UNITED STATES
                           SECURITIES AND EXCHANGE COMMISSION
                                 Washington, D.C.  20549
                                       FORM 10-K
      (Mark One)
      (X)          ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                             SECURITIES EXCHANGE ACT OF 1934
                       For the fiscal year ended December 31, 1997
                                           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 1-5005

                              SELAS CORPORATION OF AMERICA
               (Exact name of registrant as specified in its charter)

                Pennsylvania                         23-1069060
      (State or other jurisdiction of      (IRS Employer Identification No.)
      incorporation or organization)              

             Dresher, Pennsylvania                        19025
      (Address of principal executive office)          (Zip Code)
      Registrant's telephone number, including area code (215) 646-6600
       
      Securities registered pursuant to Section 12(b) of the Act:
                                               Name of each exchange on
           Title of each class                    which registered     
       Common Shares, $1 par value             American Stock Exchange
             per share

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

      Indicate by check mark whether the registrant (1) has filed all reports
      required to be filed by Section 13 or 15(d) of the Securities Exchange
      Act of 1934 during the preceding 12 months (or for such shorter periods
      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  

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

      The aggregate market value, as of March 9, 1998,of the voting stock held
      by non-affiliates of the registrant was approximately $47,743,166
      (Aggregate market value is estimated solely for the purposes of this
      report and shall not be construed as an admission for the purposes of
      determining affiliate status.)

      At March 9, 1998, there were 5,225,760 of the Company's common shares
      outstanding (exclusive of 363,564 treasury shares).

                          DOCUMENTS INCORPORATED BY REFERENCE
      Portions of the Company's 1997 annual report to shareholders are
      incorporated by reference into Part II of this report.  Portions of the
      Company's proxy statement for the 1998 annual meeting of shareholders are
      incorporated by reference into Part III of this report.  Except for the
      parts of such documents that have been specifically incorporated herein
      by reference, such documents shall not be deemed "filed" for the purposes
      of this report.



                                        -2-


                                     PART I

      ITEM 1.  Business

      Selas Corporation of America (together with its subsidiaries, unless the
      context otherwise requires, referred to herein as the "Company", was
      incorporated in Pennsylvania in 1930.  The Company is a diversified firm
      with international operations and sales that engages in the design,
      development, engineering and manufacturing of a range of products.  The
      Company, headquartered in Dresher, Pennsylvania with subsidiaries in
      Minnesota, Ohio, California, England, France, Germany and Italy (and a
      50% joint venture in Japan), operates directly or through subsidiaries 
      in three business segments.

      Under the SelasTM name, the Company designs and manufactures specialized
      industrial heat processing systems and equipment for steel, glass and
      other manufacturers worldwide.    The Company's subsidiary, Resistance
      Technology, Inc., designs and manufactures microminiature components and
      molded plastic parts primarily for the hearing instrument manufacturing
      industry worldwide and also for the electronics, telecommunications and
      medical equipment industries.  The Company's subsidiary, RTI Electronics,
      Inc., formed in 1997, has extended Resistance Technology, Inc.'s
      microminiature components business through the manufacture of heat
      sensitive resistors known as thermistors.  The Company's subsidiary,
      Deuer Manufacturing, Inc., manufactures spare tire holders and lifts and
      related products, primarily based on cable winch designs, for use
      principally as original equipment by the pick-up truck and minivan
      segment of the automotive industry.  

      Financial data relating to industry segments, geographical summary of
      assets and operations, export sales and major customers are set forth in
      Note 4 of the Company's consolidated financial statements.

                                HEAT PROCESSING

      The Company specializes in the controlled application of heat to achieve
      precise process and temperature control.  The Company's principal heat
      processing equipment and systems are large custom-engineered furnaces and
      smaller standard-engineered systems, burners and combustion control
      equipment.

      CUSTOM-ENGINEERED FURNACES

      Products and Industries Served.  The Company designs specialized furnaces
      for use primarily in the steel and glass industries worldwide.  The
      furnaces are engineered to subject a customer's products to carefully
      controlled heating and cooling processes in order to improve the physical
      characteristics of those products.  Each furnace is custom-engineered by
      the Company to meet the customer's specific requirements.  The Company
      believes that the SelasTM name, its reputation for quality and its
      leadership in the design and engineering of direct gas-fired heat
      processing furnaces are important factors in its business.  The Company
      also offers gas-fired radiant tube and electric heating technology for
      heat processing furnaces.


                                        -3-
      ITEM 1.  Business - (Continued)

      The Company's custom-engineered systems for the steel industry include
      continuous annealing furnaces and continuous galvanizing furnaces. 
      Continuous annealing furnaces are used to heat-treat semi-finished steel
      sheet and strip to soften it to improve the ductility of the steel,
      thereby making it suitable for use in the manufacture of automobiles,
      appliances and other items.  Continuous galvanizing furnaces consist of
      continuous annealing furnaces plus the components used to apply a zinc
      coating to steel strip to improve its resistance to corrosion. 

      The Company's furnaces for the glass industry are used for the tempering
      and bending of glass.  The glass tempering process toughens glass plate
      through a controlled process of heating and cooling. Glass manufacturers
      use the Company's glass bending furnaces to heat and bend plate glass for
      automotive and architectural uses.

      From time to time, the Company also designs various other specialized
      furnaces for use by manufacturers in a variety of industries to suit
      particular process requirements.  For example, over the years the Company
      has engineered large barrel line furnaces used for the continuous heat
      treatment of steel pipe, tube or bar.

      Marketing and Competition.  The Company markets its custom-engineered
      furnaces on a global basis.  Marketing personnel are located at the
      Company's offices in Dresher, Paris, Ratingen, Derbyshire, Milan and at
      the offices of its 50%-owned affiliate, Nippon Selas Co., Ltd., in Tokyo. 
      Over the years, the Company has installed custom-engineered systems
      throughout the world, in Europe, North America, South America, Asia,
      Australia and Africa.  In a particular period, a single contract may
      account for a large percentage of sales, but the Company is not dependent
      on any custom-engineered systems customer on an ongoing basis.

      Company engineering and marketing personnel maintain contact with
      potential major steel and glass customers to determine their needs for
      new furnaces, typically for expansion or new technology.  The Company's
      furnaces have long useful lives, and replacement business is not a major
      factor in sales of custom-engineered systems.  The Company has and
      continues to perform modifications to older existing furnaces to improve
      production quantities, along with quality of the end product.

      The Company also markets its products and services through agents and
      licensees located in various parts of the world.  Typically, the
      Company's license agreements provide that the licensee will act as the
      Company's sales agent in a particular territory, is granted a license to
      utilize the Company's heat processing technology in that territory, and
      is granted the right to utilize technical services provided by the
      Company.  In exchange, the Company receives certain fees when the
      licensee sells the Company's products or services in the territory.



                                        -4-


      ITEM 1.  Business - (Continued)

      Over the years, Japanese steel producers have aligned themselves in semi-
      exclusive relationships with furnace manufacturers.  For a number of
      years, the Company has licensed direct fired furnace technology to NKK
      Corporation, the second largest steel producer in Japan.

      Furnaces for continuous galvanizing and annealing lines generally utilize
      either direct fired or radiant tube technology.  The Company is the
      market leader for furnaces based on direct fired technology, and also
      sells furnaces of the radiant tube design utilized primarily by its
      competitors.  Some of the Company's competitors are larger and have
      greater financial resources.  In recent years, the Company has faced
      increased competition from competitors supplying smaller, less
      sophisticated steel lines.  These competitors do not generally offer
      custom engineering on a par with the Company, but have been willing to
      offer a more standarized and less sophisticated furnace for a lower
      price.

      Operations.  The Company's custom-engineered furnace business is
      conducted principally by its wholly-owned subsidiaries, Selas S.A.
      (Paris), CFR-CECF Forumi-Ripoche, S.A. (Paris), Selas Waermetechnik GmbH
      (Ratingen),  Selas Italiana, S.r.L. (Milan) and Selas U.K. (Derbyshire).  
      These subsidiaries currently employ approximately 149 persons, of whom 25
      are administrative personnel and 124 are sales, engineering and
      operations personnel.  A small number of engineering and marketing
      management personnel located at the Company's Dresher, Pennsylvania
      headquarters facility are also involved from time to time in the custom-
      engineered furnace business.

      On large-scale projects, such as a continuous steel strip annealing or
      galvanizing line, the customer frequently contracts for the entire line
      on a turnkey basis with an engineering and construction firm specializing
      in line terminal equipment, and the Company acts as a subcontractor for
      the design, engineering, supply of material and installation of the
      furnace portion of the line, or, alternatively, as a subcontractor only
      for design and engineering.  When the Company provides only design and
      engineering services, the prime contractor handles the fabrication and
      erection of the furnace.  With the exception of certain proprietary
      parts, the Company does not manufacture the components used in such
      systems.

      The Company's custom-engineered furnace business is historically cyclical
      in nature.  

      On February 26, 1998, the company's wholly-owned subsidiary, Selas S.A.,
      acquired the stock of CFR, a Paris, France firm engaged in the engineered
      industrial furnace business.  This acquisition was made to complement the
      Company's existing heat processing operations in Europe, particularly the
      Company's custom-engineered furnace business.  CFR engineers and designs
      batch and continuous furnaces that are used for heat treating both
      ferrous and non-ferrous metals, and also furnaces



                                        -5-

      ITEM 1.  Business - (Continued)

      used for the hardening and etching of glass and ceramic tableware. 
      Recently, CFR's principal products have been continuous custom-engineered
      furnaces for aluminum strip, furnaces for hardening and etching glass and
      ceramic tableware, along with Bell furnaces for heat treating ferrous
      metals.  CFR was formed by the merger of three French companies, CECF,
      Fofumi and Ripoche, once the largest industrial furnace company in
      France.  The Company believes that CFR enjoys a good reputation in the
      French market for engineered industrial furnaces.  CFR's sales have
      primarily been in France, although CFR has some sales in other European
      countries.  CFR's products are not in competition with the Company's
      existing products in Europe.  CFR does have several European competitors
      for each product offered and some of its competitors are larger and have
      greater financial resources.

      At its facilities in Paris, France and Maisse, France, CFR employs
      approximately 50 full-time employees of whom 8 are executive and
      administrative personnel, 27 are sales and engineering personnel, and
      15 are fabrication and assembly personnel.

      Certain information regarding the acquisition of the CFR business is set
      forth in note 19 to the Company's consolidated financial statements.

      STANDARD-ENGINEERED SYSTEMS, BURNERS AND COMBUSTION CONTROL EQUIPMENT

      Standard-Engineered Systems.  At its Dresher, Pennsylvania facility, the
      Company engineers and fabricates a variety of smaller furnaces and heat
      processing equipment.  Although these systems are based on standard
      designs, the Company often adapts or re-engineers them to meet particular
      customer needs.  These smaller systems are
      generally used by manufacturers in sophisticated applications for the
      heat treatment of finished and semi-finished parts.

      The Company's standard-engineered systems include atmosphere-
      controlled furnaces for heat treating finished metal parts.  Its
      continuous heat treating systems include not only the hardening and
      tempering furnaces central to the system, but also the ancillary loading,
      quenching and washing equipment.

      The Company also manufacturers large non-atmosphere-controlled batch-type
      furnaces in a variety of designs.  The Company's carbottom furnaces
      enable its customers to remove the furnace hearth, running on tracks
      similar to a railroad car, from the stationary furnace for loading and
      unloading.  With its hood furnaces, the furnace itself can be lifted from
      the stationary hearth for loading and unloading.  Carbottom and hood
      furnaces are used to heat treat large, usually semi-finished, metal parts
      of a variety of shapes and sizes.  Clamshell furnaces designed by the
      Company open and close around steel rolls to produce a gradation of metal
      characteristics due to the differential heating of the steel roll.  The
      Company's standard batch furnaces are supplied to customers with a need
      for the precise, accurately controlled application of heat to their
      products.



                                        -6-

      ITEM 1.  Business - (Continued)

      The Company's standard systems also include automatic brazing and
      soldering systems used in the assembly of radiators, air conditioner
      coils and electrical appliances.  The precise application of heat in
      these systems improves a customer's product quality and uniformity while
      reducing production costs.  The Company also produces the fuel mixing and
      monitoring systems, burners and product handling equipment necessary for
      these systems.

      The Company also produces custom designed barrel furnaces used primarily
      to heat treat long metal parts, and also produces specialized glass lehrs
      for heating glass products.

      Burners and Combustion Control Equipment.  The Company designs,
      manufactures and sells an array of original equipment and replacement
      gas-fired industrial burners for many applications.  The Company is a
      producer of burners used in fluid processing furnaces serving the
      petrochemical industry.  One type of fluid processing burner is capable
      of minimizing the emission of oxides of nitrogen as combustion products. 
      As many jurisdictions reduce the permissable level of emissions of these
      compounds, the Company believes that the demand for "low NOx" burners
      will increase.  The Company also produces burners suitable for creating a
      high temperature furnace environment desirable in steel and glass heat
      treating furnaces.  The Company's burners accommodate a wide variety of
      fuel types, environmental constraints and customer production
      requirements.

      The Company furnishes many industries with gas combustion control
      equipment sold both as component parts and as systems that have been
      custom-engineered to meet a particular customer's needs.  This equipment
      is provided with the Company's original custom-engineered and standard
      heat treating equipment, as replacement or additional components for
      existing furnaces being refurbished or upgraded, and as original
      components for heat treating equipment manufactured by 
      others.  The components of the combustion control systems include mixing
      valves capable of mixing gas and air and controlling the air/gas ratio,
      pressure and total flow of the mixed gases.  The Company also produces
      its Qual-O-RimeterTM automated monitoring and control device used in
      conjunction with its mixing valves to maintain precise, uniform heat
      release and flame shape, despite fluctuations in fuel mix and quality,
      air temperature and humidity.

      Additional combustion control products include Flo-ScopeTM flow meters,
      which measure the rate of flow of gases, and automatic fire checks and
      automatic blowouts, which arrest flame and pressure resulting from
      backfire from the burners into the pipe line.





                                        -7-


      ITEM 1.  Business - (Continued)

      Marketing and Competition.  The Company markets its standard-engineered
      systems products on a global basis through its sales and marketing
      personnel located in Dresher, Pennsylvania, and also sells these products
      through licensees and agents located in various parts of the world. 
      Although the Company competes for orders for such products with many
      other manufacturers, some of which are larger and have greater financial
      resources, the Company believes that its reputation and its high standard
      for quality allow it to compete effectively with other manufacturers.

      Operations.  At its Dresher facility, the Company employs approximately
      77 persons, of whom 19 are executive and administrative personnel, 20 are
      sales and engineering personnel and 38 are personnel engaged in
      manufacturing.  The hourly personnel are represented by a union, and the
      current union contract expires May 1, 1998.  The Company considers its
      relations with its employees to be satisfactory.

      The principal components used in the Company's heat processing equipment
      and other products are steel, special castings (including high-alloy
      materials), electrical and electronic controls and materials handling
      equipment.  These items are available from a wide range of independent
      suppliers.

      Research and Development.  The Company conducts research and development
      activities at its Dresher facility to support its heat processing
      services and products.  The Company's research efforts are designed to
      develop new products and technology as well as to improve existing
      products and technology.  The Company also conducts research on behalf of
      particular customers in connection with customers' unusual process needs. 
      Research and development expenditures for heat processing aggregated
      $120,000, $56,000 and $188,000 in 1997, 1996 and 1995, respectively.

      It is the Company's policy to apply for domestic and foreign patents on
      those inventions and improvements which it considers significant and
      which are likely to be incorporated in its products.  It owns a number of
      United States and foreign patents.  It is licensed under patents owned by
      others and has granted licenses to others on a fee basis.  The Company
      believes that, although these patents collectively are valuable, no one
      patent or group of patents is of material importance to its business as a
      whole.




                                        -8-

      ITEM 1.  Business - (Continued)

                   MICROMINIATURE ELECTROMECHANICAL COMPONENTS,
                         THERMISTORS AND MOLDED PLASTICS

      Resistance Technology, Inc. ("RTI"), a wholly-owned subsidiary whose
      outstanding capital stock the Company acquired on October 20, 1993,
      manufactures microminiature components and molded plastic parts primarily
      for the hearing instrument manufacturing industry worldwide.  RTI
      Electronics, Inc. ("RTIE"), formed in 1997, has expanded RTI's
      microminiature components business through the manufacture of heat
      sensitive resistors known as thermistors.

      Products and Industries Served.  RTI is a leading manufacturer and
      supplier of microminiature electromechanical components to hearing
      instrument manufacturers.  These components consist of volume controls,
      trimmer potentiometers and switches.  RTI also manufactures hybrid
      amplifiers and integrated circuit components ("hybrid amplifiers"), along
      with faceplates for in-the-ear and in-the-canal hearing instruments. 
      Components are offered in a variety of sizes, colors and capacities in
      order to accommodate a hearing manufacturer's individualized
      specifications.  Sales to hearing instrument manufacturers represented
      approximately 72% of 1997 annual net sales for the Company's
      microminiature and plastics business.

      Hearing instruments, which fit behind or in a person's ear to amplify and
      process sound for a hearing impaired person, generally are composed of
      four basic parts and several supplemental components for control or
      fitting purposes.  The four basic parts are microphones, amplifier
      circuits, miniature receivers/speakers and batteries.  RTI's hybrid
      amplifiers are a type of amplifier circuit.  Supplemental components
      include volume controls, trimmer potentiometers, which shape sound
      frequencies to respond to the particular nature of a person's hearing
      loss, and switches used to turn the instrument on and off and to go from
      telephone to normal speech modes.  Faceplates and an ear shell molded to
      fit the user's ear often serve as a housing for hearing instruments.

      The potential range of applications for RTI's molded plastic parts is
      broad.  RTI has produced intravenous flow restrictors for a medical
      instruments manufacturer and cellular telephone battery sockets for a
      telecommunications equipment manufacturer.  Sales by RTI to industries
      other than the hearing instrument industry represented approximately 11%
      of 1997 annual net sales for the Company's microminiature and plastics
      business.

      RTI manufactures its components on a short lead-time basis in order to
      supply "just-in-time" delivery to its customers.  Due to the short lead-
      time, the Company does not include orders from RTI's customers in its
      published backlog figures.

      RTIE is a wholly owned subsidiary of the Company that is under the
      management direction of RTI.  This subsidiary was established in
      February, 1997, when the Company acquired the assets and certain
      liabilities of the Rodan Division of Ketema, Inc.  RTIE manufactures



                                        -9

      and sells thermistors and thermistor assemblies, which are solid state
      devices that produce precise changes in electrical resistance as a TM 
      function of any change in absolute body temperature.  RTIE's Surge-Gard
      product line, an inrush current limiting device used primarily in
      computer power supplies, represents approximately 50% of RTIE's sales. 
      The balance of sales represent various industrial, commercial and
      military sales for thermistor and thermistor assemblies to domestic and
      international markets.  Sales for thermistor and thermistor related
      assemblies represented approximately 17% of 1997 annual net sales for the
      Company's microminiature and plastics business.

      RTIE's principal raw materials are various metal oxide powders and silver
      paste, for which there are multiple sources of supply.

      Certain information regarding the acquisition of the RTIE business is set
      forth in note 2 to the Company's Consolidated Financial Statements. 

      Marketing and Competition.  RTI sells its hearing instrument components
      directly to domestic hearing instrument manufacturers through an internal
      sales force.  Sales of molded plastic parts to industries other than
      hearing instrument manufacturers are made through a combination of
      independent sales representatives and internal sales force.  In recent
      years, three companies have accounted for a substantial portion of the
      U.S. hearing instrument sales.  In 1997, these three customers accounted
      for approximately 25% of RTI's net sales.

      Internationally, sales representatives employed by Resistance Technology,
      GmbH ("RT, GmbH"), a German company 80% of whose capital stock is owned
      by RTI, solicit sales from European hearing instrument manufacturers and
      facilitate sales with Japanese and Australian hearing instrument markets.

      RTI believes that it is the largest supplier worldwide of microminiature
      electromechanical components to hearing instrument manufacturers and that
      its full product line and automated manufacturing process allow it to
      compete effectively with other manufacturers with respect to these
      products.

      In the market of hybrid amplifiers and molded plastic faceplates, RTI's
      primary competition is from the hearing instrument manufacturers
      themselves.  The hearing instrument manufacturers produce a substantial
      portion of their internal needs for these components.

      RTIE sells its thermistors and thermistor assemplies through a
      combination of independent sales representatives and internal sales
      force.

      RTIE has many competitors, both domestic and foreign, that sell various
      thermistor and thermistor assemblies and some of these competitors are
      larger and have greater financial resources.  In addition, RTIE holds a
      relatively small market share in the world-market of thermistor products.




                                        -10-

      ITEM 1.  Business - (Continued)

      Operations.  RTI currently employs 267 people, of whom 28 are executive
      and administrative personnel and 239 are sales, engineering and
      operations personnel at RTI's two facilities near Minneapolis, Minnesota. 
      A small number of sales personnel employed by RT, GmbH are located in
      Munich, Germany.

      At its facilities in Anaheim, California, RTIE employs 72 full-time
      employees, of which 21 are salaried and 51 hourly.

      As a consumer products manufacturer, RTI is subject to claims for
      personal injuries allegedly caused by its products.  While the Company
      maintains what it believes to be adequate insurance coverage, it retains
      a self-insured deductible under its liability insurance policies.

      Research and Development.  RTI and RTIE conduct research and development
      activities primarily to improve its existing products and technology. 
      Their research and development expenditures were $1,154,000, $1,083,000
      and $1,106,000 in 1997, 1996 and 1995, respectively.  

      RTI owns a number of United States patents which cover a number of
      product designs and processes.  The Company believes that, although these
      patents collectively add some value to the Company, no one patent or
      group of patents is of material importance to its business as a whole.


                   TIRE HOLDERS, LIFTS AND RELATED PRODUCTS

      Deuer Manufacturing, Inc. ("Deuer"), a wholly-owned subsidiary,
      manufactures tire holders, lifts, and other related products based
      principally on cable winch designs.

      Products and Industries Served.  Deuer is a leading supplier of spare
      tire holders used on light trucks and mini-vans manufactured by the major
      domestic automotive manufacturers.  Deuer's spare tire holder holds the
      spare tire to the underbody of the vehicle by means of a steel cable
      running to the underside of the vehicle's frame.  One end of the steel
      cable is attached to a hub placed through the center of the spare tire's
      rim, and the other end is attached to a hand-operated winch mounted at an
      accessible location on the vehicle.  The spare tire holding system
      permits the spare tire to be stored in a remote location and to be easily
      removed without the need to crawl under the vehicle.  During 1997, sales
      of spare tire holders accounted for approximately 87% of Deuer's net
      sales.

      Deuer also produces a variety of hand-operated hoist-pullers, using
      primarily a cable winch design, sold under the Mini-MuleTM brand name. 
      These products, which retail from $30 to $60, are portable hand winches
      designed for a variety of uses, such as pulling objects, rigging loads
      and installing fencing.  Deuer furnishes these hoist-pullers in a variety
      of sizes and capacities.  It also manufactures accessories for use with
      the products, including slings, clamps, blocks and gantries.




                                       -11-


      ITEM 1.  Business - (Continued)

      Deuer manufactures products on a short lead time basis in order to
      furnish "just-in-time" delivery to its automotive customers.  Because of
      the substantial variances between manufacturers' estimated and actual
      requirements, the Company does not include blanket order commitments from
      automotive manufacturers in its published backlog figures.
      Marketing and Competition.  Deuer sells its spare tire holders directly
      to domestic automotive manufacturers.  Deuer's spare tire holders are
      sold to Chrysler Corporation, General Motors, Toyota, Ford Motor Company,
      New United Motor Manufacturing, Inc. and Mobile Home Manufactures.  The
      design and quality of Deuer's spare tire holders have been recognized by
      its major customers.  The Company sells its hoist-pullers through a
      network of distributors as well as directly to some large retail outlets.

      Deuer is one of several suppliers of spare tire holders to domestic mini-
      van and light truck manufacturers.  Some of Deuer's competitors are
      larger and have greater financial resources.  The Company believes that
      price and Deuer's reputation for quality and reliability of delivery are
      important factors in competition for business from the domestic
      automotive manufacturers.  A number of other domestic and foreign
      manufacturers sell hoist-pullers to the retail market, and Deuer's share
      of this market is relatively small.

      Operations.  At its Dayton facility, Deuer employs 18 executive and
      administrative personnel and approximately 141 manufacturing employees. 
      Some of the manufacturing employees are represented by a union, and the
      current union contract expires in October 1998.  Deuer considers its
      relations with its employees to be satisfactory.

      Deuer's principal raw material is coil rolled steel and metal cable which
      is widely available.  Deuer also conducts research and development
      activities which consist of the development of new products and
      technology and the modification of existing products.  Deuer's research
      and development expenditures aggregated $253,000, $265,000 and $171,000
      in 1997, 1996 and 1995, respectively.

      As a consumer products manufacturer, Deuer is subject to claims for
      personal injuries allegedly caused by its products.  While the Company
      maintains what it believes to be adequate insurance coverage, it retains
      a self-insured deductible under its liability insurance policies.

      ITEM 2.  Properties

      The Company owns the manufacturing facility in Dresher, Pennsylvania in
      which its standard-engineered systems, burners and combustion control
      equipment are produced.  The Company's headquarters are



                                       -12-

      ITEM 2.  Properties  - (Continued)

      located on the same 17 acre site.  The 136,000 square foot Dresher
      facility has more space than is currently needed for the Company's
      operations and headquarters, and the Company is seeking to lease all or a
      portion of the excess office and manufacturing space to a suitable
      tenant.  This property is subject to a mortgage.  See note 8 of the
      Company's consolidated financial statements.

      RTI leases a 47,000 sq. ft. manufacturing facility in Arden Hills,
      Minnesota from a partnership consisting of two officers of RTI, one of
      whom, Mark S. Gorder, serves on the Company's Board of Directors.  At
      this facility, RTI manufactures all of its products other than plastic
      component parts.  The lease expires in October, 2003, with two successive 
      5-year renewal options.  In addition, RTI owns, subject to a mortgage
      from a third party lender, a 20,000 sq. ft. building in Vadnais Heights,
      Minnesota at which RTI produces plastic component parts.  (See notes 8,
      17, and 18 of the Company's consolidated financial statements.)

      RTIE leases three buildings in an industrial park in Anaheim, California.
      These buildings constitute the manufacturing facilities and offices of
      RTIE and consist of a total of 38,400 square feet.  The lease on one
      property, consisting of 12,000 square feet, is based on a month-to-month
      lease.  The other two leases expire April 30, 1999.

      Deuer owns its 82,000 square foot manufacturing facility located on 6.5
      acres in Dayton, Ohio, where it produces its spare tire holders and
      hoist-pullers.  The facility is furnished with a variety of steel
      fabrication equipment, including punch presses, drill presses, screw
      machines, grinders, borers, lathes and welders.  

      Deuer owns and leases an additional 11,000 square feet of excess space to
      several tenants, principally for storage and office use.  This and the
      above designated Deuer property are subject to a mortgage.  See note 8 of
      the Company's consolidated financial statements.

      Selas S.A. owns the land and building which houses its engineering, sales
      and administrative operations in Gennevilliers, France (outside of
      Paris).  The land under the building is owned by Selas S.A. and the
      property outside of the building is jointly owned by the building owners
      in the office complex.  The building has 22,000 square feet.  This
      property is subject to a mortgage.  See note 8 of the Company's
      consolidated financial statements.

      Selas Italiana S.r.L., the Company's Italian subsidiary, Selas
      Waermetechnik GmbH, the Company's German subsidiary and Selas UK, the
      Company's United Kingdom subsidiary, lease facilities in Milan, Italy,
      Ratingen, Germany, and Derbyshire, UK, respectively.  The Milan and
      Derbyshire facilities are comprised of engineering, sales and
      administrative offices with the leases expiring in October 2001 and a
      month to month basis, respectively.  The Ratingen facilities are used for
      sales, administrative and engineering activities and assembly of small
      furnaces and furnace components, with the lease expiring





                                      -13-

      ITEM 2.  Properties - (Continued)

      February, 2000.  Resistance Technology, GmbH, leases office space in
      Munich, Germany, on a year-to-year basis, for its sales personnel. 
      Management expects to be able to extend these leases.

      The recently acquired CFR, leases facilities in Paris and Maisse, both in
      France.  The facilities in Paris house engineering, sales and
      administrative operations and has 10,000 square feet.  The Maisse
      facility is 40,000 square feet and houses CFR's fabrication and assembly
      operations.  The Paris lease expires January, 2000 and the Maisse lease
      expires February, 2001, each with two three-year optional renewal terms.

      ITEM 3.  Legal Proceedings

      The Company is a defendant along with a number of other parties in
      approximately 215 lawsuits as of December 31, 1997 (155 as of December
      31, 1996) alleging that plaintiffs have or may have contracted asbestos-
      related diseases as a result of exposure to asbestos products or
      equipment containing asbestos sold by one or more named defendants.  Due
      to the noninformative nature of the complaints, the Company does not know
      whether any of the complaints state valid claims against the Company. 
      The Company is also one of approximately 500 defendants in a class action
      on behalf of approximately 2,700 present or former employees of a Texas
      steel mill alleging that products supplied by the defendants created a
      poisonous atmosphere that caused unspecified physical harm.  These cases
      are being defended by one or more of the Company's  insurance carriers
      presently known to be "at risk."  Through October 1993, the legal costs
      of defense of the asbestos and steel mill cases were shared among the
      insurance carriers (92%) and the Company (8%).  The lead insurance
      carrier settled a number of the cases in 1993 and requested that the
      Company pay a portion of the settlement amount.  The Company declined to
      do so because no such payment is required by the express terms of the
      policies.  The lead carrier then purported in October 1993 to abrogate
      the arrangement under which the defense costs had been shared, and the
      Company responded by tendering all of the cases to the lead carrier and
      demanding that the lead carrier honor its obligations under its policies
      to pay 100% of the costs of defense and 100% of all settlements and
      judgments up to the policy limits.  The lead carrier has settled
      approximately 11 and 17  claims in 1997 and 1996, respectively, with no
      request for the Company to participate in any settlement.   The lead
      carrier has informed the Company that the primary policy for the period
      July 1, 1972 - July 1, 1975 has been exhausted and that the lead carrier
      will no longer provide a defense under that policy.  The Company has
      requested that the lead carrier substantiate this situation.  The Company
      has contacted representatives of the Company's excess insurance carrier
      for some or all of this period.  The Company does not believe that the
      asserted exhaustion of the primary insurance coverage for this period
      will have a material adverse effect on the financial condition,
      liquidity, or results of operations of the Company.  Management is of the
      opinion that the number of insurance carriers involved in the defense of
      the suits and the significant number of policy years and policy limits to
      which these insurance carriers are insuring the Company make the ultimate
      disposition of these lawsuits not material to the Company's consolidated
      financial position or results of operations.



                                       -14-

      ITEM 3.  Legal Proceedings - Continued

      In 1995, a dispute which was submitted to arbitration, arose under a
      contract between a customer and a subsidiary of the Company. Substantial
      claims were asserted against the subsidiary Company under the terms of
      the contract.  The Company recorded revenue of approximately $1,400,000
      in 1994 and has an uncollected receivable of $140,000.  The Company
      believes that the disposition of this claim will not materially affect
      the Company's consolidated financial position or results of operations.


      ITEM 4.  Submission of Matters to a Vote of Security Holders

                None


      ITEM 4A.  Executive Officers of the Company

      The names, ages and offices (as of February 27, 1998) of the Company's
      officers were as follows:

           Name                 Age            Office

      Stephen F. Ryan           62           President and Chief
                                             Executive Officer

      Christian Bailliart       49           Vice President and Chairman-
                                             Director Generale of Selas S.A.

      Frank J. Boyle            68           Vice President, Sales and
                                             Engineering

      James C. Deuer            69           Vice President and President
                                             of Deuer Manufacturing, Inc.

      Mark S. Gorder            51           Vice President and President of
                                             Resistance Technology, Inc.

      Robert W. Ross            49           Vice President, Chief Financial
                                             Officer, Treasurer and Secretary


      Mr. Ryan joined the Company in May 1988, as President and Chief Executive
      Officer.  Mr. Bailliart joined Selas S.A. in 1974 and in January 1, 1993
      was promoted to Vice President of the Company and Chairman-Director
      Generale of Selas S.A.  In 1989 he was promoted to Chairman-Director
      Generale of Selas S.A. from Vice President,  
      Treasurer.  Mr. Boyle joined the Company in 1961 and has held various
      management positions in research and development, applications
      engineering and sales.  He was appointed Vice President-Sales and



                                       -15-


      ITEM 4A.  Executive Officers of the Company - (Continued)

      Engineering in July 1988.  Mr. Deuer joined the Company as President of
      Deuer Manufacturing when it was acquired in May, 1986 and was promoted to
      Vice President of the Company and President of Deuer Manufacturing in
      December, 1990.  From 1965 to 1986 he was President of Deuer
      Manufacturing.  Mr. Gorder joined the Company October 20, 1993 when
      Resistance Technology, Inc. (RTI) was acquired.  Prior to the
      acquisition, Mr. Gorder was President and one of the founders of RTI,
      which began operations in 1977.  Mr. Gorder was promoted to Vice
      President of the Company and elected to the Board of Directors in 1996. 
      Mr. Ross joined the Company in October 1990 as Vice President -
      Treasurer, was appointed Chief Financial Officer January 1, 1994 and
      elected Secretary February 21, 1995.  From 1981 to 1990 he was with ALPO
      Pet Foods, a division of Grand Metropolitan PLC, as a Controller from
      1981 and as Vice President, Controller from 1988.  



                                        -16-

                                     PART II

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

      The Company's common shares are listed on the American Stock Exchange. 
      The high and low sale prices during each quarterly period during the 
      past two years were as follows:


      MARKET AND DIVIDEND INFORMATION
                                          1997                  1996      
                                         Market                Market
                                      Price Range           Price Range   
      QUARTER                       HIGH     LOW          HIGH      LOW
      First   . . . . . . . . . . . 13-1/16  10            7-13/16   5-7/8
      Second  . . . . . . . . . . . 12-5/8    9-13/16      7-11/16   6-15/16
      Third   . . . . . . . . . . . 13-1/2   11-1/4        9-9/16    6-11/16
      Fourth  . . . . . . . . . . . 13-3/16   8-15/16     11-1/2     9

      At February 12, 1998, the Company had 499 shareholders of record.  

                                     1997        1996        1995 
      Dividends per share:
        First Quarter               $.043        $.04        $.037
        Second Quarter               .045         .04         .037
        Third Quarter                .045         .04         .04
        Fourth Quarter               .045         .043        .04

      The payment of any future dividends is subject to the discretion of the
      Board of Directors and is dependent on a number of factors, including the
      Company's capital requirements, financial condition, financial covenants
      and cash availability.

      Note:  All information above has been adjusted to give retroactive
             effect to a 3 for 2 stock split in June 1997.  See note 14 to
             the Consolidated Financial Statements.




                                       -17-

      ITEM 6. Selected Financial Data

      Certain selected financial data is incorporated by reference to "Selas
      Corporation of America Five-Year Summary of Operations", page 4, and
      "Other Financial Highlights" (excluding graphs), page 5, of the Company's
      1997 annual report to shareholders.

      ITEM 7.  Management's Discussion and Analysis of Financial
               Condition and Results of Operations             

      Management's Discussion and Analysis is incorporated by reference to page
      6 through 10 of the Company's 1997 annual report to shareholders.

      Forward-Looking and Cautionary Statements.  The Company and its
      representatives may from time to time make written or oral forward-
      looking statements, including those contained in the foregoing
      Management's Discussion and Analysis.  In order to take advantage of the
      "safe harbor" provisions of the Private Securities Litigation Reform Act
      of 1995, the Company is hereby identifying certain important factors
      which could cause the Company's actual results, performance or
      achievement to differ materially from those that may be contained in or
      implied by any forward-looking statement made by or on behalf of the
      Company.  All such forward-looking statements are qualified by reference
      to the following cautionary statements.

      The Company's heat processing business, which has contributed
      substantially to the Company's consolidated results, is affected by,
      among other things, the capital expenditures of steel and glass
      manufacturers and processors, industries that are highly cyclical in
      nature.  It is difficult to predict demand for the Company's heat
      processing products, and the financial results of the Company's heat
      processing business have fluctuated, and may continue to fluctuate,
      materially from year to year.

      Several of the Company's competitors have been able to offer more
      standardized and less technologically advanced heat processing systems
      and equipment at lower prices.  Although the Company believes that it has
      produced higher quality systems and equipment than these lower priced
      competitors, in certain instances price competition has had an adverse
      effect on the Company's sales and margins.  There can be no assurance
      that the Company will be able to maintain or enhance its technical
      capabilities or compete successfully with its existing and future
      competitors.

      There can be no assurance that the Company will remain a competitive
      supplier to the automobile and truck industry in view of, among other
      things, the general trend in recent years in that industry toward a
      reduction in the number of third-party suppliers and toward more
      integrated component suppliers.

      The Company's microminiature electromechanical business has benefitted
      from its ability to automate and keep costs and prices low.  There can be
      no assurance that the Company will be able to continue to achieve such
      automation and its historical profit margins particularly as the
      technology of hearing instruments changes and as the business expands
      into other product lines.






                                       -18-

      ITEM 7.  Management's Discussion and Analysis of Financial
               Condition and Results of Operations (Continued) 


      The Company has international operations, as a result, the Company's
      performance may be materially affected by foreign economies and currency
      movements.

      The Company cautions that the foregoing list of important factors is not
      intended to be, and is not, exhaustive.  The Company does not undertake
      to update any forward-looking statement that may be made from time to
      time by or on behalf of the Company.


      ITEM 7A.  Quantitative and Qualitative Disclosures About Market Risk

      Non-applicable.


      ITEM 8.  Financial Statements and Supplementary Data

      The Company's consolidated balance sheets as of December 31, 1997 and
      1996, and the related consolidated statements of operations, cash flows
      and shareholders' equity for each of the three years in the period ended
      December 31, 1997, and the report of independent auditors thereon and the
      quarterly results of operations (unaudited) for the two year period ended
      December 31, 1997 are incorporated by reference to pages  11 to 35 of the
      Company's 1997 annual report to shareholders.


      ITEM 9.  Changes in and Disagreements With Accountants on
               Accounting and Financial Disclosure             

               None





                                        -19-
                                      PART III



      The information called for by Items 10, 11, 12 and 13 (except the
      information concerning executive officers included in Item 4A) is
      incorporated by reference to the Company's definitive proxy statement
      relating to its 1998 Annual Meeting of Shareholders which the Company
      filed on March 20, 1998.  However, the portions of such proxy statement
      constituting the report of the Compensation Committee of the Board of
      Directors and the graph showing performance of the Company's common
      shares and certain share indices shall not be deemed to be incorporated
      herein or filed for purposes of the Securities Exchange Act of 1934.





                                       -20-


                                     PART IV

      ITEM 14.  Exhibits, Financial Statement Schedules and Reports on
                Form 8-K                                               

                (a)  The following documents are filed as a part of this
      report:

      1.   Financial   Statements  -   The  Company's   consolidated  financial
           statements,  as described  below, are  incorporated by  reference to
           pages  11  through  35  of  the  Company's  1997  annual  report  to
           shareholders.

           Consolidated Balance Sheets at December 31, 1997 and 1996.

           Consolidated Statements  of Operations for the  years ended December
           31, 1997, 1996 and 1995.

           Consolidated Statements of Cash  Flows for the years  ended December
           31, 1997, 1996 and 1995.

           Consolidated Statements of Shareholders'  Equity for the years ended
           December 31, 1997, 1996 and 1995.

           Notes to Consolidated Financial Statements.

           Report of Independent Auditors.

           Financial  statements for  50%  or less  owned  companies which  are
           accounted for by the equity method have been omitted because they do
           not,  considered   individually  or  in  the  aggregate,  constitute
           significant subsidiaries.

      2.   Financial Statement Schedules
                                                             Page
           Report of Independent Auditors on the 
             Consolidated Financial Statement Schedules      24

           Schedule I - Condensed Financial Information
             of Registrant (Parent only)                     25,26,27,28

           Schedule II - Valuation and Qualifying
             Accounts                                        29, 30
           All other schedules are omitted because they are
           not applicable, or because the required information
           is included in the consolidated financial statements or notes
           thereto.





                                      -21-

      ITEM 14.  Exhibits, Financial Statement Schedules and Reports on
                Form 8-K - (Continued)                                 

      3.   Exhibits

      3A.  The Company's Articles of Incorporation as amended May 18,
           1984 and April 25, 1991.  Exhibit 3A to the Company's report on Form
           10-K for the  year ended December  31, 1984 and  Exhibit 3A1 to  the
           Company's report on Form 10-K for  the year ended December 31,  1991
           are hereby incorporated herein by reference.

      3B.  The  Company's  By-Laws as  amended.   Exhibit  3B to  the Company's
           Report on Form 10-K for  the year ended December 31, 1995  is hereby
           incorporated by reference.

      4A.  Credit  Agreement dated October 20, 1993 by and among First Fidelity
           Bank, N.A., Pennsylvania, the Company, RTI and Deuer.  Exhibit 4A to
           the Company's report  on Form 10-K  for the year ended  December 31,
           1993 is hereby incorporated by reference.

      4B.  Term Note, dated October 20, 1993,  of the Company in favor of First
           Fidelity  Bank, N.A.,  Pennsylvania.   Exhibit  4B to  the Company's
           report on Form 8-K filed on November 3, 1993  is hereby incorporated
           by reference.

      4C.  Amended Credit Agreement dated July 21, 1995 which amends the Credit
           Agreement dated October 20,  1993 by and among First  Fidelity Bank,
           N.A., Pennsylvania, the Company, RTI  and Deuer.  Exhibit 4C to  the
           Company's report  on Form 10-K for the  year ended December 31, 1995
           is hereby incorporated by reference.

      4D.  Amended  and Restated Revolving Credit Note, dated July 21, 1995, of
           the  Company in  favor of  First Fidelity  Bank, N.A.  Pennsylvania.
           Exhibit 4D to the Company's  report on Form 10-K for the  year ended
           December 31, 1995 is hereby incorporated by reference.

      4E.  Amended  and Restated Revolving Credit Note, dated July 21, 1995, of
           RTI in favor of First Fidelity Bank, N.A., Pennsylvania.  Exhibit 4E
           to the Company's report on Form 10-K for the year ended December 31,
           1995 is hereby incorporated by reference.

      4F.  Amended  and Restated Revolving Credit Note, dated July 21, 1995, of
           Deuer  in favor of First Fidelity Bank, N.A., Pennsylvania.  Exhibit
           4F to the Company's report on Form 10-K for the  year ended December
           31, 1995 is hereby incorporated by reference.

      4G.  Amended Credit Agreement  dated February 21,  1997 which amends  the
           Credit  Agreement dated  October  20, 1993  and  the July  21,  1995
           amendment  with  First  Union/First  Fidelity,   N.A.  Pennsylvania.
           Exhibit  4G to the Company's report on  Form 10-K for the year ended
           December 31, 1996 is hereby incorporated by reference.
                                      -22-

      ITEM 14.  Exhibits, Financial Statement Schedules and Reports on
                Form 8-K - (Continued)                                 

      4H.  Guaranty  dated  February, 1998  of the  Company  in favor  of First
           Union/First Fidelity, N.A. Pennsylvania.

      10A. Form of termination agreement between the Company  and Messrs. Ryan,
           Boyle, Deuer, Gorder and Ross.  

      10B. 1985 Stock  Option Plan, as  amended.  Exhibit 10C  to the Company's
           Registration Statement on  Form S-2 filed on June  15, 1990 (No. 33-
           35443) is hereby incorporated herein by reference.

      10C. Form  of Stock Option Agreements granted under the 1985 Stock Option
           Plan.  Exhibit 10D  to the Company's Registration Statement  on Form
           S-2 filed on  June 15,  1990 (No. 33-35443)  is hereby  incorporated
           herein by reference.

      10D. Form of Amendments to Stock Option Agreements granted under the 1985
           Stock  Option  Plan.   Exhibit  10D  to  the Company's  Registration
           Statement  on Form  S-2  filed on  June 15,  1990 (No.  33-35443) is
           hereby incorporated herein by reference.

      10E. Amended and Restated 1994 Stock Option Plan. 

      10F. Form  of Stock  Option  Agreements  granted  under the  Amended  and
           Restated  1994  Stock Option  Plan.   Exhibit  10F to  the Company's
           report on Form 10-K for  the year ended December 31, 1995  is hereby
           incorporated by reference.

      10G. Agreement  between  Selas  S.A.,   a  wholly-owned  subsidiary,  and
           Europarc  Gennevilliers dated May 16,  1991 relating to the purchase
           of  land and building to house its operations in France, accompanied
           by an English translation.   Exhibit 10G to the Company's  report on
           Form  10-K  for  the   year  ended  December  31,  1995   is  hereby
           incorporated by reference.

      10H. Supplemental Retirement Plan (amended and restated effective January
           1, 1995).  Exhibit 10I to the Company's  report on Form 10-K for the
           year ended December 31, 1995 is hereby incorporated by reference.

      10I. Management  Employment  Agreement  dated  October 20,  1993  between
           Resistance Technology, Inc. and Mark S. Gorder.  Exhibit  10J to the
           Company's report on  Form 10-K for the year  ended December 31, 1995
           is hereby incorporated by reference.

      10J. Amended  and Restated  Office/Warehouse  Lease,  between  Resistance
           Technology,  Inc. and  Arden Partners  I, L.L.P.  (of which  Mark S.
           Gorder  is  one of  the principal  owners)  dated November  1, 1996.
           Exhibit 10J to the Company's report on Form 10-K for  the year ended
           December 31, 1996 is hereby incorporated by reference.





                                      -23-


      ITEM 14.  Exhibits, Financial Statement Schedules and Reports on
                Form 8-K - (Continued)                                 

      13.  "Selas  Corporation  of  America  Five-Year Summary  of  Operations"
           contained  on  page  4  of  the  Company's  1997  annual  report  to
           shareholders;  "Other  Financial   Highlights"  (excluding   graphs)
           contained  on  page  5  of  the  Company's  1997  annual  report  to
           shareholders;  "Management's  Discussion and  Analysis  of Financial
           Condition  and Results of Operations" contained on pages 6-10 of the
           Company's  1997 annual  report  to shareholders;  and the  Company's
           consolidated   financial   statements,  including   the   "Notes  to
           Consolidated  Financial Statements"  and the "Report  of Independent
           Auditors" contained  on  pages 11-35  of the  Company's 1997  annual
           report to shareholders.

      21.  List of significant subsidiaries of the Company.  

      23.  Consent of Independent Auditors.

      24.  Powers of Attorney.

      99.  Portions  of the Company's  definitive proxy statement  for its 1998
           Annual Meeting of Shareholders responsive to Items 10, 11, 12 and 13
           in Part  III hereof, which was  filed on March 20,  1998, are hereby
           incorporated herein  by reference.   However,  the portions  of such
           proxy  statement  constituting   the  report  of   the  Compensation
           Committee   of  the  Board  of  Directors   and  the  graph  showing
           performance of the Company's common shares and certain share indices
           shall not  be deemed to be incorporated herein or filed for purposes
           of the Securities Exchange Act of 1934.

           (b) Reports on Form  8-K - There were  no reports on Form  8-K filed
      during the three months ended December 31, 1997.





                                      -24-



         REPORT OF INDEPENDENT AUDITORS ON FINANCIAL STATEMENT SCHEDULES







      The Board of Directors and Shareholders
      Selas Corporation of America:

      Under date of February 26, 1998, we reported  on the consolidated balance
      sheets  of Selas Corporation of  America and subsidiaries  as of December
      31, 1997 and 1996, and the related consolidated statements of operations,
      shareholders' equity, and cash flows for  each of the years in the three-
      year period  ended December  31, 1997,  as contained  in the  1997 annual
      report to shareholders.  These consolidated financial statements and  our
      reports thereon are  incorporated by  reference in the  annual report  on
      Form  10-K for  the  year 1997.   In  connection with  our audits  of the
      aforementioned  consolidated  financial statements,  we also  audited the
      related financial statement schedules as listed in the accompanying index
      (Item 14).  These financial statement schedules are the responsibility of
      the Company's management.  Our responsibility is to express an opinion on
      these financial statement schedules based on our audits.

      In our opinion,  such financial statement  schedules, when considered  in
      relation to the basic consolidated financial statements taken as a whole,
      present  fairly in  all  material  respects,  the information  set  forth
      herein.




                                               /s/ KPMG Peat Marwick LLP



      Philadelphia, Pennsylvania
      February 26, 1998 




                                         -25-
                                                             SCHEDULE I



                SELAS CORPORATION OF AMERICA AND SUBSIDIARY COMPANIES

                    Condensed Financial Information of Registrant
                                   Balance Sheets
                             December 31, 1997 and 1996


      ASSETS                                        1997            1996   

      Current assets:

        Cash and cash equivalents                $   478,119     $ 2,945,610

        Accounts receivable (including   
          $5,266,063 and $6,059,682 due from
          subsidiaries in 1997 and 1996,
          respectively, eliminated in con-
          solidation), less allowance for doubt-
          ful accounts of $10,000 in both years   11,292,250      11,105,398

        Inventories, at cost                       3,775,592       3,426,726

        Prepaid expenses and other current 
          assets                                   1,993,501       1,396,967

              Total current assets                17,539,462      18,874,701

                                                  
      Investment in wholly-owned subsidiaries     50,887,202      42,734,949

      Property and equipment, at cost              5,871,795       5,806,599

      Less:  accumulated depreciation             (4,532,232)     (4,485,172)

                                                   1,339,563       1,321,427
      Other assets and investment in
        unconsolidated affiliate                   1,072,562       1,278,987

               Total Assets                      $70,838,789     $64,210,064
                                                 ===========     ===========
                                         -26-

                                                             SCHEDULE I


               SELAS CORPORATION OF AMERICA AND SUBSIDIARY COMPANIES

                    Condensed Financial Information of Registrant
                                   Balance Sheets
                              December 31, 1997 and 1996


      LIABILITIES AND SHAREHOLDERS' EQUITY          1997            1996   

      Current liabilities:

        Notes payable and current maturities
          of long-term debt                      $ 2,350,000     $ 1,938,000

        Accounts payable (including $13,237,300
          and $12,251,876 due to subsidiaries
          in 1997 and 1996, respectively,
          eliminated in consolidation)            15,721,628      13,894,155

        Accrued expenses                           4,088,328       2,816,398

            Total current liabilities             22,159,956      18,648,553
         
      Long-term debt                               4,520,024       3,953,669

      Other postretirement benefit obligations     3,471,378       3,517,429

      Deferred income taxes                          230,945         223,877

      Pension plan obligation                         56,973         225,060

      Contingencies and commitments

      Shareholders' equity

      Common stock                                 5,589,324       5,553,624

      Retained earnings and other equity          35,192,126      32,469,789

      Less:  363,564 common shares held in 
             treasury, at cost                      (381,937)       (381,937)
                                     
           Total shareholders' equity             
                                                  40,399,513      37,641,476
           Total Liabilities and
           Shareholders' Equity                  $70,838,789     $64,210,064
                                                 ===========     ===========


          See accompanying notes to the consolidated financial statements.




                                           
                                          -27-

                                                                 SCHEDULE I


                 SELAS CORPORATION OF AMERICA AND SUBSIDIARY COMPANIES
                      CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                                STATEMENTS OF OPERATIONS
                      YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995


                                           1997          1996          1995   


      Sales,  net                      $24,187,052   $20,792,859    $13,729,233

      Add back:  license fees and 
        corporate charges paid by 
        subsidiaries, eliminated in 
        consolidation                      618,366     1,512,699        720,192

                                        24,805,418    22,305,558     14,449,425

      Costs and expenses:

        Cost of goods sold              19,344,767    16,504,848      8,289,761

        Selling, general and adminis-
          trative expenses               4,458,784     3,894,184      3,467,857

        Rent and depreciation              375,156       398,207        337,845

                                        24,178,707    20,797,239     12,095,463

      Income before income taxes and
        equity in net income of 
        subsidiaries                       626,711     1,508,319      2,353,962

      Provision for income taxes            45,295       560,111        927,328


      Income before equity in net 
        income of subsidiaries             581,416       948,208      1,426,634

      Equity in net income of 
        subsidiaries                     3,805,793     3,181,987        873,390



            Net income                 $ 4,387,209   $ 4,130,195    $ 2,300,024
                                       ===========   ===========    ===========

             See accompanying notes to the consolidated financial statements.



                                           -28-
                                                                     SCHEDULE I

                  SELAS CORPORATION OF AMERICA AND SUBSIDIARY COMPANIES

                     CONDENSED FINANCIAL STATEMENTS OF THE REGISTRANT
                                 STATEMENTS OF CASH FLOWS
                       YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

                                         1997           1996            1995   

      OPERATING ACTIVITIES
        Net income                   $ 4,387,209    $ 4,130,195     $ 2,300,024
        Adjustments to reconcile net 
          income to net cash provided
          by operating activities:
            Depreciation and 
              amortization               251,733        227,377        201,806
            Other adjustments         (4,405,561)    (3,507,200)      (814,239)
            Net changes in operating 
              assets and liabilities   2,507,566      3,665,156     (1,495,030)
        
        Net cash provided by operating 
          activities                   2,740,947      4,515,528        192,561

      INVESTING ACTIVITIES
        Dividend from unconsolidated 
          affiliate                         --           16,742            --
        Acquisition of subsidiary 
          company                     (5,152,840)          --              --
        Purchase of property, plant and 
          equipment                     (259,787)      (257,767)      (217,158)
        Proceeds of sale from property, 
          plant and equipment               --             --              325


        Net cash (used) by investing 
          activities                  (5,412,627)      (241,025)      (216,833)

      FINANCING ACTIVITIES
        Proceeds from borrowings used 
          to acquire subsidiary        3,500,000           --              --
        Proceeds from exercise of 
          stock options                  155,518           --           28,281
          Payment of dividends          (929,684)      (847,712)      (795,812)
        Repayment of long term debt   (2,521,645)    (1,859,448)    (2,148,883)
        Net cash provided (used) by 
          financing activities           204,189     (2,707,160)    (2,916,414)
      Increase (decrease) in cash
        and cash equivalents          (2,467,491)     1,567,343     (2,940,686)
      Cash and cash equivalents, 
        beginning of year              2,945,610      1,378,267       4,318,953

      Cash and cash equivalents, end 
        of year                      $   478,119    $ 2,945,610     $ 1,378,267
                                     ===========    ===========     ===========
             See accompanying notes to the consolidated financial statements.


                                             -29-
                                                                SCHEDULE II

                SELAS CORPORATION OF AMERICA AND SUBSIDIARY COMPANIES
                                                                 
                           VALUATION AND QUALIFYING ACCOUNTS
                     Years Ended December 31, 1997, 1996 and 1995

                   Column A              Column B           Column C      
                                                           Additions      

                                         Balance at   Charged to
                                         Beginning    Costs and
                Classification           of Period    Expenses       Other  

      Year ended December 31, 1997:
        Reserve deducted in the balance
          sheet from the asset to which 
          they apply:
            Allowance for doubtful 
            accounts                     $  787,121   $   15,833 $  (93,153)(a)
                                         ==========   ==========   ==========
            Deferred tax asset valuation 
            allowance                    $2,315,437   $ (618,613)  $     --     
       
                                         ==========   ==========   ==========
        Reserve not shown elsewhere:
          Reserve for estimated future
            costs of service and 
            guarantees                   $1,725,690   $1,287,940 $ (118,806)(a)
                                         ==========   ==========   ==========

      Year ended December 31, 1996:
        Reserve deducted in the balance
          sheet from the asset to which 
          it applies:
            Allowance for doubtful 
            accounts                     $  792,249   $  196,952 $  (35,428)(a)
                                         ==========   ==========   ==========
            Deferred tax asset valuation
            allowance                    $2,685,305   $ (369,868)  $     --     
       
                                         ==========   ==========   ==========
        Reserve not shown elsewhere:
          Reserve for estimated future
            costs of service and
            guarantees                   $  844,787   $1,000,677 $  (19,130)(a)
                                         ==========   ==========   ==========
      Year ended December 31, 1995:
        Reserves deducted in the balance
          sheet from the asset to which 
          they apply:
            Allowance for doubtful 
            accounts                     $  513,045   $  284,475  $   36,136(a)
                                         ==========   ==========   ==========
            Deferred tax asset valuation 
            allowance                    $2,203,780   $  481,525   $     --     
       
                                          ==========  ==========   ==========  

        Reserve not shown elsewhere:
          Reserve for estimated future 
            costs of service and
            guarantees                   $1,156,296   $  119,903 $    58,13 (a)
                                         ==========   ==========   ==========
                                                                        
      (Continued)


                                           -30-
                                                                 SCHEDULE II 

                  SELAS CORPORATION OF AMERICA AND SUBSIDIARY COMPANIES
                             VALUATION AND QUALIFYING ACCOUNTS
                       Years Ended December 31, 1997, 1996 and 1995


                   Column A                         Column D        Column E

                                                                    Balance at
                                                                      End of
                Classification                      Deductions        Period  

      Year ended December 31, 1997:
        Reserve deducted in the balance sheet
          from the asset to which they apply:
            Allowance for doubtful accounts         $   28,445 (b)  $  681,356
                                                    ==========      ==========
            Deferred tax asset valuation allowance        --        $1,696,824
                                                    ==========      ==========
        Reserve not shown elsewhere:
          Reserve for estimated future costs
            of service and guarantees               $  189,531 (c)  $2,705,293
                                                    ==========      ==========

      Year ended December 31, 1996:
        Reserve deducted in the balance sheet
          from the asset to which it applies:
            Allowance for doubtful accounts         $  166,652 (b)  $  787,121
                                                    ==========      ==========
            Deferred tax asset valuation allowance  $     --        $2,315,437
                                                    ==========      ==========

        Reserve not shown elsewhere:
          Reserve for estimated future costs
            of service and guarantees               $  100,644 (c)  $1,725,690
                                                    ==========      ==========
      Year ended December 31, 1995:
        Reserves deducted in the balance sheet
          from the asset to which they apply:
            Allowance for doubtful accounts         $   41,407 (b)  $  792,249
                                                    ==========      ==========
            Deferred tax asset valuation allowance        --        $2,685,305
                                                    ==========      ==========
        Reserve not shown elsewhere:
          Reserve for estimated future costs of
            service and guarantees                  $  489,546 (c)  $  844,787
                                                    ==========      ==========




      (a)  Represents difference between translation rates of foreign currency
           at beginning and end of year and average rate during year.
      (b)  Uncollectible accounts charged off.
      (c)  "After job" costs charged to reserve.




                                   SIGNATURES

      Pursuant to the requirements of 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.
                                           SELAS CORPORATION OF AMERICA
                                                   (Registrant)

                                           By:                           
                                                Robert W. Ross
                                                 Vice President and
                                                  Chief Financial Officer
      Dated:  March 23, 1998

      Pursuant to the requirements of the Securities Exchange Act of 1934, this
      report has been signed below by the following persons (including a
      majority of members of the Board of Directors) on behalf of the
      registrant and in the capacities and on the dates indicated.


      *By:                                   /s/ Stephen F. Ryan           
      Stephen F. Ryan                      Stephen F. Ryan
      Attorney-In-Fact                     President, Chief Executive
      March 23, 1998                       Officer and Director
                                           March 23, 1998

                   *                                                       
      John H. Austin, Jr.                  Robert W. Ross 
      Director                             Vice President, Principal 
      March 23, 1998                       Financial and Accounting Officer
                                           March 23, 1998

                   *              
      Frederick L. Bissinger
      Director
      March 23, 1998


                   *              
      Roy C. Carriker
      Director
      March 23, 1998


                   *              
      Francis J. Dunleavy
      Director
      March 23, 1998 


                   *              
      Mark S. Gorder
      Director
      March 23, 1998


                   *              
      Ralph R. Whitney, Jr.
      Director
      March 23, 1998





                                       EXHIBIT INDEX


      EXHIBITS:
      4H.   Guaranty dated February, 1998 of the Company in favor of First
            Union/First Fidelity, N.A. Pennsylvania.

      10A.  Form of termination agreement between the Company and Messrs. Ryan,
            Boyle, Deuer, Gorder and Ross.  

      10E.  Amended and Restated 1994 Stock Option Plan.  

      13.   "Selas Corporation of America Five-Year Summary of Operations"
            contained on page 4 of the Company's 1997 annual report to
            shareholders; "Other Financial Highlights" (excluding graphs)
            contained on page 5 of the company's 1997 annual report to
            shareholders; "Management's Discussion and Analysis of Financial
            Condition and Results of Operations" contained on pages 6-10 of the
            Company's 1997 annual report to shareholders; and the Company's
            consolidated financial statements, including the "Notes to
            Consolidated Financial Statements" and the "Report of Independent
            Auditors" contained on pages 11-35 of the Company's 1997 annual
            report to shareholders.

      21.   List of significant subsidiaries of the Company.

      23.   Consent of Independent Auditors.

      24.   Powers of Attorney.















      March 23, 1998



      Securities and Exchange Commission
      Judiciary Plaza
      450 Fifth Street, N.W.
      Washington, D.C.  20549

      Reference:  Selas Corporation of America;
                  Commission File #1-5005

      Gentlemen:

      The Company's 1997 Annual Report on Form 10-K has been filed
      electronically, via Edgar.   

      The financial statements for the year ended December 31, 1997 do not
      reflect any changes in accounting principles or practices, or the method
      of applying any such principles or practices from the preceding year.

      Very truly yours,
      Robert W. Ross
      Vice President and CFO

      RWR:jc

      Enclosures

      cc:  American Stock Exchange
           Attention:  Ms. Kathleen M. Bradford
           86 Trinity Place
           New York, NY  10006
           (Three copies, one with Exhibits)
           Via Certified Mail 




    
                                     GUARANTY

                                                        February __, 1998



First Union National Bank
123 South Broad Street
Philadelphia, Pennsylvania  19109
(Hereinafter referred to as "Bank")


To  induce Bank  to make,  extend  or renew  loans, advances,  credit, or 
other financial  accommodations  to  or for  the  benefit  of  Selas  S.A.,
Parc  des Barbanniers,  3-5  Place   du  Village,  Gennevilliers    92632,
Paris,  France ("Borrower"),  and  in  consideration  of  loans,  advances,
credit,  or  other financial  accommodations made,  extended or renewed  to
or  for the  benefit of Borrower,  Selas Corporation  of  America,
Dreshertown  Road &  Limekiln  Pike, Dresher, Pennsylvania   19025,   U.S.A.
("Guarantor")   hereby  absolutely, irrevocably and unconditionally
guarantees to Bank and  its successors, assigns and  affiliates  the  timely 
payment  and  performance  of  all liabilities  and obligations of Borrower
to Bank including, without limitation, those liabilities and obligations set
forth in that certain letter dated February __, 1998 by Bank to  Borrower
pursuant to  which  Bank has  made  a loan  facility  available to Borrower
in the original principal amount of Frf. 15,000,000 and all extensions,
modifications and renewals thereof, including, without limitation all
principal,interest,  charges,  and  costs  and  expenses  incurred  
thereunder  (including attorneys'  fees and other costs  of collection
incurred,  regardless of whether suit is commenced) (collectively, the
"Guaranteed Obligations").

The  maximum  liability of  Guarantor with  respect  to the  aggregate
principal amount of the Guaranteed Obligations shall not  exceed Frf.
15,000,000, plus all interest,  charges, and costs and expenses incurred  by 
Bank with respect to the Guaranteed  Obligations.    For the  purpose  of
determining  the liability  of Guarantor, the calculation of  the aggregate
principal amount of  the Guaranteed Obligations  shall not  be reduced by
any collateral  held as  security for the Guaranteed Obligations or by
payments received or to be received with respect to the Guaranteed
Obligations from persons or entities other than Borrower.

Guarantor further covenants and agrees:

GUARANTOR'S LIABILITY.  This Guaranty is a continuing and unconditional
guaranty of payment and performance and not of collection.  This Guaranty
does not impose any obligation  on Bank to extend or continue to extend
credit or otherwise deal with Borrower  at any  subsequent  time.   This
Guaranty  shall  continue to  be effective or be reinstated,  as the case
may be,  if at any time any  payment of the Guaranteed Obligations is rescind
ed, avoided or for any other reason must be returned by Bank, and the
returned  payment shall remain payable as part  of the Guaranteed
Obligations, all  as though such payment had not  been made except to
the extent the provisions of this Guaranty give the Bank additional rights,
this Guaranty shall not be deemed to supersede or replace any  other
guarantees given to Bank by Guarantor; and the obligations guaranteed hereby
shall be in addition to any other obligations guaranteed by Guarantor
pursuant to any other agreement of guaranty given to Bank and other
guaranties of the Guaranteed Obligations.
TERMINATION  OF  GUARANTY.   Guarantor may  terminate  this Guaranty  by
written notice,  delivered personally to or  received by certified  or
registered United States Mail  by an  authorized officer of  the Bank at 
the address  for notices provided  herein. Such  termination shall  be
effective  with  respect  to Guaranteed  Obligations arising more  than 15
days  after the  date such written notice  is received  by said  Bank
officer. Guarantor  may not  terminate this Guaranty  as to  Guaranteed
Obligations (including  any subsequent  extensions, modifications or
compromises of the Guaranteed Obligations) then existing, or to
Guaranteed Obligations arising  subsequent to receipt by Bank of  said
notice if such  Guaranteed Obligations are a result  of Bank's obligation to
make advances pursuant to a  commitment entered into prior to expiration  of
the 15-day notice period, or are a result  of advances which are necessary
for Bank to protect its collateral or otherwise preserve its interests.

APPLICATION OF PAYMENTS, BANK LIEN AND SET-OFF.  Monies received from any 
source by  Bank for  application toward payment  of the  Guaranteed
Obligations  may be applied to such Guaranteed Obligations in any manner or
order deemed appropriate by Bank.  Except as prohibited by law, Guarantor
grants Bank a security interest in all  of Guarantor's accounts maintained
with Bank and any  of its affiliates (collectively, the "Accounts").   If a
Default (as defined herein)  occurs, Bank is authorized to exercise its right
of  set-off or to foreclose its lien against any  obligation of Bank to
Guarantor including, without limitation, all Accounts or any other debt of
any maturity, without notice.

CONSENT TO MODIFICATIONS.  Guarantor consents and agrees that Bank may from
time to  time, in  its sole  discretion, without  affecting, impairing, 
lessening or releasing the obligations of Guarantor hereunder: (a) extend or
modify the time, manner,  place or  terms of  payment or performance  and/or
otherwise  change or modify the credit terms of the  Guaranteed Obligations;
(b) increase, renew,  or enter into a novation of the Guaranteed Obligations,
(c) waive or consent to the departure from terms of the Guaranteed
Obligations; (d) permit any change in the business or other dealings and
relations of Borrower or any other guarantor with Bank;  (e) proceed against,
exchange,  release, realize upon,  or otherwise deal with in any manner any
collateral that is or may be held by  Bank in connection with  the Guaranteed
Obligations or any liabilities or obligations of Guarantor, and  (f)  proceed
against,  settle, release,  or  compromise with  Borrower, any insurance
carrier, or  any other person or  entity liable as to any  part of the
Guaranteed  Obligations, and/or  subordinate  the payment  of  any part  of
the Guaranteed Obligations to the payment of any other obligations, which may
at any time be due or owing to Bank; all in such manner and upon such terms
as Bank may deem appropriate, and  without notice to or further consent
from Guarantor.  No invalidity,  irregularity,  discharge  or 
unenforceability  of,  or  action  or omission  by Bank  relating to any 
part of,  the Guaranteed  Obligations or any security therefor shall affect
or impair this Guaranty.

WAIVERS  AND ACKNOWLEDGMENTS.    Guarantor  waives  and releases  the
following rights,  demands, and  defenses  Guarantor may  have with  respect 
to Bank  and collection  of  the  Guaranteed  Obligations: (a) promptness 
and  diligence  in collection of  any of  the  Guaranteed Obligations  from
Borrower  or any  other person liable thereon,  and in foreclosure of any 
security  interest and sale any property serving as collateral for  the
Guaranteed Obligations; (b) any  law or  statute that requires that Bank
make  demand upon, assert claims against, or collect  from  Borrower or 
other persons  or  entities, foreclose  any security interest,  sell
collateral,  exhaust  any remedies,  or  take any  other  action
against  Borrower or  other persons  or  entities prior  to making
demand upon, collecting  from  or  taking  action  against  Guarantor  with
respect  to  the Guaranteed Obligations, including any such rights Guarantor
might otherwise have had   under   Va.   Code   section 49-25   and    49-26,
et   seq.,   N.C.G.S. sectionsection 26-7,    et   seq.,   Tenn.   Code
Ann.   47-12-101,   O.C.G.A. section 10-7-24  (and any successor statute)
and any other  applicable law; (c) any law or statute that requires that
Borrower or any other person be joined in, notified  of  or made  part  of
any action  against  Guarantor,  (d) that  Bank preserve,  insure or  perfect
any  security interest  in collateral  or sell  or dispose of collateral in a
particular manner or at a particular time; (e) notice of  extensions,
modifications,  renewals,  or  novations   of  the  Guaranteed
Obligations,  of  any new  transactions  or  other relationships  between
Bank,Borrower  and/or any  guarantor, and of  changes in the  financial
condition of, ownership of,  or business  structure of  Borrower or  any
other guarantor:  (f) presentment, protest, notice of dishonor, notice of
default, demand for payment, notice  of intention to accelerate maturity,
notice of acceleration of maturity, notice of sale, and all other notices 
of any kind whatsoever: (g) the right  to assert against Bank any  defense
(legal or equitable), setoff,  counterclaim, or claim that Guarantor  may
have at any  time against Borrower or  any other party liable  to  Bank; 
(h)  all  defenses  relating  to  invalidity,  insufficiency,
unenforceability,  enforcement,  release or  impairment  of Bank's  lien  on
any collateral, of the Loan Documents, or of any  other guaranties held by
Bank; (i) any claim or defense that acceleration of maturity of the
Guaranteed Obligations is stayed against Guarantor because of the stay of
assertion  or of acceleration of  claims against  any other  person  or
entity  for any  reason including  the bankruptcy or  insolvency of that
person  or entity; and (j) the  benefit of any exemption claimed by 
Guarantor.   Guarantor acknowledges and represents  that it has relied upon 
its own due diligence in making its own independent appraisal of Borrower, 
Borrower's   business  affairs  and  financial   condition,  and  any
collateral;  Guarantor  will  continue to  be  responsible  for  making its 
own independent appraisal of  such matters; and  Guarantor has  not relied
upon  and will not  hereafter rely upon  Bank for  information regarding
Borrower or  any collateral.

FINANCIAL  CONDITION.  Guarantor warrants, represents and covenants to Bank
that on and after the date hereof: (a) the fair saleable value of Guarantor's
assets exceeds  its liabilities, Guarantor is  meeting its current
liabilities as they mature, and Guarantor is and shall remain solvent;
(b) all  financial statements of Guarantor furnished to Bank have been
prepared accordance with  GAAP; and all such  financial  statements  fairly
present  the  financial  condition  of  the Guarantor as of  the dates and
for  the periods covered (subject in  the case ointerim financial statements,
to normal recurring  year-end adjustments in  the absence of notes) and
discloses all  liabilities, as of such dates, of Guarantor which  are
required  to be  disclosed under  GAAP;  (c) since  the date  of such
financial statements,  there has not occurred  as of the date  hereof a
material adverse change in the  financial condition of Guarantor; (d) except
s disclosed in the Guarantor's  financial statements there are not now
pending any material court or  administrative proceedings or material
undischarged judgments against Guarantor, no material federal or state  tax
liens have been filed or threatened against  Guarantor, and Guarantor is not
currently in default or claimed default under any material agreement; and
(e) at such reasonable times as Bank requests, Guarantor will  furnish Bank 
with such  other financial information as  Bank may reasonably request.

INTEREST.   Regardless of  any other  provision of this  Guaranty or  other
Loan Documents,  if for any  reason the effective  interest on any  of the
Guaranteed Obligations should exceed  the maximum lawful  interest, the 
effective  interest shall be deemed  reduced to and shall  be such maximum
lawful  interest, and any sums of  interest which have  been collected  in 
excess of  such maximum  lawful interest shall  be applied as a  credit
against the unpaid  principal balance of the Guaranteed Obligations. DEFAULT.
If any of the following events occur, a default ("Default") under this
Guaranty  shall  exist: (a)  failure  of timely  payment or  performance  of
the Guaranteed Obligations or a default under any Loan Document; (b) a breach
of any agreement or representation contained or referred to in the Guaranty,
or any of the Loan Documents, or contained in any other contract or agreement
of Guarantor with Bank  or its affiliates, whether now existing or hereafter
arising; (c) the dissolution of,  termination of existence of,  loss of good
standing  status by, appointment of  a receiver for, assignment  for the
benefit of  creditors of, or the  commencement  of any  insolvency or 
bankruptcy  proceeding by  or against, Guarantor  or (d) the entry of any
material monetary judgment or the assessment against,  the filing of  any tax
lien  against, or  the issuance of  any writ of garnishment or attachment
against any property of or debts due Guarantor.If a  Default occurs, the
Guaranteed Obligations shall  be due  immediately and payable  without 
notice. Guarantor  shall  pay  interest  on  the  Guaranteed Obligations
from  such Default at the highest rate of interest charged on any of
the Guaranteed Obligations.

ATTORNEYS FEES AND OTHER COSTS OF COLLECTION.  Guarantor shall pay all of
Bank's reasonable  expenses  incurred  to enforce  or  collect  any  of the
Guaranteed Obligations, including, without limitation, reasonable
arbitration, paralegals', attorneys'  and  experts'  fees  and  expenses, 
whether  incurred  without  the commencement  of a suit, in any suit,
arbitration, or administrative proceeding,or in any appellate or bankruptcy
proceeding.

MISCELLANEOUS.   (a) ASSIGNMENT.  This  Guaranty and other  Loan Documents
shall inure to the  benefit of and be  binding upon the  parties and their
respective heirs, legal representatives, successors  and assigns.  Bank's
interests  in and rights  under this Guaranty  and other Loan Documents  are
freely assignable, in whole or in part, by Bank.   Any assignment shall not
release Guarantor from the Guaranteed Obligations.  (b)  APPLICABLE LAW;
CONFLICT BETWEEN DOCUMENTS.   This Guaranty shall be governed by and
construed under the laws of the state in which office  of Bank  first shown
above is  located without  regard to  that state's conflict of laws
principles.  If the terms of this Guaranty should conflict with
the terms  of any commitment  letter that  survives closing, the  terms of
this Guaranty  shall  control.   (c) JURISDICTION.   Guarantor irrevocably 
agrees to non-exclusive  personal jurisdiction  in the state  in which the
office of Bank first shown above  is located.   (d)  SEVERABILITY.   If any
provision of  this Guaranty or of  the other Loan  Documents shall be
prohibited or invalid  under applicable law,  such provision shall be
ineffective but only to  the extent of such prohibition  or  invalidity,
without  invalidating  the remainder  of  such provision  or the remaining
provisions of this  Guaranty or other document.  (e) NOTICES.   Any notices
to Guarantor  shall be sufficiently given,  if in writing and  mailed or
delivered  to the Guarantor's  address shown above  or such other address  as
provided hereunder,  and  to  Bank, if  in  writing  and mailed  or
delivered to Bank's office address shown above or such other address as Bank
may specify in  writing from  time to  time.  In  the event  that Guarantor
changes Guarantor's address at any time prior to the date the Guaranteed
Obligations are paid in full, Guarantor agrees to promptly give written
notice of said change of address by registered or  certified mail, return
receipt requested,  all charges prepaid.    (f) PLURAL;  CAPTIONS.   All 
references  in the  Loan  Documents to borrower, guarantor, person, document
or other nouns of reference mean  both the singular and plural form, as  the
case may be, and the term  "person" shall mean any individual, person or
entity.  The captions contained in  the Loan Documents are  inserted  for
convenience  only  and  shall  not  affect the  meaning  or interpretation
of  the Loan  Documents.   (g) BINDING CONTRACT.   Guarantor by execution of
and  Bank by acceptance of this Guaranty agree that each  party is bound to 
all terms and provisions of this Guaranty.  (h) AMENDMENTS, WAIVERS AND 
REMEDIES.   No waivers, amendments or  modifications of this  Guaranty and
other Loan  Documents shall be  valid unless  in writing and  signed by  an
officer of Bank.  No waiver  by Bank of any Default shall operate as  a 
waiver of any other Default or the same Default on  a future occasion.
Neither the failure  nor any delay on the part of Bank  in exercising any 
right, power, or privilege  granted pursuant to  this Guaranty and  other 
Loan Documents  shall operate as  a waiver thereof, nor  shall a single or 
partial exercise thereof preclude  any other or further  exercise or the
exercise  of any other right,  power or privilege.  All remedies  available
to  Bank with  respect  to  this  Guaranty  and other  Loan Documents and
remedies available at law or in equity shall be cumulative and may be pursued
concurrently or successively.   (i) LOAN DOCUMENTS.   The term "Loan
Documents"  refers to all documents  executed in connection  with the
Guaranteed Obligations and may include, without limitation, commitment
letters that survive closing,  loan  agreements,  other  guaranty 
agreements,  security  agreements, instruments, financing  statements,
mortgages, deeds  of trust, deeds  to secure debt,  letters of  credit  and
any  amendments  or supplements  (excluding  swap agreements as defined in 
11 U.S. Code section 101).

ARBITRATION.   Upon demand of  any party  hereto, whether made  before or
after institution  of any  judicial  proceeding,  any  dispute, claim  or
controversy arising  out of,  connected with  or relating  to this  Guaranty
and  other Loan Documents  ("Disputes") between  or  among parties  to  this
Guaranty  shall  be resolved by binding arbitration as  provided herein. 
Institution of  a judicial proceeding  by  a party  does  not  waive the 
right  of  that party  to  demand arbitration hereunder.   Disputes may 
include, without limitation,  tort claims, counterclaims, disputes as to 
whether a matter is subject to arbitration, claims brought as class  actions,
claims arising  from Loan Documents  executed in  the future, or  claims
arising out of or connected with the transaction reflected by this Guaranty.
Arbitration  shall be conducted under  and governed by  the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the
American Arbitration Association (the "AAA") and Title 9 of the U.S. Code.
All arbitration  hearings shall be conducted in the city in which the office
of Bank first stated above is located.   The  expedited  procedures  set
forth  in  Rule  51 et  seq.  of  the Arbitration Rules shall be applicable
to claims of less than $l,000,000.00.  All applicable  statutes of
limitation shall apply to  any Dispute.  A judgment upon the award may be 
entered in any court having jurisdiction.  The panel from which all 
arbitrators are  selected shall  be comprised  of licensed attorneys.   The
single arbitrator selected for expedited procedure shall be a retired judge
from the highest court  of general jurisdiction, state or federal,  of the
seat where the hearing will  be conducted or if such person is  not available
to serve, the single  arbitrator may be a licensed attorney. Notwithstanding
the foregoing, this arbitration provision  does not apply to disputes under
or related to swap agreements.

PRESERVATION AND LIMITATION OF REMEDIES.   Notwithstanding the preceding
binding arbitration  provisions,   Bank  and Guarantor  agree  to  preserve,
without diminution,  certain remedies  that  any party  hereto  may employ
or  exercise freely, independently or in  connection with an arbitration
proceeding  or after an arbitration action  is brought.  Bank and  Guarantor 
shall have the  right to proceed  in any  court of  proper jurisdiction  or
by  self-help to  exercise or prosecute the following  remedies, as 
applicable: (i) all  rights to  foreclose against any real or personal
property or other security by exercising a power of sale  granted under  Loan
Documents  or under  applicable  law or  by  judicial foreclosure  and sale,
including a  proceeding to  confirm the  sale,  (ii) all rights  of 
self-help  including  peaceful  occupation  of   real  property  and 
collection of  rents, set-off,  and  peaceful possession  of personal 
property; (iii) obtaining  provisional or ancillary remedies  including
injunctive relief, sequestration, garnishment,  attachment, appointment  of
receiver and  filing an involuntary  bankruptcy  proceeding; and  (iv)  when
applicable,  a  judgment by confession of judgment.  Preservation of these
remedies does not limit the power of an arbitrator to grant similar remedies
that may be requested by a party in a Dispute. Guarantor and  Bank  agree
that  they shall  not have  a remedy  of punitive  or exemplary damages
against the other in any Dispute and hereby waive any right or claim to 
punitive or exemplary damages they have now  or which may arise in the future
in  connection  with any  Dispute  whether  the Dispute  is resolved  by
arbitration or judicially.

IN WITNESS  WHEREOF, Guarantor, as of the day  and year first written above,
has caused this Guaranty to be executed under seal.

               Selas Corporation of America
               Taxpayer Identification Number: 23-1069060

CORPORATE      By:                                          
SEAL                                                        





                                                           EXHIBIT 10A


                              1998 EXTENSION AGREEMENT


                 AGREEMENT   dated   as   of    January   1,   1998   between
      ____________________________  ("Executive")  and  Selas Corporation  of
      America ("Selas").


                                     BACKGROUND

                 Executive  and  Selas  are   parties  to  an  Agreement  re:
      Termination  following Change  of Control  or Asset  Sale, the  term of
      which, as previously extended, expires December 31, 1997 (as previously
      amended,  the "Agreement"),  which, as  an inducement  to Executive  to
      continue  his active  participation  in the  business  of Selas  or  an
      affiliate of  Selas, provides  for  certain payments  to the  Executive
      under  the circumstances and pursuant  to the terms  therein set forth.
      Capitalized  terms  used herein  have  such  meanings as  are  ascribed
      thereto in the Agreement.

                 Executive  and  Selas desire  to  confirm  in writing  their
      understanding  that  the term  of the  Agreement,  insofar as  the term
      thereof is a function of the period during which a Change of Control or
      Asset Sale may occur, is extended from December 31, 1997 until December
      31, 1998.

                 NOW, THEREFORE, in  consideration of  the agreements  herein
      contained and contained in  the Agreement, and intending to  be legally
      bound, the parties hereto agree as follows:

                 .0.0.1     Clause  (i) in  paragraph 5  of the  Agreement is
                 hereby amended by  changing the date "December  31, 1997" to
                 "December 31, 1998."

                 .0.0.2     The  Agreement,  as  amended  hereby,  is  hereby
                 ratified and confirmed in all respects.

                 IN WITNESS  WHEREOF, Selas and Executive  have executed this
      Agreement as of the date first above written.

                                  SELAS CORPORATION OF AMERICA



                                  By:______________________________

                                  _________________________________





                                              EXHIBIT 10E


                            SELAS CORPORATION OF AMERICA

                                AMENDED AND RESTATED
                               1994 STOCK OPTION PLAN


                .0.0.1     Purpose.  This 1994 Stock Option Plan (the "Plan")
                is intended to enable  Selas Corporation of America ("Selas")
                and any subsidiary corporation of Selas to attract and retain
                capable officers and other key employees, and to provide them
                with incentives to  promote the best  interests of Selas  and
                its subsidiaries through the grant of incentive stock options
                and non-qualified stock options (collectively  "Options") and
                stock appreciation  rights as defined in  Section 5(k) hereof
                ("SARs").

                As used in the Plan, the term "incentive stock options" means
      Options  which qualify as incentive stock options within the meaning of
      section 422  of the Internal Revenue Code of 1986, as amended from time
      to time (the "Code"), at the time they are granted and which are either
      designated  as incentive  stock  options in  the Option  Agreements (as
      hereinafter defined) covering  such Options or which are  designated as
      incentive  stock  options by  the Committee  (as  defined in  Section 2
      hereof) at the time of  grant.  The term "non-qualified stock  options"
      means all other Options granted under the Plan.  The  term "subsidiary"
      means any corporation (whether or not in existence at the time the Plan
      is adopted) which, at the time an Option is granted, is a subsidiary of
      Selas  under the  definition of  "subsidiary corporation"  contained in
      section 424(f) of the Code or any similar provision hereafter enacted.

                .0.0.2     Administration.  The Plan shall be administered by
                the Compensation  Committee of  the Selas Board  of Directors
                (the "Committee"), which  shall consist of not  less than two
                directors of Selas.  Committee members shall be appointed by,
                and shall serve at the pleasure of, the Board of Directors of
                Selas  (the "Board").   Each  member of the  Committee, while
                serving as such, shall be deemed to be acting in the member's
                capacity  as a  director  of  Selas.    Each  member  of  the
                Committee shall be a non-employee director within the meaning
                of Rule 16b-3(b)(3) under the Securities Exchange Act of 1934
                (the  "Exchange Act"),  or any  successor thereto,  and shall
                also be an "outside director"  within the meaning of Treasury
                Regulation section1.162-27(e)(3), or  any successor  thereto,
                under the Code.



                Subject  to the terms of  the Plan, the  Committee shall have
      full  and  final authority  in its  absolute  discretion to  select the
      persons to  whom Options and SARs  shall be granted under  the Plan, to
      grant  such Options and SARs and to set the date of grant and the other
      terms of  such Options and  SARs.   The Committee also  shall have  the
      authority to establish and  amend or rescind,  from time to time,  such
      rules and  regulations, not  inconsistent with  the  provisions of  the
      Plan, for the proper  administration of the Plan  and Options and  SARs
      granted hereunder, and to  make such determinations and interpretations
      under  or  in  connection  with the  Plan,  as  it  deems  necessary or
      advisable.  The Committee  may correct any defect, supply  any omission
      and reconcile any  inconsistency in the  Plan or in  any Option or  SAR
      granted  hereunder  in the  manner  and  to the  extent  it shall  deem
      desirable.     All   such   rules,   regulations,  determinations   and
      interpretations  shall  be  binding  and  conclusive  upon  Selas,  the
      officers  and employees  (including former  officers and  employees) of
      Selas  and  any  subsidiary,  including all  Eligible  Individuals  (as
      hereinafter defined), and upon their  respective legal representatives,
      beneficiaries,  successors  and  assigns  and upon  all  other  persons
      claiming under or through any  of them.  No  member of the Board or  of
      the Committee shall be liable  for any action or determination made  in
      good  faith with  respect to  the  Plan or  any Option  or SAR  granted
      hereunder.

                .0.0.3     Eligibility.    The  persons eligible  to  receive
                Options and SARs  under the  Plan shall be  the officers  and
                other  key employees of Selas and its subsidiaries who may be
                designated by  the Committee; provided, however, that members
                of the Committee, by virtue of their status as members, shall
                not be eligible to receive Options or SARs under the Plan.  A
                key  employee  is  an  employee who  occupies  a  responsible
                executive,  professional or  administrative position  and who
                the Committee believes has the  capacity to contribute to the
                success  of the Company  and its  subsidiaries.   The persons
                eligible to  receive Options  under the Plan  are hereinafter
                referred to as "Eligible Individuals."

                .0.0.4     Shares Subject to the Plan.  Subject to adjustment
                as provided  in Section 7  hereof, 300,000  Common Shares  of
                Selas,  par  value  $1.00  per  share  ("Shares"),  shall  be
                available  for the  grant of  Options under  the  Plan, which
                Shares may  be authorized  but unissued Shares  or reacquired
                Shares, as Selas shall determine.

                If  any Option  granted under  the Plan expires  or otherwise
      terminates, in whole  or in  part, without having  been exercised,  the
      Shares  subject  to the  unexercised portion  of  such Option  shall be
      available for  the granting of  Options under the  Plan as fully  as if
      such Shares had  never been  subject to an  Option, provided,  however,
      that (a) if an Option is cancelled, the Shares covered by the cancelled
      Option  shall be counted against the maximum number of Shares specified
      in the first paragraph of Section 5 for which Options may be granted to
      a  single Eligible Individual  and (b) if the  option exercise price is
      reduced after the date of grant of the Option, the transaction shall be
      treated as a cancellation of the original Option and the grant of a new
      Option  for purposes of determining  such maximum number  of shares for
      which Options may  be granted to an Eligible Individual.   If an Option
      granted in tandem with a SAR is exercised, in whole or in part,  by the
      exercise of the SAR, the Shares subject to the portion of the Option so
      exercised,  except to the extent transferred to the Optionee in payment
      of the SAR, shall also  be available for the granting of  Options under
      the Plan.
                .0.0.5     Grants,  Terms and  Conditions of  Options.   From
                time to time  until the expiration or  earlier termination of
                the  Plan, the  Committee may  grant to  Eligible Individuals
                (such grantees  are hereinafter referred  to as  "Optionees")
                under the Plan  such Options as it determines  are warranted;
                provided, however, that no Eligible Individual may be granted
                Options covering more than 200,000  Shares under the Plan and
                further provided that grants  of incentive and  non-qualified
                stock options shall be  separate and not in tandem.   Options
                granted  pursuant to  the Plan shall  be in such  form as the
                Committee  shall from  time  to time  approve,  and shall  be
                subject to the following terms and conditions:

      .0.0.5.0.0.1   Price.  The  option exercise price per Share  under each
      Option  granted under  the Plan  shall be determined  and fixed  by the
      Committee in its discretion but shall  not be less than the fair market
      value of  the Shares on  the date of  grant of such  Option.   The fair
      market value of  a Share on any day shall mean (i) the mean between the
      highest and  lowest selling prices of a Share  on the date of grant, as
      quoted by the  American Stock Exchange Composite  Transactions Tape, or
      if not available or if  the primary market for the Shares shall  not be
      the  American Stock Exchange (ii) fair market value determined by using
      such other method as shall be permitted by the Code for the  pricing of
      incentive stock options,  or the rules  or regulations thereunder,  and
      adopted by the Committee from time to time.

                .0.0.5.0.0.2     Term.  Subject  to subsection (j)  below and
                subject to earlier termination as provided in subsections (c)
                through  (f) below and in  Section 7 hereof,  the duration of
                each Option shall not be more  than 10 years from the date of
                grant.

                .0.0.5.0.0.3     Exercise  and  Payment.   Options  shall  be
                exercisable  in   such  installments  and   on  such   dates,
                commencing not less than one year from the date of  grant, as
                the Committee  may specify, provided, that  (i) the Committee
                may  determine  that   an  Option  will  become   immediately
                exercisable  in whole  or  in part  in  the event  of  death,
                disability  or retirement, (ii) in  the case of  a new Option
                granted in replacement for options (whether granted under the
                Plan  or  otherwise  and  whether covering  Shares  or  other
                securities issued  by Selas or  another entity)  held by  the
                same person, the new  Options may be made exercisable,  if so
                determined  by  the  Committee  in  its  discretion,  at  the
                earliest date the replaced options were exercisable and (iii)
                the Committee  may otherwise accelerate the  exercise date of
                any  outstanding Option  in its discretion  if it  deems such
                acceleration  to be desirable.   Any Shares the  right to the
                purchase  of  which  has  accrued  under  an  Option  may  be
                purchased  at any time up to the expiration or termination of
                the  Option.  Options may be  exercised, in whole or in part,
                from  time to time, by  giving written notice  of exercise to
                Selas  at  its principal  office,  specifying  the number  of
                Shares to be purchased, accompanied by payment in full of the
                aggregate  purchase price for  the Shares.   Only full Shares
                shall  be delivered,  and  any fractional  Share which  might
                otherwise be  deliverable upon exercise of  an Option granted
                hereunder shall be forfeited.

                     The option exercise price shall be payable:  (i) in cash
           or its equivalent, or (ii) if the Committee, in its discretion, so
           provides  in the Option Agreement  (as hereinafter defined) or, in
           the case of  Options that are not incentive  stock options, if the
           Committee, in its  discretion, so  determines at or  prior to  the
           time of  exercise, in  whole or  in part  through the transfer  of
           Shares previously acquired by the Optionee, provided the Shares so
           transferred have been  held for the applicable  holding period set
           forth below:

                           (i)   if  such  previously  acquired  Shares  were
                acquired through  exercise of  an incentive stock  option and
                are  being tendered as payment  of the option  price under an
                incentive  stock option, such  Shares have  been held  by the
                Optionee  for a  period  not  less  than the  holding  period
                described in section 422(a)(1) of the Code;

                         (ii)    if  such  previously  acquired  Shares  were
                acquired  through exercise  of an  incentive stock  option, a
                non-qualified stock option or a SAR and are being tendered as
                payment  of  the option  price  under  a non-qualified  stock
                option, such Shares have  been held by the Optionee  for more
                than one year; or

                        (iii)    if  such  previously  acquired  Shares  were
                acquired through exercise of  a non-qualified stock option or
                a SAR and are being  tendered as payment of the  option price
                under  an incentive stock option, such  Shares have been held
                by the Optionee for more than one year.

                     In the event such purchase price is paid, in whole or in
           part, with Shares, the portion of the purchase price so paid shall
           be equal to the fair market value,  on the date of exercise of the
           Option,  of the  Shares so  tendered in  payment of  such purchase
           price,  as  determined by,  or in  the  manner prescribed  by, the
           Committee in accordance with subsection 5(a).

                .0.0.5.0.0.4     Termination of Optionee's Employment.  If an
                Optionee's  employment with  Selas  and  all subsidiaries  is
                terminated  for any reason, with or without cause, other than
                by reason of death or disability (as described in subsections
                (e)  and (f) below) prior  to the expiration  of the original
                term  of  the  Optionee's  Option ("Expiration  Date"),  such
                Option  may  be exercised,  to the  extent  of the  number of
                shares  with  respect  to   which  the  Optionee  could  have
                exercised  it  on the  date of  such  termination, or  to any
                greater extent permitted by the Committee, by the Optionee at
                any  time prior  to the  earlier of  (i) the  Expiration Date
                specified in such Option, or (ii) the date three months after
                the date of termination of employment.

                .0.0.5.0.0.5     Death   of  Optionee.     If  an  Optionee's
                employment is  terminated by  reason of the  Optionee's death
                prior  to  the  Expiration Date  of  an  Option  held by  the
                Optionee, or  if an  Optionee whose employment  is terminated
                shall die  following termination  of employment but  prior to
                the Expiration Date of the Optionee's Option or expiration of
                the period  specified in  subsection (d) above  or determined
                under subsection (f)  below, if earlier,  such Option may  be
                exercised by  the Optionee's estate,  personal representative
                or beneficiary who acquired the right to exercise such Option
                by  bequest or inheritance  or by reason of  the death of the
                Optionee,  to the extent of the number of Shares with respect
                to  which the Optionee could have exercised it on the date of
                the Optionee's death, or  to any greater extent  permitted by
                the Committee,  at any time prior  to the earlier of  (i) one
                year  following the date of the Optionee's death, or (ii) the
                Expiration Date of such  Option (which, in the case  of death
                following a termination of  employment pursuant to subsection
                (d)  above  or  (f)  below,  shall  be  deemed  to  mean  the
                expiration  of  the  exercise  period  specified  therein  or
                determined thereunder).


                .0.0.5.0.0.6      Disability   of   Optionee.     If  an
                Optionee shall  become disabled  (within the  meaning of
                section  22(e)(3)  of the  Code)  during the  Optionee's
                employment  with  Selas  or  any   subsidiary,  and  the
                Optionee's employment with Selas and all subsidiaries is
                terminated as a consequence  of such disability prior to
                the Expiration  Date of  Optionee's Option,  such Option
                may be exercised by  the Optionee, to the extent  of the
                number  of Shares  with  respect to  which the  Optionee
                could have exercised it on the date of  such termination
                of employment, or to any greater extent permitted by the
                Committee, at any time  prior to the earlier of  (i) one
                year following the date of the Optionee's termination of
                employment, or (ii) the  Expiration Date of such Option.
                In the  event of  the Optionee's legal  disability, such
                Option  may  be so  exercised  by  the Optionee's  legal
                representative.

                .0.0.5.0.0.7     Transferability.  Except  as provided in the
                following   sentence,  no  Option   shall  be  assignable  or
                transferable  by an Optionee otherwise than by will or by the
                laws  of descent and distribution.  The Committee may, in its
                discretion,  authorize all  or a  portion of  a non-qualified
                stock  option to  be on  terms which  permit transfer  by the
                Optionee to  (i) the spouse, children or grandchildren of the
                Optionee ("Immediate Family Members"), (ii) a trust or trusts
                for the  exclusive benefit of such  Immediate Family Members,
                or (iii) a partnership in which such Immediate Family Members
                are  the only  partners, provided  that (x)  there may  be no
                consideration for any such transfer, (y) the Option Agreement
                pursuant  to which such Option is granted must be approved by
                the Committee and expressly  provide for transferability in a
                manner consistent  with  this  Section,  and  (z)  subsequent
                transfers  of the Option  shall be  prohibited other  than by
                will or the laws of descent and distribution.

                     A transferred Option shall continue to be subject to the
           same terms and conditions as were  applicable immediately prior to
           transfer, and the Optionee shall remain subject to tax withholding
           under  Section 5(l).  The  events of termination  of employment of
           Section 5  shall also continue to  be applied with respect  to the
           original Optionee, following which the Option shall be exercisable
           by  the transferee  only  to  the  extent,  and  for  the  periods
           specified in, Sections 5(d), (e) and (f).

           .0.0.5.0.0.8    Rights as  a Stockholder.  An  Optionee shall have
           no rights as a  stockholder with respect to any Shares  covered by
           an  Option until the issuance of  a stock certificate representing
           such Shares.

                     .0.0.5.0.0.9      Annual   Limit   on  Incentive   Stock
                     Options.  The aggregate fair market value (determined in
                     accordance with the last sentence of Section 5(a) hereof
                     as  of the date an incentive stock option is granted) of
                     the Shares with respect to which incentive stock options
                     become  exercisable   for  the  first  time  during  any
                     calendar year by an  Eligible Individual (under the Plan
                     and  any other incentive  stock option plan  of Selas or
                     any parent  corporation (within the  meaning of  Section
                     424(e) of the Code)  ("parent") or subsidiary) shall not
                     exceed $100,000.  If an Option intended  as an incentive
                     stock option  is granted  to an Eligible  Individual and
                     such option may not be treated in whole or in part as an
                     incentive stock option pursuant to the provisions of the
                     immediately  preceding  sentence, such  Option  shall be
                     treated as  an incentive stock  option to the  extent it
                     may  be so  treated under  such sentence  and as  a non-
                     qualified  stock  option  as  to  the  remainder.    For
                     purposes  of  determining  whether  an  incentive  stock
                     option  would   cause  the  $100,000  limitation  to  be
                     exceeded,  incentive stock options  shall be  taken into
                     account in the order granted.

                     .0.0.5.0.0.10     Ten  Percent  Shareholder.     If   an
                     Optionee owns more than 10% of the total combined voting
                     power of all shares of stock of Selas or of a subsidiary
                     or  parent  at the  time  an incentive  stock  option is
                     granted to  the Optionee, the Option  exercise price for
                     the incentive stock option shall  be not less than  110%
                     of the fair market  value of the optioned Shares  on the
                     date  the incentive  stock option  is granted,  and such
                     incentive  stock  option  by  its  terms  shall  not  be
                     exercisable after the expiration of five years after the
                     date  the  incentive  stock  option  is  granted.    The
                     conditions set  forth in  this subsection (j)  shall not
                     apply to options that are not incentive stock options.

                     .0.0.5.0.0.11     Option    Agreement     and    Further
                     Conditions.
                     As  soon as  practicable after  the grant of  an Option,
                     each Optionee  shall enter  into,  and be  bound by  the
                     terms  of,  a   stock  option  agreement  (the   "Option
                     Agreement") which  shall state  the number of  Shares to
                     which the Option pertains and specify whether the Option
                     is  intended to be an  incentive stock option  or a non-
                     qualified stock option.   The Option Agreement shall set
                     forth  such terms, conditions and restrictions regarding
                     the Option not  inconsistent with the Plan  (and, in the
                     case  of  incentive  stock  options, the  provisions  of
                     Section  422(b)  of the  Code)  as  the Committee  shall
                     determine.    Without  limiting  the  generality of  the
                     foregoing, the Committee, in  its discretion, may impose
                     further  conditions upon  the exercisability  of Options
                     and  restrictions  on  transferability with  respect  to
                     Shares issued upon exercise of Options.

                     The  Option  Agreement may,  in  the  discretion of  the
           Committee, include a provision under which the Optionee shall have
           the right,  in  lieu  of  exercising  all  or  a  portion  of  the
           Optionee's  Option, to elect instead to receive an amount equal to
           the  difference between  the  fair  market  value  of  all,  or  a
           specified number, of the Shares subject to such Option on the date
           such  right is exercised and the exercise price under such Option,
           such  amount to be paid in cash or in Shares (at their fair market
           value on the date such right is exercised), or in a combination of
           cash and Shares, as  the Committee shall determine.  Such right is
           referred to in this Plan as  a SAR.  Any SAR shall be  exercisable
           only  at a  time  when  the  Option  to which  it  is  related  is
           exercisable; provided, however, that if the Optionee is a director
           or  officer of  Selas  within the  meaning  of Section  16  of the
           Exchange Act, cash may be paid  to the Optionee upon the  exercise
           of a  SAR only if  the Optionee exercises  the SAR (by  giving the
           notice  described  in Subsection  (c)  hereof)  during the  period
           beginning  on the  third business  day following  the  release for
           publication of Selas's quarterly  and annual summary statements of
           sales  and  earnings,  and  ending  on  the twelfth  business  day
           following such date.   Any SAR shall be  subject to the  following
           additional conditions:

                           (i)   the  SAR  will  expire  no  later  than  the
                termination of the Option;

                         (ii)    the SAR  will be  transferable  only if  and
                when  the underlying  Option is  transferable, and  under the
                same conditions; and

                        (iii)    in  the case  of a  SAR granted  "in tandem"
                with an incentive stock option, the SAR may be exercised only
                when there is a  positive spread, i.e., when the  fair market
                value  of the  stock  subject to  the incentive  stock option
                exceeds the exercise price of such option.

           In any case where an Option  is granted in tandem with a SAR,  the
           tandem Option-SAR shall be considered  exercised when, and to  the
           extent that, either the underlying Option or the SAR is exercised.


                     .0.0.5.0.0.12     Withholding.  The obligation  of Selas
                     to deliver Shares upon the exercise of any Option or SAR
                     (or  cash  in lieu  thereof)  shall  be  subject to  any
                     applicable  federal, state  and  local  tax  withholding
                     requirements.

                     If  the  exercise  of  any  Option  is  subject  to  the
           withholding requirements of applicable federal, state or local tax
           laws,  the Committee,  in  its  discretion  (and subject  to  such
           withholding rules ("Withholding Rules") as shall be adopted by the
           Committee),  may permit  the minimum  required federal,  state and
           local withholding tax obligation  to be satisfied, in whole  or in
           part, by allowing  the Optionee  to elect to  have Selas  withhold
           Shares  (or by returning Shares  to Selas), which  Shares shall be
           valued, for  this purpose, at their fair  market value on the date
           of exercise  of the Option  (or, if later,  the date on  which the
           Optionee recognizes ordinary income with respect to such exercise)
           (the "Determination Date").

                .0.0.6     Listing and  Registration of Shares.   Each Option
                and  each  related SAR  shall be  subject to  the requirement
                that,   if  at  any  time  Selas   shall  determine,  in  its
                discretion,  that the listing,  registration or qualification
                of  the  Option or  SAR or  Shares  covered thereby  upon any
                securities exchange or under the laws of any jurisdiction, or
                the  consent or  approval of  any governmental  or regulatory
                body,  is necessary  or desirable  as a  condition of,  or in
                connection  with, the granting of  such Option or  SAR or the
                exercise  thereof or  that action  by Selas  or the  Optionee
                should be taken in order to obtain an exemption from any such
                requirement, then no such  Option or SAR may be  exercised in
                whole or in part unless and until such listing, registration,
                qualification,  consent, approval or  action shall  have been
                effected  or obtained,  on  conditions  acceptable to  Selas.
                Without  limiting  the  generality  of  the  foregoing,  each
                Optionee,   or   the  Optionee's   legal   representative  or
                beneficiaries,  also  may be  required  to give  satisfactory
                assurance that Shares acquired upon  exercise of an Option or
                SAR are being  acquired for investment and not with a view to
                distribution, and  certificates representing such  Shares may
                be legended accordingly.

                .0.0.7     Adjustments.   The number  of Shares which  may be
                issued under the  Plan, as  stated in Section  4 hereof,  the
                number  of Shares  specified in the  limitation in  the first
                paragraph  of  Section  5 hereof  and  the  number  of Shares
                issuable upon exercise of  outstanding Options and SARs under
                the Plan (as well as the exercise price per share  under such
                outstanding  Options), shall  be  equitably adjusted  by  the
                Committee to  reflect any stock dividend,  stock split, share
                combination or similar change in the capitalization of Selas.

                In the event of a  proposed dissolution, liquidation or  sale
      of a  substantial portion  of  the assets  of Selas,  or  of a  merger,
      consolidation, share exchange, exchange  of shares or other transaction
      in which holders  of Shares  are to receive  cash, securities or  other
      property, the Committee  shall, in its  unlimited discretion, have  the
      power prior to such event (a) to terminate  all outstanding Options and
      related SARs upon  at least seven  days' prior notice to  each Optionee
      and, if the Committee deems it appropriate, to cause the Company to pay
      to each Optionee  an amount in cash with respect to each Share to which
      a terminated Option pertains equal to the difference between the Option
      exercise price and  the value, as  determined by  the Committee in  its
      sole discretion, of the consideration to be received by  the holders of
      Shares in connection  with such transaction, or (b)  to provide for the
      exchange of Options outstanding  under the Plan for options  to acquire
      securities or other  property to  be delivered in  connection with  the
      transaction  and   in  connection   therewith  to  make   an  equitable
      adjustment, as determined by  the Committee in its sole  discretion, in
      the Option exercise  price and number  of Shares or amount  of property
      subject  to the Option and,  if deemed appropriate,  provide for a cash
      payment to Optionees in partial consideration for such exchange.
                .0.0.8    Acquisitions.  Notwithstanding any other provision
                of the Plan, Options may be granted hereunder in substitution
                for  options   held  by  officers  and   employees  of  other
                corporations who  have become officers or  employees of Selas
                or a subsidiary as a result of a merger, consolidation, share
                exchange,  acquisition of  assets  or similar  transaction by
                Selas  or  a subsidiary.    The terms,  including  the option
                price, of the substitute Options so granted may vary from the
                terms set forth  in this Plan to such extent as the Committee
                may deem appropriate to conform, in  whole or in part, to the
                provisions of  the options in substitution for which they are
                granted.

                .0.0.9    Amendment or  Discontinuance of the Plan.   At any
                time  and from  time  to  time,  the  Board  may  suspend  or
                discontinue the Plan or amend it, and the Committee may amend
                any outstanding Options and  SARs, in any respect whatsoever,
                provided,   however,  that  without   the  approval   by  the
                affirmative  votes of the holders  of at least  a majority of
                the Shares present, or represented, and entitled to vote at a
                duly  held meeting  of the  Shareholders of  Selas:   (a) the
                class  of individuals  eligible to  receive Options  and SARs
                shall  not be materially modified, (b)  the maximum number of
                Shares with respect to which Options may be granted under the
                Plan to  any  one  Eligible Individual  or  to  all  Eligible
                Individuals shall not be  increased except as permitted under
                Section 7 hereof, (c)  the lowest price at which  Options may
                be  granted shall not be reduced and the benefits, within the
                meaning  of Rule  16b-3 under  the Exchange Act,  accruing to
                Eligible  Individuals  shall  not  otherwise   be  materially
                increased,  and (d) the duration of the Plan under Section 13
                shall not  be extended;  provided further that  any amendment
                that would require shareholder  approval pursuant to Treasury
                Regulation section1.162-27(e)(4)(vi) or any successor thereto
                shall not  be made without the  shareholder approval required
                thereby; and  provided  further,  that  no  such  suspension,
                discontinuance  or  amendment  shall  materially  impair  the
                rights  of any holder of an outstanding Option or SAR without
                the consent of such holder.

                .0.0.10    Absence   of  Rights.     The   recommendation  or
                selection  of an  Eligible Individual  as  a recipient  of an
                Option  under the Plan shall  not entitle such  person to any
                Option  or SAR unless and  until the grant  actually has been
                made  by appropriate action  of the  Committee; and  any such
                grant is subject to the provisions of the Plan and the Option
                Agreement  relating to  such  Option or  SAR.   Further,  the
                granting of an Option  or SAR to a  person shall not  entitle
                that person to continued employment by  Selas or a subsidiary
                or affect  the terms and  conditions of such  employment, and
                Selas  shall have the  absolute right, in  its discretion, to
                retire such person in accordance with its retirement policies
                or  otherwise to  terminate  the employment  of such  person,
                whether  or not such termination  may result in  a partial or
                total termination of an Option or SAR.

                .0.0.11    Shareholder  Approval.   This Plan was  adopted by
                Selas on February 15, 1994 and was approved on April 19, 1994
                by  the  affirmative  votes of  the  holders  of  at least  a
                majority of the Shares  present, or represented, and entitled
                to vote at a duly held meeting of  the Shareholders of Selas.


                .0.0.12    No Obligation to Exercise Option.  The granting of
                an Option  shall impose  no obligation  upon  an Optionee  to
                exercise such Option.

                .0.0.13    Termination of  Plan.  No  Options or SARs  may be
                granted under  the  Plan after  February 14, 2004,  provided,
                however,  that the Plan and all  outstanding Options and SARs
                shall remain  in  effect until  such  Options and  SARs  have
                expired or are terminated in accordance with the Plan.


                .0.0.14    Governing  Law.    With respect  to  any incentive
                stock  options granted  pursuant to  the Plan and  the Option
                Agreements thereunder,  the Plan, such Option  Agreements and
                any incentive stock options granted pursuant thereto shall be
                governed  by the  applicable Code  provisions to  the maximum
                extent  possible.  Otherwise, the laws of the Commonwealth of
                Pennsylvania shall govern the operation of, and the rights of
                all persons  under, the Plan,  the Option Agreements  and the
                Options and SARs.




      Amended and Restated by the Board of Directors on November 19, 1996


                                                                 EXHIBIT 13
      SELAS CORPORATION OF AMERICA
      is a diversified firm with international operations and sales that
      engages in the design, development, engineering and manufacturing of a
      range of products.  The Company, headquartered in Dresher, Pennsylvania
      with subsidiaries in Minnesota, Ohio, California, England, France,
      Germany and Italy (and a 50% joint venture in Japan),  operates
      directly or through subsidiaries in three business segments.

      Under the SelasTM name, the Company designs and manufactures 
      specialized industrial heat processing systems and equipment for steel,
      glass and other manufacturers worldwide.  The Company's subsidiary,
      Resistance Technology, Inc., designs and manufactures microminiature
      components and molded plastic parts primarily for the hearing instrument
      manufacturing industry and also for the electronics, telecommunications
      and medical equipment industries.  The Company's subsidiary, RTI
      Electronics, Inc.,  formed in 1997, manufactures heat sensitive
      resistors known as thermistors used as an electronic current limiting
      device to protect computer installations.  The Company's subsidiary,
      Deuer Manufacturing, Inc., manufactures spare tire holders and lifts
      and related products, primarily based on cable winch designs, for use
      principally as original equipment by the pick-up truck and minivan
      segment of the automotive industry.
      FINANCIAL HIGHLIGHTS
      YEARS ENDED DECEMBER 31               1997             1996
      Net sales . . . . . . . . . . . .     $111,165,000     $103,426,000
      Operating income  . . . . . . . .  $  7,171,000        $  7,522,000
      Net income  . . . . . . . . . . .  $  4,387,000        $  4,130,000
      Earnings per share:
          Basic   . . . . . . . . . . .          $.84                $.80
          Diluted . . . . . . . . . . .             $.82             $.78
      Working capital . . . . . . . . .     $ 18,642,000     $ 19,822,000
      Total assets  . . . . . . . . . .  $ 81,795,000        $ 91,162,000
      Total shareholders' equity  . . .  $ 40,399,000        $ 37,641,000
      MARKET AND DIVIDEND INFORMATION
                                          1997                  1996      
                                         Market                Market
                                      Price Range           Price Range   
      QUARTER                       HIGH     LOW          HIGH      LOW
      First   . . . . . . . . . . . 13-1/16  10            7-13/16   5-7/8
      Second  . . . . . . . . . . . 12-5/8    9-13/16      7-11/16   6-15/16
      Third   . . . . . . . . . . . 13-1/2   11-1/4        9-9/16    6-11/16
      Fourth  . . . . . . . . . . . 13-3/16   8-15/16     11-1/2     9

      At February 12, 1998, the Company had 499 shareholders of record.  

                                     1997     1996         1995 
      Dividends per share:
        First Quarter               $.043     $.04         $.037
        Second Quarter               .045      .04          .037
        Third Quarter                .045      .04          .04
        Fourth Quarter               .045      .043         .04
      The payment of any future dividends is subject to the discretion of the
      Board of Directors and is dependent on a number of factors, including
      the Company's capital requirements, financial condition, financial
      covenants and cash availability.
      Note:  All information above has been adjusted to give retroactive
             effect to a 3 for 2 stock split in June 1997.  See note 14 to
             the Consolidated Financial Statements.

      Selas is an equal opportunity employer.

      THE COMMON STOCK OF SELAS CORPORATION OF AMERICA IS LISTED ON THE
      AMERICAN STOCK EXCHANGE UNDER THE SYMBOL SLS.


      SELAS CORPORATION OF AMERICA
      FIVE-YEAR SUMMARY OF OPERATIONS
      (In thousands, except for share data)

      Years Ended December 31        1997 (a)          1996          1995    

      Sales, net                   $ 111,165       $ 103,426      $   71,215
      Cost of sales                   87,704          80,870          52,060
      Selling, general and admin-
        istrative expenses            16,289          15,034          14,397
      Interest expense                 1,040           1,212           1,336
      Interest (income)                 (237)           (298)           (340)
      Other (income) expense, net          8              83              36 
      Income before income taxes       6,361           6,525           3,726
      Income taxes                     1,974           2,395           1,426

      Net income                   $   4,387       $   4,130      $    2,300
                                    =========       =========      ==========
      Earnings per share:

        Basic                           $.84            $.80            $.44
                                   =========       =========      ==========
        Diluted                         $.82            $.78            $.44
                                   =========       =========      ==========
      Weighted average number of
        common and common equivalent
        shares outstanding during
        year 

        Basic                      5,213,124       5,190,075      5,189,048
                                   =========       =========      =========
        Diluted                    5,354,978       5,271,959      5,202,411
                                   =========       =========      =========
      Years Ended December 31           1994        1993 (b)
      Sales, net                   $  73,663       $  52,268
      Cost of sales                   52,813          39,962
      Selling, general and admin-
        istrative expenses            14,727           9,687
      Interest expense                 1,282             601
      Interest (income)                 (303)           (346)
      Other (income) expense, net        165             (12) 
      Income before income taxes       4,979           2,376
      Income taxes                     1,875           1,029 
      Net income                   $   3,104       $   1,347
                                    ==========      =========
      Earnings per share:
        Basic                           $.60            $.28
                                   ==========      =========
        Diluted                         $.60            $.28
                                   =========       =========
      Weighted average number of
        common and common equivalent
        shares outstanding during
        year 
        Basic                      5,179,246       4,818,531
                                   =========       =========
        Diluted                    5,215,736       4,872,240
                                   =========       =========
      (a)  On February 21, 1997, the Company acquired the assets of RTI
           Electronics, Inc.
      (b)  On October 20, 1993, the Company acquired all of the outstanding
           common shares of Resistance Technology, Inc.
      Note:  All information above has been adjusted to give retroactive
      effect
             to a 3 for 2 stock split distributed in June, 1997.  See
             note 14 to the Consolidated Financial Statements.


       OTHER FINANCIAL HIGHLIGHTS
      Years Ended December 31        1997 (a)       1996           1995
      (In thousands, except for share data)

      Working capital              $18,642         $19,822        $15,751
      Total assets                 $81,795         $91,162        $67,960
      Long-term debt               $ 7,015         $ 6,837        $ 9,100
      Long-term benefit 
        obligations                $ 4,081         $ 4,310        $ 4,409
      Shareholders' equity:
        Capital stock and additional
         paid-in capital           $17,382         $17,214        $17,214
        Retained earnings           23,130          19,673         16,390
        Foreign currency translation
         adjustment                    269           1,136          1,440
        Minimum pension liability
         adjustment                    --               --             (6)
        Treasury stock                (382)           (382)          (382)

      Total shareholders' equity   $40,399         $37,641        $34,656

      Depreciation and 
        amortization               $ 3,469         $ 2,826        $ 2,771
      Dividends per share            $.178           $.163          $.154



      Years Ended December 31        1994           1993 (b)
      (In thousands, except for share data)

      Working capital              $17,935         $14,722
      Total assets                 $70,120         $72,864
      Long-term debt               $11,136         $11,579
      Long-term benefit 
        obligations                $ 4,431         $ 4,553
      Shareholders' equity:
        Capital stock and additional
          paid-in capital          $17,182         $16,980
        Retained earnings           14,886          12,490
        Foreign currency translation
          adjustment                 1,524             587
        Minimum pension liability
          adjustment                  (112)           (248)
        Treasury stock                (382)           (382)

      Total shareholders' equity   $33,098         $29,427

      Depreciation and 
         amortizationt             $ 2,732         $ 1,326 
      Dividends per share            $.137           $.133






      MANAGEMENT'S DISCUSSION AND ANALYSIS
      OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

      1997 COMPARED WITH 1996

      Consolidated sales increased 7.5% to $111.2 million in 1997 from $103.4
      million in 1996.   Net sales from the heat  processing segment were $63
      million in 1997 compared to $62.8 million in 1996.  The slight increase
      in  sales  for 1997  is  attributed to  the  high level  of  backlog at
      December  31,  1996, coupled  with additional  bookings  in 1997.   The
      recent  turmoil in the  Asian markets also  had an impact  on sales and
      bookings  in 1997 as several  highly expected orders  have been delayed
      and put on hold by our  customers.  Approximately 10.6% of 1997 revenue
      is related to contracts or sales to customers in Asia.   Other than the
      decline in sales and  bookings, management does not believe  that there
      is any further exposure  to the Company from the  Asian market turmoil.
      Consolidated  backlog for the heat processing segment was down to $12.2
      million at December 31, 1997 compared  to $55.5 million at December 31,
      1996.   In  February, 1998  this business  segment received  orders for
      several projects in excess of $17 million.

      The  Company's  precision  electromechanical  and  plastics  components
      segment sales increased to  $33.3 million in 1997 from $27.4 million in
      1996.  The majority of the increase in sales  for 1997 is attributed to
      the  February, 1997 acquisition of  RTI Electronics which  had sales of
      $5.7 million in  1997.  There was  also a mix  in products sold to  the
      hearing  aid industry  as plastic  component part  sales  were slightly
      below the 1996  level and  microminiature system sales  were higher  in
      1997.

      Net  sales for  the tire  holders, lifts  and related  products segment
      increased  to $14.9 million  in 1997 from  $13.2 million in  1996.  The
      increase  in sales  is  primarily  due to  higher  tire lift  sales  to
      domestic automotive manufacturers, and, to a lesser degree, to overseas
      automotive manufacturers.

      The Company's gross profit margin as a percentage-of-sales decreased to
      21.1%  in 1997 from 21.8%  in 1996.  Gross profit  margins for the heat
      processing  segment decreased to 14.7% in 1997  from 16% in 1996.  Heat
      processing  gross  profit  margins   vary  markedly  from  contract  to
      contract, depending  on customer  specifications  and other  conditions
      related to the contract.  The gross profit margins were impacted by two
      contracts  in 1997  and  one  contract in  1996  that had  losses  that
      impacted the segment's overall  gross profit margins.   Heat processing
      reserves  for  guarantee  obligations  and estimated  future  costs  of
      services  increased to $2.7  million in 1997 from  $1.7 million in 1996
      due to  several large custom-engineered contracts  in process, recently
      completed,  or near  completion in  1997 compared  to 1996.   Guarantee
      obligations  and  estimated future  service  costs  on these  contracts
      extend for up to one year from completion.

      Consolidated net sales for the heat processing segment in 1997 and 1996
      include approximately  $40.7 million and  $43.4 million,  respectively,
      from  large  custom-engineered  contracts  executed  by  the  Company's
      wholly-owned European subsidiaries.  Consolidated





      MANAGEMENT'S DISCUSSION AND ANALYSIS
      OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

      income before taxes in 1997 and 1996 included approximately $.8 million
      in both years from the  results of operations of the  Company's wholly-
      owned European subsidiaries in the heat processing segment.  Due to the
      nature of the Company's large custom-engineered contracts, one contract
      may  account for a  large percentage of  sales in  a particular period;
      however, the Company  is not  dependent on any  one engineered  systems
      customer on an ongoing basis.

      Gross profit  for the precision electromechanical  and plastics segment
      decreased to 35.1%  in 1997 from 39%  in 1996.  The  lower gross profit
      margins  in 1997 are attributable to the acquisition of RTI Electronics
      in February, 1997 as its products, while profitable, do not achieve the
      historical  gross  profit  margins  of  this  business segment.    Also
      impacting the lower 1997  gross profit margins, but to a lesser degree,
      is the mix of sales between 1997 and 1996 as microminiature systems and
      plastic component parts have varying profit margins.

      Gross  profit margins for the tire holders, lifts and related product's
      segment improved to 17% in 1997 from 13.6% in 1996.  The improvement in
      1997  is  due  to  efficiencies  from  higher  production  through  the
      increased sales of tire lifts.

      Selling, general  and administrative (SG&A) expenses  increased 8.3% to
      $16.3 million in 1997, up from  $15 million in 1996.  Approximately $.4
      million  of  the  increase is  due  to  costs related  to  the proposed
      acquisition of MRL Industries,  Inc., which acquisition has  since been
      terminated, and the SG&A costs of RTI Electronics which account for the
      balance of the increase in 1997 or approximately $.9 million.

      Research  and  development  costs  amounted to  $1.5  million  in  1997
      compared to $1.4 million in 1996.

      Interest  expense  decreased in  1997 to  $1  million compared  to $1.2
      million  in 1996, due  to lower average  borrowings in 1997.   Interest
      income decreased  to $.2  million in  1997 compared to  $.3 million  in
      1996, due to lower average funds available for investment in 1997.

      Other (income) expense included a gain on foreign currency transactions
      of $14,000 in 1997 compared to a loss of $8,000 in 1996.

      The  effective tax rate in 1997 and  1996 on income before income taxes
      was  31% and 36.7%, respectively.  The lower rate in 1997 is due to the
      benefit of utilizing net  foreign operating loss carryforwards, coupled
      with lower effective state taxes in 1997.




       MANAGEMENT'S DISCUSSION AND ANALYSIS
      OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

      The Company's net deferred  tax assets include a substantial  amount of
      foreign net  operating  loss, postretirement  benefit  obligations  and
      employee pension plan liabilities.  The Company continually reviews the
      adequacy of the  valuation allowance  and recognizes  benefits only  as
      reassessment  indicates  that  it is  more  likely  than  not that  the
      benefits  will be realized.  Realization of future tax benefits related
      to  deferred tax  assets is  dependent on  many factors,  including the
      Company's  ability  to  generate  taxable  income  within  the  foreign
      subsidiary's net operating loss period and the timing of the turnaround
      of  the  postretirement benefit  and  pension plan  obligations  in the
      future.    Management  has considered  these  factors  in  reaching its
      conclusion  as to the adequacy of the valuation allowance for financial
      reporting purposes.

      Consolidated net income of $4.4  million in 1997 was up 6.2%  from $4.1
      million in  1996.   The  largest increase  was  in the  Company's  tire
      holders, lifts  and related  product's segment  which increased  to $.5
      million  in 1997  compared  to  $.1 million  in  1996.   The  precision
      electromechanical and  plastics components increased its  net income in
      1997 to  $2.1 million from  $2.0 million in  1996.  The  Company's heat
      processing  segment was  impacted by  additional costs  of $.4  million
      relating  to  the proposed  acquisition of  MRL Industries,  Inc. which
      resulted  in lower  earnings in  1997 of  $1.8 million  compared to  $2
      million in 1996.

      LIQUIDITY AND CAPITAL RESOURCES

      Consolidated net working capital decreased to $18.6 million at December
      31, 1997  from $19.8 million at  December 31, 1996.   The lower working
      capital was  due  in part  to  the February,  1997 acquisition  of  RTI
      Electronics,  repayment  of  long-term  debt  obligations,  payment  of
      dividends and  capital expenditures,  partially offset by  the earnings
      for  the year, along with  depreciation and amortization  expense.  The
      major changes in the  components of working capital were  lower current
      liabilities of  $12.2 million  and lower  receivables of  $10.7 million
      both due  primarily to the  level of  activity in  the heat  processing
      segment.  Other changes are lower cash equivalents of $5.3 million  and
      higher inventories  of $1.6 million in  1997 due to  the acquisition of
      RTI  Electronics and  the  level of  activity  in the  heat  processing
      segment.  The current  liabilities include value-added taxes  which are
      $3.4 million lower in 1997.  

      The  Company's long-term debt at  December 31, 1997  was             $7
      million.    The increase  in  long-term  debt  is  the  result  of  the
      acquisition of RTI  Electronics on February 21, 1997.   Under the terms
      of  Selas' credit facility, there  are covenants that  may restrict the
      payment  of future dividends.  The credit facility required the Company
      to maintain consolidated tangible  capital funds of approximately $21.1
      million through  December 31, 1997 consisting  of shareholders' equity,
      plus subordinated  debt, less  intangible assets increased  annually by
      60% of net income and  60% of the aggregate amount of  contributions to
      capital.    At  December 31,  1997,  the  Company  exceeded the  amount
      required  to satisfy  this  covenant in  the  credit facility  by  $3.3
      million.
       MANAGEMENT'S DISCUSSION AND ANALYSIS
      OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
      The Company's French subsidiary has an interest rate swap agreement for
      the  purpose of  managing interest  rate expense.   The  total notional
      amount of  $2.3 million  at December  31, 1997  will decrease  with the
      terms of the  long-term debt  agreement.  The  swap agreement  requires
      fixed  interest rate payments of  8.55% through May,  2006.  Additional
      interest  incurred in  1997  in connection  with  the swap  arrangement
      amounted  to  $95,584 vs.  $101,738  in  1996.    See  note  9  of  the
      Consolidated Financial Statements for discussion of this agreement.

      The Company  is a defendant  along with  a number of  other parties  in
      approximately 215 lawsuits as of December 31, 1997 (155 as of  December
      31,  1996)  alleging  that  plaintiffs  have  or  may  have  contracted
      asbestos-related  diseases as a result of exposure to asbestos products
      or  equipment containing asbestos sold by one or more named defendants.
      Due  to the noninformative nature  of the complaints,  the Company does
      not know  whether any of the complaints  state valid claims against the
      Company.  The Company is also one of approximately 500  defendants in a
      class  action on  behalf  of  approximately  2,700  present  or  former
      employees of a Texas steel mill  alleging that products supplied by the
      defendants created  a  poisonous  atmosphere  that  caused  unspecified
      physical harm.  These cases  are being defended by  one or more of  the
      Company's insurance carriers presently known to be "at risk".  The lead
      carrier has  settled approximately 11 and  17 claims in  1997 and 1996,
      respectively, with no  request for  the Company to  participate in  any
      settlement.  Management is of the  opinion that the number of insurance
      carriers  involved  in the  defense of  the  suits and  the significant
      number  of  policy years  and policy  limits  to which  these insurance
      carriers  are insuring  the Company  make the  ultimate disposition  of
      these  lawsuits not  material to  the Company's  consolidated financial
      position or results of operations.

      In February,  1998, the Company  acquired the  stock of  CFR, a  Paris,
      France  firm  in  the  engineered industrial  furnace  business.    The
      principal market  served  by CFR  is  engineered batch  and  continuous
      furnaces for  heat treating both ferrous and  non-ferrous metals, glass
      and ceramic tableware.   CFR had sales for the  year ended December 31,
      1997  of  107.5  million  French francs  (FF)  or  approximately  $18.3
      million.  The  purchase price was  15 million FF or  approximately $2.5
      million and the assumption of certain liabilities which was paid for by
      additional bank borrowings of 15 million FF which will be paid off over
      five years at a fixed annual interest rate of 5.65%.

      In  September, 1997, the Company  entered into an  agreement to acquire
      MRL  Industries, Inc.,  Sonora,  CA,  a  manufacturer of  furnaces  and
      furnace components used in the semiconductor manufacturing process, for
      $16,750,000 of the Company's  Common Shares in a merger to be accounted
      for  as  a pooling  of  interests.    The  acquisition was  subject  to
      customary  conditions, including due diligence and shareholder approval
      by both parties.  On  February 26, 1998 the parties announced  they had
      mutually agreed to terminate the acquisition agreement as a result of a
      number  of unresolved issues between the parties.  The Company incurred
      costs of approximately  $0.4 million  in 1997 in  connection with  this
      proposed transaction. 


       MANAGEMENT'S DISCUSSION AND ANALYSIS
      OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

      The Company is in the  process of conducting a comprehensive review  of
      its computer systems to identify the systems that could be  affected by
      the  "Year  2000" issue  and is  developing  an implementation  plan to
      resolve the issue.   The Year  2000 problem is  the result of  computer
      programs being written using two digits  rather than four to define the
      applicable  year.    Any of  the  Company's  programs  that have  time-
      sensitive  software may recognize  a date using  "00" as the  year 1900
      rather than the year 2000.  This could result in a major system failure
      or  miscalculations.    The   Company  presently  believes  that,  with
      modifications to existing software and converting to new  software, the
      Year  2000 problem will  not pose significant  operational problems for
      the  Company's computer systems as so modified and converted.  However,
      if such modifications  and conversations are not  completed timely, the
      Year  2000 issue may  have a material  impact on the  operations of the
      Company.  The  costs of the  modifications are not  expected to have  a
      material effect on the results of operations of the Company.

      A  significant  portion  of  the  heat  processing  segment  sales  are
      denominated  in   foreign  currencies,  primarily  the   French  franc.
      Generally, the income statement effect of changes in foreign currencies
      is  partially or wholly offset by the European subsidiaries' ability to
      make corresponding price changes in the local currency.   The impact of
      fluctuations  in foreign currencies did  not have a  material effect on
      the financial results of the Company in 1997, 1996 or 1995.

      In June, 1997,  the Financial Accounting Standards  Board (FASB) issued
      Statement of Financial Accounting  Standards (SFAS) No. 130, "Reporting
      Comprehensive Income."  This statement requires that all items that are
      recognized under  accounting standards  as components of  comprehensive
      income be  reported in a financial statement that is displayed with the
      same prominence as other financial statements.

      In  June,  1997,  the FASB  issued  SFAS  No.  131, "Disclosures  about
      Segments  of an  Enterprise and  Related Information."   This statement
      establishes   standards  for  reporting   information  about  operating
      segments  in   annual  financial   statements  and  requires   selected
      information  about  operating  segments  in  interim financial  reports
      issued  to shareholders.   It  also  establishes standards  for related
      disclosures  about products  and services,  geographic areas  and major
      customers.

      In  February, 1998, the FASB issued SFAS No. 132 "Employers' Disclosure
      about  Pensions and  Other  Postretirement Benefits."   This  Statement
      revises  employers' disclosures about  pension and other postretirement
      benefit plans.   It does not  change the measurement or  recognition of
      those plans.

      The  Company  plans to  adopt  these accounting  standards  for periods
      beginning with January  1, 1998, as  required.   The adoption of  these
      standards will not impact consolidated results, financial condition, or
      long-term liquidity.  




      MANAGEMENT'S DISCUSSION AND ANALYSIS
      OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

      The Company believes that its present working capital position combined
      with funds expected to  be generated from operations and  the available
      borrowing capacity through its revolving credit loan facilities will be
      sufficient  to meet  its  anticipated cash  requirements for  operating
      needs and capital expenditures.

      1996 COMPARED WITH 1995

      Consolidated sales increased 45.2% to $103.4 million in 1996 from $71.2
      million in 1995.   Net sales for the heat  processing segment increased
      to  $62.8  million in  1996  from $32.6  million  in 1995.    The sharp
      increase  in sales was due to the record level of backlog at the end of
      1995,  along  with additional  bookings  of  several large  engineering
      contracts  in  1996.   Consolidated  backlog  for  the  heat processing
      segment  was $55.5  million  at December  31,  1996 compared  to  $69.3
      million at December 31, 1995.

      The  Company's  precision  electromechanical  and  plastics  components
      business segment  had sales of $27.4 million  in 1996 compared to sales
      of $24.9 million in 1995.  The sales increase in this segment is due to
      higher unit sales to the hearing aid industry.

      Net  sales  of the  tire holders,  lifts  and related  products segment
      decreased  to $13.2 million  in 1996 from  $13.8 million in  1995.  The
      decrease in sales  for this segment is due  to the previously disclosed
      finalization of the Chrysler mini-van contract after the  first quarter
      of 1995.

      The Company's gross profit margin as a percentage-of-sales decreased to
      21.8%  in 1996 from 26.9% in  1995.  Gross profit  margins for the heat
      processing segment decreased to 16.0% in 1996 from 25.8% in 1995.  Heat
      processing  gross  profit  margins   vary  markedly  from  contract  to
      contract,  depending on  customer specifications  and other  conditions
      related to the contract.  The lower gross profit margins  for 1996 were
      also  impacted by a large engineered  contract that resulted in a loss.
      Heat processing reserves for guarantee obligations and estimated future
      costs of services increased to $1.7 million in 1996 from $.8 million in
      1995 due  to several  large custom-engineered  contracts in  process or
      recently completed  during 1996.   Guarantee obligations  and estimated
      future service costs on these contracts extend for up to  one year from
      completion.

      Consolidated net sales for the heat processing segment in 1996 and 1995
      include approximately  $43.4 million and   $20.2 million, respectively,
      from  large custom-engineered contracts executed by the Company and its
      wholly-owned European subsidiaries.  Consolidated income (loss)  before
      taxes  in 1996 and 1995  included approximately $.8  million and $(1.8)
      million, respectively, from the results of operations  of the Company's
      wholly-owned European subsidiaries.   Consolidated backlog for the heat
      processing  segment  in  1996   and  1995  include  $55.5  and   $69.3,
      respectively, for engineering contracts to be executed by the Company's
      wholly-owned  subsidiaries.  Due to  the nature of  the Company's large
      custom-engineered contracts, one contract may account for a


       MANAGEMENT'S DISCUSSION AND ANALYSIS
      OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

      large  percentage of sales in a particular period; however, the Company
      is not dependent on any one engineered systems customer.

      Gross profit  margins for the precision  electromechanical and plastics
      segment  increased  to  39%   for  1996  compared  to  36%   for  1995.
      Productivity  improvement in  manufacturing,  along  with  higher  unit
      sales, generated the  higher gross  profit margins for  the segment  in
      1996.

      Gross profit margins for  the tire holders, lifts and  related products
      segment  improved to  13.6% in  1996 compared  to 12.9%  in 1995.   The
      improvement for this segment in 1996 is due to productivity improvement
      and a more favorable product mix.

      Selling, general  and administrative (SG&A) expenses  increased 4.4% in
      1996 to $15 million from $14.4 in 1995.  SG&A expense, as a percentage-
      of-sales, represented 14.5% in 1996, down from 20.2% in 1995 due to the
      higher amount of sales in 1996, which is up 45.2%, compared to the 4.4%
      increase in SG&A expense in 1996.  The majority of the SG&A increase is
      in the Company's precision electromechanical and plastics segment which
      increased $.8 million in 1996.

      Research  and  development  costs  amounted  to $1.4  million  in  1996
      compared to $1.5 million in 1995.

      Interest expense decreased to $1.2 million in 1996 from $1.3 million in
      1995 due  to lower borrowings  in 1996.   Interest income for  1996 and
      1995 was $.3 million.

      Other (income) expense includes losses on foreign currency transactions
      of $8,000 in 1996 and $123,000 in 1995.

      The effective tax  rate in 1996 and 1995 on  income before income taxes
      was 36.7% and 38.3%, respectively.   The higher rate in 1995  is due to
      foreign operating losses not subject to tax benefits.

      The Company's net deferred  tax assets include a substantial  amount of
      foreign  net operating  loss,  postretirement  benefit obligations  and
      employee pension plan liabilities.  The Company continually reviews the
      adequacy of  the valuation  allowance and  recognizes benefits  only as
      reassessment  indicates  that  it is  more  likely  than  not that  the
      benefits  will be realized.  Realization of future tax benefits related
      to  deferred tax  assets is  dependent on  many factors,  including the
      Company's  ability  to  generate  taxable  income  within  the  foreign
      subsidiary's net operating loss period and the timing of the turnaround
      of the  postretirement  benefit and  pension  plan obligations  in  the
      future.   Management  has  considered  these  factors in  reaching  its
      conclusion  as to the adequacy of the valuation allowance for financial
      reporting purposes.





      MANAGEMENT'S DISCUSSION AND ANALYSIS
      OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

      Consolidated net income of $4.1  million in 1996 is up 79.6%  from $2.3
      million  in 1995.  The  Company's heat processing  segment's net income
      for 1996 increased to $2.0 million in 1996 from $.6 million in 1995 due
      primarily   to  the   strong  increase   in   sales.     The  precision
      electromechanical and plastic  components segment net  income increased
      to $2 million in 1996 from $1.5 million in 1995 due to higher sales and
      improved gross profit margins.

      FORWARD-LOOKING AND CAUTIONARY STATEMENTS

      Certain  statements herein  are, or  could be  deemed to  be, "forward-
      looking statements" within the meaning of Section 27A of the Securities
      Act of 1933, as amended, and Section 21E of the Securities Exchange Act
      of 1934,  as amended.  Reference  is made to the  Company's 1997 Annual
      Report  on Form 10-K regarding  important factors that  could cause the
      actual  results, performance or  achievement of  the Company  to differ
      materially from those  contained in or  implied by any  forward-looking
      statement  made  by or  on behalf  of  the Company,  including forward-
      looking statements contained herein.





      SELAS CORPORATION OF AMERICA
      CONSOLIDATED STATEMENTS OF OPERATIONS
      YEARS ENDED DECEMBER 31              1997           1996       1995

      Sales, net . . . . . . . . .  $111,164,563     $103,426,075 $71,215,413

      Operating costs and expenses
        Cost of sales  . . . . .      87,703,693       80,870,331  52,060,118
        Selling, general and
          administrative expenses     16,289,388       15,033,728  14,397,489 

      Operating income . . . . . .     7,171,482        7,522,016   4,757,806

      Interest expense . . . . .       1,039,524        1,212,194   1,336,386
      Interest (income). . . . . .      (237,592)        (297,806)   (339,895)
      Other expense, net . . . . .         8,385           82,475      35,732 

      Income before income taxes .     6,361,165        6,525,153   3,725,583
      Income taxes   . . . . . . . .   1,973,956        2,394,958   1,425,559 

      Net income . . . . . . . . .  $  4,387,209     $  4,130,195  $2,300,024
                                    ============     ============ ===========


      Earnings per share 

        Basic  . . . . . . . . .            $.84             $.80        $.44
                                    ============     ============  ===========

        Diluted  . . . . . . . . .          $.82             $.78        $.44
                                    =============    ============  ===========










               See   accompanying  notes   to   the  consolidated   financial
      statements.



      CONSOLIDATED BALANCE SHEETS

      ASSETS                                          1997          1996    
    
    Current assets

        Cash, including cash equivalents
          of $2,579,000 in 1997 and
          $ 7,532,000 in 1996. . . . . . . . . . . $ 3,034,903   $ 8,343,820

        Accounts and notes receivable, (including
          unbilled receivables of $6,574,000 in
          1997 and $7,783,000 in 1996) less
          allowance for doubtful accounts of
          $681,000 in 1997 and $787,000 in 1996     30,931,625    41,660,153

        Inventories  . . . . . . . . . . . . . . .   9,999,140     8,433,522

        Deferred income taxes  . . . . . . . . . .   2,840,423     2,051,580

        Other current assets . . . . . . . . . . .     919,608       623,169

            Total current assets . . . . . . . . .  47,725,699    61,112,244


      Investment in unconsolidated affiliate . . .     472,689       538,278


      Property, plant and equipment

        Land   . . . . . . . . . . . . . . . . . .   1,041,869     1,118,802

        Buildings  . . . . . . . . . . . . . . . .  10,839,950    11,499,609

        Machinery and equipment  . . . . . . . . .  22,720,633    19,455,946

                                                    34,602,452    32,074,357

        Less:  Accumulated depreciation  . . . . .  17,284,665    15,362,577

            Net property, plant and equipment. . .  17,317,787    16,711,780

      Deferred pension cost  . . . . . . . . . . .      56,973       225,060

      Excess of cost over net assets of acquired
        subsidiaries, less accumulated
        amortization of $1,696,000 and $1,140,000   15,502,201    12,126,709

      Other assets, less amortization  . . . . . .     719,715       448,201

                                                   $81,795,064   $91,162,272
                                                   ===========   ===========

      See accompanying notes to the consolidated financial statements.




      December 31, 1997 and 1996

      LIABILITIES AND SHAREHOLDERS' EQUITY               1997           1996 

      Current liabilities

        Notes payable  . . .  . . .  . . .  . . .  . . .$  975,804 $   583,767

        Current maturities of long-term debt  . . .      2,618,463   2,271,830

        Accounts payable  . . . . . . . . . . . . .     14,336,607  20,169,143

        Federal, state and foreign income taxes . .        693,240     926,823

        Customers' advance payments on contracts  .        902,592   4,854,880

        Guarantee obligations and estimated future 
          costs of service  . . . . . . . . . . . .      2,705,293   1,725,690

        Other accrued liabilities . . . . . . . . .      6,851,846  10,758,185

                Total current liabilities . . . . . . . 29,083,845  41,290,318

       Long-term debt  . . . . . . . . . . . . . . .     7,015,080   6,836,593

      Pension plan obligation . . . . . . . . . . .         56,973     225,060

      Other postretirement benefit obligations  . .      4,024,217   4,084,768

      Deferred income taxes . . . . . . . . . . . .      1,215,436   1,084,057

      Contingencies and commitments

      Shareholders' equity

        Common shares, $1 par; 10,000,000 shares
          authorized; 5,589,324 and 5,553,639 
          shares issued, respectively . . . . . . .     5,589,324    5,553,639
       
        Additional paid-in capital  . . . . . . .    . 11,792,878   11,660,792

        Retained earnings . . . . . . . . . . . . .    23,130,255   19,672,730
        Foreign currency translation adjustment . .       268,993    1,136,252
                                                       40,781,450   38,023,413

        Less:  363,564 common shares held in
          treasury, at cost . . . . . . . . . . .         381,937      381,937

               Total shareholders' equity  . . . . .   40,399,513   37,641,476

                                                      $81,795,064  $91,162,272
                                                      ===========  ===========

               See   accompanying   notes  to   the   consolidated  financial
      statements.


      CONSOLIDATED STATEMENTS OF CASH FLOWS

      YEARS ENDED DECEMBER 31                                         1997

      Cash flows from operating activities:
        Net income . . . . . . . . . . . . . . . . . .         $ 4,387,209
        Adjustments to reconcile net income to net cash 
          provided by operating activities:
            Depreciation and amortization  . . . . . . .         3,468,498
            Equity in (income) losses of unconsolidated
      .      affiliates                                              4,715
            (Gain) on sale of equity in affiliate  . . .
                                                                       --
            (Gains) losses on sale of property and 
              equipment                                              3,965
            Deferred taxes . . . . . . . . . . . . . . .          (683,615)
            Changes in operating assets and liabilities:
                (Increase) decrease in accounts receivable       5,900,924
                (Increase) decrease in inventories . . . .      (1,296,090)
                (Increase) decrease in other assets  . . .        (651,087)
                 Increase (decrease) in accounts payable .      (2,788,173)
                 Increase (decrease) in accrued expenses .      (1,334,874)
                 Increase (decrease) in customer advances       (3,373,838)
                 Increase (decrease) in other liabilities          (29,709)

                   Net cash provided by operating activities     3,607,925

      Cash flows from investing activities:
        Purchases of property, plant and equipment . . . . .    (3,662,783)
        Proceeds from sale of equity in affiliate  . . . . .          --
      Proceeds from sales of property and equipment. . .            12,052
        Dividend from unconsolidated affiliate . . . . . .            --
        Acquisition of subsidiary company, net of cash 
         acquired                                               (5,151,620) 

            Net cash (used) by investing activities             (8,802,351)

      Cash flows from financing activities:
        Proceeds from short-term borrowings  . . . . . . . . .   1,000,725
        Repayments of short-term borrowings  . . . . . . . . .    (513,448)
        Proceeds from borrowings used to acquire subsidiary 
         company  . . . . . . . . . . . . . . . . . . . . . .    3,500,000
        Proceeds from long-term debt . . . . . . . . . . . . .     176,793
        Repayments of long-term debt . . . . . . . . . . . . .  (2,846,487) 
        Proceeds from exercise of stock options  . . . . . . .     155,518
        Payment of dividends   . . . . . . . . . . . . . . . .    (929,684)

            Net cash provided (used) by financing activities  .    543,417 

      Effect of exchange rate changes on cash  . . . . . . . .    (657,908)

      Increase (decrease) in cash and cash equivalents . . . .  (5,308,917)

      Cash and cash equivalents beginning of year. . . . . . .   8,343,820 

      Cash and cash equivalents end of year. . . . . . . . .   $ 3,034,903
                                                               ============

      See accompanying notes to the consolidated financial statements.


      CONSOLIDATED STATEMENTS OF CASH FLOWS

      YEARS ENDED DECEMBER 31                                         1996

      Cash flows from operating activities:
        Net income . . . . . . . . . . . . . . . . . . .       $  4,130,195
        Adjustments to reconcile net income to net cash 
          provided by operating activities:
            Depreciation and amortization  . . . . . . .          2,826,038
            Equity in (income) losses of unconsolidated 
             affiliates  . . . . . . . . . . . . . . . .            115,880
            (Gain) on sale of equity in affiliate  . . ..              --
            (Gains) losses on sale of property and equipment         (1,163)
            Deferred taxes . . . . . . . . . . . . . . . . .       (718,935)
            Changes in operating assets and liabilities:
              (Increase) decrease in accounts receivable . . .  (19,912,666)
              (Increase) decrease in inventories . . . . . . .     (677,400)
                (Increase) decrease in other assets  . . . . .      788,452
                 Increase (decrease) in accounts payable . . .   15,103,964
                 Increase (decrease) in accrued expenses . . .    7,635,111
                 Increase (decrease) in customer advances  . .    2,553,785 
                 Increase (decrease) in other liabilities  . .      (53,122)

                   Net cash provided by operating activities     11,790,139 

      Cash flows from investing activities:
        Purchases of property, plant and equipment . . . . .     (2,859,166)
        Proceeds from sale of equity in affiliate  . . . . .        575,826
        Proceeds from sales of property and equipment. . . .         35,827
        Dividend from unconsolidated affiliate . . . . . . .         16,742
        Acquisition of subsidiary company, net of cash 
         acquired  . . . . . . . . . . . . . . . . . . . . .           --    

            Net cash (used) by investing activities .            (2,230,771)

      Cash flows from financing activities:
        Proceeds from short-term borrowings  . . . . . . . .          --
        Repayments of short-term borrowings  . . . . . . . .     (2,012,413)
        Proceeds from borrowings used to acquire subsidiary 
         company  . . . . . . . . . . . . . . . . . . . . .           -- 
        Proceeds from long-term debt . . . . . . . . . . . .          --
        Repayments of long-term debt . . . . . . . . . . . .     (2,102,684)
        Proceeds from exercise of stock options  . . . . . .          --   
        Payment of dividends   . . . . . . . . . . . . . . .       (847,712)

            Net cash provided (used) by financing activities     (4,962,809)
      Effect of exchange rate changes on cash  . . . . . . .       (165,103)

      Increase (decrease) in cash and cash equivalents . . .      4,431,456

      Cash and cash equivalents beginning of year. . . . . .      3,912,364

      Cash and cash equivalents end of year. . . . . . . . .   $  8,343,820
                                                               ============

      See accompanying notes to the consolidated financial statements.



       CONSOLIDATED STATEMENTS OF CASH FLOWS

      YEARS ENDED DECEMBER 31                                         1995

      Cash flows from operating activities:
        Net income . . . . . . . . . . . . . . . . . . .       $ 2,300,024
        Adjustments to reconcile net income to net cash
          provided by operating activities:
            Depreciation and amortization  . . . . . . .         2,770,728
            Equity in (income) losses of unconsolidated 
             affiliates  . . . . . . . . . . . . . . . .           (14,024)
            (Gain) on sale of equity in affiliate  . . .          (171,983)
            (Gains) losses on sale of property and equipment        (4,199)
            Deferred taxes . . . . . . . . . . . . . . .          (108,437)
            Changes in operating assets and liabilities:
                (Increase) decrease in accounts receivable       1,383,444
                (Increase) decrease in inventories . . . .         425,641
                (Increase) decrease in other assets  . . .         (82,004)
                 Increase (decrease) in accounts payable .      (6,977,690)
                 Increase (decrease) in accrued expenses .        (610,643)
                 Increase (decrease) in customer advances        1,516,404
                 Increase (decrease) in other liabilities           63,638

                 Net cash provided by operating activities         490,899 

      Cash flows from investing activities:
        Purchases of property, plant and equipment . . . .      (2,277,075)
        Proceeds from sale of equity in affiliate  . . . .         294,127
        Proceeds from sales of property and equipment. . .          43,243
        Dividend from unconsolidated affiliate . . . . . .            --
        Acquisition of subsidiary company, net of cash 
         acquired  . . . . . . . . . . . . . . . . . . . .            --   

            Net cash (used) by investing activities . . . .     (1,939,705)

      Cash flows from financing activities:
        Proceeds from short-term borrowings  . . . . . . . .     2,604,370
        Repayments of short-term borrowings  . . . . . . . .          --
        Proceeds from borrowings used to acquire subsidiary 
         company   . . . . . . . . . . . . . . . . . . . . .          --
        Proceeds from long-term debt . . . . . . . . . . . .          --
        Repayments of long-term debt . . . . . . . . . . . .    (2,397,789)
        Proceeds from exercise of stock options  . . . . . .        28,281
        Payment of dividends   . . . . . . . . . . . . . . .      (795,812)

            Net cash provided (used) by financing activities      (560,950)

      Effect of exchange rate changes on cash  . . . . . . .       109,612 

      Increase (decrease) in cash and cash equivalents . . .    (1,900,144)

      Cash and cash equivalents beginning of year. . . . . .     5,812,508
      Cash and cash equivalents end of year. . . . . . . . .   $ 3,912,364
                                                               ===========

      See accompanying notes to the consolidated financial statements. 


      Consolidated Statements of Shareholders' Equity
      Years ended December 31, 1997, 1996 and 1995

                                                                  
                                         Common Stock             Additional
                                  Number of                       Paid-In
                                   Shares           Amount        Capital   
      Balance, January 1, 1995    5,546,139       $5,546,139     $11,635,927

      Net income
      Translation (loss)
      Exercise of 7,500 stock
        options                       7,500            7,500          24,865
      Change in minimum
        pension liability
      Cash dividends paid 
        ($.154 per share)                                                   
      Balance, December 31, 1995  5,553,639        5,553,639      11,660,792

      Net income
      Translation (loss)
      Change in minimum
        pension liability
      Cash dividends paid
        ($.163 per share)                                                   
      Balance, December 31, 1996  5,553,639        5,553,639      11,660,792

      Net income
      Translation  (loss)
      Exercise of 35,685 stock
        options                      35,685           35,685         132,086
      Cash dividends paid
        ($.178 per share)                                                   

      Balance, December 31, 1997  5,589,324       $5,589,324     $11,792,878
                                  ==========      ==========     ===========

                                                    Foreign       Minimum
                                                    Currency      Pension
                                    Retained      Translation     Liability 
                                    Earnings       Adjustment    Adjustment

      Balance, January 1, 1995    $14,886,035     $ 1,524,372    $(112,623)

      Net income                    2,300,024
      Translation (loss)                              (84,429)
      Exercise of 7,500 stock
        options
      Change in minimum
        pension liability                                          106,113
      Cash dividends paid 
        ($.154 per share)            (795,812)                            
      Balance, December 31, 1995   16,390,247      1,439,943        (6,510)

      Net income                    4,130,195
      Translation (loss)                            (303,691)
      Change in minimum
        pension liability                                            6,510
      Cash dividends paid
        ($.163 per share)            (847,712)  
                          



      Consolidated Statements of Shareholders' Equity
      Years ended December 31, 1997, 1996 and 1995 - (Continued)



                                                    Foreign       Minimum
                                                    Currency      Pension
                                    Retained      Translation     Liability 
                                    Earnings       Adjustment    Adjustment

      Balance, December 31, 1996  19,672,730       1,136,252          --   

      Net income                   4,387,209
      Translation  (loss)                           (867,259)
      Exercise of 35,685 stock
        options
      Cash dividends paid
        ($.178 per share)            (929,684)                            
      Balance, December 31, 1997  $23,130,255     $  268,993     $    --   
                                  ===========     ==========     =========



                                                                Total
                                          Treasury           Shareholders'
                                           Stock               Equity   

      Balance, January 1, 1995            $(381,937)         $33,097,913
      Net income                                               2,300,024
      Translation (loss)                                         (84,429)
      Exercise of 7,500 stock
        options                                                   32,365
      Change in minimum
        pension liability                                        106,113
      Cash dividends paid 
        ($.154 per share)                                       (795,812)

      Balance, December 31, 1995           (381,937)          34,656,174
      Net income                                               4,130,195
      Translation (loss)                                        (303,691)
      Change in minimum
        pension liability                                          6,510
      Cash dividends paid
        ($.163 per share)                                       (847,712)

      Balance, December 31, 1996           (381,937)          37,641,476
      Net income                                               4,387,209
      Translation  (loss)                                       (867,259)
      Exercise of 35,685 stock
        options                                                  167,771
      Cash dividends paid
        ($.178 per share)                                       (929,684)

      Balance, December 31, 1997          $(381,937)         $40,399,513
                                          =========          ===========

      See accompanying notes to the consolidated financial statements.


                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Selas Corporation of America is a diversified firm with international
      operations and sales that engages in the design, development,
      engineering and manufacturing of a range of products.  The Company,
      headquartered in Dresher, Pennsylvania with subsidiaries in Minnesota,
      Ohio, California, England, France, Germany and Italy (and a 50% joint
      venture in Japan), operates directly or through subsidiaries in three
      business segments.   Under the Selastm name, the Company designs and
      manufactures specialized industrial heat processing systems and
      equipment for steel,glass and other manufacturers worldwide. The
      Company's subsidiary, Resistance Technology, Inc. (RTI), designs and
      manufactures microminiature components and molded plastic parts 
      primarily for the hearing instrument manufacturing industry worldwide
      and also for the electronics, telecommunications, and medical equipment 
      industries.  The Company's subsidiary, RTI Electronics, Inc., formed
      in 1997,


      manufactures heat sensitive resistors known as thermistors, used as an
      electronic current limiting device to protect computer installations. 
      The Company's subsidiary, Deuer Manufacturing, Inc., manufactures spare
      tire holders and lifts and related products, primarily based on cable
      winch designs, for use principally as original equipment by the pick-up
      truck and minivan segment of the automotive industry.

      CONSOLIDATION - The consolidated financial statements include the
      accounts of the Company and its wholly-owned subsidiaries.  All
      material intercompany transactions have been eliminated in
      consolidation.

      AFFILIATED COMPANIES - The Company accounts for its investment in 50%
      or less owned affiliates on the equity method.  At December 31, 1997
      and 1996 the Company owned a 50% interest in Nippon Selas Co. Ltd.,
      Tokyo, Japan. 

      CASH EQUIVALENTS - The Company considers all highly liquid debt
      instruments purchased with an original maturity of three months or less
      to be cash equivalents.  

      INVENTORIES - Inventories, other than inventoried costs relating to
      long-term contracts, are stated at the lower of cost or market. The
      cost of the inventories was determined by the average cost and first
      in, first out method. Inventoried costs relating to long-term contracts
      are stated at the production and engineering cost, including overhead
      as well as actual costs incurred from sub-contractors, which are not in
      excess of estimated realizable value.  

      REVENUE RECOGNITION - As long-term contracts progress, the Company
      records sales and cost of sales based on the percentage-of-completion
      method, whereby the sales value is determined by multiplying the total
      contract amount by the percent of costs incurred to estimated total
      costs.  Such contract costs and expenses incurred on a progress basis
      at the time the sales value is recorded are charged to cost of sales. 
      General and administrative costs are expensed as incurred.  The Company
      provides currently for anticipated and known contract losses. 
      Guarantee obligations and estimated future contract costs of services
      on large custom-engineered contracts are based on past experience of
      similar projects.  Due to the nature of large custom-engineered
      contracts, the guarantee obligations and estimated future costs will


      1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)
      vary significantly from contract to contract.  Revisions in cost
      estimates during the progress of the work under the contracts have the
      effect of including in the current accounting period adjustments
      necessary to reflect the results indicated by the revised estimates of
      final cost.  Sales of manufactured products not sold under long-term
      contracts are recorded upon shipment to the customer.

      License fees under agreements not requiring substantial services are
      recognized at time of effectiveness of the license agreement.

      PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are
      carried at cost.  Depreciation is computed by straight line and
      accelerated methods using estimated useful lives of 5 to 50 years for
      buildings and improvements, and 3 to 12 years for machinery and
      equipment.  Improvements are capitalized and expenditures for 
      maintenance, repairs and minor renewals are charged to expense when
      incurred.  At the time assets are retired or sold, the costs and
      accumulated depreciation are eliminated and the resulting gain or loss,
      if any, is reflected in the consolidated statement of operations.

      EXCESS OF COST OVER NET ASSETS OF ACQUIRED SUBSIDIARIES  - Goodwill
      represents the excess of purchase price over fair value of net assets
      acquired and is amortized on a straight-line basis over the expected
      periods to be benefited, which currently is between fifteen and forty
      years.  

      Patents and other intangible assets are valued at the lower of
      amortized cost or fair market value and are amortized on a straight-
      line basis over the expected periods to be benefited, which currently
      is 5 to 20 years.   

      The Company assesses the recoverability of intangible assets by
      determining whether the amortization of the balance over its remaining
      life can be recovered through projected undiscounted future cash flows
      of the business for which the intangible assets arose.  The amount of
      the impairment, if any, is measured based on projected discounted
      future operating cash flows using a discount rate reflecting the
      Company's average cost of funds or fair value of the asset, where
      appropriate.  The assessment of the recoverability of intangible assets
      will be impacted if estimated future operating cash flows are not
      achieved.

      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.

      DERIVATIVE FINANCIAL INSTRUMENTS - The Company has only limited
      involvement with derivative financial instruments and does not use them
      for trading purposes.  They are used to manage well-defined interest
      rate and foreign currency risks.  The differential to be paid or
      received on interest rate swap agreements is accrued as interest rates
      change and recognized as an adjustment to interest



      1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

      DERIVATIVE FINANCIAL INSTRUMENTS - (Continued)
      expense.  The gains and losses on foreign currency exchange contracts
      are deferred and recognized when the offsetting gains and losses are
      recognized on the related hedged items.

      EMPLOYEE  BENEFIT OBLIGATIONS - The Company provides health care
      insurance for certain domestic retirees and employees.  The Company
      also provides retirement related benefits for certain foreign
      employees.  The Company measures the costs of its obligation based on
      its best estimate. The net periodic costs are recognized as employees
      render the services necessary to earn the postretirement benefit.

      Deferred pension costs are actuarially determined and are amortized on
      a straight-line basis over the expected periods to be benefited, which
      currently is 15 years.

      RESEARCH AND DEVELOPMENT COSTS - Research and development costs,
      including supporting services, amounted to $1,527,000 in 1997,
      $1,404,000 in 1996 and $1,466,000 in 1995.  Such costs are charged to
      expense when incurred.

      EARNINGS PER SHARE - In 1997, the Company adopted Statement of
      Financial Accounting Standards (SFAS) No. 128, "Earnings per Share". 
      The adoption of SFAS 128 requires the Company to replace primary and
      fully diluted earnings per share with basic and diluted earnings per
      share.  Basic earnings per share are computed by dividing net income by
      the weighted average number of shares of common stock outstanding
      during the year.  Diluted earnings per common share reflects the
      potential dilution of securities that could share in the earnings. 
      Prior year earnings per share have been restated.

      USE OF ESTIMATES  - Management of the Company has made a number of
      estimates and assumptions relating to the reporting of assets and
      liabilities, the recording of reported amounts of revenues and expenses
      and the disclosure of contingent assets and liabilities to prepare
      these financial statements in conformity with generally accepted
      accounting principles.  Actual results could differ from those
      estimates.

      2.  ACQUISITION

      On February 21, 1997, the Company acquired the assets and assumed
      certain liabilities of Rodan Division of Ketema, Inc., a manufacturer
      of thermistors and thermistor assemblies used primarily as an electric
      current limiting device to protect computer installations.  The
      purchase price was $4.75 million in cash and, additionally, up to a
      maximum of 85,000 shares of the Company's common stock tied to the
      operation's earnings for the twelve months ended February 28, 1998.  It
      is currently estimated that additional shares will be issued, but less
      than the maximum shares allowed under the purchase agreement.  This
      acquisition was accounted for as a purchase and the excess of the fair
      value of the assets (goodwill) is being amortized on a straight line
      basis over 15 years.  In financing the acquisition, the Company
      increased its bank borrowings by $3.5 million.  The proforma effect on
      operations in 1997 and 1996, assuming the acquisition was effective
      January 1, 1996, would not be material.  See note 8 regarding
      borrowings. 


       3.  STATEMENTS OF CASH FLOWS

      Supplemental disclosures of cash flow information:

                                       Years Ended December 31       
                                   1997          1996          1995  

      Interest received         $  218,061    $  283,353    $  277,888
      Interest paid             $  913,312    $1,010,092    $1,306,636
      Income taxes paid         $2,311,305    $2,179,053    $2,410,060

      During 1995,  in connection with the sale of the investment in Isiglass
      SPA,  which resulted in a gain of  $172,000, the Company received notes
      receivable amounting  to $943,000 of  which $315,000 was  repaid during
      1995 and the remainder in 1996.





      4.  BUSINESS SEGMENT INFORMATION

      The  Company  is  engaged   in  providing  engineered  heat  processing
      equipment  and  services  to   industries  throughout  the  world,  the
      manufacture of precision electromechanical and  plastic component parts
      predominantly for  the hearing instrument industry  and the manufacture
      of  spare tire  holders and  lifts for  U.S. manufacturers  of original
      equipment for  light trucks and  vans.  The  results of operations  and
      assets of these  segments for the years  ended December 31,  1997, 1996
      and  1995 included  in  the consolidated  financial  statements are  as
      follows:

      For the year ended
      December 31, 1997                            Segments              

                                                       Tire Holders, Lifts
                                            Heat           and Related 
                                         Processing         Products 
      Operations
        Sales, net                       $62,971,797      $14,938,301
        Operating costs and expenses      59,311,804       14,114,362
        General corporate expenses, net       --               --    
        Operating income                 $ 3,659,993      $   823,939
                                         ===========      ===========
        Interest expense
        Interest (income)                                             
        Other (income) expense, net
        Income before income taxes
      Depreciation and amortization      $   511,014      $   241,708
                                         ===========      ===========
      Property, plant and equipment
        additions                        $   370,235      $   342,649
                                         ===========      ===========
      Total assets                       $42,487,156      $ 5,922,281
                                         ===========      ===========
      For the year ended
      December 31, 1997                             Segments         
                                           Precision
                                         lectromechanical
                                         & Plastic Component
                                             Parts           Total   
      Operations
        Sales, net                       $33,254,465      $111,164,563
        Operating costs and expenses      29,407,506       102,833,672
        General corporate expenses, net       --             1,159,409
        Operating income                 $ 3,846,959         7,171,482
                                         ===========      ===========
        Interest expense                                     1,039,524
        Interest (income)                                     (237,592)
        Other (income) expense, net                              8,385
        Income before income taxes                        $  6,361,165
                                                          ============
      Depreciation and amortization      $ 2,715,776      $  3,468,498
                                         ===========      ============
      Property, plant and equipment
        additions                        $ 2,949,899      $  3,662,783
                                         ===========      ============
      Total assets                       $33,385,627      $ 81,795,064
                                         ===========      ============



      4.  BUSINESS SEGMENT INFORMATION  (Continued)

      For the year ended
      December 31, 1996                             Segments           

                                                       Tire Holders, Lifts
                                            Heat           and Related   
                                         Processing         Products 
      Operations
        Sales, net                       $ 62,801,105     $ 13,208,814
        Operating costs and expenses       58,696,391       13,104,340
        General corporate expenses, net       --               --    
        Operating income                 $  4,104,714     $    104,474
                                         ============     ============
        Interest expense
        Interest (income)                                       
        Other (income) expense, net
        Income before income taxes
      Depreciation and amortization      $    487,422     $    318,039
                                         ============     ============
      Property, plant and equipment
        additions                        $    504,384     $    109,940
                                         ============     ============
      Total assets                       $ 59,138,027     $  5,212,886
                                         ============     ============
      For the year ended
      December 31, 1996                          Segments            
                                           Precision
                                         Electromechanical
                                         & Plastic Component
                                             Parts           Total   
      Operations
        Sales, net                       $ 27,416,156     $103,426,075
        Operating costs and expenses       23,563,515       95,364,246
        General corporate expenses, net       --               539,813

        Operating income                 $  3,852,641        7,522,016
                                         ============     ============

        Interest expense                                     1,212,194
        Interest (income)                                     (297,806)
        Other (income) expense, net                             82,475
        Income before income taxes                        $  6,525,153
                                                          ============
      Depreciation and amortization      $  2,020,577     $  2,826,038
                                         ============     ============
      Property, plant and equipment
        additions                        $  2,244,842     $  2,859,166
                                         ============     ============
      Total assets                       $ 26,811,359     $ 91,162,272
                                         ============     ============




      4.  BUSINESS SEGMENT INFORMATION  (Continued)
      For the year ended
      December 31, 1995                          Segments            

                                                       Tire Holders, Lifts
                                            Heat           and Related 
                                         Processing         Products 
      Operations
        Sales, net                       $32,551,967      $13,789,543
        Operating costs and expenses      30,115,903       13,618,682
        General corporate expenses, net                              

        Operating income                 $ 2,436,064      $   170,861
                                         ===========      ===========

        Interest expense
        Interest (income)                                             
        Other (income) expense, net
       
        Income before income taxes

      Depreciation and amortization      $   480,362      $   417,706
                                         ===========      ===========
      Property, plant and equipment
        additions                        $   249,215      $   171,975
                                         ===========      ===========
      Total assets                       $36,148,264      $ 5,476,449
                                         ===========      ===========

      For the year ended
      December 31, 1995                           Segments             

                                           Precision
                                        Electromechanical
                                       & Plastic Component
                                             Parts           Total   
      Operations
        Sales, net                       $24,873,903      $71,215,413
        Operating costs and expenses      22,057,423       65,792,008
        General corporate expenses, net                       665,599

        Operating income                 $ 2,816,480        4,757,806
                                         ===========      ===========
        Interest expense                                    1,336,386
        Interest (income)                                    (339,895)
        Other (income) expense, net                            35,732
       
        Income before income taxes                        $ 3,725,583
                                                          ===========
      Depreciation and amortization      $ 1,872,660      $ 2,770,728
                                         ===========      ===========
      Property, plant and equipment
        additions                        $ 1,855,885      $ 2,277,075
                                         ===========      ===========
      Total assets                       $26,334,807      $67,959,520
                                         ===========      ===========





      4.  BUSINESS SEGMENT INFORMATION - (Continued)

      The geographical distribution of identifiable assets and  net assets at
      December 31, 1997, 1996 and 1995, and income (loss) before income taxes
      (benefits) for the years then ended is set forth below:
                                                            Income (loss)
                          Identifiable          Net         before taxes
                             assets           assets         (benefits) 

                                 
                                               1997                     

      United States   . . $58,660,565       $36,634,141     $ 5,422,777
      Europe          . .  28,744,894         3,765,372         938,388
      Eliminations    . .  (5,610,395)          --               --     
      Consolidated    . . $81,795,064       $40,399,513     $ 6,361,165
                          ===========       ===========     ===========

                                               1996                     

      United States   . . $ 53,007,230      $ 33,751,368    $ 5,509,966
      Europe          . .   44,315,117         3,890,108      1,015,187
      Eliminations    . .   (6,160,075)          --             --      
      Consolidated    . . $ 91,162,272      $ 37,641,476    $ 6,525,153
                          ============      ============    ===========



                                               1995                     

      United States   . . $49,813,578       $30,974,151     $ 5,454,734
      Europe          . .  24,759,046         3,682,023      (1,729,151)
      Eliminations    . .  (6,613,104)          --              --     
      Consolidated    . . $67,959,520       $34,656,174     $ 3,725,583
                          ===========       ===========     ===========








      4.  BUSINESS SEGMENT INFORMATION - (Continued)

      Net sales  by geographic area  for the years  ended December 31,  1997,
      1996 and 1995 are as follows:

                                                     Transfers
                                 Sales to            between
                               unaffiliated         geographic
                                customers             areas   


                                            1997              

      United States  . . .     $ 70,564,577 (a)    $ 1,815,241
      Europe         . . .       40,599,986 (b)      4,465,277
      Eliminations   . . .          --              (6,280,518)
      Consolidated   . . .     $111,164,563        $     -- 
                               ============        ===========


                                            1996              

      United States   . . .    $ 59,922,640 (a)    $ 1,420,690
      Europe          . . .      43,503,435 (b)        314,027
      Eliminations    . . .         --              (1,734,717)
      Consolidated    . . .    $103,426,075        $     -- 
                               ============        ===========
                                            1995              

      United States   . . .    $ 50,387,079 (a)    $ 1,767,546
      Europe          . . .      20,828,334 (b)      1,054,656
      Eliminations    . . .         --              (2,822,202) 
      Consolidated    . . .    $ 71,215,413        $     -- 
                               ============        ===========



      (a) Includes export sales of approximately $15,511,000 in
          1997, $15,026,000 in 1996 and $16,480,000 in 1995,
          principally to Europe, Asia, Canada and South America.

      (b) Includes export sales of approximately $38,798,000 in 1997,
          $40,549,000 in 1996 and $9,034,000 in 1995, principally to Austria,
          the United States, Asia and Turkey.

      Transfers between geographic areas are recorded at amounts which
      approximate prevailing selling prices.

      Consolidated net sales in 1997 include approximately $34,719,000 or 31%
      from contracts with two customers executed by the Company's heat
      processing group.  Due to the nature of the Company's engineered
      systems products, one contract may account for a large percentage of
      sales in a particular period; however, the Company is not dependent on
      any one engineered systems customer on an ongoing basis.  
      Approximately $51,780,000 of consolidated net sales were attributable
      to customers in the steel industry.  





      4.  BUSINESS SEGMENT INFORMATION - (Continued)

      Consolidated net sales in 1996 include approximately $22,132,000 or 21%
      from contracts with one customer executed by the Company's wholly-owned
      European subsidiary, Selas S.A.  Approximately $45,258,000 of
      consolidated net sales were attributable to customers in the steel
      industry.

      Consolidated net sales in 1995 do not result from sales to any one
      individual customer in excess of 10% of total sales.  Consolidated net
      sales in 1995 include approximately $13,321,000 attributable to the
      steel industry.

      5.  FAIR VALUE OF FINANCIAL INSTRUMENTS

      The following table presents the carrying amounts and estimated fair
      values of the Company's financial instruments at December 31, 1997 and
      1996.  FASB Statement No. 107, "Disclosures about Fair Value of
      Financial Instruments", defines the fair value of a financial
      instrument as the amount at which the instrument could be exchanged in
      a current transaction between willing parties.

                                      1997                     1996          
                              Carrying       Fair       Carrying     Fair
                               Amount       Value       Amount        Value  


      Financial assets
        Cash, including cash
          equivalents . . . .$ 3,034,903 $ 3,034,903  $ 8,343,820  $ 8,343,820
        Accounts and notes 
          receivables . . . . 30,931,625  30,931,625   41,660,153   41,609,153

      Financial liabilities
        Notes payable . . . .    975,804     975,804      583,767      583,767
        Trade accounts 
          payables. . . . . . 14,336,607  14,336,607   20,169,143   20,169,143
        Customer advance 
          payments on
          contracts . . . . .    902,592     902,592    4,854,880    4,854,880
        Other accrued 
          liabilities . . . .  6,851,846   6,851,846   10,758,185   10,758,185
       
        Long-term debt. . . .  9,633,543   9,419,381    9,108,423    8,923,577

      The carrying amounts shown in the table are included in the statement
      of financial position under the indicated captions.

      The following methods and assumptions were used to estimate the fair
      value of each class of financial instruments:

      Cash, including cash equivalents, short-term accounts and notes
      receivables, other current assets, notes payable to banks, trade
      accounts payables, and other accrued expenses:  The carrying amounts
      approximate fair value because of the short maturity of those
      instruments.







      5.  FAIR VALUE OF FINANCIAL INSTRUMENTS - (CONTINUED)

      Accounts and notes receivable long-term in 1996:  The fair value of the
      receivables is determined as the present value of expected future cash
      flows discounted at a rate of 6%.

      Long-term debt:  The fair value of the Company's long-term debt is
      estimated by discounting the future cash flows of each instrument at
      rates currently offered to the Company for similar debt instruments of
      comparable maturities by the Company's bankers.

      See note 9 regarding the fair value of derivative financial
      instruments.

      The estimated fair value of financial instruments has been determined
      based on available market information and appropriate valuation
      methodologies.  However, considerable judgment is necessarily required
      in interpreting market data to develop the estimates of fair value. 
      Accordingly, the estimates presented herein are not necessarily
      indicative of the amounts that the Company might realize in a current
      market exchange.  The use of different market assumptions and/or
      estimation methodologies may have a material effect on the estimated
      fair value.


      6.  INVENTORIES

      Inventories consist of the following:

                                                       Finished
                            Raw         Work-in-     products and
         December 31      materials     process      components     Total  

      1997
      Domestic . . . . .  $2,936,574   $2,036,831   $3,971,429   $8,944,834
      Foreign  . . . . .     117,970      685,133      251,203    1,054,306
        Total  . . . . .  $3,054,544   $2,721,964   $4,222,632   $9,999,140
                          ==========   ==========   ==========   ==========

      1996
      Domestic . . . . .  $2,431,182   $1,731,479   $3,849,215   $8,011,876
      Foreign  . . . . .     170,745       17,892      233,009      421,646
        Total  . . . . .  $2,601,927   $1,749,371   $4,082,224   $8,433,522
                          ==========   ==========   ==========   ==========


      7.  LONG-TERM CONTRACTS AND RECEIVABLES

      Accounts and notes receivable at December 31, 1997 and 1996 include the
      following elements from long-term contracts:

                                              1997            1996   

      Amounts billed . . . . . . . . .    $14,236,348     $21,721,085
      Retainage, due upon completion .        715,924       2,179,825
      Unbilled receivables . . . . . .      6,574,392       7,782,606
        Total  . . . . . . . . . . . .    $21,526,664     $31,683,516
                                          ===========     ===========

      The balances billed but not paid by customers, pursuant to retainage
      provisions included in long-term contracts, will be due upon completion
      of the contracts and acceptance by the customer.  The retainage
      balances at December 31, 1997 are anticipated to be collected in 1998.

      The unbilled receivables are comprised principally of amounts of
      revenue recognized on contracts (on the percentage-of-completion
      method) for which billings had not been presented to the customers
      because the amounts were not billable under the contract terms at the
      balance sheet date.  In accordance with the contract terms the unbilled
      receivables at December 31, 1997 will be billed in 1998. 

      Inventories include costs relating to long-term sales contracts of
      $187,666 and $140,611 at December 31, 1997 and 1996, respectively. 

      At December 31, 1997 and 1996, the Company had $1,799,128 and
      $1,283,201, respectively, of trade accounts receivable due from major
      U.S. automotive manufacturers.  At December 31, 1997 and 1996, the
      Company had $2,685,219 and $2,722,501, respectively, of trade accounts
      receivable due from hearing aid manufacturers.  The Company also had
      $19,803,826 and $28,512,481 at December 31, 1997 and 1996,
      respectively, in currently billed and unbilled receivables from long-
      term contracts for customers in the steel industry in North America and
      Europe.




      8.  NOTES PAYABLE AND LONG-TERM DEBT 
      NOTES PAYABLE

      Notes payable at December 31, 1997 and 1996 are summarized below:

                                             1997            1996   
      Notes payable:

        Short term borrowings, 
         European banks                   $  975,804      $   583,767
                                          ==========      ===========

      Consolidated European subsidiaries have working capital credit
      arrangements with European banks aggregating $8,762,000.  Of this
      amount, $1,883,000 may be used to borrow funds for working capital or
      guarantee customer advance payments on contracts.  The remaining
      $6,879,000 may be used only for guaranteeing customer advance payments,
      of which $2,058,000 was utilized at December 31, 1997 at interest rates
      ranging from .65% to .75%.  At December 31, 1997 the Company's European
      subsidiaries had borrowings of $975,804, which bear interest at annual
      rates ranging from 5% to 13%.  These credit arrangements have no
      expiration dates and are guaranteed by the Company.  

      The maximum amounts of short-term borrowings and bank guarantees at any
      month end were $15,002,000 in 1997, $21,954,000 in 1996 and $6,030,000
      in 1995.  The average short-term borrowings and bank guarantees
      outstanding during 1997, 1996 and 1995 amounted to $8,498,000,
      $10,636,000 and $4,389,000, respectively.  The average short-term
      interest rates in 1997, 1996 and 1995 for outstanding borrowings were
      9%, 11% and  9%, respectively. 

      LONG-TERM DEBT

      Long-term debt at December 31, 1997 and 1996 is summarized below:

                                              1997           1996   
      Long-term debt:        
        Term loans, Domestic banks        $ 6,870,024     $ 5,891,669
        Term loans, European banks and 
          government agency                 1,697,171       2,289,262
        Mortgage notes                        917,606         927,492
        Other borrowings                      148,742          --    
                                            9,633,543       9,108,423
        Less:  current maturities           2,618,463       2,271,830

                                          $ 7,015,080     $ 6,836,593
                                          ===========     ===========

      On February 20, 1997, the Company amended its existing domestic term
      loan agreement with a commercial bank to increase its borrowings by
      $3.5 million to purchase the assets of the Rodan Division of Ketema
      through its wholly-owned subsidiary, RTI Electronics.  See note 2
      regarding the acquisition.  Under the terms of the amended agreement,
      principal amounts are repayable over the next five years on a monthly
      basis with aggregate principal payments of $700,000 per year. 
      Borrowings under this amended agreement bear interest at a rate of 1.5%
      above the London Inter-Bank Offered Rate (LIBOR) (7.46% at December 31,
      1997) payable monthly.  The previous borrowings under the amended
      agreement were unchanged as principal amounts are repayable over the
      next three years on a monthly basis with aggregate principal payments
      of $1,650,000 per




      8.  NOTES PAYABLE AND LONG-TERM DEBT  - (Continued)
      year.  Additional payments of principal are required depending upon the
      annual earnings of the Company's domestic operations and as a result of
      this requirement, the Company made an additional principal payment of
      $288,312 in 1997 based upon the Company's 1996 domestic earnings.  No
      payment is required in 1998.  At December 31, 1997, these borrowings
      under the credit agreement bore interest, payable monthly, at a fixed
      interest rate of 6-3/4%.  The credit agreement is subject to a
      prepayment penalty of 3%, to the extent the loan is paid off with
      additional borrowings.

      The Company and its domestic subsidiaries entered into revolving credit
      loan facilities  under which borrowings or letters of credit
      aggregating $3,500,000 could be outstanding at any one time.  At
      December 31, 1997, there were no borrowings under the revolving credit
      loan facility.  Borrowings under the facility bear interest at a rate
      of 1.5% above the London Inter-Bank Offered Rate (LIBOR) and a
      commitment fee of 1/4% per annum is payable on the unborrowed portion
      of the line.  The credit facility expires on June 1, 1998.

      The credit agreement and revolving credit loan facilities are secured
      by the Company's domestic assets, except RTI's land and building which
      is pledged under a separate agreement, and the Company's  domestic
      subsidiaries' stock.  The agreements contain restrictive covenants
      regarding the payment of cash dividends, maintenance of working
      capital, net worth, and shareholders' equity, along with the
      maintenance of certain financial ratios.  The Company and its domestic
      subsidiaries are required to maintain consolidated tangible capital
      funds of approximately $21.1 million through December 31, 1997
      consisting of shareholders' equity, plus subordinated debt, less
      intangible assets, increased annually after December 31, 1997 by 60% of
      net income and contributions to capital.  At December 31, 1997, the
      Company exceeded the amount required to satisfy this covenant in the
      loan agreement by $3.3 million. 

      The Company's French subsidiary, Selas S.A., financed its premises
      outside of Paris with bank borrowings maturing August 31, 2006 with
      required quarterly installments of principal of $49,917 (FF 300,000). 
      The loan carries interest payable quarterly at the Paris Interbank
      Offered Rate (PIBOR) plus .7% (4.4% at December 31, 1997).  The loan
      balances as of December 31, 1997 and 1996 were $1,697,171 (FF
      10,200,000) and $2,196,532 (FF 11,400,000), respectively.  This loan
      can be prepaid, subject to a premium of 3% of the amount prepaid.  The
      debt is secured by the land and building of Selas S.A.  The subsidiary
      also had a term loan with a French government agency which was non-
      interest bearing and paid in 1997.  The loan balance as of December 31,
      1996 was $92,730 (FF 481,268).

      The Company assumed a mortgage at the date of acquisition of RTI which
      is payable in monthly installments of $9,285, including interest,
      through July 1, 2019.  The mortgage has an interest rate of 11% and is
      secured by the land and building of RTI.  Prepayment of the mortgage is
      permitted; however, it is subject to a penalty which is tied to the
      current interest rates and the length of the loan.  The lender has the
      right to call the loan at any time after July 1, 1999 on ninety days
      written notice to the Company.





      8.  NOTES PAYABLE AND LONG-TERM DEBT - (Continued)

      The aggregate maturities of long-term debt for the five years ending
      December 31, 2002 and thereafter are as follows:
      Years ending December 31,           Aggregate Maturity

      1998 . . . . . . . . . . . . . .      $  2,618,463
      1999 . . . . . . . . . . . . . .         3,516,302
      2000 . . . . . . . . . . . . . .         1,583,941
      2001 . . . . . . . . . . . . . .           899,667
      2002 . . . . . . . . . . . . . .           316,334
      2003 and thereafter  . . . . . .           698,836    
                                            $  9,633,543
                                          ==============

      9.  DERIVATIVE FINANCIAL INSTRUMENTS

      Interest rate swap agreements are used to reduce the potential impact
      of increases in interest rates on floating-rate long-term debt.  At
      December 31, 1997, the Company's French subsidiary was a party to one
      interest rate swap agreement.  The interest rate swap agreement is with
      major European financial institutions having a total notional amount of
      $2.3 million at December 31, 1997.  The notional amount will decrease
      consistent with the terms of the related long-term debt agreement.  The
      swap agreement requires fixed interest payments based on an effective
      rate of 8.55% for the remaining term through May, 2006.  The subsidiary
      continually monitors its position and the credit ratings of its
      counterparties and does not anticipate nonperformance by the
      counterparties.  Additional interest incurred during 1997, 1996 and
      1995 in connection with the swap agreement amounted to $95,584,
      $101,738 and $65,175, respectively.

      The fair value of the interest rate swap agreement was $2.2 million at
      December 31, 1997.  The fair value of this financial instrument (used
      for hedging purposes) represents the aggregate replacement cost based
      on financial institution quotes.  The Company is exposed to market
      risks from changes in interest rates and fluctuations in foreign
      exchange rates.







       10.  OTHER ACCRUED LIABILITIES

      Other accrued liabilities at December 31, 1997 and 1996 are as follows:

                                              1997            1996  

      Salaries, wages and commissions .   $ 2,825,558     $ 3,591,356
      Taxes, including payroll 
        withholdings and VAT, 
        excluding income taxes              2,217,951       5,594,441
      Accrued pension costs                   662,433         532,582
      Accrued professional fees               541,967         432,207
      Accrued insurance                       218,392         377,478
      Other                                   385,545         230,121
                                          $ 6,851,846     $10,758,185
                                          ===========     ===========

      11.  DOMESTIC AND FOREIGN INCOME TAXES

      Domestic and foreign income taxes (benefits) are comprised as follows:

                                     Years Ended December 31          
                                 1997           1996           1995   
      Current
        Federal   . .       $ 2,222,160     $ 2,168,819    $ 1,901,334
        State     . .           197,799         454,367        255,666
        Foreign   . .           237,612         490,707       (623,004)

                              2,657,571       3,113,893      1,533,996 

      Deferred
        Federal   . .          (543,436)       (552,526)      (251,078)
        State     . .          (130,176)        (61,116)        36,400
        Foreign   . .           (10,003)       (105,293)       106,241 

                               (683,615)       (718,935)      (108,437)

      Income taxes  . .     $ 1,973,956     $ 2,394,958    $ 1,425,559
                            ============    ===========    ===========

      Income (loss) before income taxes is as follows:

        Foreign   . .       $   938,388     $ 1,015,187    $(1,729,151)
        Domestic  . .         5,422,777       5,509,966      5,454,734

                            $ 6,361,165     $ 6,525,153    $ 3,725,583
                            ============    ===========    ===========




      11.  DOMESTIC AND FOREIGN INCOME TAXES - (Continued)

      The following is a reconciliation of the statutory federal income tax
      rate to the effective tax rate based on income (loss): 

                                      Years Ended December 31    
                                    1997           1996        1995 
      Tax provision at statutory
        rate  . . . . . . .       34.0%           34.0%       34.0%
      Net foreign operating loss  
        carryforwards . . .       (1.5)            0.3         4.9
      Effect of foreign tax 
        rates . . . . . . .         --             1.8        (5.2)
      State taxes net of 
        federal benefit . .        0.7             4.0         5.5
      Tax benefits related to 
        export sales    . .       (3.2)           (2.7)       (3.4)
      Other . . . . . . . .        1.0            (0.7)        2.5 

      Domestic and foreign 
        income tax rate  . .      31.0%           36.7%       38.3%
                                  =====           =====       =====


      The significant components of deferred income taxes (benefits) for the
      years ended December 31, 1997, 1996 and 1995 are as follows:

                                               Years Ended December 31       
                                         1997          1996           1995   

        Deferred income tax (benefit) $ (38,853)    $(342,743)     $(604,443)
        Increase (decrease) in beginning
          -of-the-year balance of the 
          valuation allowance for 
          deferred tax assets          (618,613)     (369,868)       481,525
        Other                           (26,149)       (6,324)        14,481 
                                      $(683,615)    $(718,935)     $(108,437)
                                      =========     =========      =========





      11.  DOMESTIC AND FOREIGN INCOME TAXES - (Continued)

      The tax effects of temporary differences that give rise to significant
      portions of the deferred tax assets and deferred tax liabilities at
      December
      31, 1997 and 1996 are presented below:

      DEFERRED TAX ASSETS:                             1997           1996   

        Postretirement benefit obligations          $1,274,049     $1,284,333
        Net operating loss carryforwards               849,669      1,372,575
        State income taxes                             463,220        374,689
        Guarantee obligations and estimated future
          costs of service accruals                    895,034        528,586
        Employee pension plan obligations              208,155        181,078
        Compensated absences, principally due to
          accrual for financial reporting purposes     290,209        273,910
        Other                                          836,411        624,765

          Total gross deferred tax assets            4,816,747      4,639,936
          Less:  valuation allowance                 1,696,824      2,315,437

          Net deferred tax assets                    3,119,923      2,324,499

      Deferred tax liabilities:

        Plant and equipment, principally due
          to differences in depreciation and
          capitalized interest                       1,219,890      1,152,692

        Other                                          275,046        204,284
          Total gross deferred tax liabilities       1,494,936      1,356,976

          Net deferred tax assets                   $1,624,987     $  967,523
                                                    ==========     ==========


      Domestic and foreign deferred taxes are comprised as follows:

      December 31, 1997     Federal      State        Foreign        Total  

      Current deferred 
        asset            $1,847,390    $  400,228    $ 592,805     $2,840,423
      Non-current deferred
        (liability)        (729,294)      (67,029)    (419,113)
      (1,215,436)

      Net deferred tax 
        asset            $1,118,096    $  333,199    $ 173,692     $1,624,987
                         ==========    ==========    =========     ==========


      December 31, 1996   Federal        State        Foreign         Total  

      Current deferred 
        asset            $1,260,593    $ 311,697     $ 479,290     $2,051,580
      Non-current deferred
        (liability)        (734,607)     (60,001)     (289,449)    (1,084,057)

      Net deferred tax 
        asset            $  525,986    $ 251,696     $ 189,841     $  967,523
                         ==========    =========     =========     ==========







      11.  DOMESTIC AND FOREIGN INCOME TAXES - (Continued)

      At December 31, 1997, the Company had $286,021 of income tax receivable
      included in accounts and notes receivable.

      The valuation allowance for deferred tax assets as of January 1, 1997
      was $2,315,437.  The net change in the total valuation allowance for
      the year ended December 31, 1997 was a decrease of $618,613. 
      Subsequently recognized tax benefits relating to the valuation
      allowance for deferred tax assets will be reported in the consolidated
      statement of operations.

      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.  Based upon the level of historical
      taxable income and projections for future taxable income over the
      periods which the deferred tax assets are deductible, management
      believes it is more likely than not the Company will realize the
      benefits of these deductible differences, net of the existing valuation
      allowances, at December 31, 1997. 

      At December 31, 1997 the Company has net operating loss carryforwards
      for foreign income tax purposes of $2,614,435 of which $479,212 expire
      in 1998 and $2,135,223 have no expiration date and are available to
      offset future foreign taxable income.

      No provision has been made for United States income tax which may be
      payable on undistributed income of the Company's foreign subsidiaries
      since it is the Company's intention to reinvest the unremitted
      earnings.  Furthermore, based on current federal income tax laws, the
      federal income tax on future dividends will be offset by foreign tax
      credits in certain instances.  At December 31, 1997, the Company has
      not recognized a deferred tax liability of approximately $1,906,000 on
      undistributed retained earnings of such subsidiaries of $5,606,000.





      12. EMPLOYEE BENEFIT PLANS

      The parent Company has two defined benefit pension plans.  One covers
      salaried employees and is a career average compensation plan.  The
      other plan covers hourly employees and is based on a fixed benefit and
      years of credited service.  Pension costs are determined by independent
      actuaries and include current service costs and the amortization of
      past service costs.  The Company makes annual contributions to the
      plans in conformity with ERISA funding requirements.
      The following table sets forth the plans' funded status and amounts
      recognized in the Company's statements of financial position at
      December 31,
      1997 and 1996:


                                               December 31, 1997    
                                              Union        Salaried
                                              Plan           Plan  
      Actuarial present value of benefit
        obligations:
      Vested benefit obligation            $(2,501,638)   $(2,062,156)
                                            ===========    ===========

      Accumulated benefit obligation       $(2,536,246)   $(2,086,259)
                                            ===========    ===========
      Projected benefit obligation for
        service rendered to date           $(2,536,246)   $(2,318,561)

      Plan assets at contract or fair value, 
        including insurance contracts 
        and various common trust fund
        investments                          1,900,305      2,225,258

      Projected benefit obligation (in ex-
        cess of) plan assets                  (635,941)       (93,303)
      Unrecognized prior service costs          20,629          6,154
      Unrecognized net (gain) or loss         (129,022)        53,897 
      Unrecognized net obligation at
        January 1, 1986 being recognized
        over 15 years                          165,366          --   
      Accrued pension cost liability included
        in current liabilities before     
        adjustment of additional minimum
        liability                             (578,968)       (33,252)
      Adjustment required to recognize
        additional minimum liability           (56,973)         --    
      Accrued pension cost after adjust-
        ment of additional minimum liability
        at December 31, 1997 and 1996      $  (635,941)   $   (33,252)
                                            ===========    ===========

      As of December 31, 1997, the Company has recognized the additional
      minimum liability of $56,973 and an intangible asset of $56,973.





                                               December 31, 1996    
                                              Union        Salaried
                                              Plan           Plan  
      Actuarial present value of benefit
        obligations:
      Vested benefit obligation            $(2,498,941)   $(1,754,530)
                                            ===========    ===========

      Accumulated benefit obligation       $(2,528,777)   $(1,797,321)
                                            ===========    ===========
      Projected benefit obligation for
        service rendered to date           $(2,528,777)   $(2,019,916)

      Plan assets at contract or fair value, 
        including insurance contracts 
        and various common trust fund
        investments                          1,714,493      1,932,219

      Projected benefit obligation (in ex-
        cess of) plan assets                  (814,284)       (87,697)
      Unrecognized prior service costs          29,348          7,862
      Unrecognized net (gain) or loss          (24,775)       136,477 
      Unrecognized net obligation at
        January 1, 1986 being recognized
        over 15 years                          220,487         --    
      Accrued pension cost liability included
        in current liabilities before     
        adjustment of additional minimum
        liability                             (589,224)        56,642
      Adjustment required to recognize
        additional minimum liability          (225,060)        --     
      Accrued pension cost after adjust-
        ment of additional minimum liability
        at December 31, 1997 and 1996      $  (814,284)   $    56,642
                                           ===========    ===========  

      As of December 31, 1997, the Company has recognized the additional 
      minimum liability of $56,973 and an intangible asset of $56,973.








      12.  EMPLOYEE BENEFIT PLANS- (Continued)


      Net periodic pension cost for these plans for the years 1997, 1996 and
      1995 included the following components:

                                            Years Ended December 31       
                                           1997        1996          1995  

      Service cost - benefits
        earned during the period        $ 182,973   $ 187,955    $ 160,038

      Interest cost on projected
        benefit obligation                319,109     306,788      304,065

      Actual return on assets            (640,938)   (419,872)    (638,756)

      Net amortization and deferral       420,506     228,214      497,947 

      Net periodic pension cost         $ 281,650   $ 303,085    $ 323,294
                                        =========   =========    ========= 

      The discount rate used to determine the projected benefit obligation
      for both the salaried and union plans was 7% for 1997 and 7.25% for
      1996 and 1995.

      The projected benefit obligation was determined by using an assumed
      rate of increase in compensation levels of 5% for 1997, 1996 and 1995
      for the salaried plan.  The expected long-term rate of return on assets
      for both plans was 8%.

      The Company's French subsidiary is obligated to contribute to an
      employee profit sharing plan under which annual contributions are
      determined on the basis of a prescribed formula using capitalization,
      salaries and certain revenues.  Amounts are paid into a bank trust fund
      the year following the contribution calculation.  Profit sharing
      expense for 1997, 1996 and 1995 was $0, $96,970, and $0, respectively. 

      The Company has defined contribution plans for most of its domestic
      employees not covered by collective bargaining agreements.  Under these
      plans, eligible employees may contribute amounts through payroll
      deductions supplemented by employer contributions for investment in
      various investments specified in the plans.  The Company contribution
      to these plans for 1997, 1996 and 1995 was $362,292, $288,556 and
      $273,675, respectively.





      12.  EMPLOYEE BENEFIT PLANS- (Continued)


      The Company provides postretirement medical benefits to certain
      domestic full-time employees who meet minimum age and service
      requirements.  The Company's policy is to pay the cost of these
      postretirement benefits when required on a cash basis.  The Company
      also has provided certain foreign employees with retirement related
      benefits.

      The following table presents the amounts recognized in the Company's
      consolidated balance sheet at December 31, 1997 and 1996 for
      postretirement medical benefits:

      Accrued postretirement medical benefits:


                                                      December 31       
      Accumulated postretirement medical 
      benefit obligation                          1997            1996  

        Retirees                              $1,827,874      $ 1,922,719
        Fully eligible active plan 
          participants                           562,603          515,701
        Other active plan participants           410,574          345,098
                                               2,801,051        2,783,518
      Unrecognized net gain                      489,686          533,423

        Accrued postretirement medical
        benefit cost                          $3,290,737      $ 3,316,941
                                              ===========     ===========

      Accrued postretirement medical benefit costs are classified as other
      postretirement benefit obligations as of December 31, 1997 and 1996.  

      Net periodic postretirement medical benefit costs for 1997, 1996 and
      1995 include the following components:

                                          Years Ended December 31       
                                      1997          1996          1995  

        Service cost               $ 27,707      $ 25,834      $ 20,210
        Interest cost               192,610       194,081       206,227
        Net gain                    (18,702)      (18,171)      (33,660)

        Net periodic postretirement 
          medical benefit cost     $201,615      $201,744      $192,777
                                   ========      ========      ========


      12.  EMPLOYEE BENEFIT PLANS - (Continued) 


      For measurement purposes, a 11% annual rate of increase in the per
      capita cost of covered benefits (i.e., health care cost trend rate) was
      assumed for 1997; the rate was assumed to decrease gradually to 6% by
      the year 2006 and remain at that level thereafter.  The health care
      cost trend rate assumption has a significant effect on the amounts
      reported.  For example, increasing the assumed health care cost trend
      rates by one percentage point in each year would increase the
      accumulated postretirement medical benefit obligation as of December
      31, 1997 by $244,000 and the aggregate of the service and interest cost
      components of net periodic postretirement medical benefit cost for the
      year ended December 31, 1997 by $17,500.

      The weighted-average discount rate used in determining the accumulated
      postretirement medical benefit obligation at December 31, 1997 and 1996
      was 7.25%.  

      The Company provides retirement related benefits to a former employee,
      and to certain foreign subsidiary employees in accordance with
      industry-wide collective labor agreements.  The liabilities established
      for these benefits at December 31, 1997 and 1996 were $733,480 and
      $742,831, respectively, and are classified as other postretirement
      benefit obligations as of December 31, 1997 and 1996.

      13.  CURRENCY TRANSLATION ADJUSTMENTS

      All assets and liabilities of foreign operations are translated into
      U.S. dollars at prevailing rates of exchange in effect at the balance
      sheet date.  Revenues and expenses are translated using average rates
      of exchange for the year.  The functional currency of the Company's
      foreign operations is the currency of the country in which the entity
      resides; such currencies are the French franc, German mark, Italian
      lira and Japanese yen.  Adjustments resulting from the process of
      translating the financial statements of foreign subsidiaries into U.S.
      dollars are reported as a separate component of shareholders' equity,
      net of tax where appropriate.  Gains and losses arising from foreign
      currency transactions are reflected in the consolidated statements of
      operations as incurred.  Foreign currency transaction gains (losses)
      included in the statement of operations for 1997, 1996 and 1995 were
      $13,819, $(8,200) and $(123,419), respectively.

      14.   COMMON STOCK AND STOCK OPTIONS

      On April 22, 1997, the Board of Directors declared a three-for-two
      split of the Company's stock, pursuant to which 1,737,510 shares were
      issued.  Shareholders of record on June 10, 1997 received one
      additional share for each two common shares held.  The effect of this
      transaction was to reduce additional paid-in capital by $1,737,510 with
      a corresponding increase in common stock which has been retroactively
      recorded.  All common share data in these financial statements and
      notes have been adjusted to reflect this transaction.

      Under the Company's 1985 and 1994 Stock Option Plans, options to an
      aggregate of 900,000 shares of common stock may be granted to certain
      officers and key employees at no less than 100% of the fair market
      value at the date of grant.  All options are exercisable until the
      earlier of termination pursuant to the plans or ten years from date of
      grant.
       14.   COMMON STOCK AND STOCK OPTIONS (Continued)

      At December 31, 1997, there were 312,000 additional shares available
      for grant under the 1994 plan.  The per share weighted-average fair
      value of stock options granted during 1995 was $3.23 on the date of
      grant using the Black Scholes option-pricing model with the following
      weighted-average assumptions:  1995 - expected dividend yield 2.1%;
      risk free interest rate of 5.58%; expected life of 6 years and expected
      volatility of the stock over the life of the options which is based on
      the past 6 years of the stock's activity.

      The Company applies APB Opinion No. 25 in accounting for its Plans,
      and, accordingly, no compensation cost has been recognized for its
      stock options in the financial statements.  Had the Company determined
      compensation cost based on the fair value at the grant date of its
      stock options under SFAS No. 123, the Company's net income would have
      been reduced to the proforma amount indicated below:

                                       1997          1996          1995   
      Net income as reported        $4,387,209    $4,130,195    $2,300,024
      Net income proforma           $4,346,245    $4,092,615    $2,263,394
      Basic earnings per share as 
        reported                          $.84          $.80          $.44
      Basic earnings per share 
        proforma                          $.83          $.79          $.44

      No options were granted in 1997 and 1996.  Proforma net income reflects
      options granted in 1995.  Therefore, the full impact of calculating
      compensation cost for stock options under SFAS No. 123 is not reflected
      in the proforma net income amounts presented above because compensation
      cost is reflected over the options vesting period of 5 years and
      compensation cost for options granted prior to January 1, 1995 is not
      considered.

      Stock option activity during the periods indicated is as follows:

                                             Number of      Weighted-average
                                              Shares      Exercise Price 

      Outstanding at January 1, 1995            310,988        $  7.81   
        Options exercised                        (7,500)          3.77
        Options granted                         138,000           5.35

      Outstanding at December 31, 1995          441,488        $  7.11
        Options forfeited                       (22,500)          9.33

      Outstanding at December 31, 1996          418,988        $  6.99
        Options exercised                       (35,700)          4.35

      Outstanding at December 31, 1997          383,288        $  7.24
                                                =======

      At December 31, 1997, the range of exercise prices were $3.77-$11.42
      and weighted-average remaining contractual life of outstanding options
      was 5.4 years.

      At December 31, 1997 and 1996, the number of options exercisable was
      279,158 and 269,588, respectively and the weighted average price of
      these options were $ 7.73 and $ 7.71, respectively.





      15. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
      The following is a tabulation of unaudited quarterly results of   
      operations.  


      1997                    First        Second
                             Quarter      Quarter   

      Net sales . . . . . .$30,905,000   $27,101,000
                           ===========   ===========

      Gross profit  . . . .$ 6,445,000   $ 6,483,000
                           ===========   ===========

      Net income    . . . .$ 1,162,000   $ 1,379,000
                           ===========   ===========

      Earnings 
        per common and common
        equivalent share

          Basic                   $.22          $.26
                           ===========   ===========

          Diluted                 $.22          $.26  
                           ===========   ===========


      1997                   Third          Fourth
                             Quarter       Quarter  

      Net sales . . . . . .$28,328,000   $24,830,000
                           ===========   ===========

      Gross profit  . . . .$ 5,475,000   $ 5,058,000
                           ===========   ===========

      Net income    . . . .$ 1,139,000   $   707,000
                           ===========   ===========

      Earnings 
        per common and common
        equivalent share

          Basic                   $.22          $.14
                           ===========   ===========

          Diluted                 $.21          $.13 
                           ===========   ===========




       1996                   First        Second
                             Quarter       Quarter  

      Net sales . . . . . .$18,571,000   $25,460,000
                           ===========   ===========

      Gross profit  . . . .$ 4,728,000   $ 5,292,000
                           ===========   ===========

      Net income  . . . . .$   574,000   $   807,000
                           ===========   ===========

      Earnings 
        per common and
        common equivalent 
        share

          Basic                  $ .11         $ .16 
                           ===========   ===========

          Diluted                $ .11         $ .15
                           ===========   ===========


      1996                   Third          Fourth
                             Quarter       Quarter  

      Net sales . . . . . .$29,724,000   $29,671,000
                           ===========   ===========

      Gross profit  . . . .$ 5,984,000   $ 6,552,000
                           ===========   ===========

      Net income  . . . . .$ 1,340,000   $ 1,409,000
                           ===========   ===========

      Earnings 
        per common and
        common equivalent 
        share

          Basic                  $ .26         $ .27 
                           ===========   ===========

          Diluted                $ .25         $ .26
                           ===========   ===========



      16.  EARNINGS PER SHARE

      The following table  sets forth  the computation of  basic and  diluted
      earnings per share:
                                              1997             
                                 Income        Shares     Per Share
                                Numerator    Denominator   Amount
      Basic Earnings Per Share
      Income available to
        common shareholders     $4,387,209    5,213,124    $0.84
                                                           =====
      Effect of Dilutive Securities
      Stock options                             141,063
      Earnings contingency                          791

      Diluted Earnings Per Share
      Income available to common
        shareholders plus assumed
        conversions             $4,387,209    5,354,978    $0.82
                                ================================

                                              1996               
                                Income        Shares     Per Share
                                Numerator    Denominator  Amount  
      Basic Earnings Per Share
      Income available to
        common shareholders     4,130,195     5,190,075    $0.80
                                                           ====
      Effect of Dilutive Securities
      Stock options                              81,884
      Earnings contingency                         --     

      Diluted Earnings Per Share
      Income available to common
        shareholders plus assumed
        conversions             $4,130,195    5,271,959    $0.78
                                ================================

                                              1995                
                                 Income        Shares       Per Share
                                Numerator    Denominator    Amount

      Basic Earnings Per Share
      Income available to
        common shareholders     $2,300,024    5,189,048    $0.44
                                                           =====
      Effect of Dilutive Securities
      Stock options                              13,363
      Earnings contingency                        --     

      Diluted Earnings Per Share
      Income available to common
        shareholders plus assumed
        conversions             $2,300,024    5,202,411    $0.44
                                ================================

      For additional disclosures regarding the earnings contingency and stock
      options, see notes 2 and 14, respectively.


      17.  CONTINGENCIES AND COMMITMENTS
      The Company  is a defendant  along with  a number of  other parties  in
      approximately 215 lawsuits as of December 31, 1997 (155  as of December
      31,  1996)  alleging  that  plaintiffs  have  or  may  have  contracted
      asbestos-related diseases as a result of exposure  to asbestos products
      or  equipment containing asbestos sold by one or more named defendants.
      Due  to the noninformative nature  of the complaints,  the Company does
      not know whether any of  the complaints state valid claims against  the
      Company.  The Company is also one of approximately 500  defendants in a
      class  action  on  behalf  of  approximately  2,700  present or  former
      employees of a  Texas steel mill alleging that products supplied by the
      defendants created  a  poisonous  atmosphere  that  caused  unspecified
      physical  harm.  These cases are  being defended by one  or more of the
      Company's  insurance carriers presently known to be "at risk."  Through
      October 1993, the legal costs of defense of the asbestos and steel mill
      cases  were shared among the  insurance carriers (92%)  and the Company
      (8%).  The lead insurance carrier settled a number of the cases in 1993
      and requested that the Company pay  a portion of the settlement amount.
      The Company  declined to do so  because no such payment  is required by
      the express  terms of the policies.  The lead carrier then purported in
      October  1993 to abrogate the arrangement under which the defense costs
      had  been shared,  and the  Company responded  by tendering all  of the
      cases to the lead carrier and demanding that the lead carrier honor its
      obligations under its policies to pay 100% of the costs  of defense and
      100% of  all settlements and  judgments up to  the policy limits.   The
      lead carrier  has settled approximately 11  and 17  claims  in 1997 and
      1996, respectively, with no  request for the Company to  participate in
      any settlement.    The lead  carrier has informed the  Company that the
      primary policy  for the  period July 1,  1972 -  July 1, 1975  has been
      exhausted  and that the  lead carrier will no  longer provide a defense
      under that policy.   The Company  has requested that  the lead  carrier
      substantiate this situation.  The Company has contacted representatives
      of the  Company's excess  insurance carrier  for some  or  all of  this
      period.  The  Company does not believe that the  asserted exhaustion of
      the primary insurance  coverage for  this period will  have a  material
      adverse  effect on  the financial  condition, liquidity, or  results of
      operations  of the  Company.   Management is  of  the opinion  that the
      number  of insurance carriers involved in the  defense of the suits and
      the significant number of policy years and policy limits to which these
      insurance  carriers   are  insuring  the  Company   make  the  ultimate
      disposition   of  these   lawsuits  not   material  to   the  Company's
      consolidated financial position or results of operations.

      In 1995,  a dispute which was  submitted to arbitration, arose  under a
      contract  between  a  customer   and  a  subsidiary  of  the   Company.
      Substantial claims  were asserted against the  subsidiary Company under
      the  terms  of  the   contract.    The  Company  recorded   revenue  of
      approximately  $1,400,000 in 1994 and has  an uncollected receivable of
      $140,000.  The Company believes that the disposition of this claim will
      not materially affect the  Company's consolidated financial position or
      results of operations.

      The  Company is also involved  in other lawsuits  arising in the normal
      course of business.  While it is not possible to predict with certainty
      the outcome  of these matters,  management is  of the opinion  that the
      disposition of these lawsuits and claims will not


      17.  CONTINGENCIES AND COMMITMENTS (Continued

      materially  affect  the  Company's  consolidated   financial  position,
      liquidity, or results of operations.

      Total  rent expense  for 1997,  1996 and  1995 under  leases pertaining
      primarily  to  engineering,  manufacturing,  sales  and  administrative
      facilities,  with an  initial  term of  one  year or  more,  aggregated
      $873,000,  $904,000  and  $846,000, respectively.    Remaining  rentals
      payable  under such  leases are as  follows:   1998 -  $746,000; 1999 -
      $715,000; 2000 - $656,000; 2001 - $536,000; 2002 - $453,000.

      18.  RELATED-PARTY TRANSACTIONS

      One  of the Company's subsidiaries leases office and factory space from
      a partnership consisting  of three  present or former  officers of  the
      subsidiary.   The subsidiary is  required to pay  all real estate taxes
      and operating expenses.  In the opinion of management, the terms of the
      lease  agreement are comparable to  those which could  be obtained from
      unaffiliated  third parties.  The total rent expense incurred under the
      lease  was  approximately  $330,000  for 1997,  $373,000  for  1996 and
      $485,000  for  1995.   Annual  lease  commitments approximate  $330,000
      through December, 1998.

      19.  SUBSEQUENT EVENTS

      In  February, 1998,  the Company acquired  the stock  of CFR,  a Paris,
      France, firm  in  the  engineered industrial  furnace  business.    The
      principal  market served  by  CFR is  engineered  batch and  continuous
      furnaces for heat treating both  ferrous and non-ferrous metals,  along
      with  supplying furnaces  for the  hardening and  etching of  glass and
      ceramic tableware.  CFR had sales  for the year ended December 31, 1997
      of  107.5 million  French francs  (FF) or  approximately $18.3  million
      (unaudited).  The  purchase price  was 15 million  FF or  approximately
      $2.5 million which  was paid  for by additional  bank borrowings of  15
      million FF at a fixed rate of 5.65% for 5 years.

      In  September, 1997, the Company  entered into an  agreement to acquire
      MRL  Industries,  Inc.,  Sonora,  CA, a  manufacturer  of  furnaces and
      furnace components used in the semiconductor manufacturing process, for
      $16,750,000 of the Company's Common Shares  in a merger to be accounted
      for as  a  pooling  of  interests.   The  acquisition  was  subject  to
      customary conditions, including due diligence  and shareholder approval
      by both parties.  On  February 26, 1998 the parties announced  they had
      mutually agreed to terminate the acquisition agreement as a result of a
      number  of unresolved issues between the parties.  The Company incurred
      costs of approximately  $0.4 million  in 1997 in  connection with  this
      proposed transaction.









      REPORT OF INDEPENDENT AUDITORS



      The Board of Directors and Shareholders
      Selas Corporation of America:

      We have audited  the accompanying consolidated balance sheets  of Selas
      Corporation of America  and subsidiaries  as of December  31, 1997  and
      1996,   and  the   related  consolidated   statements  of   operations,
      shareholders'  equity, and  cash flows  for each  of the  years in  the
      three-year  period  ended  December   31,  1997.    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
      Selas  Corporation of America and subsidiaries at December 31, 1997 and
      1996, and the results of their operations and their cash flows for each
      of  the years  in the  three-year period  ended  December 31,  1997, in
      conformity with generally accepted accounting principles.






                                         KPMG PEAT MARWICK LLP


      Philadelphia, Pennsylvania
      February 26, 1998


                                                           EXHIBIT 21
                           Significant Subsidiaries of
                          Selas Corporation of America





      SUBSIDIARY                           PLACE OF INCORPORATION


      Deuer Manufacturing, Inc.                 Ohio


      Resistance Technology GmbH                Germany
      Vertrieb von Elecktronikteilen


      Resistance Technology, Inc.               Minnesota


      RTI Electronics, Inc.                     Delaware


      Selas S.A.                                France


      Selas Italiana, S.A.                      Italy


      Selas Engineering UK Ltd.                 England


      Selas Waermetechnik, GmbH                 Germany





                                                           EXHIBIT 23




                          SELAS CORPORATION OF AMERICA

                                   Exhibit 23

                         Consent of Independent Auditors







      The Board of Directors
      Selas Corporation of America:


      We consent to the incorporation by reference in the Registration
      Statements No. 33-33712 on Form S-3, No. 33-35802 on Form S-8, and No.
      333-16377 on Form S-8, of Selas Corporation of America and subsidiaries
      of our reports dated February 26, 1998 relating to the consolidated
      balance sheets of Selas Corporation of America and subsidiaries as of
      December 31, 1997 and 1996 and the related consolidated statements of
      operations, shareholders' equity, and cash flows and related financial
      statement schedules for each of the years in the three-year period
      ended December 31, 1997, which reports are included in or incorporated
      by reference in the December 31, 1997 annual report on Form 10-K of
      Selas Corporation of America.






                                           KPMG Peat Marwick LLP



      Philadelphia, Pennsylvania
      March 20, 1998




                                                        EXHIBIT 24




                             POWER OF ATTORNEY



                KNOW ALL MEN BY THESE PRESENTS that the undersigned does
      hereby consent and appoint Stephen F. Ryan and Robert W. Ross, or
      either of them, his attorney to do any and all acts, including the
      execution of documents, which said attorneys, or either of them, may
      deem necessary or advisable to enable Selas Corporation of America (the
      "Company") to comply with the Securities Exchange Act of 1934, as
      amended, and the rules, regulations and requirements of the Securities
      and Exchange Commission, in connection with the filing under said Act
      of an annual report of the Company on Form 10-K for the year ended
      December 31, 1997, including the power and authority to sign in the
      name and on behalf of the undersigned, in any and all capacities in
      which the signature of the undersigned would be appropriate, such
      annual report and any and all amendments thereto and generally to do
      and perform all things necessary to be done in the premises as fully
      and effectually in all respects as the undersigned could do if
      personally present.

                IN WITNESS WHEREOF, the undersigned has hereunto set his hand
      and seal this 23 day of March, 1998.


                                      /s/ John H. Austin Jr.    
                                          John H. Austin, Jr.


                                      /s/ Frederick L. Bissinger
                                        Frederick L. Bissinger


                                      /s/ Roy C. Carriker       
                                            Roy C. Carriker


                                      /s/ Francis J. Dunleavy   
                                          Francis J. Dunleavy
                                      /s/ Mark S. Gorder        
                                             Mark S. Gorder


                                      /s/ Ralph R. Whitney, Jr. 
                                         Ralph R. Whitney, Jr.

 

5 This schedule contains summary financial information extracted from the financial statements of Selas Corporation of America for the year ended December 31, 1997 and is qualified in its entirety by reference to such financial statements. 12-MOS DEC-31-1997 DEC-31-1997 3,034,903 0 31,612,980 681,355 9,999,140 47,725,699 34,602,452 17,284,665 81,795,064 29,083,845 7,015,080 0 0 5,589,324 34,810,189 81,795,064 111,164,563 111,164,563 87,703,693 87,703,693 0 15,833 1,039,524 6,361,165 1,973,956 4,387,209 0 0 0 4,387,209 0.84 0.82