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, 1998
                                           OR
      ( )       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                             SECURITIES EXCHANGE ACT OF 1934

          For the transition period from                to                

                             Commission File Number 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, 1999, of the voting stock held
      by non-affiliates of the registrant was approximately $28,272,522
      (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, 1999, there were 5,260,004 of the Company's common shares
      outstanding (exclusive of 363,564 treasury shares).

                          DOCUMENTS INCORPORATED BY REFERENCE
      Portions of the Company's 1998 annual report to shareholders are
      incorporated by reference into Part II of this report.  Portions of the
      Company's proxy statement for the 1999 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, Italy, Portugal
      and Singapore (and a 50% joint venture in Japan), operates directly or
      through subsidiaries in three business segments.

      Under the SelasTM name, the Heat Technology segment designs and
      manufactures specialized industrial heat technology systems and equipment
      for steel, glass and other manufacturers worldwide.  The Company's
      Precision Miniature Medical and Electronic Products segment designs and
      manufactures microminiature components and molded plastic parts primarily
      for the hearing instrument manufacturing and other medical equipmnet
      industries and also for the electronics, telecommunications and computer
      industries.  The Company's Tire Holders, Lifts and Related Products
      segment manufactures 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 TECHNOLOGY

      The Company specializes in the controlled application of heat to achieve
      precise process and temperature control.  The Company's principal heat
      technology 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, Leiria,
      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), Selas U.K. (Derbyshire), and
      CFR Portugal (Leiria).   These subsidiaries currently employ
      approximately 153 persons, of whom 18 are administrative personnel and
      135 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 used for the hardening
      and etching of  glass and



                                        -5-

      ITEM 1.  Business - (Continued)

      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 2 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.

      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.



                                        -7-

      ITEM 1.  Business - (Continued)

      Operations.  At its Dresher facility, the Company employs approximately
      60 persons, of whom 18 are executive and administrative personnel, 17 are
      sales and engineering personnel and 25 are personnel engaged in
      manufacturing.  The hourly personnel are represented by a union, and the
      current union contract expires May 16, 2001.  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
      $77,000, $120,000, and $56,000 in 1998, 1997 and 1996, 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.
               PRECISION MINIATURE MEDICAL AND ELECTRONIC PRODUCTS

      Resistance Technology, Inc. ("RTI"), a wholly-owned subsidiary,
      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 electrical
      resistors known as thermistors and film capacitors.

      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 68% of 1998 annual net sales for the Company's precision
      miniature medical and electronic products business.



                                        -8-

      ITEM 1.  Business - (Continued)

      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 12%
      of 1998 annual net sales for the Company's precision miniature medical
      and electronic products 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 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.  
      RTI's principal raw materials are plastics, various metal oxide powders
      and silver paste, for which there are multiple sources of supply.

      In order to enhance its product line offering, RTI has made several
      strategic acquisitions in 1998.  These acquisitions bolster RTI's and
      RTIE's precision miniature mechanical and electronic products.

      On May 27, 1998, RTI Electronics acquired the stock of IMB Electronics
      Products, Inc., a manufacturer of film capacitors, which are energy
      storage devices used primarily to resist changes in voltage.  The film
      capacitor business represents a product line addition for the power and
      computer industries which RTIE serves.  Effective January 1, 1999, IMB
      Electronics Products, Inc. was merged into RTI.




                                        -9

      ITEM 1.  Business - (Continued)

      On October 28, 1998, a newly formed subsidiary of RTI, RTI Technologies
      PTE LTD acquired certain assets and liabilities of Lectret, a
      manufacturer of microphone capsules.  The acquisition expands RTI's
      product capability in the hearing health market by adding a microphone
      product line.  

      Certain information regarding the acquisition of the RTIE, IMB and RTI
      Technologies PTE LTD businesses 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 1998, these three customers accounted
      for approximately 28% 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 film capacitors through a combination of
      independent sales representatives and internal sales force.

      RTIE has many competitors, both domestic and foreign, that sell various
      thermistor and film capacitors 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 and film
      capacitor products.
      Operations.  RTI currently employs 264 people, of whom 54 are executive
      and administrative personnel and 210 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 and RTI Technologies employs 43 people at its Singapore
      location.




                                       -10-

      ITEM 1.  Business - (Continued)

      At its facilities in Anaheim, California, RTIE employs 118 full-time
      employees, of which 17 are salaried and 101 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 $1,290,000, $1,154,000
      and $1,083,000 in 1998, 1997 and 1996, 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 1998, sales
      of spare tire holders accounted for approximately 89% 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.

      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.
                                        -11-

      ITEM 1.  Business - (Continued)

      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 35 executive and
      administrative personnel and approximately 148 manufacturing employees. 
      Some of the manufacturing employees are represented by a union, and the
      current union contract expires in October 2002.  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 $239,000, $253,000 and $265,000
      in 1998, 1997 and 1996, 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  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 former officers of RTI and
      Mark S. Gorder who serves as an officer of RTI and 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





                                       -12-
      ITEM 2.  Properties  - (Continued)

      options.  In addition, RTI owns, subject to a mortgage from a third party
      lender, a 34,000 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 a building in Anaheim, California, which contains its  
      manufacturing facilities and offices and consists of a total of 50,000
      square feet.  The lease expires September, 2008.

      Deuer owns its 92,000 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.  This property is 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 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.  RTI Technologies PTE LTD leases a building
      in Singapore which houses its production facilities and administrative
      offices.  The building contains 6,000 square feet and its lease expires
      June, 2001.

      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.  Management
      expects to be able to extend these leases.  CFR Portugal leases a
      building in Leiria, Portugal which houses its fabrication facilities and
      administrative offices.






                                      -13-


      ITEM 3.  Legal Proceedings

      The Company is a defendant along with a number of other parties in
      approximately 147 lawsuits as of December 31, 1998 (215 as of December
      31, 1997) 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 lead insurance 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.

      The Company was one of approximately 500 defendants in a class action on
      behalf of approximately 2,700 present and former employees of a Texas
      steel mill.  The cases were being defended by one or more of the
      Company's insurance carriers presently known to be "at risk".  In
      October, 1998 the class action suit was settled.  The Company's insurance
      carriers have not asked the Company to contribute to any settlement
      payments made by them in connection with this settlement.

      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.  In June, 1998,
      the arbitrator found in favor of the customer.  The Company has refused
      to recognize the validity of the arbitration proceedings and decision and
      believes it is entitled to a new hearing before an international or
      French tribunal.  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






                                       -14-



      ITEM 4A.  Executive Officers of the Company

      The names, ages and offices (as of February 26, 1999) of the Company's
      officers were as follows:

           Name                  Age          Office

      Stephen F. Ryan            63         Chairman, President and
                                            Chief Executive Officer

      Christian Bailliart        50         Vice President and Chairman-
                                            Director Generale of Selas S.A.

      James C. Deuer             70         Vice President and President
                                            of Deuer Manufacturing, Inc.

      Mark S. Gorder             52         Vice President and President of
                                            Resistance Technology, Inc.

      Robert W. Ross             50         President Heat Technology Group
                                            Vice President and Secretary

      Francis A. Toczylowski     48         Vice President and Treasurer

      Mr. Ryan joined the Company in May 1988, as President and Chief Executive
      Officer.  In December, 1998, he was elected Chairman of the Board of
      Directors.  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. 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.  In December, 1998, he was appointed
      President of the Heat Technology Group of the Company.  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.  Mr.
      Toczylowski joined the Company in 1981 and has held several positions in
      the accounting and finance area, most recently serving as Corporate
      Controller.  In December, 1998, he was elected Vice President and
      Treasurer.


                                        -15-

                                     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
                                          1998                  1997      
                                         Market                Market
                                      Price Range           Price Range   
      QUARTER                       HIGH     LOW          HIGH      LOW
      First   . . . . . . . . . . . 12-5/8   9-1/8        13-1/16   10
      Second  . . . . . . . . . . .  9-7/8   8-3/4        12-5/8     9-13/16
      Third   . . . . . . . . . . .  9       6-7/16       13-1/2    11-1/4
      Fourth  . . . . . . . . . . .  8-7/16  6-5/8        13-3/16    8-15/16

      At February 8, 1999, the Company had 471 shareholders of record.  

                                     1998        1997        1996 
      Dividends per share:
        First Quarter               $.045       $.043        $.04
        Second Quarter               .045        .045         .04
        Third Quarter                .045        .045         .04
        Fourth Quarter               .045        .045         .043

      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.

      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
      1998 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 1998 annual report to shareholders.

      Forward-Looking and Cautionary Statements.  Certain statements herein
      that include forward-looking terminology such as "may", "will", "should",
      "expect", "anticipate", "estimate", "plan" or "continue" or the negative
      thereof or other variations thereon 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.  These




                                       -16-

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

      forward-looking statements are affected by known and unknown risks,
      uncertainties and other factors that may cause the Company's actual
      results, performance or achievements to differ materially from the
      results, performance and achievements expressed or implied in the
      Company's forward-looking statements.  These risks, uncertainties and
      factors include competition by competitors with more resources than the
      Company, foreign currency risks arising from the Company's foreign
      operations, and the cyclical nature of the market for large heat
      technology contracts.  

      The Company's heat technology 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
      technology products, and the financial results of the Company's heat
      technology 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 technology 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 precision miniature medical and electronics 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.

      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.






                                       -17-

      ITEM 7A.  Quantitative and Qualitative Disclosures About Market Risk

      The Company's consolidated cash flows and earnings are subject to
      fluctuations due to changes in foreign currency exchange rates.  The
      Company attempts to limit its exposure to changing foreign currency
      exchange rates through operational and financial market actions.  The
      Company does not hold derivatives for trading purposes.

      The Company manufactures and sells its products in a number of locations
      around the world, resulting in a diversified revenue and cost base that
      is exposed to fluctuations in European and Asian currencies.  This
      diverse base of foreign currency revenues and costs serves to create a
      hedge that limits the Company's net exposure to fluctuations in these
      foreign currencies.

      Short-term exposures to changing foreign currency exchange rates are
      occasionally managed by financial market transactions, principally
      through the purchase of forward foreign exchange contracts (with
      maturities of six months or less) to offset the earnings and cash flow
      impact of the nonfunctional currency denominated receivables and payables
      relating to select custom engineered heat technology segment contracts. 
      The decision by management to hedge any such transaction is made on a
      case-by-case basis.  Foreign exchange forward contracts are denominated
      in the same currency as the receivable or payable being covered, and the
      term and amount of the forward foreign exchange contract substantially
      mirrors the term and amount of the underlying receivable or payable.  The
      receivables and payables being covered arise from trade and intercompany
      transactions of and among the Company's foreign subsidiaries.  At
      December 31, 1998 the Company did not have any forward foreign exchange
      contracts outstanding.

      To manage exposure to interest rate movements and to reduce its borrowing
      costs, the Company's French subsidiary, Selas S.A., has entered into an
      interest rate swap agreement.  Selas S.A. is exposed to changes in
      interest rates primarily due to its borrowing activities which are
      related to long term debt used to finance its office building.  The swap
      agreement requires fixed interest payments based on an effective rate of
      8.55% for the remaining term through May, 2006.  A 100 (10% adverse
      change) basis point move in interest rates would affect the Company's
      floating and fixed rate instruments, including short and long-term debt
      and derivative instruments, by approximately $.1 million at December 31,
      1998.  The fair value of the Company's variable rate debt is not
      significantly different from its recorded amount.

      Swap and forward foreign exchange contracts are entered into for periods
      consistent with related underlying exposures.  The Company does not enter
      into contracts for speculative purposes and does not use leveraged
      instruments.




                                        -18-


      ITEM 8.  Financial Statements and Supplementary Data

      The Company's consolidated balance sheets as of December 31, 1998 and
      1997, and the related consolidated statements of operations, cash flows
      and shareholders' equity for each of the three years in the period ended
      December 31, 1998, and the report of independent auditors thereon and the
      quarterly results of operations (unaudited) for the two year period ended
      December 31, 1998 are incorporated by reference to pages  11 to 39 of the
      Company's 1998 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 1999 Annual Meeting of Shareholders which the Company
      filed on March 18, 1999.  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  39  of  the  Company's  1998  annual  report  to
           shareholders.

           Consolidated Balance Sheets at December 31, 1998 and 1997.

           Consolidated Statements  of Operations for the  years ended December
           31, 1998, 1997 and 1996.

           Consolidated Statements  of Cash Flows for the  years ended December
           31, 1998, 1997 and 1996.

           Consolidated Statements of Shareholders'  Equity for the years ended
           December 31, 1998, 1997 and 1996.

           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.  Amended  and Restated Credit Agreement dated July 31, 1998 among the
           Company, Deuer Manufacturing, Inc., Resistance Technology, Inc., RTI
           Export, Inc. and RTI Electronics, Inc.  Exhibit 4A to  the Company's
           report on Form 10-Q for the  nine months ended September 30, 1998 is
           hereby incorporated by reference.

      4B.  Amended  and Restated Revolving Credit Note, dated July 31, 1998, of
           the Company  in favor of First  Union National Bank.   Exhibit 4B to
           the  Company's report  on  Form  10-Q  for  the  nine  months  ended
           September 30, 1998 is hereby incorporated by reference.

      4H.  Guaranty  dated  February, 1998  of the  Company  in favor  of First
           Union/First  Fidelity,  N.A.  Pennsylvania.     Exhibit  4H  to  the
           Company's report  on Form 10-K for the  year ended December 31, 1997
           is hereby incorporated by reference.

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

      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.   Exhibit 10E  to the
           Company's report on Form 10-K  for the year ended December 31,  1997
           is hereby incorporated by reference.




                                      -22-

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

      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.

      10K. Non-Employee Directors' Stock  Option Plan and Form  of Stock Option
           Agreements  under  such  Plan.     Exhibit  10K  to   the  Company's
           Registration  Statement on  Form S-8  filed on  October 30,  1998 is
           hereby incorporated herein by reference.

      13.  "Selas  Corporation of  America  Five-Year  Summary  of  Operations"
           contained  on  page      of  the  Company's  1998  annual report  to
           shareholders;  "Other  Financial   Highlights"  (excluding   graphs)
           contained  on  page  5  of  the  Company's  1998  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  1998 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 1998  annual
           report to shareholders.





                                      -23-


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


      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  1999
           Annual Meeting of Shareholders responsive to Items 10, 11, 12 and 13
           in Part  III hereof, which was  filed on March 20,  1999, 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, 1998.





                                      -24-
         REPORT OF INDEPENDENT AUDITORS ON FINANCIAL STATEMENT SCHEDULES







      The Board of Directors and Shareholders
      Selas Corporation of America:

      Under date of February 19, 1999, we reported on  the consolidated balance
      sheets  of Selas Corporation of  America and subsidiaries  as of December
      31, 1998 and 1997, 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, 1998,  as contained  in the  1998 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 1998.   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 LLP



      Philadelphia, Pennsylvania
      February 19, 1999 




                                         -25-
                                                             SCHEDULE I



                SELAS CORPORATION OF AMERICA AND SUBSIDIARY COMPANIES

                    Condensed Financial Information of Registrant
                                   Balance Sheets
                             December 31, 1998 and 1997


      ASSETS                                        1998            1997   

      Current assets:

        Cash and cash equivalents                $    70,837     $   478,119

        Accounts receivable (including            
          $5,862,697 and $5,266,063 due from
          subsidiaries in 1998 and 1997,
          respectively, eliminated in con-
          solidation), less allowance for doubt-
          ful accounts of $10,000 in both years    8,892,207      11,292,250

        Inventories, at cost                       3,509,970       3,775,592

        Prepaid expenses and other current 
          assets                                   1,592,723       1,993,501

              Total current assets                14,065,737      17,539,462

                                                  
      Investment in wholly-owned subsidiaries     53,697,350      50,887,202

      Property and equipment, at cost              5,897,016       5,871,795

      Less:  accumulated depreciation             (4,713,782)     (4,532,232)

                                                   1,183,234       1,339,563
      Other assets and investment in
        unconsolidated affiliate                   2,394,617       1,072,562

               Total Assets                      $71,340,938     $70,838,789
                                                 ===========     ===========




                                         -26-

                                                             SCHEDULE I


               SELAS CORPORATION OF AMERICA AND SUBSIDIARY COMPANIES

                    Condensed Financial Information of Registrant
                                   Balance Sheets
                              December 31, 1998 and 1997


      LIABILITIES AND SHAREHOLDERS' EQUITY          1998            1997   

      Current liabilities:

        Notes payable and current maturities
          of long-term debt                      $ 4,441,554     $ 2,350,000

        Accounts payable (including $13,503,551
          and $13,237,300 due to subsidiaries
          in 1998 and 1997, respectively,
          eliminated in consolidation)            14,531,749      15,721,628

        Accrued expenses                           2,806,974       4,088,328

            Total current liabilities             21,780,277      22,159,956
         
      Long-term debt                               2,170,024       4,520,024

      Other postretirement benefit obligations     3,535,050       3,471,378

      Deferred income taxes                          227,347         230,945

      Pension plan obligation                           --            56,973

      Contingencies and commitments
      Shareholders' equity

      Common stock                                 5,615,081       5,589,324

      Retained earnings and other equity          38,395,096      35,192,126

      Less:  363,564 common shares held in 
             treasury, at cost                      (381,937)       (381,937)
                                     
           Total shareholders' equity             
                                                  43,628,240      40,399,513
           Total Liabilities and
           Shareholders' Equity                  $71,340,938     $70,838,789
                                                 ===========     ===========


          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, 1998, 1997 and 1996


                                         1998            1997          1996   


      Sales, net                     $13,431,912     $24,187,052    $20,792,859

      Add back:  license fees and 
        corporate charges paid by 
        subsidiaries, eliminated in 
        consolidation                    805,796         618,366      1,512,699

                                      14,237,708      24,805,418     22,305,558

      Costs and expenses:

        Cost of goods sold             9,582,358      19,344,767     16,504,848

        Selling, general and adminis-
          trative expenses             3,761,810       4,458,784      3,894,184

        Rent and depreciation            360,801         375,156        398,207

                                      13,704,969      24,178,707     20,797,239

      Income before income taxes and
        equity in net income of 
        subsidiaries                     532,739         626,711      1,508,319

      Provision for income taxes
        (benefits)                      (753,789)         45,295        560,111
      Income before equity in net 
        income of subsidiaries         1,286,528         581,416        948,208

      Equity in net income of 
        subsidiaries                   2,322,994       3,805,793      3,181,987



            Net income               $ 3,609,522     $ 4,387,209    $ 4,130,195
                                     ===========     ===========    ===========

             See accompanying notes to the consolidated financial statements.



                                           -28-
                                                                     SCHEDULE I

                   SELAS CORPORATION OF AMERICA AND SUBSIDIARY COMPANIES

                     Condensed Financial Information of the Registrant
                                 Statements of Cash Flows
                       Years Ended December 31, 1998, 1997 and 1996

                                         1998           1997           1996   

      OPERATING ACTIVITIES
        Net income                   $ 3,609,522    $ 4,387,209    $ 4,130,195
        Adjustments to reconcile net 
          income to net cash provided
          by operating activities:
            Depreciation and 
              amortization               259,716        251,733        227,377
            Other adjustments         (3,050,628)    (4,405,561)    (3,507,200)
            Net changes in operating 
              assets and liabilities      57,727      2,507,566      3,665,156 
        
        Net cash provided by operating 
          activities                     876,337      2,740,947      4,515,528

      INVESTING ACTIVITIES
        Dividend from unconsolidated 
          affiliate                         --             --           16,742
        Acquisition of subsidiary 
          company                           --       (5,152,840)          --
        Purchase of property, plant and 
          equipment                      (93,415)      (259,787)      (257,767) 


        Net cash (used) by investing 
          activities                     (93,415)    (5,412,627)      (241,025)

      FINANCING ACTIVITIES
        Proceeds from borrowings used 
          to acquire subsidiary             --        3,500,000           --
        Proceeds from exercise of 
          stock options                   10,196        155,519           --
        Proceeds from short term
          borrowings                   2,091,554           --             --
        Payment of dividends            (941,954)      (929,685)      (847,712)
        Repayment of long term debt   (2,350,000)    (2,521,645)    (1,859,448)
        Net cash provided (used) by 
          financing activities        (1,190,204)       204,189     (2,707,160)
      Increase (decrease) in cash
        and cash equivalents            (407,282)    (2,467,491)     1,567,343
      Cash and cash equivalents, 
        beginning of year                478,119      2,945,610      1,378,267

      Cash and cash equivalents, end 
        of year                      $    70,837    $   478,119    $ 2,945,610
                                     ===========    ===========    ===========


             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, 1998, 1997 and 1996

                   Column A             Column B            Column C      
                                                           Additions      

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

      Year ended December 31, 1998:
        Reserves deducted in the balance
          sheet from the asset to which 
          they apply:
            Allowance for doubtful 
            accounts                    $  681,356    $1,324,093     $  106,973a
                                        ==========    ==========     ==========
            Deferred tax asset valuation 
            allowance                   $1,696,824    $  (76,662)(d) $     --   
         
                                          =========   ==========     ========== 
       
        Reserve not shown elsewhere:
          Reserve for estimated future 
            costs of service and
            guarantees                  $2,705,293    $  355,013     $ 51,393 a
                                        ==========    ==========     ==========

      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
                                        ==========    ==========     ==========
                                                                        
      (Continued)


                                           -30-
                                                                 SCHEDULE II 

                  SELAS CORPORATION OF AMERICA AND SUBSIDIARY COMPANIES

                            Valuation and Qualifying Accounts
                       Years Ended December 31, 1998, 1997 and 1996


                   Column A                         Column D        Column E

                                                                    Balance at
                                                                      End of
                Classification                      Deductions        Period  

      Year ended December 31, 1998:
        Reserves deducted in the balance sheet
          from the asset to which they apply:
            Allowance for doubtful accounts         $  118,689 (b)  $1,993,733
                                                    ==========      ==========
            Deferred tax asset valuation allowance        --        $1,620,162
                                                    ==========      ==========
        Reserve not shown elsewhere:
          Reserve for estimated future costs of
            service and guarantees                  $  816,810 (c)  $2,294,889
                                                    ==========      ==========

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



      (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.
      (d)  Valuation allowance adjustment.  See note 11 to the consolidated
           financial statements.




                                   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:                           
                                                Francis A. Toczylowski
                                                 Vice President and
                                                 Treasurer
      Dated:  March 23, 1999

      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                     Chairman, President, Chief
                                           Executive Officer and Director
      March 23, 1999                       March 23, 1999

                   *                                                       
      John H. Austin, Jr.                  Francis A. Toczylowski
      Director                             Vice President and Treasurer
      March 23, 1999                       March 23, 1999

                   *              
      Frederick L. Bissinger
      Director
      March 23, 1999

                   *              
      Roy C. Carriker
      Director
      March 23, 1999
                   *              
      Mark S. Gorder
      Director
      March 23, 1999

                   *              
      Michael J. McKenna
      Director
      March 23, 1999

                   *              
      Ralph R. Whitney, Jr.
      Director
      March 23, 1999





                                       EXHIBIT INDEX


      EXHIBITS:

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

      13.   "Selas Corporation of America Five-Year Summary of Operations"
            contained on page 4 of the Company's 1998 annual report to
            shareholders; "Other Financial Highlights" (excluding graphs)
            contained on page 5 of the company's 1998 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 11-39 of the Company's 1998 annual
            report to shareholders.

      21.   List of significant subsidiaries of the Company.

      23.   Consent of Independent Auditors.

      24.   Powers of Attorney.















      March 26, 1999



      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 1998 Annual Report on Form 10-K has been filed
      electronically, via Edgar.   

      The financial statements for the year ended December 31, 1998 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,




      Francis A. Toczylowski
      Vice President and Treasurer

      RWR:jc

      Enclosures

      cc:  American Stock Exchange
           Attention:  Mr. Thomas Mason
           86 Trinity Place
           New York, NY  10006
           (Three copies, one with Exhibits)
           Via Certified Mail 



                                                       EXHIBIT 10A

                          1999 EXTENSION AGREEMENT

           AGREEMENT dated as of January 1, 1999 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, 1998 (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, 1998 until December 31, 1999.

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

           1.  Clause (i) in paragraph 5 of the Agreement is hereby amended by
      changing the date "December 31, 1998" to "December 31, 1999."
           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:                         
                                           Name:
                                           Title:


                                                                    
                                       Name:



                                                                 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, Italy, Portugal, and Singapore (and a 50% joint venture in
      Japan),  operates directly or through subsidiaries in three business
      segments.

      Under the Selas TMname, the Heat Technology segment designs and
      manufactures specialized industrial heat technology systems and equipment
      for steel, glass and other manufacturers worldwide.  The Company's
      Precision Miniature Medical and Electronic Products segment designs and
      manufactures microminiature components and molded plastic parts primarily
      for the hearing instrument manufacturing industry and also for the
      electronics, telecommunications, computer and medical equipment
      industries.  The Company's Tire Holders, Lifts and Related Products
      segment manufactures 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                   1998             1997
      Net sales . . . . . . . . . . . .  $ 99,555,000     $111,165,000
      Operating income  . . . . . . . .  $  4,858,000     $  7,171,000
      Net income  . . . . . . . . . . .  $  3,610,000     $  4,387,000
      Earnings per share:
          Basic   . . . . . . . . . . .          $.69             $.84
          Diluted . . . . . . . . . . .          $.68             $.82
      Working capital . . . . . . . . .  $ 17,211,000     $ 18,642,000
      Total assets  . . . . . . . . . .  $ 87,781,000     $ 81,795,000
      Total shareholders' equity  . . .  $ 43,628,000     $ 40,399,000
      MARKET AND DIVIDEND INFORMATION
                                          1998                  1997      
                                         Market                Market
                                      Price Range           Price Range   
      QUARTER                       HIGH     LOW          HIGH      LOW
      First   . . . . . . . . . . . 12-5/8   9-1/8        13-1/16   10
      Second  . . . . . . . . . . .  9-7/8   8-3/4        12-5/8     9-13/16
      Third   . . . . . . . . . . .  9       6-7/16       13-1/2    11-1/4
      Fourth  . . . . . . . . . . .  8-7/16  6-5/8        13-3/16    8-15/16

      At February 8, 1999, the Company had 471 shareholders of record.  
                                     1998        1997        1996 
      Dividends per share:
        First Quarter               $.045       $.043        $.04
        Second Quarter               .045        .045         .04
        Third Quarter                .045        .045         .04
        Fourth Quarter               .045        .045         .043

      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.

      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 per share data)


      Years Ended December 31         1998 (a)      1997 (b)           1996

      Sales, net                    $  99,555     $ 111,165       $  103,426

      Cost of sales                    76,832        87,704           80,870
      Selling, general and 
        administrative expenses        17,864        16,289           15,034
      Interest expense                  1,139         1,040            1,212
      Interest (income)                  (145)         (237)            (298)
      Other (income) expense, net         (85)            8               83

      Income before income taxes        3,950         6,361            6,525
      Income taxes                        340         1,974            2,395

      Net income                    $   3,610     $   4,387        $   4,130
                                     ========      ========        =========

      Earnings per share:

        Basic                            $.69          $.84             $.80
                                    =========     =========       ==========
        Diluted                          $.68          $.82             $.78
                                    =========     =========       ==========
        
      Comprehensive income (c)      $   3,996     $   3,520       $    3,833
                                    =========     =========       ==========

      Weighted average number of
        shares outstanding during
        year 

        Basic                       5,233,016     5,213,124        5,190,075
                                    =========     =========        =========
        Diluted                     5,310,354     5,354,978        5,271,959
                                    =========     =========        =========




                                                                 Continued





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


      Years Ended December 31            1995        1994    

      Sales, net                    $   71,215    $   73,663

      Cost of sales                     52,060        52,813
      Selling, general and 
        administrative expenses         14,397        14,727
      Interest expense                   1,336         1,282
      Interest (income)                   (340)         (303)
      Other (income) expense, net           36           165

      Income before income taxes         3,726         4,979
      Income taxes                       1,426         1,875 

      Net income                    $    2,300    $    3,104
                                     =========     =========

      Earnings per share:

        Basic                             $.44          $.60
                                    ==========    ==========
        Diluted                           $.44          $.60
                                    ==========    ==========
        
      Comprehensive income (c)      $    2,322    $    4,176
                                    =========     ==========

      Weighted average number of
        shares outstanding during
        year 

        Basic                        5,189,048     5,179,246
                                    ==========     =========
        Diluted                      5,202,411     5,215,736
                                    ==========     =========

      (a)  On February 28, 1998, the Company acquired the stock of CFR, a
           Paris, France based company.

           On May 27, 1998, a subsidiary of the Company acquired the stock of
           IMB Electronic Products, Inc.

           On October 28, 1998, a newly formed subsidiary of the Company, RTI
           Technologies PTE LTD acquired certain assets
           and liabilities of Lectret.

      (b)  On February 21, 1997, the Company acquired the assets of RTI
           Electronics, Inc.

      (c)  In 1998, the Company adopted Statement of Financial Accounting
           Standards (SFAS) No. 130, "Reporting Comprehensive Income."  See
           note 1 to the consolidated financial statements.



      OTHER FINANCIAL HIGHLIGHTS
      Years Ended December 31         1998 (a)      1997 (b)          1996
      (In thousands, except for per share data)

      Working capital               $17,211         $18,642        $19,822
      Total assets                  $87,781         $81,795        $91,162
      Long-term debt                $ 6,266         $ 7,015        $ 6,837
      Long-term benefit obligations $ 4,096         $ 4,081        $ 4,310
      Shareholders' equity:
        Capital stock and additional
          paid-in capital           $17,556         $17,382        $17,214
        Retained earnings            25,798          23,130         19,673
        Accumulated other
          comprehensive income          656             269          1,136
        Treasury stock                 (382)           (382)          (382)

          Total shareholders' 
            equity                  $43,628         $40,399        $37,641

      Depreciation and amortization $ 3,809         $ 3,469        $ 2,826
      Dividends per share              $.18           $.178          $.163



                                                                   Continued





      OTHER FINANCIAL HIGHLIGHTS
      Years Ended December 31         
      (In thousands, except for 
      per share data)                  1995            1994

      Working capital               $15,751         $17,935
      Total assets                  $67,960         $70,120
      Long-term debt                $ 9,100         $11,136
      Long-term benefit 
        obligations                 $ 4,409         $ 4,431
      Shareholders' equity:
        Capital stock and 
          additional
          paid-in capital           $17,214         $17,182
        Retained earnings            16,390          14,886
        Accumulated other
          comprehensive income        1,434           1,412
        Treasury stock                 (382)           (382)

          Total shareholders' 
            equity                  $34,656         $33,098

      Depreciation and 
        amortization                $ 2,771         $ 2,732
      Dividends per share             $.154           $.137
      MANAGEMENT'S DISCUSSION AND ANALYSIS
      OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

      1998 COMPARED WITH 1997

      Consolidated  net sales  decreased 10.4%  to $99.5  million in  1998 from
      $111.2 million  in 1997.    Net sales  from the  heat technology  segment
      decreased to $46.4 million in 1998 compared to $63 million in 1997.   The
      decline in sales in 1998  is attributable in part to lower  sales backlog
      of large custom engineered contracts as of the beginning of 1998 compared
      to  the  beginning  of 1997.    The  February,  1998  acquisition of  CFR
      generated sales of $14.5 million for the year which partially offset some
      of  the decrease  for the  period.   Sales and  earnings of  large custom
      engineered  contracts  are recognized  on  the  percentage of  completion
      method and generally require  more than twelve months  to complete.   The
      Company  is not  dependent  on any  one heat  technology  customer on  an
      ongoing basis.  Backlog for the heat technology segment was $24.8 million
      as of December 31, 1998 compared to $12.2 million at December 31, 1997.

      The Company's precision miniature medical and electronic products segment
      net sales  increased to $37 million  in 1998 from $33.3  million in 1997.
      The increase in sales is partially attributable to the acquisition of IMB
      Electronic Products, Inc. (IMB) in May, 1998 and RTI Technologies PTE LTD
      (RTIT) in October, 1998.  Also impacting this segment's increased revenue
      were  higher  sales  of  hybrid  electromechanical  systems  and  plastic
      component sales  to its  hearing health  customers, which  were partially
      offset by lower sales in the electronic products segment due to the Asian
      economic situation.

      Net  sales for  the  tire holders,  lifts  and related  products  segment
      increased to $16.1 million in 1998 compared to sales of  $14.9 million in
      1997.  The increase in  revenue is primarily due to higher unit  sales of
      tire lifts to the domestic automotive industry.

      The  Company's gross  profit  margin as  a percentage-of-sales  increased
      slightly to 22.8% in 1998 from  21.1% in 1997.  Gross profit  margins for
      the heat technology segment increased to 18.7% for 1998 compared to 14.7%
      in  1997.    Heat technology  gross  profit  margins  vary markedly  from
      contract  to contract,  depending  on customer  specifications and  other
      conditions related to the contract.  The gross profit margins in 1998 and
      1997 were impacted  by several  contracts that had  higher than  expected
      costs.  Heat 



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

      technology reserves for guarantee  obligations and estimated future costs
      of services decreased  to $2.3 million in 1998 from  $2.7 million in 1997
      due to the  completion of several  contracts during the year.   Guarantee
      obligations and estimated  future service costs on these contracts extend
      for up to one year from completion.

      Gross profit  margins for the precision miniature  medical and electronic
      products segment declined to 29.3% in 1998 from 35.1% in 1997.  The lower
      gross profit margins are partially attributable to the acquisition of IMB
      in  May, 1998  and  RTIT  in  October,  1998  as  their  products,  while
      profitable,  do not achieve the  historical gross profit  margins of this
      business  segment.   To a  lesser degree,  the gross  profit margins  are
      impacted by the mix of  sales between 1998 and 1997 as  electromechanical
      systems and plastic component parts have varying profit margins.  Further
      affecting the gross profit margins of the electronic products line is the
      severe  price  competition  from   competitors  and  the  Asian  economic
      situation.
      Gross profit margins  for the  tire holders, lifts  and related  products
      segment improved to 19.8% in  1998 from 17% in 1997.   The improvement in
      1998  is due to efficiencies from higher production through the increased
      sale of tire lifts.

      Selling,  general and  administrative  expenses increased  9.7% to  $17.9
      million as compared  to 1997  expenses of $16.3  million.   Approximately
      $1.5 million of  the increase is due to  the acquisitions of CFR  and IMB
      during the year.

      Research  and development costs amounted to $1.6 million in 1998 compared
      to $1.5  million in 1997.   Interest  expense increased in  1998 to  $1.1
      million  compared  to $1  million in  1997,  due to  increased borrowings
      partially offset  by  lower  average  interest rates.    Interest  income
      decreased to $.1 million in 1998 compared to  $.2 million in 1997, due to
      lower average funds available for investment in 1998.

      Other (income) expense included gains on foreign currency transactions of
      $176,000 and $14,000 in 1998 and 1997, respectively.

      The effective tax rate in 1998 and 1997 on income before income taxes was
      8.6% and 31%, respectively.  The lower rate in 1998 is due principally to
      the reduction of the valuation allowance on deferred tax assets.





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

      In  the second  quarter  of  1998,  the  Company  reduced  the  valuation
      allowance applied against deferred  tax benefits associated with domestic
      postretirement  benefit  obligations  by  $724,512  and  against  certain
      domestic  employee pension plan obligations by $33,694.  The reduction in
      the valuation allowance was  based on several factors including:   recent
      acquisitions, past  earnings history  and trends, reasonable  and prudent
      tax planning strategies, and the expiration dates of carryforwards. 

      Realization  of future  tax benefits  related to  deferred tax  assets is
      dependent on many factors,  including acquisitions, past earnings history
      and  trends,   reasonable  and  prudent  tax   planning  strategies,  the
      expiration  dates of  carryforwards,  the Company's  ability to  generate
      taxable income within the foreign  subsidiary's net operating loss period
      and the timing of the reversal 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.   The Company continually  reviews the
      adequacy  of  the valuation  allowance  and recognizes  benefits  only as
      reassessment indicates that it is  more likely than not benefits will  be
      realized.

      Consolidated net income of $3.6 million in 1998 decreased 17.7% from $4.4
      million  in  1997.   The  Company's  heat  technology  segment had  lower
      earnings of $1.1 million in 1998 compared to $1.8 million in 1997 due  to
      lower  sales and several contracts that  had higher costs.  The precision
      miniature medical  and electronic products segment's  income decreased to
      $1.6 million in  1998 from  $2.1 million  in 1997,   as a  result of  the
      change  in  the product  mix of  sales  and increased  competition.   The
      Company's  tire holders, lifts and related products segment increased its
      net income in 1998  to $.9 million compared to  $.5 million in 1997  as a
      result of its  increased tire lift production and sales.   Net income was
      also impacted by the reduction of the valuation allowance applied against
      deferred tax benefits of $.8 million.
      LIQUIDITY AND CAPITAL RESOURCES

      Consolidated net working  capital decreased to $17.2  million at December
      31,  1998 from  $18.6 million at  December 31,  1997.   The lower working
      capital  was due in part to  the 1998 acquisitions of  CFR, IMB and RTIT,
      repayment of long-term debt obligations, payment of dividends and capital
      expenditures, partially  offset by the earnings for  the year.  The major
      changes  in the  components  of  working  capital  were  an  increase  in
      inventories  of  $2.6  million  offset  by  an   increase  in  short-term
      borrowings of  $4.3 million, both  due to  the 1998 acquisitions.   Other
      changes are a decrease  in accounts receivable and a decrease  in accrued
      expenses  and customer advances, which are  primarily due to the level of
      activity in the heat technology segment.  The change in deferred taxes is
      the result of the reduction of the valuation allowance and the




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

      recognition of tax benefits connected with  foreign net operating losses.


      The Company's long-term debt at December 31, 1998 was $6.3  million.  The
      decrease in  long-term debt is  due to repayments  during the year.   The
      increase in notes payable is  the result of the acquisitions of  CFR, IMB
      and  RTIT during 1998.  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 $23.7  milion through  December 31,  1998
      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, 1998, the
      Company  exceeded the  amount required  to satisfy  this covenant  in the
      credit facility by $3 million.

      The  Company's French subsidiary, Selas  S.A., has an  interest rate swap
      agreement for the purpose of  managing interest rate expense.  The  total
      notional amount of $2.1  million 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.   Additional interest incurred  during
      1998 and 1997 in connection with the swap arrangement amounted to $81,512
      and $95,584, respectively.

      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.

      A  significant  portion   of  the  heat  technology   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 1998, 1997 or 1996.

      The Company  is a  defendant  along with  a number  of  other parties  in
      approximately 147 lawsuits  as of December  31, 1998 (215 as  of December
      31,  1997) 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  lead insurance  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


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

      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.

      The Company  was one of approximately 500 defendants in a class action on
      behalf of approximately  2,700 present  and former employees  of a  Texas
      steel  mill.   The  cases  were being  defended  by one  or  more  of the
      Company's  insurance  carriers  presently known  to  be  "at  risk".   In
      October,  1998, the  class  action  suit  was  settled.    The  Company's
      insurance  carriers have  not  asked the  Company  to contribute  to  any
      settlement payments made by them in connection with this settlement.

      The Company is aware of the issues associated with the Year 2000 problem.
      The "Year 2000" matter relates to whether computer hardware, software and
      equipment will properly recognize date sensitive information referring to
      the  Year 2000.  Potential computer system and equipment failures arising
      from years beginning with "20" rather than "19" are a known risk.

      The Company currently  has a program underway to remediate  by the second
      quarter  of 1999 all of  the Company's significant  computer systems that
      are not Year  2000 compliant.   The program is  divided into three  major
      components:   (1)  identification of  all information  technology systems
      ("IT Systems") and non-information  technology systems ("Non-IT Systems")
      that  are not  Year  2000 compliant;  (2) repair  or  replacement of  the
      identified  non-compliant systems;  and (3)  testing of  the repaired  or
      replaced  systems.  Approximately 25% of  the IT Systems the Company uses
      are in-house developed.  Commercially developed software, the majority of
      which is  periodically upgraded  through existing  maintenance contracts,
      accounts for the balance.   Part (1) and  (2) of the Company's Year  2000
      program are substantially complete.   Review of accounting  and financial
      reporting  systems is finished, and  the Company is  continuing to review
      Non-IT Systems  that have  embedded microprocessors in  various types  of
      equipment.  Part  (2), repairing  and replacing, has  been completed  for
      both  in-house and commercially developed IT Systems.  Part (3), testing,
      is underway and the Company has targeted the end of the second quarter of
      1999 as a completion date.

      The  Company has  been inquiring  of certain  key suppliers  and business
      partners  about their  Year 2000 readiness.   While no  assurances can be
      given that key suppliers and business partners will remedy their own Year
      2000 issues, the  Company to date has not identified  any material impact
      on its ability to  continue normal business operations with  suppliers or
      other third parties who fail to address the Year 2000 issue.


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

      Actual costs  associated with implementation  of the Company's  Year 2000
      program  are not expected to be material  to the Company's operations and
      financial condition.    Costs  of  $200,000 to  $250,000,  primarily  for
      software and outside services, have  been or are expected to be  incurred
      and expensed.   As of December 31,  1998, approximately $150,000 of costs
      have been expended.

      The Company will continue to monitor and evaluate the impact  of the Year
      2000 issue on its operations.  Until the Company has completed  the final
      testing part of its program, the risks from potential  Year 2000 failures
      cannot be fully assessed.  Due to this situation, the  Company cannot now
      begin  final contingency  plans.    These  plans  will  be  developed  as
      potential  Year 2000 failures are identified in the final testing stages.
      Nevertheless, if remediation is not accomplished successfully in a timely
      fashion and successful contingency plans are not implemented, the Company
      believes the  Year 2000 issue could have a material adverse effect on the
      Company.

      On January  1, 1999, eleven of  fifteen member countries of  the European
      Union   established  fixed   conversion  rates  between   their  existing
      currencies ("legacy  currencies") and one  common currency  -- the  Euro.
      The  Euro  trades  on currency  exchanges  and may  be  used  in business
      transactions.    The conversion  to  the  Euro  will  eliminate  currency
      exchange risk between the  member countries.  Beginning in  January 2002,
      new  Euro-denominated  bills  and  coins  will  be   issued,  and  legacy
      currencies  will  be  withdrawn  from  circulation.    The  Company   has
      recognized this situation and is currently in the process of developing a
      plan  to address  any  issue being  raised  by the  currency  conversion.
      Possible  issues include,  but are  not  limited to,  the  need to  adapt
      computer   and   financial    systems   to   recognize   Euro-denominated
      transactions, as well  as the impact of  one common European currency  on
      pricing.  The  Company anticipates  that any unaddressed  issues will  be
      resolved during 1999.

      In June  1998, the  Financial  Accounting Standards  Board (FASB)  issued
      Statement of  Financial Accounting  Standard (SFAS) No.  133, "Accounting
      for  Derivative  Instruments and  Hedging  Activities".   This  statement
      standardizes  the  accounting   for  derivative  instruments,   including
      derivative instruments embedded in other contracts, by requiring  that an
      entity recognize those items as assets or liabilities in the statement of
      financial position  and measure  them at  fair value.   The  statement is
      effective for fiscal years beginning after June 15, 1999.  Management has
      not yet  determined the impact  that the adoption  of this  statement may
      have on earnings,  financial condition or liquidity of  the Company.  The
      Company  plans to  adopt SFAS  No. 133  as  permitted by  this accounting
      standard by January 1, 2000.

      In  March  1998, the  Accounting  Standards  Executive Committee  (AcSEC)
      issued  Statement of  Position (SOP)  98-1 "Accounting  For the  Costs of
      Computer  Software Developed or Obtained  for Internal Use."   The SOP is
      effective  for  financial statements  for  fiscal  years beginning  after
      December 15, 1998.




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

      In  April  1998, the  Accounting  Standards  Executive Committee  (AcSEC)
      issued  Statement  of Position  (SOP) 98-5,  "Reporting  on the  Costs of
      Start-Up  Activities."   This  SOP  provides  guidance on  the  financial
      reporting of start-up  costs and  organization costs.   The SOP  requires
      costs related  to start-up activities and organization  costs be expensed
      as incurred.   The statement  is effective for  financial statements  for
      fiscal years beginning after December 15, 1998.

      The Company plans to adopt these SOP's in connection with the preparation
      of the December  31, 1999 consolidated financial statements  as permitted
      by SOP 98-1 and 98-5.  The adoption of these standards is not expected to
      have a material impact on  consolidated results, financial conditions, or
      long-term liquidity.

      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 technology 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 turmoil in the
      Asian markets also had an impact on sales and bookings in 1997 as several
      highly expected  orders were delayed  and put on  hold by our  customers.
      Approximately 10.6% of 1997 revenue is  related to contracts or sales  to
      customers in  Asia.  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  heat technology customer on  an ongoing basis.   Backlog for the
      heat technology  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 miniature medical and electronic products 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.




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

      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
      technology segment decreased  to 14.7% in  1997 from 16%  in 1996.   Heat
      technology 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  technology 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.

      Gross profit  for the precision miniature medical and electronic products
      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  products
      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.



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

      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.

      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 products segment which increased to $.5 million in 1997
      compared to  $.1 million in  1996.  The  precision miniature  medical and
      electronic products increased its net income in 1997 to $2.1 million from
      $2.0 million in 1996.  The Company's heat technology 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.

      FORWARD-LOOKING AND CAUTIONARY STATEMENTS

      Certain statements  herein that include forward-looking  terminology such
      as "may", "will", "should", "expect", "anticipate", "estimate", "plan" or
      "continue"  or the negative thereof  or other variations  thereon 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.   These forward-looking
      statements are  affected by  known and unknown  risks, uncertainties  and
      other factors that may cause the Company's actual results, performance or
      achievements  to  differ materially  from  the  results, performance  and
      achievements  expressed  or  implied  in  the  Company's  forward-looking
      statements.   These risks, uncertainties and  factors include competition
      by  competitors with  more resources  than the Company,  foreign currency
      risks  arising from  the Company's foreign  operations, and  the cyclical
      nature of the  market for large heat technology  contracts.  Reference is
      made  to the  Company's 1998 Annual  Report on Form  10-K regarding other
      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              1998             1997         1996

      Sales, net . . . . . . . .    $ 99,554,554     $111,164,563  $103,426,075

      Operating costs and expenses
        Cost of sales  . . . . .      76,832,570       87,703,693    80,870,331
        Selling, general and
          administrative expenses     17,863,587       16,289,388    15,033,728 

      Operating income . . . . .       4,858,397        7,171,482     7,522,016

      Interest expense . . . . .       1,139,274        1,039,524     1,212,194
      Interest (income). . . . .        (145,047)        (237,592      (297,806)
      Other (income) expense, net        (85,677)           8,385        82,475 

      Income before income taxes       3,949,847        6,361,165     6,525,153
      Income taxes   . . . . . .         340,325        1,973,956     2,394,958 

      Net income . . . . . . . .    $  3,609,522     $  4,387,209     4,130,195
                                    ============     ============     =========


      Earnings per share 

        Basic  . . . . . . . . .            $.69             $.84          $.80
                                    ============     ============   ============

        Diluted  . . . . . . . .            $.68             $.82          $.78
                                    ============     ============  ============

      Comprehensive income . . .    $  3,996,304     $  3,519,950    $3,833,014
                                    ============     ============    ==========








               See accompanying notes to the consolidated financial statements.



                                                                            
         
                                           CONSOLIDATED BALANCE SHEETS

      ASSETS                                           1998           1997

      Current assets

        Cash, including cash equivalents
          of $313,000 in 1998 and
          $2,579,000 in 1997 . . . . . . . . . .$ 2,784,284     $ 3,034,903

        Accounts and notes receivable, (including
          unbilled receivables of $3,898,000 in
          1998 and $6,574,000 in 1997) less
          allowance for doubtful accounts of
          $1,994,000 in 1998 and $681,000 in 
          1997                                   30,494,933      30,931,625

        Inventories  . . . . . . . . . . . . . . 12,628,623       9,999,140

        Deferred income taxes  . . . . . . . . . .3,603,701       2,840,423

        Other current assets . . . . . . . . . .  1,332,135         919,608

            Total current assets . . . . . . . . 50,843,676      47,725,699


      Investment in unconsolidated affiliate . . .  538,913         472,689

      Property, plant and equipment

        Land   . . . . . . . . . . . . . . . . . .1,077,522       1,041,869

        Buildings  . . . . . . . . . . . . . . . 12,129,811      10,839,950

        Machinery and equipment  . . . . . . . . 25,788,736      22,720,633

                                                 38,996,069      34,602,452

        Less:  Accumulated depreciation  . . . . 20,038,177      17,284,665 

            Net property, plant and equipment. . 18,957,892      17,317,787

      Deferred pension cost  . . . . . . . . . . .     --            56,973

      Excess of cost over net assets of acquired
        subsidiaries, less accumulated
        amortization of $2,452,000 and 
        $1,696,000                               16,813,073      15,502,201

      Other assets, less amortization  . . . . .    627,009         719,715
                                                $87,780,563     $81,795,064
                                                ===========     ===========

           See accompanying notes to the consolidated financial statements.





      December 31, 1998 and 1997

      LIABILITIES AND SHAREHOLDERS' EQUITY             1998           1997 


      Current liabilities

        Notes payable . . . . . . . . . . . . . $ 4,701,279     $   975,804

        Current maturities of long-term debt  . . 3,178,241       2,618,463

        Accounts payable  . . . . . . . . . . . .15,410,642      14,336,607

        Federal, state and foreign income taxes .   838,634         693,240

        Customers' advance payments on contracts    697,270         902,592

        Guarantee obligations and estimated future 
          costs of service  . . . . . . . . . . . 2,294,889       2,705,293

        Other accrued liabilities . . . . . .     6,512,016       6,851,846

            Total current liabilities . . . .    33,632,971      29,083,845

      Long-term debt  . . . . . . . . . . . .     6,265,720       7,015,080

      Pension plan obligation . . . . . . . .          --            56,973

      Other postretirement benefit obligations    4,096,057       4,024,217

      Deferred income taxes . . . . . . . . .       157,575       1,215,436

      Contingencies and commitments

      Shareholders' equity

        Common shares, $1 par; 10,000,000 shares
          authorized; 5,615,081 and 5,589,324 
          shares issued, respectively . . . . .   5,615,081       5,589,324
       
        Additional paid-in capital  . . . . . .  11,941,498      11,792,878

        Retained earnings . . . . . . . . . . .  25,797,823      23,130,255

        Accumulated other comprehensive income      655,775         268,993

                                                 44,010,177      40,781,450

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

            Total shareholders' equity  . . .    43,628,240      40,399,513

                                                $87,780,563     $81,795,064
                                                ===========     ===========
               See accompanying notes to the consolidated financial statements.



      CONSOLIDATED STATEMENTS OF CASH FLOWS

      YEARS ENDED DECEMBER 31                                        1998

      Cash flows from operating activities:
        Net income . . . . . . . . . . . . . . . . . . . .    $ 3,609,522
        Adjustments to reconcile net income to net cash 
          provided byoperating activities:
            Depreciation and amortization  . . . . . . . .      3,809,245
            Equity in (income) loss of unconsolidated 
                       affiliate                                   (2,924)
            (Gain) loss on sale of property and equipment             999 
            Deferred taxes . . . . . . . . . . . . . . . .     (2,013,714)
            Changes in operating assets and liabilities:
                (Increase) decrease in accounts receivable .    2,036,197 
                (Increase) in inventories  . . . . . . . . .     (609,863)
                (Increase) decrease in other assets  . . . .       47,134
                 Increase (decrease) in accounts payable . .      280,579
                 Increase (decrease) in accrued expenses . .   (2,513,121)
                 Increase (decrease) in customer advances  .   (1,108,010)
                 Increase (decrease) in other liabilities  .      115,049

                   Net cash provided by operating activities    3,651,093

      Cash flows from investing activities:
        Purchases of property, plant and equipment . . . .     (3,554,540)
        Proceeds from sale of equity in affiliate  . . . .           --  
        Proceeds from sales of property and equipment. . .         18,837
        Dividend from unconsolidated affiliate . . . . . .           --
        Acquisition of subsidiary companies, net of cash 
          acquired                                             (2,776,230)

                   Net cash (used) by investing activities .   (6,311,933)

      Cash flows from financing activities:
        Proceeds from short-term borrowings  . . . . . . . .    4,095,199
        Repayments of short-term borrowings  . . . . . . . .           --
        Proceeds from borrowings used to acquire 
          subsidiaries                                          2,542,373
        Proceeds from long-term debt . . . . . . . . . . . .         --
        Repayments of long-term debt . . . . . . . . . . . .   (3,483,296)
        Proceeds from exercise of stock options  . . . . . .       10,196
        Payment of dividends   . . . . . . . . . . . . . . .     (941,954)

                   Net cash provided (used) by financing 
                   activities                                   2,222,518 

      Effect of exchange rate changes on cash  . . . . . . .      187,703 

      Increase (decrease) in cash and cash equivalents . . .     (250,619)

      Cash and cash equivalents beginning of year. . . . . .    3,034,903

      Cash and cash equivalents end of year. . . . . . . . .  $ 2,784,284
                                                              ===========


         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) loss of unconsolidated 
              affiliate  . . . . . . . . . . . . . . . . . .        4,715
            (Gain) loss 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) 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 companies, 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 
          subsidiaries  . . . . . . . . . . . . . . . . . . .   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) loss of unconsolidated 
              affiliate  . . . . . . . . . . . . . . . . . .       115,880
            (Gain) loss 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) 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 companies, 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 
          subsidiaries  . . . . . . . . . . . . . . . . .             --  
        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 Shareholders' Equity
      Years ended December 31, 1998, 1997 and 1996

                                                                   
                                          Common Stock             Additional
                                   Number of                       Paid-In
                                    Shares          Amount         Capital   

      Balance, January 1, 1996     5,553,639      $5,553,639      $11,660,792
      Net income
      Translation (loss)
      Change in minimum pension 
        liability                                                     
      Cash dividends paid 
        ($.163 per share)                                                    
      Comprehensive income                                                    


      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)                                                    
      Comprehensive income

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

      Net income
      Translation  gain  
      Exercise of 2,200 stock
        options                        2,200           2,200            8,505
      Issuance of 23,557 shares
        for acquisition               23,557          23,557          140,115
      Cash dividends paid
        ($.18 per share)                                                     
      Comprehensive income                                                   

      Balance, December 31, 1998   5,615,081      $5,615,081      $11,941,498
                                   ==========     ==========      ===========

               See accompanying notes to the consolidated financial statements.

      Consolidated Statements of Shareholders' Equity
      Years ended December 31, 1998, 1997 and 1996

                                                  Accumulated
                                                     Other
                                   Retained       Comprehensive   Comprehensive
                                   Earnings         Income           Income  

      Balance, January 1, 1996     $16,390,247    $1,433,433

      Net income                     4,130,195                    $ 4,130,195
      Translation (loss)                            (303,691)        (303,691)
      Change in minimum pension 
        liability                                      6,510            6,510
      Cash dividends paid 
        ($.163 per share)            (847,712)                               
      Comprehensive income                                        $ 3,833,014
                                                                  ===========

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

      Net income                     4,387,209                    $ 4,387,209
      Translation (loss)                            (867,259)        (867,259)
      Exercise of 35,685 stock
        options
      Cash dividends paid
        ($.178 per share)             (929,684)                              
      Comprehensive income                                        $ 3,519,950
                                                                  ===========
      Balance, December 31, 1997    23,130,255       268,993                

      Net income                     3,609,522                    $ 3,609,522
      Translation  gain                              386,782          386,782
      Exercise of 2,200 stock
        options                     
      Issuance of 23,557 shares
        for acquisition
      Cash dividends paid
        ($.18 per share)              (941,954)                              
      Comprehensive income                                        $ 3,996,304
                                                                  ===========
      Balance, December 31, 1998   $25,797,823    $  655,775                 
                                   ==========     ==========

           See accompanying notes to the consolidated financial statements.




      Consolidated Statements of Shareholders' Equity
      Years ended December 31, 1998, 1997 and 1996
                                           
                                                     Total
                                   Treasury       Shareholders'
                                    Stock            Equity  

      Balance, January 1, 1996     $(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)
      Comprehensive income                                   


      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)
      Comprehensive income

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

      Net income                                    3,609,522
      Translation  gain                               386,782 
      Exercise of 2,200 stock
        options                                        10,705
      Issuance of 23,557 shares
        for acquisition                              163,672
      Cash dividends paid
        ($.18 per share)                             (941,954)
      Comprehensive income                                  

      Balance, December 31, 1998   $(381,937)     $43,628,240
                                   ==========     ===========

      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, Italy, Portugal and Singapore (and a 50% joint
      venture in  Japan), operates directly  or through  subsidiaries in  three
      business segments.

      Under  the Selas  TM  name,  the  Heat  Technology  segment  designs  and
      manufactures specialized industrial heat technology systems and equipment
      for  steel, glass  and  other  manufacturers  worldwide.   The  Company's
      Precision Miniature  Medical and Electronic Products  segment designs and
      manufactures microminiature components and molded plastic parts primarily
      for  the  hearing  instrument manufacturing  industry  and  also for  the
      electronics,   telecommunications,   computer   and   medical   equipment
      industries.   The  Company's Tire  Holders,  Lifts and  Related  Products
      segment manufactures  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 COMPANY -  The Company accounts  for its  investment in a  50%
      interest in Nippon Selas Co. Ltd., Tokyo, Japan on the equity method. 

      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 vary significantly


      1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

      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



      1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

      received on interest rate swap agreements is accrued as interest rates
      change and recognized as an adjustment to interest 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.

      In 1998, the Company adopted Statement of Financial Accounting Standards
      (SFAS) No. 132, "Employers' Disclosure about Pensions and Other
      Postretirement Benefits."  SFAS 132 revises the employers' disclosure
      about pensions and other postretirement benefit plans, however, it does
      not change the measurement or recognition of those plans.  Prior year
      disclosures have been restated.

      RESEARCH AND DEVELOPMENT COSTS - Research and development costs,
      including supporting services, amounted to $1,606,000 in 1998, $1,527,000
      in 1997 and $1,404,000 in 1996.  Such costs are charged to expense when
      incurred.

      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. 

      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.

      COMPREHENSIVE INCOME - In 1998, the Company adopted SFAS No. 130,
      "Reporting Comprehensive Income."  SFAS 130 establishes the standards for
      the reporting of comprehensive income and its components.  Comprehensive
      income consists of net income, minimum pension liability adjustment and
      foreign currency translation adjustments and is presented in the
      Consolidated Statement of Shareholders' Equity.  The adoption of SFAS 130
      had no impact on total shareholders' equity.  Prior year financial
      statements have been reclassified to conform to SFAS 130 requirements.

      SEGMENT DISCLOSURES - In 1998, the Company adopted SFAS No. 131,
      "Disclosures about Segments of an Enterprise and Related Information." 
      SFAS 131 establishes standards for reporting information about operating
      segments and related disclosures about products and services, geographic
      areas and major customers.  Prior year financial statements have been
      reclassified to conform to SFAS 131 requirements.


       2.  ACQUISITIONS

      On February 28, 1998, the Company acquired the stock of CFR, a 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.  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.  The
      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 20 years.

      On May 27, 1998, a subsidiary of the Company acquired the stock of IMB
      Electronic Products, Inc.,  (IMB) a manufacturer of film capacitors,
      which are energy storage devices used primarily to resist changes in
      voltage.  IMB had sales for the fiscal year ending November 30, 1997 of
      $2,953,000.  The purchase price of $1.3 million was funded through the
      domestic line of credit.  The 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 20 years.

      On October 28, 1998, a newly formed subsidiary of the Company, RTI
      Technologies PTE LTD, acquired certain assets and liabilities of Lectret,
      a manufacturer of microphone capsules.  The purchase price of $1.1
      million was financed through the domestic line of credit.  The
      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.

      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.  During 1998, the
      Company issued 23,557 shares of the Company's common stock with a value
      of $163,672 as additional consideration related to the acquisition.  The
      number of shares was tied to the operation's earnings for the twelve
      months ended February 28, 1998.  Goodwill was increased by the value of
      the common stock issued.  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 following table presents the unaudited proforma results of operations
      as if the acquisition of CFR, IMB, RTIT and the Rodan Division of Ketema,
      Inc. had occurred at the beginning of each respective period presented
      after giving effect to certain adjustments, including amortization of
      goodwill, increased interest expense on acquisition debt and related
      income tax effects.  These proforma results have been prepared for
      comparative purposes only and do not purport to be indicative of what
      would have occurred had the acquisition been made as of those dates or
      results which may occur in the future.




      2.  ACQUISITIONS - (Continued)

                                            Years Ended December 31    
                                          1998                 1997    

      Net sales                       $103,636,000         $132,465,000
                                      ============         ============

      Net income                      $  3,872,000         $  5,449,000
                                      ============         ============

      Earnings per share:

        Basic                                 $.74                $1.05
                                      ============         ============

        Diluted                               $.73                $1.02
                                      ============         ============


      3.  STATEMENTS OF CASH FLOWS

      Supplemental disclosures of cash flow information:

                                             Years Ended December 31       
                                         1998          1997          1996  

      Interest received               $  156,968    $  218,061    $  283,353
      Interest paid                   $1,078,324    $  913,312    $1,010,092
      Income taxes paid               $2,011,520    $2,311,305    $2,179,053

      During 1998, the  Company issued  23,557 shares of  the Company's  common
      stock with a value of $163,672 as additional consideration related to the
      1997 acquisition  of the Rodan  Division of Ketema,  Inc.  The  number of
      shares was  tied to the operation's earnings  for the twelve months ended
      February 28, 1998.


      4.  BUSINESS SEGMENT INFORMATION

      During  1998, the  Company has  adopted SFAS  No. 131,  "Disclosure about
      Segments  of an Enterprise and  Related Information", which requires that
      companies disclose segment  data based on how  management makes decisions
      about allocating  resources to segments and  measuring their performance.
      The  Company has three  operating segments.   The  Company is  engaged in
      providing engineered heat technology equipment and services to industries
      throughout the world, the manufacture  of precision miniature medical and
      electronic products 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, 1998, 1997 and 1996 are prepared on the same  basis as
      the consolidated financial statements.

      The Company's reportable  segments reflect separately managed,  strategic
      business units  that provide  different products  and  services, and  for
      which financial  information is separately  prepared and monitored.   The
      accounting  policies  for each  segment  are described  in  the Company's
      summary  of  significant accounting  policies.   See  note 1  for further
      information.

      Interest expense has been allocated to the segments based on the specific
      loan balance outstanding  during the  year.  The  corporate component  of
      operating income represents corporate selling, general and administrative
      expenses.

      For the year ended
      December 31, 1998                         Segments            
                                                       Tire Holders,
                                                          Lifts   
                                      Heat              and Related 
                                   Technology           Products  
      Sales                        $46,404,713         $16,155,730
      Operating costs and 
        expenses                    45,246,138          14,782,644
      General corporate expenses,
        net                                --                  -- 
      Operating income               1,158,575           1,373,086
      Interest expense                 628,362                 313
      Interest (income)               (122,948)               --
      (Earnings) of affiliate           (2,924)               --
      Other (income) expense, net      (69,325)            (27,409)
      Income before income
        taxes (benefits)               725,410           1,400,182
      Income taxes (benefits)         (914,422)            523,799
      Income taxes (benefits)
        general corporate
        expenses, net                      --                  -- 
      Net income                   $ 1,639,832         $   876,383
                                   ===========         ===========
      Depreciation and 
        amortization               $   636,323         $   221,320
                                   ===========         ===========
      Property, plant and 
        equipment additions        $   298,274         $   157,928
                                   ===========         ===========
      Total assets                 $44,106,733         $ 6,481,758
                                   ===========         ===========
                                                         Continued





      4.  BUSINESS SEGMENT INFORMATION (Continued)


      For the year ended
      December 31, 1998                    Segments               

                                    Precision
                                    Miniature
                                    Medical and 
                                    Electronic
                                      Products            Total   

      Sales                        $36,994,111         $99,554,554  
      Operating costs and 
        expenses                    33,858,895          93,887,677
      General corporate expenses,
        net                                --              808,480
      Operating income               3,135,216           4,858,397

      Interest expense                 510,599           1,139,274
      Interest (income)                (22,099)           (145,047)
      (Earnings) of affiliate             --                (2,924)
      Other (income) expense, net       13,981             (82,753)

      Income before income
        taxes (benefits)             2,632,735           3,949,847

      Income taxes (benefits)        1,054,340             663,717

      Income taxes (benefits)
        general corporate
        expenses, net                      --             (323,392)
      Net income                   $ 1,578,395         $ 3,609,522
                                   ===========         ===========

      Depreciation and 
        amortization               $ 2,951,602         $ 3,809,245
                                   ===========         ===========
      Property, plant and 
        equipment additions        $ 3,098,338         $ 3,554,540
                                   ===========         ===========

      Total assets                 $37,192,072         $87,780,563
                                   ===========         ===========








      4.  BUSINESS SEGMENT INFORMATION (CONTINUED)

      FOR THE YEAR ENDED
      December 31, 1997                      Segments                


                                                     Tire Holders, Lifts
                                       Heat              and Related 
                                    Technology            Products  

      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                 396,578               1,174
      Interest (income)               (236,353)               --     
      Losses of affiliate                4,715                --
      Other (income) expense, net      113,357             (35,500)

      Income before income
        taxes (benefits)             3,381,696             858,265
      Income taxes                     939,902             318,601
      Income taxes (benefits)
        general corporate
        expenses, net                      --                  -- 

      Net income                   $ 2,441,794         $   539,664
                                   ===========         ===========

      Depreciation and 
        amortization               $   511,014         $   241,708
                                   ===========         ===========
      Property, plant and 
        equipment additions        $   370,235         $   342,649
                                   ===========         ===========

      Total assets                 $42,487,156         $ 5,922,281
                                   ===========         ===========






      4.  BUSINESS SEGMENT INFORMATION (CONTINUED)

      FOR THE YEAR ENDED
      December 31, 1997                     Segments     
                                    Precision
                                    Miniature       
                                    Medical and
                                     Electronic
                                     Products             Total   

      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                 641,772            1,039,524
      Interest (income)                 (1,239)            (237,592)
      Losses of affiliate                 --                  4,715
      Other (income) expense, net      (74,187)               3,670

      Income before income
        taxes (benefits)             3,280,613            6,361,165
      Income taxes                   1,179,217            2,437,720
      Income taxes (benefits)
        general corporate
        expenses, net                      --              (463,764)

      Net income                   $ 2,101,396         $  4,387,209
                                   ===========         ============

      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 
                                   Technology            Products 

      Sales                        $ 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                  646,656                 729
      Interest (income)                (296,995)               --
      Losses of affiliate               115,880                --
      Other (income) expense, net        20,003             (34,396)

      Income before income
        taxes (benefits)              3,619,170             138,141
      Income taxes                    1,326,613              42,094
      Income taxes (benefits)
        general corporate
        expenses, net                      --                   -- 

      Net income                   $  2,292,557        $     96,047
                                   ============        ============

      Depreciation and 
        amortization               $    487,422        $    318,039
                                   ============        ============
      Property, plant and 
        equipment additions        $    504,384        $    109,940
                                   ============        ============

      Total assets                 $ 59,138,027        $  5,212,886
                                   ============        ============






      4.  BUSINESS SEGMENT INFORMATION (CONTINUED)


      FOR THE YEAR ENDED
      December 31, 1996                       Segments               

                                    Precision
                                    Miniature
                                    Medical and
                                    Electronic
                                     Products             Total   

      Sales                        $ 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                  564,809           1,212,194
      Interest (income)                    (811)           (297,806)
      Losses of affiliate                  --               115,880
      Other (income) expense, net       (19,012)            (33,405)

      Income before income
        taxes (benefits)              3,307,655           6,525,153
      Income taxes                    1,242,176           2,610,883
      Income taxes (benefits)
        general corporate
        expenses, net                      --              (215,925)

      Net income                   $  2,065,479        $  4,130,195
                                   ============        ============

      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)

      The geographical  distribution of  identifiable assets and  net sales  to
      geographical areas for the years ended  December 31, 1998, 1997, and 1996
      are set forth below:


      Identifiable Assets

                                  1998             1997             1996  

      United States           $58,806,813      $58,660,565      $ 53,007,230
      France                   31,224,448       25,311,908        40,459,744
      Other                     2,815,754        3,432,986         3,855,373
      Eliminations             (5,066,452)      (5,610,395)       (6,160,075)

      Consolidated            $87,780,563      $81,795,064      $ 91,162,272
                              ===========      ===========      ============


      Net Sales to Geographical Areas


      United States           $46,037,182      $ 55,833,866     $ 46,843,283
      Austria                   1,336,418        21,033,610       22,210,245
      France                    9,911,425           571,618          131,870
      Germany                   8,660,921         2,132,966        2,687,857
      All other countries      33,608,608        31,592,503       31,552,820

      Consolidated            $99,554,554      $111,164,563     $103,426,075
                              ===========      ============     ============


      Due to the nature of the Company's heat technology products, one contract
      may  account for  a large  percentage of  sales  in a  particular period;
      however, the Company is not dependent on any one heat technology customer
      on an ongoing basis.  

      Geographic net sales are allocated based on the location of the customer.
      All  other countries include primarily  net sales to  the United Kingdom,
      Saudi Arabia and Mexico.

      Consolidated net  sales in  1998  do not  result from  sales  to any  one
      individual customer  in excess of  10% of total sales.   Consolidated net
      sales in 1998 include approximately $21,176,000 attributable to the steel
      industry.

      Consolidated net sales  in 1997 include approximately $34,719,000  or 31%
      from  contracts  with  two  customers  executed  by  the  Company's  heat
      technology group.   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.

      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, 1998 and
      1997.  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.

                                          1998         
                                  Carrying       Fair
                                   Amount       Value  

      Financial assets
        Cash, including cash
          equivalents . . . .   $ 2,784,284  $ 2,784,284
        Accounts and notes 
          receivables . . . .    30,494,933   30,494,933

      Financial liabilities
        Notes payable . . . .     4,701,279    4,701,279
        Trade accounts 
          payables. . . . . .    15,410,642   15,410,642
        Customer advance 
          payments on
          contracts . . . . .       697,270      697,270
        Other accrued 
          liabilities . . . .     6,512,016    6,512,016
       
        Long-term debt. . . .     9,443,961    9,184,268

                                          1997          
                                  Carrying       Fair
                                   Amount       Value  

      Financial assets
        Cash, including cash
          equivalents . . . .   $ 3,034,903  $ 3,034,903
        Accounts and notes 
          receivables . . . .    30,931,625   30,931,625

      Financial liabilities
        Notes payable . . . .       975,804      975,804
        Trade accounts 
          payables. . . . . .    14,336,607   14,336,607
        Customer advance 
          payments on
          contracts . . . . .       902,592      902,592
        Other accrued 
          liabilities . . . .     6,851,846    6,851,846
       
        Long-term debt. . . .     9,633,543    9,419,381



      5.  FAIR VALUE OF FINANCIAL INSTRUMENTS - (CONTINUED)

      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.

      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  

      1998
      Domestic . . $3,226,583    $ 2,514,280  $4,657,729    $10,398,592
      Foreign  . .    192,308      1,772,286     265,437      2,230,031
        Total  . . $3,418,891    $ 4,286,566  $4,923,166    $12,628,623
                   ==========    ===========  ==========    ===========
      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
                   ==========    ==========   ==========    ===========


      7.  LONG-TERM CONTRACTS AND RECEIVABLES

      Accounts and notes receivable at December 31, 1998 and 1997 include the
      following elements from long-term contracts:

                                                   1998            1997   

      Amounts billed . . . . . . . . . . . .   $ 8,443,357     $14,236,348
      Retainage, due upon completion . . . .       398,664         715,924
      Unbilled receivables . . . . . . . . .     3,897,965       6,574,392
        Total  . . . . . . . . . . . . . . .   $12,739,986     $21,526,664
                                               ===========     ===========

      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, 1998 are anticipated to be collected in 1999.

      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, 1998 will be billed in 1999. 

      Inventories include costs relating to long-term sales contracts of
      $203,132 and $187,666 at December 31, 1998 and 1997, respectively. 

      At December 31, 1998 and 1997, the Company had $1,793,489 and $1,799,128,
      respectively, of trade accounts receivable due from major U.S. automotive
      manufacturers.  At December 31, 1998 and 1997, the Company had $4,218,009
      and $2,685,219, respectively, of trade accounts receivable due from
      hearing aid manufacturers.  The Company also had $11,886,926 and
      $19,803,826 at December 31, 1998 and 1997, 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, 1998 and 1997 are summarized below:

                                                   1998           1997   
      Notes payable:
        Short term borrowings, European banks   $2,609,725     $  975,804
        Short term borrowings, Domestic banks    2,091,554           --  

          Total notes payable                   $4,701,279     $  975,804
                                                ==========     ==========

      Consolidated European subsidiaries have working capital credit
      arrangements with European banks aggregating $13,220,000.  Of this
      amount, $3,682,000 may be used to borrow funds for working capital or
      guarantee customer advance payments on contracts.  The remaining
      $9,538,000 may be used only for guaranteeing customer advance payments,
      of which $2,898,000 was utilized at December 31, 1998 at interest rates
      ranging from .5% to .75%.  At December 31, 1998 the Company's European
      subsidiaries had borrowings of $2,609,725, which bear interest at annual
      rates ranging from 5.35% to 7.71%.  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 $7,447,000 in 1998, $15,002,000 in 1997 and $21,954,000 in
      1996. The average short-term borrowings and bank guarantees outstanding
      during 1998, 1997 and 1996 amounted to $4,865,000, $8,498,000 and
      $10,636,000, respectively.  The average short-term interest rates in
      1998, 1997 and 1996 for outstanding borrowings were   6%, 9% and 11%,
      respectively. 
      The Company and its domestic subsidiaries entered into revolving credit
      loan facilities under which borrowings or letters of credit aggregating
      $4,000,000 could be outstanding at any one time.  On October 28, 1998,
      $1,100,000 of available funds were used by a subsidiary to purchase
      certain assets and liabilities of Lectret.  These borrowings bear a 60
      day London Interbank Offered Rate (LIBOR) plus 1.25% variable rate.  At
      December 31, 1998, the rate was 6.4696%.  At December 31, 1998, the
      balance on this portion of the outstanding credit line was $1,100,000. 
      On May 27, 1998, $1,278,000 of available funds were used by a subsidiary
      to purchase the stock of IMB Electronic Products, Inc.   At December 31,
      1998, $991,554 of the original $1,278,000 borrowing was outstanding on
      the line which bears interest at 6.31%.  Borrowings under the facility,
      excluding the $1,100,000 portion, bear interest at a rate of 1.25% above
      LIBOR and a commitment fee of 1/4% per annum is payable on the unborrowed
      portion of the line.  The credit facility expires on August 1, 2000.

      The maximum amounts of short term borrowings at any month end 1998 were
      $2,589,000.  The average short term borrowings outstanding during 1998
      were $1,497,000.  The average short term interest rate in 1998 was 7%.





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

      LONG-TERM DEBT

      Long-term debt at December 31, 1998 and 1997 is summarized below:

                                                1998            1997   
      Long-term debt:        
        Term loans, Domestic banks          $ 4,520,024      $ 6,870,024
        Term loans, European banks            3,926,376        1,697,171

        Mortgage notes                          906,584          917,606
        Other borrowings                         90,977          148,742
                                              9,443,961        9,633,543
        Less:  current maturities             3,178,241        2,618,463

                                            $ 6,265,720      $ 7,015,080
                                            ===========      ===========

      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 LIBOR (7.06% at December
      31, 1998) payable monthly.  The previous borrowings under the amended
      agreement were unchanged as principal amounts are repayable over the next
      two years on a monthly basis with aggregate principal payments of
      $1,650,000 per 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 will have an additional
      principal payment of approximately $226,000 in 1999.  No additional
      payment was required in 1998.  At December 31, 1998, 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 credit agreement and revolving credit loan facilities are secured by
      the Company's domestic assets, except RTI's land and building which are
      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
      $23.7 million through December 31, 1998 consisting of shareholders'
      equity, plus subordinated debt, less intangible assets, increased
      annually after December 31, 1998 by 60% of net income and contributions
      to capital.  At December 31, 1998, the Company exceeded the amount
      required to satisfy this covenant in the loan agreement by $3 million. 





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

      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 $53,571 (FF 300,000). 
      The loan carries interest payable quarterly at the Paris Interbank
      Offered Rate (PIBOR) plus .7% (3.95% at December 31, 1998).  The loan
      balances as of December 31, 1998 and 1997 were $1,607,143 (FF 9,000,000)
      and $1,697,171 (FF 10,200,000), 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 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.  The mortgage note has been classified as long-term debt in
      accordance with its normal terms since the Company has the ability and
      intent to maintain this obligation for longer than one year.

      On February 28, 1998 the Company's French subsidiary entered into a loan
      to borrow $2,678,571 (FF 15,000,000) to purchase the assets of CFR.  See
      note 2 regarding the acquisition.  Under the terms of the agreement,
      principal amounts are repayable over the next five years on a quarterly
      basis of $133,929 (FF 750,000).  The loan carries interest at a fixed
      rate of 5.65%.  At December 31, 1998 the loan balance was $2,276,786 (FF
      12,750,000).

      The aggregate maturities of long-term debt for the five years ending
      December 31, 2003 and thereafter are as follows:

      Years ending December 31              Aggregate Maturity

             1999 . . . . . . . . . . . .     $  3,178,241
             2000 . . . . . . . . . . . .        3,042,784
             2001 . . . . . . . . . . . .        1,453,954
             2002 . . . . . . . . . . . .          870,621
             2003 . . . . . . . . . . . .          352,169
             2004 and thereafter  . . . .          546,192    
                                              $  9,443,961
                                            ==============
      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, 1998, 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 $2.1
      million at December 31, 1998.  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 1998, 1997 and 1996
      in connection with the swap agreement amounted to $81,512, $95,584 and
      $101,738, respectively.




      9.  DERIVATIVE FINANCIAL INSTRUMENTS - (Continued)

      The fair value of the interest rate swap agreement was $1.9 million at
      December 31, 1998.  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, 1998 and 1997 are as follows:

                                                1998             1997  

      Salaries, wages and commissions . . . $ 2,652,296      $ 2,825,558
      Taxes, including payroll withholdings 
        and VAT, excluding income taxes . .   1,696,040        2,217,951
      Accrued pension costs . . . . . . . .     611,794          669,193
      Accrued professional fees . . . . . .     748,464          541,967
      Accrued insurance . . . . . . . . . .     306,585          218,392
      Other . . . . . . . . . . . . . . . .     496,837          378,785

                                            $ 6,512,016      $ 6,851,846
                                            ===========      ===========

      11.  DOMESTIC AND FOREIGN INCOME TAXES

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

                                 Years Ended December 31          
                                1998             1997            1996   

      Current
        Federal   . . . . . $ 1,296,209      $ 2,222,160      $ 2,168,819
        State     . . . . .     246,035          197,799          454,367
        Foreign   . . . . .     811,795          237,612          490,707 

                              2,354,039        2,657,571        3,113,893 

      Deferred
        Federal   . . . . .    (476,590)        (543,436)       (552,526)
        State     . . . . .    (220,237)        (130,176)         (61,116)
        Foreign   . . . . .  (1,316,887)         (10,003)        (105,293)

                             (2,013,714)        (683,615)        (718,935)

      Income taxes  . . . . $   340,325      $ 1,973,956      $ 2,394,958
                            ===========      ===========      ===========

      Income (loss) before income taxes is as follows:

        Foreign   . . . . . $  (758,980)     $   938,388      $ 1,015,187
        Domestic  . . . . .   4,708,827        5,422,777        5,509,966

                            $ 3,949,847      $ 6,361,165      $ 6,525,153
                            ===========      ===========      ===========




      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    
                                      1998         1997          1996 
      Tax provision at
        statutory rate               34.0%        34.0%         34.0%
      Net foreign operating
        loss carryforwards           (1.3)        (1.5)          0.3 
      Effect of foreign tax rates    (5.0)          --           1.8 
      Change in domestic valuation 
        allowance                   (19.2)          --            --
      Goodwill amortization           3.2          1.8           1.7
      State taxes net of federal
        benefit                       0.4          0.7           4.0
      Tax benefits related to 
        export sales                 (3.6)        (3.2)         (2.7)
      Other                           0.1         (0.8)         (2.4)

      Domestic and foreign income 
        tax rate                      8.6%        31.0%         36.7%
                                    =====         ====          ====


      The significant components of deferred income taxes (benefits) for the
      years ended December 31, 1998, 1997 and 1996 are as follows:

                                             Years Ended December 31       
                                       1998             1997           1996   

      Deferred income tax (benefit) $(1,894,475)     $ (38,853)     $(342,743)
      (Decrease) in beginning-of-
        the-year balance of the 
        valuation allowance for 
        deferred tax assets             (76,664)      (618,613)      (369,868)
      Other                             (42,575)       (26,149)        (6,324)

                                    $(2,013,714)     $(683,615)     $(718,935)
                                    ===========      =========      =========





      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, 1998 and 1997 are presented below:
      Deferred tax assets:                          1998            1997   

      Postretirement benefit obligations         $1,353,770      $1,274,049
      Net operating loss carryforwards            2,613,379         849,669
      State income taxes                            432,762         463,220
      Guarantee obligations and estimated future
        costs of service accruals                   749,147         895,034
      Employee pension plan obligations             208,011         208,155
      Compensated absences, principally due to
        accrual for financial reporting purposes    285,780         290,209
      Other                                       1,021,777         836,411

        Total gross deferred tax assets           6,664,626       4,816,747
        Less:  valuation allowance   1,620,162    1,696,824

        Net deferred tax assets                   5,044,464       3,119,923

      Deferred tax liabilities:

        Plant and equipment, principally due
          to differences in depreciation and
          capitalized interest                    1,389,500       1,219,890
        Other                                       208,838         275,046
          Total gross deferred tax liabilities    1,598,338       1,494,936

          Net deferred tax assets                $3,446,126      $1,624,987
                                                 ==========      ==========

      Domestic and foreign deferred taxes are comprised as follows:

      December 31, 1998                    Federal       State  

      Current deferred 
        asset                            $1,573,791    $   78,192
      Non-current deferred
        asset (liability)                    66,841       279,298 

      Net deferred tax 
        asset                            $1,640,632    $  357,490 
                                         ==========    ==========

      December 31, 1998                    Foreign       Total  

      Current deferred 
        asset                            $1,951,718    $3,603,701 
      Non-current deferred
        asset (liability)                  (503,714)     (157,575) 

      Net deferred tax 
        asset                            $1,448,004    $3,446,126 
                                         ==========    ==========





      11.  DOMESTIC AND FOREIGN INCOME TAXES - (Continued)

      December 31, 1997                    Federal       State  

      Current deferred 
        asset                            $1,847,390    $  400,228
      Non-current deferred
        (liability)                        (729,294)      (67,029)
      Net deferred tax 
        asset                            $1,118,096    $  333,199
                                         ==========    ==========


      December 31, 1997                   Foreign         Total  

      Current deferred 
        asset                            $  592,805    $2,840,423
      Non-current deferred
        (liability)                        (419,113)   (1,215,436)

      Net deferred tax 
        asset                            $  173,692    $1,624,987
                                         ==========    ==========

      At December 31, 1998, the Company had $646,038 of income tax receivable
      included in accounts and notes receivable.

      The valuation allowance for deferred tax assets as of January 1, 1998 was
      $1,696,824.  The net change in the total valuation allowance for the year
      ended December 31, 1998 was a decrease of $76,662.  In the second
      quarter, the Company reduced the valuation allowance applied against
      deferred tax benefits associated with domestic postretirement benefit
      obligations by $724,512 and against certain domestic employee pension
      plan obligations by $33,694.  The reduction in the valuation allowance
      was based on several factors including:  recent acquisitions, past
      earnings history and trends, reasonable and prudent tax planning
      strategies, and the expiration dates of carryforwards.  The Company has
      determined that it is more likely than not that the $758,206 of deferred
      tax assets will be realized.  The offsetting valuation allowance increase
      of approximately $681,544 is maintained against deferred tax assets which
      the Company has determined are not more than likely to be realized.  
      Subsequently recognized tax benefits, if any, relating to the valuation
      allowance for deferred tax assets will be reported in the consolidated
      statement of operations.






      11.  DOMESTIC AND FOREIGN INCOME TAXES - (Continued)

      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, along with reasonable and prudent tax planning
      strategies and the expiration dates of carryforwards,   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, 1998. 

      At December 31, 1998 the Company has net operating loss carryforwards for
      foreign income tax purposes of $6,493,683 of which $314,136 expire in
      2001, $449,441 expire in 2002, $2,294,311 expire in 2003 and $3,435,795
      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, 1998, the Company has not recognized a
      deferred tax liability of approximately $1,690,000 on undistributed
      retained earnings of such subsidiaries of $4,970,000.



      12. EMPLOYEE BENEFIT PLANS

      During 1998, the Company has adopted SFAS No. 132, "Employers' Disclosure
      about Pension and Other Postretirement Benefits."  SFAS 132 revises the
      employers disclosure about pensions and other postretirement benefit
      plans, however, it does not change the measurement or recognition of the
      plans.  Prior year disclosures have been restated.

      The Company has two defined benefit pension plans.  One covers salaried
      employees and the other plan covers union employees.  The following table
      sets forth the plans' funded status and amounts recognized in the
      Company's statements of financial position at December 31, 1998 and 1997:

                                                        December 31        
                                                  1998             1997    
      Change in Projected Benefit Obligation

      Projected benefit obligation at 
        January 1                              $ 4,854,807      $ 4,548,693
      Service cost (excluding administra-
        tive expenses)                             190,634          156,396
      Interest cost                                327,160          319,109
      Actuarial (gain)/loss                        246,923          148,333
      Benefit paid                                (321,217)        (317,724)

      Projected benefit obligation at
        December 31                              5,298,307        4,854,807

      Change in Fair Value of Plan Assets

      Fair value of plan assets at
        January 1                                4,125,563        3,646,712
      Actual return on plan assets                 804,213          640,938
      Employer contribution                        289,627          202,012
      Expenses                                     (33,749)         (46,375)
      Benefits paid                               (321,217)        (317,724)

      Fair value of plan assets at 
        December 31                              4,864,437        4,125,563

      Funded status                               (433,870)        (729,244)
      Unrecognized net actuarial (gain)/loss      (304,525)         (75,125)
      Unrecognized net obligation                  110,245          165,366
      Unrecognized prior service cost               16,356           26,783

      (Accrued) pension cost after adjustment
        of minimum liability at December 31    $  (611,794)     $  (612,220)
                                               ===========      ===========
      Amounts recognized in the statement of
        financial position consist of:
          Accrued benefit liability            $  (611,794)     $  (669,193)
          Intangible asset                            --             56,973

      Net amount recognized                    $  (611,794)     $  (612,220)
                                               ===========      ===========

      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 1998, 1997 and
      1996 included the following components:

                                              Years Ended December 31       
                                          1998         1997           1996  

      Service cost - benefits
        earned during the period      $ 220,141     $ 182,973     $ 187,955

      Interest cost on projected
        benefit obligation              327,160       319,109       306,788

      Expected return on assets        (323,648)     (285,980)     (257,206)

      Amortization of net obligation     55,121        55,121        55,121

      Amortization of prior service
        cost                             10,427        10,427        10,427 

      Net periodic pension cost       $ 289,201     $ 281,650     $ 303,085
                                      =========     =========     ========= 

      The discount rate used to determine the projected benefit obligation for
      both the salaried and union plans was 6.5% for 1998, 7% for 1997 and
      7.25% for 1996.

      The projected benefit obligation was determined by using an assumed rate
      of increase in compensation levels of 5% for 1998, 1997 and 1996 for the
      salaried plan.  The expected long-term rate of return on assets for both
      plans was 8%.

      The Company's French subsidiary, Selas S.A.,  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 1998, 1997 and 1996 was $0, $0 and $96,970, 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 1998, 1997 and 1996 was $377,447, $362,292 and $288,556,
      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, 1998 and 1997 for
      postretirement medical benefits:

      Accumulated postretirement medical benefit obligation:


                                                         December 31       

      Change in Projected Benefit Obligation         1998            1997  

      Projected benefit obligation at January 1  $ 2,801,051     $ 2,783,518
      Service cost (excluding administrative
        expenses)                                     30,611          27,707
      Interest cost                                  187,324         192,610
      Actuarial (gain)/loss                           71,387          50,031
      Benefits paid                                 (223,272)       (252,815)

      Projected benefit obligation at 
        December 31                                2,867,101       2,801,051

      Change in Fair Value of Plan Assets

      Employer contribution                          223,272         252,815
      Benefits paid                                 (223,272)       (252,815)

      Fair value of plan assets at December 31          --              --  

      Funded status                                2,867,101       2,801,051 
      Unrecognized net actuarial gain                403,329         489,686 

      Accrued postretirement benefit cost        $ 3,270,430     $ 3,290,737 
                                                 ===========     ===========

      Accrued postretirement medical benefit costs are classified as other
      postretirement benefit obligations as of December 31, 1998 and 1997.  




      12.  EMPLOYEE BENEFIT PLANS - (Continued) 

      Net periodic postretirement medical benefit costs for 1998, 1997 and 1996
      include the following components:

                                            Years Ended December 31       
                                        1998          1997          1996  

        Service cost                 $ 30,611      $ 27,707      $ 25,834
        Interest cost                 187,324       192,610       194,081
        Amortization of unrecognized
          gain                        (14,970)      (18,702)      (18,171)

        Net periodic postretirement 
          medical benefit cost       $202,965      $201,615      $201,744
                                     ========      ========      ========

      For measurement purposes, a 10% annual rate of increase in the per capita
      cost of covered benefits (i.e., health care cost trend rate) was assumed
      for 1998; 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, 1998 by
      $280,621 and the aggregate of the service and interest cost components of
      net periodic postretirement medical benefit cost for the year ended
      December 31, 1998 by $18,879.

      The weighted-average discount rate used in determining the accumulated
      postretirement medical benefit obligation at December 31, 1998 and 1997
      was 6.5% and 7.25%, respectively.  

      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, 1998 and 1997 were $825,627 and $733,480,
      respectively, and are classified as other postretirement benefit
      obligations as of December 31, 1998 and 1997.

      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, British
      pound, Singapore dollar 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 1998, 1997 and 1996
      were $175,609, $13,819 and $(8,200), 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 and in 1998 the Board of Directors established
      a 1998 Stock Option Plan to issue up to 75,000 shares to certain non-
      employee Directors, both 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.

      At December 31, 1998, there were 114,200 additional shares available for
      grant under the 1994 plan and 50,000 additional shares available for
      grant under the 1998 plan.  The per share weighted-average fair values of
      stock options granted during 1998 ranged from $3.07 to $4.25 on the date
      of grants using the Black Scholes option-pricing model with the following
      weighted-average assumptions:  1998 - expected dividend yield 1.9%; risk
      free interest rates ranged from 4.39% to 5.71%; expected life of 6 years
      and expected volatility of the stock over the life of the options which
      is based on the past 9 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:

                                   1998          1997          1996   

      Net income as reported    $3,609,522    $4,387,209    $4,130,195
      Net income proforma       $3,297,704    $4,346,245    $4,092,615
      Basic earnings per share as 
        reported                      $.69          $.84          $.80
      Basic earnings per share 
        proforma                      $.63          $.83          $.79

      Options of 225,000 were granted in 1998.  No options were granted in 1997
      or 1996.  Proforma net income reflects options granted in 1998 and 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 periods of 2 to 5 years and compensation cost for options
      granted prior to January 1, 1995 is not considered.






      14.   COMMON STOCK AND STOCK OPTIONS- (Continued)

      Stock option activity during the periods indicated is as follows:

                                              Number of     Weighted-average
                                               Shares      Exercise Price 
       
      Outstanding at January 1, 1996           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
        Options granted                        225,000            9.61
        Options exercised                       (2,200)           4.63
        Options forfeited                       (2,200)           6.10

      Outstanding at December 31, 1998         603,888         $  8.14
                                              ========

      At December 31, 1998, the range of exercise prices were $3.77-$11.42 and
      weighted-average remaining contractual life of outstanding options was
      4.7 years.

      At December 31, 1998 and 1997, the number of options exercisable was
      330,568 and 279,158, respectively and the weighted average price of these
      options were $7.58 and $7.73, respectively.
      15. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

      The following is a tabulation of unaudited quarterly results of   
      operations.  

      1998                                      First           Second
                                               Quarter        Quarter (1)

      Net sales . . . . . .                  $21,867,000      $25,222,000
                                             ===========      ===========

      Gross profit  . . . .                  $ 5,256,000      $ 6,487,000
                                             ===========      ===========

      Net income  . . . . .                  $   559,000      $ 1,766,000
                                             ===========      ===========

      Earnings per share

          Basic                                     $.11             $.34 
                                             ===========      ===========

          Diluted                                   $.10             $.33
                                             ===========      ===========


      1998                                     Third             Fourth
                                               Quarter          Quarter  

      Net sales . . . . . .                  $25,203,000      $27,263,000
                                             ===========      ===========

      Gross profit  . . . .                  $ 5,783,000      $ 5,196,000
                                             ===========      ===========

      Net income  . . . . .                  $   918,000      $   367,000
                                             ===========      ===========

      Earnings per share

          Basic                                     $.18             $.07 
                                             ===========      ===========

          Diluted                                   $.17             $.07
                                             ===========      ===========


      (1) In the second quarter, the Company reduced the valuation allowance
      applied
          against deferred tax benefits associated with domestic postretirement
          benefit and employee pension plan obligations by $758,000.




      15. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (Continued)

      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 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 share

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

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









      16.  EARNINGS PER SHARE

      The  following  table sets  forth the  computation  of basic  and diluted
      earnings per share:



                                                 1998                 
                                   Income        Shares       Per Share
                                  Numerator    Denominator     Amount  

      Basic Earnings Per Share

      Income available to
        common shareholders       $3,609,522     5,233,016     $0.69
                                                               =====



      Effect of Dilutive Securities

      Stock options                                 77,338
      Earnings contingency                            --  




      Diluted Earnings Per Share

      Income available to common
        shareholders plus assumed
        conversions               $3,609,522     5,310,354     $0.68
                                  ==================================






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





      16.  EARNINGS PER SHARE(Continued)

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






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



       16.  EARNINGS PER SHARE (Continued)

      The  following  table sets  forth the  computation  of basic  and diluted
      earnings per share:



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






      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  147 lawsuits as  of December 31, 1998  (215 as of December
      31,  1997) 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  lead insurance  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.

      The Company  was one of approximately 500 defendants in a class action on
      behalf of approximately  2,700 present  and former employees  of a  Texas
      steel  mill.   The  cases were  being  defended  by one  or  more of  the
      Company's  insurance  carriers  presently known  to  be  "at  risk".   In
      October, 1998 the class action suit was settled.  The Company's insurance
      carriers  have  not asked  the Company  to  contribute to  any settlement
      payments made by them in connection with this settlement.

      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.   In June, 1998,
      the  arbitrator found in favor of the  customer.  The Company has refused
      to recognize the validity of the arbitration proceedings and decision and
      believes  it  is entitled  to a  new hearing  before an  international or
      French tribunal.  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 materially  affect the
      Company's  consolidated  financial  position, liquidity,  or  results  of
      operations.






      17.  CONTINGENCIES AND COMMITMENTS - (Continued)

      Total  rent expense  for  1998, 1997  and  1996 under  leases  pertaining
      primarily  to   engineering,  manufacturing,  sales   and  administrative
      facilities,  with an  initial  term  of  one  year  or  more,  aggregated
      $1,020,000,  $873,000  and  $904,000,  respectively.    Remaining rentals
      payable under  such leases  are as  follows:  1999  - $1,015,000;  2000 -
      $962,000; 2001 - $903,000; 2002 - $773,000; 2003 - $643,000.


      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 1998 and 1997 and $373,000 for 1996.
      Annual lease commitments approximate $330,000 through December, 1999.









      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, 1998 and 1997,
      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, 1998.  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,  1998 and 1997,
      and the results of their  operations and their cash flows for each of the
      years in the  three-year period  ended December 31,  1998, in  conformity
      with generally accepted accounting principles.






                                                  KPMG LLP


      Philadelphia, Pennsylvania
      February 19, 1999



                                                           EXHIBIT 21




                           Significant Subsidiaries of
                          Selas Corporation of America





      SUBSIDIARY                           PLACE OF INCORPORATION


      CFR-CECF Forumi-Ripoche, S.A.             France


      CFR Portugal                              Portugal


      Deuer Manufacturing, Inc.                 Ohio


      Resistance Technology GmbH                Germany
      Vertrieb von Elecktronikteilen


      Resistance Technology, Inc.               Minnesota


      RTI Electronics, Inc.                     Delaware


      RTI Technologies PTE LTD                  Singapore


      SEER                                      France


      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,  No. 333-
      16377 on Form S-8, and No. 333-66433 on Form S-8 of Selas Corporation of
      America and subsidiaries of our reports dated February 19, 1999 relating
      to the consolidated balance sheets of Selas Corporation of America and
      subsidiaries as of December 31, 1998 and 1997 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, 1998, which reports are included
      in or incorporated by reference in the December 31, 1998 annual report on
      Form 10-K of Selas Corporation of America.






                                           KPMG LLP



      Philadelphia, Pennsylvania
      March 26, 1999




                                                        EXHIBIT 24




                             POWER OF ATTORNEY



                KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby
      consent and appoint Stephen F. Ryan and Francis A. Toczylowski, 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, 1998,
      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 23rd day of March, 1999.


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


                                      /s/ Frederick L. Bissinger
                                        Frederick L. Bissinger
                                      /s/ Roy C. Carriker       
                                            Roy C. Carriker


                                      /s/ Mark S. Gorder        
                                           Mark S. Gorder    


                                      /s/ Michael J. McKenna    
                                           Michael J. McKenna


                                      /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, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 12-MOS DEC-31-1998 DEC-31-1998 2,784,284 0 32,488,666 1,993,733 12,628,623 50,843,676 38,996,069 20,038,177 87,780,563 33,632,971 6,265,720 0 0 5,615,081 38,013,159 87,780,563 99,554,554 99,554,554 76,832,570 76,832,570 0 1,324,094 1,139,274 3,949,847 340,325 3,609,522 0 0 0 3,609,522 .69 .68
 

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