. Mobley(5)                                   --            --              647,517             14.1%     
H. David Hughes, Trustee                              --            --              365,786(6)           8.0%     
T.M. Mobley                                           --            --            1,108,210(7)          24.2%     
Jo Ann Mobley Grooms                                  --            --              324,671(8)           7.10%    
Susan Mobley Matthews                                 --            --              235,471(9)           5.1%     
David Mobley                                          --            --              515,163(10)         11.3%     
Robert G. Schleier, Trustee                           --            --              691,527(11)         15.1%     
Pilot Investments, Ltd.                               --            --              433,454              9.47%    
Directors and Executive Officers                                                                                  
  as a Group (3 persons)                              --            --            1,578,487             39.2%     

--------------------                                                            
*Less than 1%                                                                   

(1)  Each share of Class B Stock is convertible into Class A Stock on a         
  share-for-share basis at any time. The information set forth for Class A
  Stock does not include the shares of Class B Stock which are convertible
into Class A Stock.                                                   
(2)  Addresses of beneficial owners are as follows: John Mobley, Lois Ann Mobley
     and Pilot Investments, Inc., 305 Camp Craft Road, Suite 150, Austin, Texas;
  James A. Mobley, 919 Hillcrest Drive, Longview, Texas; Steven M. Mobley,
816 Congress Avenue, Suite 1100, Austin, Texas; H. David Hughes, 111  
   Congress Avenue, Suite 1400, Austin, Texas; T.M. Mobley, 609 Willow Bend,
   Kilgore, Texas; Jo Ann Mobley Grooms, 1880 Bent Tree, Tyler, Texas; Susan
Mobley Matthews, HCR 68, Box 23A, Hondo, Texas; David Mobley, 1909 N. 
   Longview Street, Kilgore, Texas; and Robert G. Schleier, 1100 Stone Road,
Suite 101, Kilgore, Texas.                                            

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(3)  Includes 253,550 shares held by a family trust for which Mr. Mobley's      
spouse, Lois Ann Mobley, is co-trustee; Mr. Mobley has no pecuniary   
interest in such shares. Also includes a pro-rata portion of shares   
owned by a partnership in which Mr. Mobley has an ownership interest; 
Mr. Mobley shares voting and investment power for shares owne by such 
partnership.                                                          

(4)  Includes 253,550 shares held as co-trustee for a trust; Mrs. Mobley        
  shares voting and investment power for such shares with H. David Hughes.
    Also includes a pro-rata portion of shares owned by a partnership in which
Mrs. Mobley has an ownership interest; Mrs. Mobley shares voting and  
investment power for shares owned by such partnership.                

(5)  The number of shares listed for each of James A. Mobley and Steven M.      
Mobley includes 290,600 shares owned by trusts for which they serve as
trustees.                                                             
(6)  Represents shares held as co-trustee for two trusts (see Footnotes (6) and 
(9)). Although Mr. Hughes shares voting and investment power for such 
shares, he has no pecuniary interest in the shares.                   
(7)  Includes 112,236 shares held as co-trustee for a trust; although Mr. Mobley
     shares voting and investment power with H. David Hughes for shares owned by
such trust, he has no pecuniary interest in those shares.             
(8)  Includes 296,671 shares owned by trusts for which Mrs. Grooms is sole      
trustee. Also includes 28,000 shares owned of record by Mrs. Grooms'  
spouse; Mrs. Grooms disclaims beneficial ownership for such shares.   
(9)  Includes 207,471 shares owned by trusts for which Mrs. Matthews is sole    
trustee. Also includes 28,000 shares owned of record by Mrs. Matthews'
spouse; Mrs. Matthews disclaims beneficial ownership for such shares. 
(10) Represents shares held as trustee or co-trustee for trusts. Mr. Mobley     
shares voting and investment power for 512,739 of the shares.         
(11) Represents shares held as trustee or co-trustee for four trusts; Mr.       
   Schleier shares voting and investment power with David Mobley for 511,527
    of these shares. However, Mr. Schleier has no pecuniary interest in any of
the shares he beneficially owns.                                      

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                        

  In 1996, the Company engaged Cureton & Co., an entity in which Stewart
Cureton, Jr. has an ownership and management interest, to provide certain       
business consulting services to the Company, including analysis and negotiation 
of potential business combination transactions to which the Company might be a  
party. Until March 1999, Mr. Cureton was a Class A director. Under the terms of 
the engagement, the Company paid Cureton & Co. retainer fees of $12,200 through 
December 31, 1997. Additionally, the Company paid Cureton & Co. a total of      
approximately $220,000, plus out-of-pocket expenses, in conjunction with the    
sale of assets to U.S. Filter, and a fee of approximately $207,500, plus        
out-of-pocket expenses, in connection with U. S. Filter's acquisition of PORI,  
which was completed on February 28, 1997. Under the terms of the Agreement, U.S.
Filter reimbursed the Company $250,000 for expenses associated with its due     
diligence investigations of PORI, including amounts due to Cureton & Co.        
Additionally, in connection with the disposition of its oilfield services       
business described previously, the Company paid Cureton & Co. approximately     
$150,000, plus out-of-pocket expenses. The Company believes that the terms of   
its arrangements with Cureton & Co. are consistent with industry standards for  
similar services.                                                               

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     PART IV

ITEM 13.  EXHIBITS LIST AND REPORTS ON FORM 8-K                                 

ITEM 13 (a) LIST OF EXHIBITS                                        

Exhibit                                                                         
Number     Description of Exhibit                                               
-------    ----------------------                                               

3.1*       Certificate of Incorporation of the Company (filed as Exhibit 3.1 to 
      the Company's Registration Statement on Form S-1, No. 33-41722).

3.2*       Bylaws of the Company (filed as Exhibit 3.2 to the Company's         
Registration Statement on Form S-1, No. 33-41722).        

3.3*       Amendment to Bylaws of the Company (filed as Exhibit 3.2(b) to the   
          Company's Annual Report on Form 10-K for the year ended December 31,
1991).                                                    

4.1*       Specimen Class A Common Stock Certificate (filed as Exhibit 4.1 to   
      the Company's Registration Statement on Form S-1, No. 33-41722).

4.2*       Specimen Class B Common Stock Certificate (filed as Exhibit 4.2 to   
      the Company's Registration Statement on Form S-1, No. 33-41722).

10.1*+     Form of Restated Stock Compensation Plan (filed as Exhibit 4.3 to the
  Company's Registration Statement on Form S-8, No. 33-92336).

10.2*+     Mobley Employees Profit Sharing Plan, as amended and restated        
        effective January 1, 1994 (filed as Exhibit 10(e) to the Company's
       Annual Report on Form 10-K for the year ended December 31, 1994).

10.3*      Registration Rights Agreement, dated August 23, 1991 between the     
           Company and David Mobley Grantor Trust (filed as Exhibit 10.54 to the
  Company's Registration Statement on Form S-1, No. 33-41722).

10.4*      Stock Purchase Agreement dated May 10, 1994 by and between American  
           Ecology Corporation and Mobley Environmental Services, Inc. (filed as
        Exhibit 10(ii) to the Company's Annual Report on Form 10-K for the
year ended December 31, 1993).                            

10.5*      Side Letter Agreement dated May 13, 1994 between American Ecology    
       Corporation and Mobley Environmental Services, Inc. regarding the
    Stock Purchase Agreement set forth at Exhibit 10(ii) (filed as
        Exhibit 10(jj) to the Company's Annual Report on Form 10-K for the
year ended December 31, 1993).                            

10.6*      Amendment to Stock Purchase Agreement dated September 2, 1994 between
          American Ecology Corporation and Mobley Environmental Services, Inc.
        regarding the Stock Purchase Agreement (filed as Exhibit 10(mm) to
          the Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1994).                                     

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10.7*      Promissory Note in the original principal amount of $550,000 dated   
           December 31, 1994 executed by American Ecology Corporation payable to
        Mobley Environmental Services, Inc. (filed as Exhibit 10(v) to the
          Company's Annual Report on Form 10-K for the year ended December 31,
1994).                                                    

10.8*+     1995 Employee Restricted Stock Plan (filed as Exhibit 4.4 to the     
  Company's Registration Statement on Form S-8, No. 33-92336).

10.9*      Asset Purchase Agreement dated April 25, 1997 by and among Mobley    
     Environmental Services, Inc., Mobley Company, Inc., Hydrocarbon
           Technologies, Inc., United States Filter Corporation, and U.S. Filter
Recovery Services (Southwest), Inc.                       

10.10*     Asset Purchase Agreement dated January 20, 1997 by and among Mobley  
Company, Inc., and Dawson Production Services, Inc.       

10.11*     Promissory Note in the amount of $500,000 dated January 20, 1997     
    executed by Dawson Production Services, Inc. payable to Mobley
Company, Inc.                                             

10.12*     Information Statement dated May 9, 1997 to the Shareholders of the   
       Company relating to the pending sale of the Company's hydrocarbon
         recycling and recovery business, including Supplement thereto dated
           May 12, 1997 (filed as Schedule 14C on May 9, 1997 and May 14, 1997).

10.13*     Tolling Agreement dated July 30, 1997 between American Ecology       
Corporation and Mobley Environmental Services, Inc.       

23         Independent Auditors' Consent.                                       

27         Financial Data Schedule (submitted only in electronic format).       

--------------------                                                            
  *       Incorporated herein by reference to the respective filing identified
above.                                                    
   +       Identifies management or compensatory plan or arrangement required to
        be filed as an exhibit to this form pursuant to Item 14(c) of this
report.                                                   

ITEM 13(b)  REPORTS ON FORM 8-K                                           

None                                                                  

17  

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SIGNATURES

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

Date: March 31, 1999            Mobley Environmental Services, Inc.             
Registrant      

   /s/ John Mobley
                                ------------------------------------------------
John Mobley     
                                President, Chief Financial Officer and Secretary

         In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in   
the capacities and on the dates indicated.                                      

Signature                Title                           Date                   
---------                -----                           ----                   

/s/ John Mobley         Chairman of the Board           March 31, 1999        
----------------------   and Director; President,                               
John Mobley              Chief Financial Officer,                               
and Secretary                 

/s/ T.M. Mobley         Vice-Chairman of the            March 31, 1999        
----------------------   Board and Director;                                    
T.M. Mobley              Vice President and                                     
Treasurer                     

18  

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INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders                                         
Mobley Environmental Services, Inc.:                                            

We have audited the accompanying consolidated balance sheets of Mobley          
Environmental Services, Inc. and subsidiaries as of December 31, 1998 and       
1997, and the related consolidated statements of operations, stockholders'      
equity, and cash flows for the years then ended. These consolidated financial   
statements are the responsibility of the Company's management. Our              
responsibility is to express an opinion on these consolidated financial         
statements based on our audits.                                                 

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

In our opinion, the consolidated financial statements referred to above         
present fairly, in all material respects, the financial position of Mobley      
Environmental Services, Inc. and subsidiaries as of December 31, 1998 and       
1997, and the results of their operations and their cash flows for the years    
then ended, in conformity with generally accepted accounting principles.        

KPMG LLP                                                                        

Shreveport, Louisiana                                                           
March 12, 1999                                                                  

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MOBLEY ENVIRONMENTAL SERVICES, INC. AND SUBSIDIARIES

   Consolidated Balance Sheets

    December 31, 1998 and 1997
   (in thousands, except share data)

                                                        [Enlarge/Download Table]


                                                                              1998                 1997        
                                                                        ------------------  -------------------
                                                                                                               
                                 ASSETS                                                                        

Current assets:                                                                                                
    Cash and cash equivalents                                          $               81                  353 
    Receivables                                                                       155                  373 
    Prepaid expenses                                                                   94                   93 
                                                                        ------------------  -------------------
                  Total current assets                                                330                  819 

Property, plant, and equipment, net                                                   188                  211 
Note receivable                                                                         -                  500 
Investment securities available for sale                                            4,954                4,495 
Other assets, net                                                                     359                  192 
                                                                        ------------------  -------------------

                                                                        $           5,831                6,217 
                                                                        ------------------  -------------------
                                                                        ------------------  -------------------

                  LIABILITIES AND STOCKHOLDERS' EQUITY                                                         

Accounts payable                                                        $              61                  100 
Accrued expenses                                                                      413                1,041 
                                                                        ------------------  -------------------
                  Total current liabilities                                           474                1,141 
                                                                        ------------------  -------------------

Stockholders' equity:                                                                                          
    Preferred stock, $.01 par value; 2,000,000 shares authorized,                                              
       none issued                                                                      -                    - 
    Common stock, $.01 par value:                                                                              
       Class A, 15,000,000 shares authorized; 4,259,650 shares                                                 
           issued and outstanding in 1998 and 1997                                     43                   43 
       Class B, 10,000,000 shares authorized; 4,660,350 shares issued                                          
          and 4,575,643 shares outstanding in 1998 and 1997                            47                   47 
    Additional paid-in capital                                                     25,159               25,159 
    Accumulated deficit                                                           (19,845)             (20,093)
    Accumulated other comprehensive income (loss)                                     (39)                  29 
    Deferred compensation costs under restricted stock agreements                       -                 (101)
    Treasury stock:  84,707 shares of Class B common stock, at cost                    (8)                  (8)
                                                                        ------------------  -------------------
                  Total stockholders' equity                                        5,357                5,076 

Commitments and contingencies                                                                                  
                                                                        ------------------  -------------------

                                                                        $           5,831                6,217 
                                                                        ------------------  -------------------
                                                                        ------------------  -------------------


See accompanying notes to consolidated financial statements.                    

                                                                 (Continued)
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MOBLEY ENVIRONMENTAL SERVICES, INC. AND SUBSIDIARIES

 Consolidated Statements of Operations

  Years ended December 31, 1998 and 1997
 (in thousands, except per share amounts and share data)

                                                        [Enlarge/Download Table]


                                                                             1998              1997       
                                                                        ----------------  ----------------
                                                                                                          
Revenues                                                                $             -                 - 
Cost of revenues                                                                      -                 - 
                                                                        ----------------  ----------------
                  Gross profit                                                        -                 - 

Selling, general, and administrative expenses                                       704               759 
                                                                        ----------------  ----------------

                  Operating loss                                                   (704)             (759)

Gain on sale of investment securities                                                 -               555 

Interest income                                                                     330               158 

Other income (expense), net                                                          15                42 
                                                                        ----------------  ----------------

                  Loss from continuing operations before income taxes              (359)               (4)

Income taxes                                                                          -                 - 
                                                                        ----------------  ----------------

                  Loss from continuing operations                                  (359)               (4)
                                                                        ----------------  ----------------

Discontinued operations, net of tax:                                                                      

    Net loss from operations of waste management services segment                     -              (405)

    Gain on sale of oilfield services segment                                         -             2,802 

    Net gain from the earnout period of waste management services segment           607                 - 
                                                                        ----------------  ----------------

       Income from discontinued operations                                          607             2,397 
                                                                        ----------------  ----------------

       Net income                                                                   248             2,393 

    Comprehensive income (loss):                                                                          

       Other comprehensive income (loss) - change in net unrealized                                       
          gains (losses) on securities, net of tax of $(35) and $15                 (68)               29 
                                                                        ----------------  ----------------

       Comprehensive income                                             $           180             2,422 
                                                                        ----------------  ----------------
                                                                        ----------------  ----------------
Net income (loss) per share - basic and assuming dilution:                                                
    Continuing operations                                               $         (0.04)            (0.00)
    Discontinued operations                                                        0.07               .27 
                                                                        ----------------  ----------------
                                                                        $          0.03               .27 
                                                                        ----------------  ----------------
                                                                        ----------------  ----------------


See accompanying notes to consolidated financial statements.                    

                                                                 (Continued)
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MOBLEY ENVIRONMENTAL SERVICES, INC. AND SUBSIDIARIES  

Consolidated Statements of Stockholders' Equity   

Years ended December 31, 1998 and 1997  
(in thousands, except share data)   

                                                        [Enlarge/Download Table]


                                                                 1998              1997       
                                                            ----------------  ----------------
                                                                                              
Preferred stock - none issued                               $             -                 - 

Class A common stock:                                                                         
    Balance at beginning of year                                         43                42 
    Conversion of 104,553 shares of Class B common stock                  -                 1 
                                                            ----------------  ----------------
                  Balance at end of year                                 43                43 
                                                            ----------------  ----------------

Class B common stock:                                                                         
    Balance at beginning of year                                         47                48 
    Conversion of 104,553 shares into Class A common stock                -                (1)
                                                            ----------------  ----------------
                  Balance at end of year                                 47                47 
                                                            ----------------  ----------------

Additional paid-in capital                                           25,159            25,159 
                                                            ----------------  ----------------

Accumulated deficit:                                                                          
    Balance at beginning of year                                    (20,093)          (22,486)
    Net income                                                          248             2,393 
                                                            ----------------  ----------------
                  Balance at end of year                            (19,845)          (20,093)
                                                            ----------------  ----------------

Accumulated other comprehensive income (loss):                                                
    Balance at beginning of year                                         29                 - 
    Unrealized gain (loss) on investment securities                     (68)               29 
                                                            ----------------  ----------------
                  Balance at end of year                                (39)               29 

Deferred compensation costs under restricted                                                  
    stock agreements:                                                                         
       Balance at beginning of year                                    (101)             (288)
       Amortization of deferred compensation costs                      101               187 
                                                            ----------------  ----------------
                  Balance at end of year                                  -              (101)
                                                            ----------------  ----------------

Treasury stock                                                           (8)               (8)
                                                            ----------------  ----------------

                  Total stockholders' equity                $         5,357             5,076 
                                                            ----------------  ----------------
                                                            ----------------  ----------------


See accompanying notes to consolidated financial statements.                    

                                                                 (Continued)
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MOBLEY ENVIRONMENTAL SERVICES, INC. AND SUBSIDIARIES  

 Consolidated Statements of Cash Flows

  Years ended December 31, 1998 and 1997
(in thousands)

                                                        [Enlarge/Download Table]

                                                                             1998            1997      
                                                                        ---------------  --------------
                                                                                                       
Cash flows from operating activities:                                                                  
    Net income                                                          $          248           2,393 
    Adjustments to reconcile net income to net cash used by                                            
       operating activities:                                                                           
          Gain on sale of US Filter stock                                            -            (556)
          US Filter stock received from earnout of waste management                                    
             services segment                                                     (794)              - 
          Gain on sale of oilfield services segment                                  -          (2,802)
          Depreciation and amortization                                             23             538 
          Deferred income tax benefit                                                -            (148)
          Amortization of deferred compensation costs                              101             187 
          Bad debt expense                                                           -             152 
          Changes in certain operating assets and liabilities:                                         
             Receivables                                                           218            (750)
             Prepaid expenses and other assets                                    (168)            364 
             Accounts payable                                                      (39)           (931)
             Accrued expenses                                                     (594)         (2,122)
             Other                                                                  (4)            (36)
                                                                        ---------------  --------------
                  Net cash used by operating activities, including                                     
                     discontinued operations                                    (1,009)         (3,711)
                                                                        ---------------  --------------

Cash flows from investing activities:                                                                  
    Net proceeds from sale of oilfield services segment                              -           4,656 
    Net proceeds from sale of US Filter stock                                        -           8,556 
    Net proceeds from sale of investment securities available for sale             435             349 
    Net proceeds from maturity of investment securities                                                
       available for sale                                                          551               - 
    Purchase of investment securities available for sale                          (750)         (4,801)
    Proceeds from sale of fixed assets                                               1              45 
    Capital expenditures                                                             -            (112)
                                                                        ---------------  --------------
                  Net cash provided by investing activities,                                           
                     including discontinued operations                             237           8,693 
                                                                        ---------------  --------------

Cash flows from financing activities:                                                                  
    Principal payments on long-term debt                                             -          (5,014)
    Proceeds from collection of note receivable                                    500               - 
                                                                        ---------------  --------------
                  Net cash provided (used) by financing activities,                                    
                     including discontinued operations                             500          (5,014)

                  Net decrease in cash and cash equivalents                       (272)            (32)

Cash and cash equivalents at beginning of year                                     353             385 
                                                                        ---------------  --------------

Cash and cash equivalents at end of year                                $           81             353 
                                                                        ---------------  --------------
                                                                        ---------------  --------------

See accompanying notes to consolidated financial statements.                    

                                                                 (Continued)
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MOBLEY ENVIRONMENTAL SERVICES, INC. AND SUBSIDIARIES  
Notes to Consolidated Financial Statements    
December 31, 1998 and 1997    

(1)  DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES     

PRINCIPLES OF CONSOLIDATION                                           

 The accompanying financial statements present the consolidated accounts
of Mobley Environmental Services, Inc. (the "Company") and its        
wholly-owned subsidiaries, Hydrocarbon Technologies, Inc. ("HTI") and 
Mobley Company, Inc. ("Mobley"). In January 1997, the Company sold the
assets of its oilfield services segment, and in May 1997, it sold the 
assets of its waste management services segment (note 2). All         
 significant intercompany accounts and transactions have been eliminated
in consolidation.                                                     

DESCRIPTION OF BUSINESS                                               

  Prior to the sale of its oilfield services and waste management services
segments, the Company provided diverse environmental and field-related
services to industrial, governmental, and commercial markets,         
  specialized in the collection, transportation, treatment, recycling, and
management of a wide variety of non-hazardous liquid hydrocarbons, oil
filters, absorbents, and related materials and also provided oilfield 
services for managing liquids used or produced during the lifecycle of
oil and gas wells. The Company operated primarily in the states of    
Texas, Louisiana, and Arkansas.                                       

As of May 1997, the Company had sold all of its operating assets.     
 Proceeds from the sale of its segments have been invested until pending
litigation and outstanding contractual indemnification obligations    
expire or are otherwise satisfied. The Company is being managed by its
President. Accounting and other administrative functions are being    
performed by third-parties through contractual arrangements.          

BASIS OF PRESENTATION                                                 

The accompanying consolidated financial statements have been prepared 
  assuming that the Company will continue as a going concern. As discussed
in note 2, the Company's Board of Directors determined that the       
divestiture of its operations was in the best interests of the Company
and its shareholders. The consolidated financial statements do not    
include any adjustments that might result from the liquidation of the 
Company.                                                              

CASH EQUIVALENTS                                                      

 For purposes of reporting cash flows, the Company considers investments
  with original maturities of three months or less to be cash equivalents.
Cash equivalents consist of investments in money market accounts at   
December 31, 1998 and 1997.                                           

INVESTMENT SECURITIES                                                 

 The Company classifies its debt and marketable equity securities in one
of three categories: trading, available-for-sale, or held-to-maturity.
Trading securities are bought and held principally for the purpose of 
selling them in the near term. Held-to-maturity securities are those  
securities in which the Company has the ability and intent to hold the
  security until maturity. All other securities not included in trading or
held-to-maturity are classified as available-for-sale. All of the     
Company's investment securities are classified as available-for-sale, 
which are recorded at fair value. Unrealized holding gains and losses,
net of the related tax effect, are excluded from earnings and are     
  reported as a separate component of stockholders' equity until realized.

                                                                 (Continued)
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 A decline in the market value of any security below cost that is deemed
other than temporary is charged to operations resulting in the        
establishment of a new cost basis for the security.                   

Due to the overall immateriality to the consolidated financial        
 statements, premiums and discounts are taken to the income statement at
the time of purchase. Dividend and interest income are recognized when
earned. Realized gains and losses are included in earnings and are    
derived using the specific identification method for determining the  
cost of securities sold.                                              

PROPERTY, PLANT, AND EQUIPMENT                                        

Property, plant, and equipment are recorded at cost and depreciated   
  using the straight-line method over their estimated useful lives ranging
from three to thirty years. Routine maintenance and repair costs are  
charged to expense as incurred. Renewals and betterments are          
capitalized. When an asset is retired or sold, its cost and related   
accumulated depreciation are removed from the accounts and the        
difference between the net book value of the asset and proceeds from  
disposition is recognized as gain or loss.                            

 IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF

  The Company utilizes the provisions of Statement of Financial Accounting
Standards No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS 
  AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF ("SFAS 121"), which requires
 that long-lived assets and certain identifiable intangibles be reviewed
  for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Recoverability
of assets to be held and used is measured by a comparison of the      
carrying amount of an asset to future net cash flows, undiscounted and
  without interest charges, expected to be generated by the asset. If such
  assets are considered to be impaired, the impairment to be recognized is
  measured by the amount by which the carrying amount of the assets exceed
the fair value of the assets. Assets to be disposed of are reported at
the lower of the carrying amount or fair value less costs to sell.    

INCOME TAXES                                                          

Income taxes are accounted for under the asset and liability method.  
Deferred tax assets and liabilities are recognized for the future tax 
  consequences attributable to differences between the financial statement
  carrying amounts of existing assets and liabilities and their respective
 tax bases and operating loss and tax credit carryforwards. Deferred tax
 assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary         
differences are expected to be recovered or settled. The effect on    
deferred tax assets and liabilities of a change in tax rates is       
recognized in income in the period that includes the enactment date.  

EARNINGS PER COMMON SHARE                                             

Earnings per share amounts presented were calculated under the        
 provisions of SFAS 128, EARNINGS PER SHARE. Basic earnings per share is
computed based on earnings available to common shareholders and the   
weighted average number of common shares outstanding. The earnings per
  share assuming dilution amounts presented are computed based on earnings
available to common shareholders and the weighted average number of   
common shares outstanding, including shares assumed to be issued under
the Company's 1995 Employee Restricted Stock Plan. SFAS 128 had no    
significant impact on earnings per share.                             

                                                                 (Continued)
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USE OF ESTIMATES                                                      

  Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure
of contingent assets and liabilities to prepare these consolidated    
financial statements in conformity with generally accepted accounting 
principles.                                                           

Actual results could differ from those estimates.                     

FINANCIAL INSTRUMENTS                                                 

Statement of Financial Accounting Standards No. 107, DISCLOSURES ABOUT
 FAIR VALUE OF FINANCIAL INSTRUMENTS, requires that the Company disclose
estimated fair values for its financial instruments. Fair value       
estimates are set forth below for the Company's financial instruments:

-    Cash and Cash Equivalents, Receivables, Accounts Payable, and    
  Accrued Expenses - The carrying amounts approximate fair value
because of the short maturity of these instruments.         

-    Note Receivable - The carrying amount of the note receivable at  
   December 31, 1997 approximated market because the interest rate
was comparable to the then current market rates.            

-    Investment Securities Available for Sale - The fair value of     
  securities available for sale is estimated based on bid prices
published in financial newspapers or bid quotations received
from security dealers.                                      

STOCK COMPENSATION PLANS                                              

The Company has elected to continue to apply the provisions of        
 Accounting Principles Board Opinion No. 25, ACCOUNTING FOR STOCK ISSUED
 TO EMPLOYEES ("APB 25") and provide the pro forma disclosure provisions
of Statement of Accounting Standards Statement No. 123, ACCOUNTING FOR
STOCK-BASED COMPENSATION ("SFAS 123"). As a result of the Company     
 selling all of its operating assets during 1997, all stock compensation
plans, except for the 1995 Employee Restricted Stock Plan, have been  
terminated and options outstanding under these plans have been        
forfeited. (note 11).                                                 

COMPREHENSIVE INCOME                                                  

On January 1, 1998, the Company adopted SFAS No. 130, REPORTING       
COMPREHENSIVE INCOME. SFAS No. 130 establishes standards for reporting
and presentation of comprehensive income and its components in a full 
  set of financial statements. Comprehensive income consists of net income
 and net unrealized gains (losses) on securities and is presented in the
consolidated statements of operations. The Statement requires only    
  additional disclosures in the consolidated financial statements; it does
not affect the Company's financial position or results of operations. 
  Prior year financial statements have been reclassified to conform to the
requirements of SFAS No. 130.                                         

                                                                 (Continued)
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(2)  ASSET SALES AND DISCONTINUED OPERATIONS                                    

During 1996, in light of the Company's severely weakened financial    
  condition and, in particular, concerns about its liquidity, the Board of
Directors reviewed the challenges facing the Company and discussed in 
general terms the alternatives available to address them. As part of  
these deliberations, management and the Company's financial advisors  
 reviewed in detail with the Board of Directors their efforts with third
  parties to attract possible investments in, or strategic alliances with,
  the Company. Since such efforts had not yielded access to funds on terms
acceptable to the Company, the Board of Directors determined that the 
divestiture of its operations was in the best interest of the Company 
and its shareholders. These circumstances required the Company to     
re-evaluate the basis used to assess the carrying values of assets.   
Subsequently, on January 20, 1997, and May 29, 1997, the Company sold 
 substantially all of its operating assets in two separate transactions.
The transactions and their impact on the Company's consolidated       
financial statements are described in the following paragraphs.       

The Company's two business segments, waste management services and    
oilfield services, have been accounted for as discontinued operations,
and accordingly, their operations have been segregated in the         
accompanying consolidated statements of operations. The revenues,     
  operating costs and expenses, interest expense, and income taxes for the
year ended December 31, 1997, have been reclassified for amounts      
associated with the discontinued segments. Due to the relative        
significance of the Company's business segments to its operations as a
whole, and in light of the Company's decision in 1996 to divest itself
of all of its operating assets, the Company allocated certain general 
  and administrative expenses to the business segments in the accompanying
  consolidated segments of operations. General and administrative expenses
  attributable to continuing operations have been determined based upon an
allocation of such costs between the business segments and continuing 
operations. Other income and expense have been recorded as continuing 
 operations as such amounts were not specifically attributable to either
of the Company's business segments which were disposed of. Interest   
expense was allocated to the segments based on the outstanding        
indebtedness attributable to each of the business segments.           

  SALE OF OILFIELD SERVICES ASSETS AND DISCONTINUANCE OF BUSINESS SEGMENT.

On January 20, 1997, the Company sold substantially all of the assets 
  related to its oilfield services business to Dawson Production Services,
Inc. ("Dawson"). As a result of that transaction, the Company received
approximately $4,917,000 and a subordinated note in the amount of     
$500,000, due in January 2002, in exchange for such assets. The assets
which were the subject of the sale had a net book value, based on     
 historical cost adjusted for accumulated depreciation and amortization,
of approximately $2,354,000. The results of operations associated with
 the discontinued segment through the disposal date, after allocation of
certain overhead and interest costs, did not result in a loss. The    
Company's oilfield services segment generated net income of           
 approximately $120,000 during the period October 1, 1996 to January 20,
1997. The Company recognized a gain upon completion of the sale, after
 transaction costs of approximately $261,000, amounting to approximately
$2,802,000 in January 1997. The $500,000 note was paid in full during 
the fourth quarter of 1998.                                           

                                                                 (Continued)
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 SALE OF WASTE MANAGEMENT SERVICES ASSETS AND DISCONTINUANCE OF BUSINESS
SEGMENT.                                                              

On May 29, 1997, the Company sold substantially all of the assets     
related to its waste management services activities to United States  
  Filter Corporation ("USF"). As a result of that transaction, the Company
received $8,000,000 in shares of USF common stock (registered with the
  Securities and Exchange Commission) in exchange for such assets, and can
earn up to an additional $4,000,000 in USF common stock based on the  
performance of the business during the two years following its sale.  
Additionally, USF assumed certain liabilities (accounts payable and   
 accrued expenses) as part of the transaction. The net assets which were
 the subject of that transaction have been removed from the consolidated
 balance sheet as of December 31, 1997. Such assets had a net book value
(net of assumed liabilities) of approximately $14,965,060.            

During the year ended December 31, 1996, the Company recorded a charge
of $7,621,000 (net of a deferred income tax benefit of $698,000),     
  representing the estimated loss on the disposal of the business segment.
The Company's waste management services segment incurred a net loss of
 approximately $405,000 during the period from January 1, 1997 until May
29, 1997, the date of closing on the sale, which was in excess of the 
amounts previously accrued. The majority of this loss was created by  
 additional charges related to automobile liability insurance claims and
medical claims which were not included in the accruals established at 
December 31, 1996.                                                    

Operating results and the estimated loss on disposal of the Company's 
waste management services segment for the year ended December 31, 1997
are as follows (in thousands of dollars):                             

                                                                [Download Table]


                                                              1997    
                                                          ----------- 
                                                                      
Revenues                                                  $     9,489 
Cost of revenues                                                7,697 
                                                          ----------- 
          Gross profit                                          1,792 
Selling, general, and administrative expenses, including              
  allocated amounts                                             2,209 
                                                          ----------- 
          Operating loss                                         (417)
Interest expense, net                                            (136)
                                                          ----------- 
          Loss before income taxes                               (553)
Income tax benefit                                                148 
                                                          ----------- 
          Net loss from operations of waste management                
            services segment                              $      (405)
                                                          ----------- 
                                                          ----------- 

                                                                 (Continued)
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   Operating results of the Company's oilfield services segment for the year
ended December 31, 1997 are as follows (in thousands of dollars):     

                                                                [Download Table]

                                                                         1997   
                                                                     -----------
                                                                                
Revenues                                                             $       231
Cost of revenues                                                             168
                                                                     -----------
          Gross profit                                                        63
Selling, general, and administrative expenses, including                        
  allocated amounts                                                           63
                                                                     -----------
          Net loss from operations of oilfield                                  
            services segment                                         $         -
                                                                     -----------
                                                                     -----------


Upon completion of the sale of the waste management services segment, 
the $8,000,000 of USF common stock was sold resulting in a gain of    
 $556,000 which is reflected in other income in continuing operations in
the 1997 statement of operations. Proceeds from this sale were used to
pay off existing long-term debt and current liabilities, and the      
remaining proceeds were used to purchase investment grade fixed term  
securities. As of December 31, 1997, approximately $825,000 in        
investments were held in escrow until May 29, 1998 to satisfy any     
indemnification obligations of the Company to USF. As of May 29, 1998,
 approximately $500,000 were released from escrow. In an agreement dated
September 25, 1998 with USF, an additional $55,000 were released from 
escrow, with all other funds being remitted to USF.                   

As of May 29, 1998, approximately 20% of the earnout was achieved and 
  28,294 shares of USF stock was received for the first year of operations
subsequent to closing the sale. The fair value of the 28,294 shares at
June 30, 1998 was approximately $794,000, which was reported as a gain
from discontinued operations during the period ended June 30, 1998. As
of December 31, 1998, the fair value of the stock had declined to     
approximately $647,000 resulting in a recorded unrealized loss of     
approximately $147,000.                                               

In 1996, the Company engaged an investment banking and financial      
advisory firm in which a Class A director has an ownership and        
management interest to provide certain business consulting services to
the Company, including analysis and negotiation of potential business 
combination transactions to which the Company might be a party. Under 
the terms of the engagement, the Company paid the investment banking  
firm retainer fees of $12,200 in 1997. Additionally, the Company paid 
such investment banking firm a total of approximately $220,000, plus  
  out-of-pocket expenses, in conjunction with the transaction with USF and
 approximately $207,500, plus out-of-pocket expenses, in connection with
USF's acquisition of an unrelated entity, which was completed on      
February 28, 1997. However, USF reimbursed the Company $250,000 for   
certain expenses, including amounts that were paid to the investment  
banking firm. In connection with the disposition of the Company's     
 oilfield services segment, the Company paid the investment banking firm
approximately $150,000, plus out-of-pocket expenses. The Company      
believes that the terms of its arrangement with the investment banking
firm are consistent with industry standards for similar services.     

                                                                 (Continued)
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Because of the outstanding contractual indemnification obligations of 
the Company resulting from its business divestitures and in light of  
pending litigation to which the Company is a party, the Company will  
remain in existence and incur certain general and administrative      
expenses for the foreseeable future but will have no operating assets.
 Therefore, certain general and administrative expenses and nonoperating
income and expense have been accounted for as continuing operations.  
Future costs incurred in connection with these indemnification        
 obligations and litigation responsibilities will be reported as part of
the discontinued operations in which they originated or to which they 
related. The Company believes it is probable that it will continue to 
 incur certain costs associated with these legal matters and accordingly
established an accrual for estimated out-of-pocket expenses related to
the ongoing administrative management of such matters. However, the   
Company is currently unable to reasonably estimate its potential      
  exposure for defending such matters, any indemnity obligations resulting
therefrom, and any corresponding insurance reimbursement (note 14).   

(3)  SALE OF GIBRALTAR                                                          

Effective December 31, 1994, pursuant to a definitive agreement (the  
"Stock Purchase Agreement"), the Company completed the sale of all of 
 the outstanding shares of common stock of Gibraltar to American Ecology
Corporation ("AEC"). The Company received cash of $5,500,000 from AEC 
and a note payable to the Company in the amount of $550,000 to be held
in escrow as a source of payment of claims, if any, for which the     
Company indemnifies AEC under the Stock Purchase Agreement (note 14). 

The change in the reserve for loss on the sale of Gibraltar for the   
years ended December 31, 1998 and 1997, is summarized as follows (in  
thousands of dollars):                                                

                                                                [Download Table]


                                                                           
Balance at December 31, 1996, included in accrued expenses      $      404 
Allocation of additional reserves to cover Gibraltar indemnity             
  obligations                                                          190 
1997 expenditures related to Gibraltar indemnity obligations          (331)
                                                                -----------
Balance at December 31, 1997, included in accrued expenses             263 
1998 expenditures related to Gibraltar indemnity obligations          (104)
                                                                 ----------
Balance of December 31, 1998, included in accrued expenses       $     159 
                                                                 ----------
                                                                 ----------

                                                                 (Continued)
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(4)  PREVIOUS ASSET ACQUISITION                                                 

In 1995, the Company acquired certain assets of a group of three      
affiliated companies, including Romero Bros. Oil Exchange, Inc.,      
Environmental Petroleum Products Co./EPPCO, and Environmental Insight,
Inc. The principals of the acquired companies had the right to earn   
shares in the Company based on the profitability of the acquired      
companies. This right was suspended due to the sale of the waste      
management services segment. In order to settle this obligation and to
offer the principals of the acquired companies an incentive to remain 
 with the business to maximize the Company's earnout provision with USF,
 the Company paid the principals of the acquired companies approximately
$115,000 in June 1998. This payment had not been accrued and was      
recorded as a loss from discontinued operations. In addition, the     
 principals of the acquired companies are to receive a percentage of the
Company's earnout with USF. Approximately $72,500 was paid to the     
principals of the acquired companies during the third quarter of 1998 
  resulting from the earnout with USF that was achieved as of May 29, 1998
for the first year of operations subsequent to closing the sale of the
waste management services segment. This payment has also been reported
as a loss from discontinued segments.                                 

(5)  INVESTMENT SECURITIES                                                      

The amortized cost, gross unrealized holding gains, gross unrealized  
holding losses and fair value for investment securities by major      
 security type and class of security at December 31, 1998 and 1997, were
as follows:                                                           

                                                        [Enlarge/Download Table]


                                                    GROSS              GROSS                         
                                                  UNREALIZED         UNREALIZED                      
                                AMORTIZED          HOLDING            HOLDING             FAIR       
                                  COST              GAINS              LOSSES             VALUE      
                            ------------------ -----------------  ----------------- -----------------
                                                                                                     
      At December 31, 1998                                                                           
      --------------------                                                                           
U.S. Treasury securities    $            720                 20                  -               740 
Corporate debt securities              3,500                 67                  -             3,567 
                            ------------------ -----------------  ----------------- -----------------
                                       4,220                 87                  -             4,307 

U.S. Filter common stock                 794                  -               (147)              647 
                            ------------------ -----------------  ----------------- -----------------
                            $          5,014                 87               (147)            4,954 
                            ------------------ -----------------  ----------------- -----------------
                            ------------------ -----------------  ----------------- -----------------

                                                        [Enlarge/Download Table]


                                                    GROSS              GROSS                         
                                                  UNREALIZED         UNREALIZED                      
                                AMORTIZED          HOLDING            HOLDING             FAIR       
                                  COST              GAINS              LOSSES             VALUE      
                            ------------------ -----------------  ----------------- -----------------
                                                                                                     
      At December 31, 1997                                                                           
      --------------------                                                                           
U.S. Treasury securities    $            900                 13                  -               913 
Corporate debt securities              3,551                 33                 (2)            3,582 
                            ------------------ -----------------  ----------------- -----------------

                            $          4,451                 46                 (2)            4,495 
                            ------------------ -----------------  ----------------- -----------------
                            ------------------ -----------------  ----------------- -----------------

                                                                 (Continued)
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The carrying amount of debt securities at December 31, 1998, by       
  contractual maturity are as follows: 1999 - $648,629; 2000 - $1,343,371;
2001 - $1,800,992; 2002 - $0; and 2003 - $514,017.                    

(6)  PROPERTY, PLANT, AND EQUIPMENT                                             

Property, plant, and equipment consisted of the following at          
December 31, 1998 and 1997 (in thousands of dollars):                 

                                                                [Download Table]

                                         1998             1997     
                                    ---------------  --------------
                                                                   
Land                                $           65              65 
Buildings and improvements                     253             253 
Machinery and equipment                         32              32 
Furniture, fixtures, and other                  41              43 
                                    ---------------  --------------
                                               391             393 
Less:  Accumulated depreciation                203             182 
                                    ---------------  --------------
Net property, plant, and equipment  $          188             211 
                                    ---------------  --------------
                                    ---------------  --------------


Depreciation expense totaled $23,000 and $485,000 for the years ended 
December 31, 1998 and 1997, respectively.                             

(7)  NOTES PAYABLE                                                              

   The Company had a credit agreement (the "Credit Agreement") that provided
  up to $6,500,000 in available credit for the Company. In connection with
the closing of the sale of the Company's oilfield services segment in 
 January 1997, the Company repaid $3,300,000 of outstanding indebtedness
   under the Credit Agreement. In connection with the closing of the sale of
  the Company's waste management services segment in May 1997, the Company
repaid the remaining balance of $1,714,000 of outstanding indebtedness
under the Credit Agreement.                                           

(8)  ACCRUED EXPENSES                                                           

Accrued expenses consisted of the following at December 31, 1998 and  
1997 (in thousands of dollars):                                       

                                                        [Enlarge/Download Table]


                                                                  1998            1997     
                                                             ---------------  -------------
                                                                                           
Accrued insurance claims payable                             $          206            526 
Accrued  expenses  for  estimated  legal costs  relating to                                
   Gibraltar (notes 3 and 14)                                           159            263 
Other                                                                    48            252 
                                                             ---------------  -------------

                                                             $          413          1,041 
                                                             ---------------  -------------
                                                             ---------------  -------------

                                                                 (Continued)
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(9)  INCOME TAXES                                                               

   Income taxes for the years ended December 31, 1998 and 1997, consisted of
the following (in thousands of dollars):                              

                                                        [Enlarge/Download Table]

                                                            1998            1997      
                                                       ---------------  ------------- 
                                                                                      
Deferred Federal income tax benefit from discontinued                                 
  operations                                           $            -            (148)
                                                       ---------------  ------------- 
                                                       ---------------  ------------- 


Income tax expense (benefit) differed from the amounts computed by    
  applying the U.S. Federal income tax rate of 34% to income (loss) before
income taxes as a result of the following (in thousands of dollars):  

                                                        [Enlarge/Download Table]


                                                          1998              1997     
                                                    ----------------  -------------- 
                                                                                     
Computed "expected" tax expense (benefit)           $            84             763  
Change in the beginning-of-the-year balance of the                                   
  valuation allowance for deferred tax assets                   139            (911) 
Other, net                                                     (223)             -   
                                                    ----------------  ---------------

     Total income tax benefit                       $             -            (148) 
                                                    ----------------  ---------------
                                                    ----------------  ---------------

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at   
December 31, 1998 and 1997, are presented below (in thousands of      
dollars):                                                             

                                                        [Enlarge/Download Table]


                                                                 1998             1997       
                                                            ---------------  ----------------
                                                                                             
Deferred tax assets:                                                                         

   Net operating loss carryforwards                         $        2,687             2,144 
   Property, plant and equipment - basis differences and                                     
       depreciation                                                    127                89 
   Accrued expenses, provisions for book not yet                                             
       deductible for tax                                                -               468 
   Capital loss carryforward                                             6               194 
   Alternative minimum tax credit carryforward                         586               134 
   US Filter contingent gain recognized for tax purposes             1,090             1,360 
   Other                                                                32                -  
                                                            ---------------  ----------------
                   Total gross deferred tax assets                   4,528             4,389 
                   Less valuation allowance                         (4,528)           (4,389)
                                                            ---------------  ----------------
                   Net deferred tax assets                  $           -                  - 
                                                            ---------------  ----------------
                                                            ---------------  ----------------
Deferred tax liabilities:                                                                    

   Property, plant, and equipment - depreciation and basis                                   
       differences                                          $           -                  - 
   Other                                                                -                  - 
                                                            ---------------  ----------------
                   Total gross deferred tax liability                   -                  - 
                                                            ---------------  ----------------

                   Net deferred tax liability               $           -                  - 
                                                            ---------------  ----------------
                                                            ---------------  ----------------

                                                                 (Continued)
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In assessing the realizability of deferred tax assets, management     
  considers whether it is more likely than not that some portion or all of
the deferred tax assets will not be realized. The ultimate realization
of deferred tax assets is dependent upon the generation of future     
taxable income during the periods in which those temporary differences
become deductible. Management considers the scheduled reversal of     
deferred tax liabilities and projected future taxable income in making
this assessment. Subsequently recognized tax benefits relating to the 
valuation allowance for deferred tax assets as of December 31, 1998,  
 will be included as an income tax benefit in the consolidated statement
of operations in future periods.                                      

At December 31, 1998, the Company has net operating loss carryforwards
for federal income tax purposes of approximately $7,900,000. Such     
amounts are available to offset future Federal taxable income, if any,
through 2018 and expire in the following years: 2009 - approximately  
$1,600,000; 2010 - approximately $1,200,000; 2011 - approximately     
$2,900,000; 2012 -approximately $1,600,000; and 2018 - approximately  
$600,000.                                                             

(10) LEASES                                                                     

The Company leased certain equipment and facilities used in its       
operations, the majority of which were assumed by USF and Dawson at   
closing of the respective transactions. Total rentals approximated    
$20,000 and $303,000 for the years ended December 31, 1998 and 1997,  
respectively.                                                         

(11) EMPLOYEE BENEFIT PLANS                                                     

RESTATED STOCK COMPENSATION PLAN                                      

 The Company had adopted the Restated Stock Compensation Plan to provide
for the grant of nonqualified options to participating employees. An  
 aggregate of 645,000 shares of Class A common stock had been authorized
 and reserved for issuance under such plan. The plan was administered by
  the Compensation Committee of the Board of Directors, which had the sole
authority to interpret the plan, to determine the persons to whom     
  options would be granted, and to determine the exercise price, duration,
and other terms of options to be granted under the plan, provided that
options would not be granted at prices less than fair market value on 
 the dates of the grants and that options would not be outstanding for a
 period longer than ten years from the date the options were granted. As
a result of the Company selling all its operating assets during 1997, 
the Restated Stock Compensation Plan was terminated and any options   
outstanding were forfeited.                                           

The following table summarizes activity under the Company's Restated  
Stock Compensation Plan for the year ended December 31, 1997:         

                                                                [Download Table]


                                          NUMBER OF         AVERAGE    
                                           OPTIONS           PRICE     
                                       ---------------  ---------------
                                                                       
Balance at December 31, 1996                 567,673            2.3408 
  Granted                                         -                 -  
  Forfeited                                 (567,673)           2.3408 
                                       ---------------  ---------------
Balance at December 31, 1997 and 1998             -                 -  
                                       ---------------  ---------------
                                       ---------------  ---------------

                                                                 (Continued)
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1995 EMPLOYEE RESTRICTED STOCK PLAN                                   

In January 1995, the Board of Directors adopted the 1995 Employee     
Restricted Stock Plan (the "Restricted Plan"). The Restricted Plan was
 approved by the shareholders in June 1995, at which time 420,000 shares
  of Class A common stock available for issuance under the Restricted Plan
were issued to certain executive officers and senior managers of the  
Company pursuant to the terms of the Restricted Plan. The original    
shares granted under the Restricted Plan were to vest 20% per year    
beginning in January 1995 with provisions for earlier vesting based on
increases in the Company's stock price. As a result of the Company    
 selling its operating assets during 1997, certain shares under the plan
  were forfeited. As of December 31, 1998, four former employees are still
  covered by the plan. The total number of shares remaining under the plan
is 168,000, with future vesting being dependent on the performance of 
the hydrocarbon business that was sold to USF in May 1997. Should the 
business perform as expected, during the two years following its sale,
the four former employees will receive shares of Company stock in     
accordance with the Restricted Plan.                                  

1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN                          

  In December 1995, the Board of Directors adopted, subject to shareholder
approval, the 1996 Non-Employee Director Stock Option Plan. Such plan 
  replaced the Nonqualified Stock Option Plan for Outside Directors, which
was adopted in 1991. Directors who were not employees of the Company  
were eligible to participate in the plan. Under the terms of the plan,
the exercise price of each option granted was to be equal to the fair 
 market value on the date of grant. Options became fully exercisable one
 year from the date of grant, provided that such vesting period would be
 accelerated upon the occurrence of a change of control. Options were to
expire ten years after the date of grant. A total of 90,000 shares of 
Class A common stock had been reserved for issuance under the plan.   
Participants were granted, effective December 6, 1995, options to     
purchase 15,000 shares of Class A common stock at an exercise price   
equal to the fair market value at that date of $1.0625, of which 5,000
  shares vested immediately with the remainder vesting in equal increments
on the first and second anniversary dates of the grant. Upon the      
election of any new outside directors, each such director was to be   
granted an option to purchase 7,500 shares of Class A common stock.   
Thereafter, each participant was to be granted an option to purchase  
3,000 shares of Class A common stock each date he or she was reelected
 as a director of the Company, subject to share availability, adjustment
for stock dividends, splits, and similar events. As a result of the   
Company selling all its operating assets during 1997, the 1996        
Non-Employee Director Stock Option Plan was terminated and any options
outstanding were forfeited.                                           

MOBLEY EMPLOYEES' PROFIT SHARING PLAN                                 

The Company had a contributory profit sharing plan for the benefit of 
 substantially all employees. Contributions to the plan were made at the
discretion of the Compensation Committee of the Board of Directors and
 approximated $8,000 for the year ended December 31, 1997. Subsequent to
the sale of the Company's operating assets during 1997, the plan was  
terminated.                                                           

                                                                 (Continued)
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MOBLEY ENVIRONMENTAL SERVICES, INC. EMPLOYEES' BENEFIT TRUST          

 The Company had a medical benefit plan which was funded by employer and
participant contributions and supplemented by stop-loss insurance.    
Contributions were determined by the plan administrator based upon the
actual claim experience and administrative costs of the plan. As a    
result of the sale of the Company's operating assets, the plan was    
 terminated effective July 1, 1997 and benefits were no longer available
 to participants. All remaining claims incurred prior to the termination
date are being funded by the Company and paid by the plan.            

(12) STOCKHOLDERS' EQUITY                                                       

The Company is authorized to issue up to 2,000,000 shares of preferred
 stock (par value $.01), and the Board of Directors has the authority to
fix the rights, preferences, privileges, limitations, and restrictions
of such stock. No preferred stock has been issued as of December 31,  
1998.                                                                 

  Each share of the Company's Class A and Class B common stock is entitled
 to one vote per share and ten votes per share, respectively. Each share
 of Class B common stock is convertible into one share of Class A common
stock at any time at the option of the stockholder, and certain       
restrictions may exist upon the transfer of Class B common shares.    

(13) EARNINGS PER SHARE                                                         

The following data shows the weighted average number of shares used in
computing basic and diluted income (loss) per share.                  

                                                                [Download Table]


                                                   1998            1997     
                                               -------------    ------------
                                                                            
Weighted  average  number of common shares                                  
   used in basic EPS                           $   8,835,293       8,835,293
Effect of dilutive securities                                               
   1995 Employee Restricted Stock Plan               168,000         168,000
Weighted average number of common shares                                    
   and dilutive potential common stock                                      
   used in EPS assuming dilution                   9,003,293       9,003,293

(14) COMMITMENTS AND CONTINGENCIES                                              

LETTERS OF CREDIT                                                     

 At December 31, 1998 and 1997, letters of credit totaling approximately
 $442,566 and $1,012,000, respectively, had been provided by the Company
to its insurance carrier in connection with its workers' compensation,
general liability, and auto liability insurance policies.             

                                                                 (Continued)
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REGULATORY ENFORCEMENT ACTIONS                                        

In November 1993, the State of Texas filed a lawsuit against Gibraltar
stemming from an enforcement action by the TNRCC alleging certain     
regulatory violations. The lawsuit was subsequently amended to include
certain notices of violation issued by the TNRCC and allegations of   
noncompliance associated with certain regulatory orders. In July 1994,
 this litigation was tentatively settled through mediation and an Agreed
Final Judgment was subsequently entered in December 1994. Under the   
terms of the judgment, Gibraltar was obligated for $1,150,000 in      
 assessed fines and attorneys fees. Of such amount, $450,000 was paid by
  the American Ecology Corporation ("AEC") and the Company was responsible
  for payment of the remaining $700,000. During 1996 and 1997, the Company
paid all of its obligations.                                          

In January 1996, the Company was notified by the TNRCC that it was a  
potentially responsible party of the alleged release, during the early
or mid-1980s, of hazardous substances at the McBay Oil and Gas State  
Superfund Site located near Grapeland, Texas. During 1997, the Company
entered into a contractual remediation plan for this site and paid the
contract amount. Such plan did not have a material affect on the      
consolidated financial statements. However, completion of the         
  remediation and final resolution of the matter is subject to approval of
the TNRCC.                                                            

LITIGATION AND VARIOUS OTHER CLAIMS                                   

The Company continues to defend various claims resulting from the     
operations of its former subsidiary, Gibraltar (the sale of which is  
 discussed in note 3). As of December 31, 1998, three such lawsuits were
 pending. During the Company's ownership of Gibraltar, Gibraltar engaged
 in the collection, transportation, analysis, treatment, management, and
disposal of various types of hazardous wastes. In the actions pending 
against the Company and/or Gibraltar, the plaintiffs complain of a    
variety of acts by Gibraltar which allegedly occurred in the course of
its operations, including improper air emissions, nuisance odors,     
 contamination of water supplies, and repeated and continuing violations
  of environmental laws. In the various pending actions, plaintiffs assert
similar theories as the alleged basis for recovery, including         
negligence, nuisance, trespass, fraudulent concealment, assault and   
battery, and international infliction of emotional distress. Likewise,
such plaintiffs seek similar types of damages, including loss of      
  property value and compensatory and punitive damages for personal injury
and property damage for nuisance odors, physical discomfort and       
impairment, interference with use and enjoyment of property, medical  
expenses, mental anguish, and loss of earning capacity. An additional 
 claimant seeks permanent closure of the facility and civil penalties as
the remedy for alleged violations by Gibraltar of environmental       
protection statutes and endangerment to public health and the         
environment.                                                          

These matters raise difficult and complex factual and legal issues,   
including but not limited to, the nature and amount of the Company's  
liability, if any. Although the Company is a defendant in some        
litigation, in other matters the Company's potential liability arises 
from material contractual indemnifications given by the Company to the
purchaser of Gibraltar. In particular, in connection with the sale of 
Gibraltar, the Company made extensive representations and warranties  
regarding Gibraltar. The Company is required to idemnify AEC for all  
losses resulting from breaches of representations and warranties and  
pending or future claims or proceedings resulting from circumstances  
existing prior to closing. The terms of the stock purchase agreement  
between AEC and the Company provided that such indemnification        
obligations would extend through June 30, 1996 (or in the case of tax,
environmental and ERISA claims, through June 30, 1998). However, the  

                                                                 (Continued)
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Company and AEC executed a Tolling Agreement dated July 30, 1997,     
pursuant to which the statute of limitations period for certain       
 potential claims by either party against the other was tolled from July
30, 1997 through July 30, 2000. These indemnifications may include the
potential liability of former customers of Gibraltar, a significant   
number of which have also become defendants in litigation involving   
Gibraltar's operations. The failure of Gibraltar to prevail in these  
matters could result in significant liabilities to the Company.       

 The Company has been notified by its insurance carrier that it disputes
the Company's interpretation of its pollution liability insurance     
coverage and policy limitations applicable to the foregoing claims.   
 While the Company is vigorously pursuing a favorable resolution of this
dispute, it is unable to determine the likelihood of an unfavorable   
outcome at this time.                                                 

  The Company, based on consultation with its legal counsel, believes that
it is probable that the Company will continue to incur certain costs  
associated with the foregoing matters and accordingly, in connection  
with the divestiture of Gibraltar in 1994, established an accrual for 
estimated out-of-pocket expenses related to the ongoing administrative
management of such matters (notes 3 and 8). However, the Company is   
currently unable to reasonably estimate its potential exposure for    
defending such matters, any indemnity obligations resulting therefrom,
and any corresponding insurance reimbursement. As noted above, the    
litigation matters to which the Company is a party raise several      
difficult and complex factual and legal issues. More specifically: (i)
while certain of the plaintiffs exhibit apparent physical injury and a
variety of health problems, the requisite causal connection of        
Gibraltar's facilities or operations has not been established; (ii)   
certain of the cases involve literally hundreds of plaintiffs whose   
physical condition and medical history have not yet begun to be       
investigated; (iii) although the Company has historically experienced 
some degree of success in certain jury trials, there is inherent      
uncertainty associated with jury trials in such cases such as these   
which tend to have a strong emotional appeal; (iv) the extent of      
pollution liability insurance coverage available to the Company for   
 potential indemnity exposure and defense costs is currently in dispute;
  (v) the Company's potential liability relating to defense cost claims of
approximately 50 of Gibraltar's former customers who have also been   
named in the litigation (and who are represented by over 20 different 
 law firms) is currently not determinable; and (vi) the indemnifications
  given to AEC in connection with the Gibraltar sale are comprehensive and
subject to broad interpretation. Accordingly, the Company has not made
an accrual for losses, if any, which might result from these legal    
matters as such amounts or a range of amounts are not currently       
reasonably estimatable. The Company's future financial condition,     
results of operations, and liquidity could be materially adversely    
affected as the nature and scope of the Company's ultimate liability  
arising from Gibraltar's operations and sale become better defined.   

There are various other routine claims and legal actions pending and  
threatened against the Company which are incidental to the Company's  
 business and have arisen in the ordinary course of its business related
  to services, contracts, employment, and other matters. Where applicable,
the Company has recorded accruals for estimated potential damages and 
 expenses associated with such matters. While the final outcome of these
matters cannot be predicted with certainty, management, upon          
consultation with legal counsel, and considering the Company's limited
continuing activities, believes that financial obligations of the     
  Company arising from such claims could have a material adverse effect on
its consolidated financial condition, results of operations, or       
liquidity.                                                            

                                                                 (Continued)
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(15) SUPPLEMENTAL CASH FLOW INFORMATION                                         

                                                                [Download Table]


                                               1998            1997     
                                           --------------  -------------
                                                                        
Interest paid, net of amounts capitalized  $           -            151 


(16) YEAR 2000 COMPLIANCE                                                       

  The Company has made an assessment of the potential risk associated with
  the Year 2000 issue. The Company has had no operations subsequent to the
sale of its operating assets as previously discussed. The risk related
to internal systems is minimal due to the limited accounting functions
that are currently required. The Company does rely upon third parties 
such as its investment advisors and custodians. There can be no       
assurance that these third parties will be compliant but do to the    
limited activity, these functions could be performed by the Company.  

 The Company is not aware of any additional cost required to become Year
2000 compliant nor is it aware of any contingency plans that would    
require additional funding.                                           

F-21

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10KSB’ Filing		Date		First		Last			Other Filings
		1/4/02		11
		7/30/00		4		40
		12/31/99		8
Filed on:		3/31/99		20					10QSB
		3/15/99		16
		3/12/99		21
		3/1/99		1		9
For Period End:		12/31/98		1		39
		10/20/98		8					DEF 14A
		9/25/98		11		31			DEF 14A
		6/30/98		4		39			10-Q,  10-Q/A
		5/29/98		10		33
		1/1/98		28
		12/31/97		9		38			10-K405
		7/30/97		4		40
		7/1/97		38
		5/29/97		3		30
		5/14/97		19					DEFR14C
		5/12/97		7		19
		5/9/97		19					DEF 14C
		4/25/97		5		19			8-K
		2/28/97		17		31
		1/20/97		3		29
		1/1/97		10		30
		12/31/96		10		32			10-K,  NT 10-K
		10/30/96		5
		10/9/96		4
		10/1/96		10		29
		8/7/96		7
		6/30/96		4		39			10-Q
		5/23/96		8
		3/11/96		4
		12/6/95		37
		8/31/95		7
		1/1/95		15
		12/31/94		3		32
		9/6/94		7
		9/2/94		18
		6/30/94		18
		5/13/94		18
		5/10/94		3		18
		1/1/94		18
		12/31/93		18
		10/18/93		7
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