UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

[ X ] QUARTERLY  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
      EXCHANGE ACT OF 1934

For the quarterly period ended              September 30, 2000
                                        ----------------------

                                       or

[ ]  TRANSACTION  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from          ___________ to  ___________


Commission File Number:                 333-56217.



                               ISG Resources, Inc.

             (Exact name of registrant as specified in its charter)


                      Utah                                      87-0327982
         ---------------------------------                   -------------
         (State or other jurisdiction of                     (I.R.S. Employer
         incorporation or organization)                      Identification No.)


          136 East South Temple, Suite 1300, Salt Lake City, Utah 84111
         -----------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (801) 236-9700
                            -----------------------
              (Registrant's telephone number, including area code)


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

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock,  as of the latest  practicable  date. As of October 31,
2000 :


      Classes of Common Stock                  Number of shares outstanding
   --------------------------------------    ------------------------------
       Common Stock, no par value                               100


<PAGE>


                               ISG Resources, Inc.

                                  ------------

                               INDEX TO FORM 10-Q

                         PART I -- FINANCIAL INFORMATION

Item 1.  Financial Statements                                               Page
         --------------------                                               ----

         Unaudited Condensed Consolidated Balance Sheets --
         September  30, 2000 and December 31, 1999 .......................    1

         Unaudited Condensed  Consolidated  Statements  of
         Operations  and Comprehensive  Income --
         Three months ended September 30, 2000 and 1999 and
         Nine months ended September 30, 2000 and 1999  ..................    2

         Unaudited Condensed Consolidated Statements of Cash Flows --
         Nine months ended September 30, 2000 and 1999....................    4

         Notes to Unaudited Condensed Consolidated Financial Statements ...   5

Item 2.  Management's Discussion and Analysis of
         Financial Condition and Results of Operations  ...................   12
         ---------------------------------------------

Item 3.  Quantitative and Qualitative Disclosure about Market Risk
         -----------------------------------------------------------

          There have been no  significant  changes  since the annual report Form
          10-K filed for the year ended December 31, 1999.

                           PART II - OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K  ...............................    18
         --------------------------------


                                       ii
<PAGE>

<TABLE>
<CAPTION>

                      ISG Resources, Inc. and Subsidiaries
                 Unaudited Condensed Consolidated Balance Sheets

                                                                        September 30,           December 31,
                                                                             2000                   1999
Assets
Current assets:
<S>                                                                   <C>                      <C>
   Cash and cash equivalents                                          $              -              $          -
   Accounts receivable:
       Trade, net of allowance for doubtful accounts of
          $391,000 and $329,000, respectively                               33,538,069                21,167,616
       Retainage                                                               138,416                   176,000
       Other                                                                   815,197                   502,058
   Deferred tax asset                                                          253,906                   316,161
   Inventories                                                               6,856,620                 4,055,425
   Other current assets                                                        918,117                   829,661
Total current assets                                                        42,520,325                27,046,921

Property, plant and equipment, net of accumulated depreciation of
   $11,664,402 and $7,893,374, respectively                                 36,676,051                33,584,188
Intangible assets, net                                                     169,275,136               153,952,547
Debt issuance costs, net                                                     4,661,426                 4,826,010
Other assets                                                                 1,500,419                 1,052,845
Total assets                                                           $   254,633,357           $   220,462,511
-------------------------------------------------------------------=================================================

Liabilities and shareholders' equity Current liabilities:
   Accounts payable                                                       $ 17,311,347               $10,409,583
   Accrued liabilities:
      Payroll                                                                1,769,646                 1,288,732
      Interest                                                               4,725,498                 2,190,471
      Other                                                                    971,475                 1,828,537
   Income taxes payable                                                      1,514,777                 1,705,678
   Other current liabilities                                                   527,727                   652,119
                                                                     -----------------------------------------------
Total current liabilities                                                   26,820,470                18,075,120

Long-term debt                                                             155,000,000               133,500,000
Deferred tax liability                                                      37,377,539                39,158,249
Payable to Industrial Services Group                                           643,983                   643,983
Other liabilities                                                            1,582,088                 1,923,355

Shareholders' equity:
   Common stock, no par value; 100 shares authorized, issued and
     outstanding                                                            34,745,050                25,000,050
   Cumulative foreign currency translation adjustment                           (2,135)                        -
   Retained earnings (deficit)                                              (1,533,638)                2,161,754
                                                                     -----------------------------------------------
Total shareholders' equity                                                  33,209,277                27,161,804
                                                                     -----------------------------------------------
Total liabilities and shareholders' equity                               $ 254,633,357             $ 220,462,511
                                                                     ===============================================
See accompanying notes.
</TABLE>

                                       1
<PAGE>

<TABLE>
<CAPTION>

                      ISG Resources, Inc. and Subsidiaries
          Unaudited Condensed Consolidated Statements of Operations and
                              Comprehensive Income

                                                                          Three Months
                                                                       Ended September 30,
                                                              ------------------------------------------
                                                                      2000                   1999
                                                              ------------------------------------------
Revenues:
<S>                                                             <C>                 <C>
   Product revenues                                               $   47,201,000      $   38,608,195
   Service revenues                                                    9,381,100          10,286,648
                                                              ------------------------------------------
                                                                      56,582,100          48,894,843
Costs and expenses:
   Cost of product revenues, excluding depreciation                   35,143,989          24,795,355
   Cost of service revenues, excluding depreciation                    6,325,765           7,761,827
   Depreciation and amortization                                       4,156,198           3,174,575
   Selling, general and administrative expenses                        5,648,770           4,741,251
   New product development                                               551,187             566,575
                                                              ------------------------------------------
                                                                      51,825,909          41,039,583
                                                              ------------------------------------------
Operating income                                                       4,756,191           7,855,260

Interest income                                                           13,174              11,762
Interest expense                                                      (4,086,488)         (3,419,021)
Other income and expense                                                 229,038              32,249
                                                              ------------------------------------------
Income before income taxes                                               911,915           4,480,250
Income tax expense                                                      (619,594)         (2,044,376)
                                                              ------------------------------------------
Net income                                                               292,321           2,435,874
Other comprehensive income, net of tax:
  Foreign currency translation adjustment                                  3,477                   -
                                                              ------------------------------------------
Comprehensive income                                               $     295,798       $   2,435,874
                                                              ==========================================


See accompanying notes.
</TABLE>

                                       2
<PAGE>
<TABLE>
<CAPTION>

                      ISG Resources, Inc. and Subsidiaries
          Unaudited Condensed Consolidated Statements of Operations and
                              Comprehensive Income

                                                                           Nine Months
                                                                       Ended September 30,

                                                              ------------------------------------------
                                                                      2000              1999
                                                              ------------------------------------------
Revenues:
<S>                                                              <C>                <C>
   Product revenues                                              $   110,698,790    $     91,079,134
   Service revenues                                                   25,094,077          27,384,259
                                                              ------------------------------------------
                                                                     135,792,867         118,463,393

Costs and expenses:
   Cost of product revenues, excluding depreciation                   81,759,997          60,908,108
   Cost of service revenues, excluding depreciation                   17,428,495          19,980,978
   Depreciation and amortization                                      11,022,296           9,269,686
   Selling, general and administrative expenses                       17,185,498          14,524,123
   New product development                                             1,628,308           1,409,474
                                                              ------------------------------------------
                                                                     129,024,594         106,092,369
                                                              ------------------------------------------
Operating income                                                       6,768,273          12,371,024

Interest income                                                           34,748              32,940
Interest expense                                                     (11,487,575)         (9,940,393)
Other income and expense                                                 434,640              27,150
                                                              ------------------------------------------
Income before income taxes                                            (4,249,914)          2,490,721
Income tax benefit (expense)                                             554,522          (1,579,541)
                                                              ------------------------------------------
Net income (loss)                                                     (3,695,392)            911,180
Other comprehensive loss, net of tax:
   Foreign currency translation adjustment                                (2,135)
                                                              ------------------------------------------
Comprehensive income (loss)                                       $   (3,697,527)       $    911,180
                                                              ==========================================


</TABLE>

See accompanying notes.

                                       3
<PAGE>
<TABLE>
<CAPTION>

                      ISG Resources, Inc. and Subsidiaries
            Unaudited Condensed Consolidated Statements of Cash Flows

                                                                                     Nine Months
                                                                                Ended September 30,
                                                                               2000             1999

Operating activities
<S>                                                                        <C>            <C>
Net income (loss)                                                          $ (3,695,392)    $    911,180
Adjustments to reconcile net income (loss) to net cash provided by
   operating activities:
     Depreciation and amortization                                           11,022,296        9,269,686
     Amortization of debt issuance costs                                        594,696          522,665
     Loss on sale of fixed assets                                                58,134           28,213
     Deferred income taxes                                                   (1,625,295)      (1,020,378)
     Changes in operating assets and liabilities:
         Receivables                                                         (9,047,214)     (11,233,394)
         Inventories                                                           (925,203)        (958,643)
         Other current and non-current assets                                  (466,261)        (527,182)
         Accounts payable                                                     6,179,407        4,028,939
         Accrued expenses                                                     1,302,128        6,608,387
         Other current and non-current liabilities                           (2,065,398)        (290,883)
Net cash provided by operating activities                                     1,331,898        7,338,590

Investing activities
Purchases of property, plant and equipment                                   (5,492,898)      (6,842,100)
Proceeds on sale of property, plant and equipment                               517,970          147,326
Acquisitions of businesses, net of cash acquired                            (26,050,281)     (23,112,502)
Purchase of intangible assets                                                (1,119,441)        (696,165)
Net cash used in investing activities                                       (32,144,650)     (30,503,441)

Financing activities
Cash contributions from shareholder                                           9,745,000               -0-
Proceeds from long-term debt                                                147,000,000       83,500,000
Payments on notes payable and long-term debt                               (125,500,000)     (60,000,000)
Debt issuance costs incurred                                                   (430,113)        (335,149)
Net cash provided by financing activities                                    30,814,887       23,164,851

Effect of exchange rate changes on cash                                          (2,135)               -

Net decrease in cash and cash equivalents                                             -                -
Cash and cash equivalents at beginning of period                                      -                -
Cash and cash equivalents at end of period                                 $          -     $          -
                                                                         ====================================

Cash paid for interest                                                     $  8,349,101      $ 6,850,903
                                                                         ====================================
Cash paid (received) for income taxes                                      $  1,209,892       $( 689,716)
-------------------------------------------------------------------------====================================

</TABLE>
See accompanying notes

                                       4
<PAGE>


                               ISG RESOURCES, INC.

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.   Basis of Presentation

ISG  Resources,  Inc., a Utah  corporation  (the  "Company"),  is a wholly owned
subsidiary  of  Industrial  Services  Group,  Inc.  ("ISG").  ISG was  formed in
September 1997 and acquired the stock of JTM Industries, Inc. ("JTM") on October
14,  1997.  In 1998,  JTM  acquired  the  stock of  Pozzolanic  Resources,  Inc.
("Pozzolanic"), Power Plant Aggregates of Iowa, Inc. ("PPA"), Michigan Ash Sales
Company d.b.a. U.S. Ash Company,  together with two affiliated  companies,  U.S.
Stabilization,  Inc. and Flo Fil Company, Inc.  (collectively,  "U.S. Ash"), and
Fly  Ash  Products,   Inc.  ("Fly  Ash  Products")   (collectively,   the  "1998
Acquisitions").  Effective January 1, 1999, JTM, Pozzolanic,  PPA, U.S. Ash, Fly
Ash  Products  and their  wholly  owned  subsidiaries  merged  with and into the
Company.  Pneumatic Trucking, Inc.  ("Pneumatic"),  a wholly owned subsidiary of
Michigan Ash Sales Company,  was not merged into ISG Resources,  Inc. Therefore,
Pneumatic became a wholly owned subsidiary of the Company.

In 1999, the Company  acquired the stock of Best Masonry & Tool Supply ("Best"),
Mineral  Specialties,  Inc.  ("Specialties"),  Irvine Fly Ash, Inc.  ("Irvine"),
Lewis  W.  Osborne,   Inc.   ("Osborne"),   United  Terrazzo  Supply  Co.,  Inc.
("Terrazzo"),  and  Magna  Wall,  Inc.  ("Magna  Wall")  and  sold  all  of  the
outstanding stock of Pneumatic.

On March 2, 2000,  the Company  acquired  directly  and  indirectly  through ISG
Manufactured  Products,  Inc., a newly  formed  wholly-owned  subsidiary  of the
Company,  all of the  partnership  interest  of  Don's  Building  Supply  L.L.P.
("Don's") for approximately $5.9 million in cash. Don's is engaged in the retail
and  wholesale   distribution  of  construction  materials  to  residential  and
commercial contractors primarily in the State of Texas.

The purchase  price of Don's was  allocated  based on  estimated  fair values of
assets and liabilities at the date of acquisition.  Goodwill  resulting from the
difference  between the purchase price plus acquisition costs and the net assets
acquired  totaled  approximately  $4.3  million  and  is  being  amortized  on a
straight-line basis over 20 years.

On May 31, 2000, the Company  completed the acquisition of all outstanding stock
of Palestine  Concrete Tile Company,  Inc. and certain  associated real property
(collectively,   "Palestine")   for   approximately   $18.5   million  in  cash.
Additionally,   the  Company  paid  off   outstanding   debt  of  Palestine  for
approximately $1.0 million.  Palestine is a Texas corporation  primarily engaged
in the manufacture and  distribution of concrete block. The Company financed the
acquisition  of  Palestine by  obtaining a  $15,000,000  increase in the Secured
Credit  Facility  on May 26,  2000  and  receiving  an  equity  contribution  of
$9,745,000 from ISG on April 19, 2000.

The purchase price of Palestine was allocated  based on estimated fair values of
assets and liabilities at the date of acquisition.  Goodwill  resulting from the
difference  between the purchase price plus acquisition costs and the net assets
acquired  totaled  approximately  $14.9  million,  and is being  amortized  on a
straight-line basis over 20 years.

On September 15, 2000, the Company acquired certain fixed and intangible  assets
from Hanson Aggregates West, Inc.  ("Hanson").  Hanson is a subsidiary of Hanson
PLC, a leading international building materials company with operations in North
America and Europe.  The Company  negotiated a purchase price of $2.1 million in
cash for equipment and other fixed assets, as well as contracts with three Texas
and  Louisiana  power plants.  ISG will utilize the assets  purchased to provide
materials  management services under the utility contracts acquired in the asset
acquisition.

                                       5
<PAGE>


The following pro forma combined financial information reflects operations as if
the  acquisition  of Don's,  Palestine,  and  Hanson and the  related  financing
transactions  had  occurred  as of  January  1,  1999.  The pro  forma  combined
financial  information is presented for  illustrative  purposes  only,  does not
purport to be indicative  of the Company's  results of operations as of the date
hereof and is not necessarily indicative of what the Company's actual results of
operations  would have been had the acquisition  and the financing  transactions
been consummated on such date.

                               Three Months Ended September 30,
                                    2000             1999
                           ------------------ --------------------
          Revenues         $     58,942        $   58,378
          Net income       $        587        $    2,972


                                Nine Months Ended September 30,
                                        2000             1999
                               ------------------ --------------------
          Revenues             $    151,359       $    145,040
          Net income (loss)    $     (1,392)      $      2,167


These  financial  statements  reflect the  consolidated  financial  position and
results of  operations  of the Company and its wholly  owned  subsidiaries.  All
significant  intercompany  accounts and  transactions  have been  eliminated  in
consolidation.

In the opinion of management,  the accompanying unaudited condensed consolidated
financial  statements  reflect all  adjustments,  consisting of normal recurring
adjustments,  necessary to present  fairly the  financial  position,  results of
operations and cash flows of the Company,  for the respective periods presented.
The results of operations for the three and nine-month  periods ended  September
30, 2000 are not necessarily indicative of the results which may be expected for
any other interim period or for the year as a whole.

The preparation of financial  statements,  in conformity with generally accepted
accounting  principles,  requires  management to make estimates and  assumptions
that affect the reported  amounts of assets and  liabilities  and  disclosure of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

Certain  information  and footnote  disclosures  normally  included in financial
statements presented in accordance with generally accepted accounting principles
have been condensed or omitted.  The accompanying  unaudited  interim  condensed
consolidated  financial  statements  should  be read  in  conjunction  with  the
consolidated  financial  statements and notes in the Company's Form 10-K for the
fiscal year ended December 31, 1999.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin (SAB) 101, Revenue Recognition in Financial  Statements.  The effective
date of SAB 101 is the fourth quarter of fiscal years  beginning  after December
15, 1999. This SAB clarifies proper methods of revenue recognition given certain
circumstances surrounding sales transactions.  The Company continues to evaluate
the impact of SAB 101, but believes it is in compliance  with the  provisions of
the SAB and  accordingly,  does not expect SAB 101 to have a material  effect on
its financial statements.

In  1998,  the  Financial  Accounting  Standards  Board  issued  SFAS  No.  133,
"Accounting  for  Derivative  Instruments  and  Hedging  Activities,"  which was
subsequently  amended  by SFAS No.  137  "Accounting  for  Derivative  Financial
Instruments and Hedging  Activities - Deferral of the Effective Date of SFAS No.
133" and SFAS No. 138 "Accounting for Certain Derivative Instruments and Certain
Hedging Activities." SFAS No. 133 establishes accounting and reporting standards
requiring  that  every  derivative  instrument,   including  certain  derivative
instruments  embedded in other  contracts,  be recorded in the balance  sheet as
either an asset or  liability  measured at its fair value.  The  statement  also
requires that changes in the  derivative's  fair value be recognized in earnings
unless specific hedge  accounting  criteria are met. SFAS No. 133, as amended by
SFAS No. 137 and SFAS No. 138, is effective  for all fiscal  quarters  beginning
after June 15, 2000.  The Company has adopted SFAS No. 133 in the third quarter.
The  adoption  of SFAS No. 133 did not have a material  impact on the  Company's
financial condition or results of operations.

                                       6
<PAGE>
The  consolidated  balance  sheet at December  31, 1999 was derived from audited
consolidated financial statements, but does not include all disclosures required
under  generally  accepted  accounting  principles.  Certain  amounts  have been
reclassified to conform to the September 30, 2000 presentation.

2.       Description of Business

The Company operates two principal  business  segments:  coal combustion product
(CCP) management and building materials manufacturing and distribution.  The CCP
division  purchases,  removes  and sells fly ash and other  by-products  of coal
combustion  to producers and  consumers of building  materials and  construction
related products  throughout the United States and parts of Canada. The building
materials division  manufactures and distributes masonry construction  materials
to  residential  and  commercial  contractors  primarily  in Texas,  California,
Georgia and Florida.

3.       Property, Plant and Equipment

Property,  plant and equipment  amounts are carried at cost.  Costs  assigned to
property, plant and equipment of acquired businesses are based on estimated fair
values  at the date of  acquisition.  Depreciation  of plant  and  equipment  is
calculated using the straight-line method over the estimated useful lives of the
assets.  Expenditures  related to  construction  in  progress  are  included  in
property, plant and equipment.  Costs incurred which materially increase values,
change capacities or extend useful lives are capitalized in property,  plant and
equipment. Routine maintenance and repairs are charged against current operation
expense. Upon sale or retirement, the costs and related accumulated depreciation
are eliminated from property, plant and equipment and any resulting gain or loss
is included in income.

In  accordance  with the  Financial  Accounting  Standards  Board  Statement  of
Financial  Accounting  Standards  No.  121  "Accounting  for the  Impairment  of
Long-Lived  Assets and for  Long-Lived  Assets to be  Disposed  Of" (SFAS  121),
certain  long-lived  assets  and  certain  identifiable  intangibles,  including
goodwill,  to be held and used by the Company, are periodically  reviewed by the
Company for impairment whenever events or changes in circumstances indicate that
the  carrying  amount of the assets may not be  recoverable,  and an estimate of
future  undiscounted  cash flows is less than the carrying  amount of the asset.
Accordingly,  when indicators of impairment are present, the Company adjusts the
net book value of the underlying  asset if the sum of the expected  undiscounted
future cash flows is less than book value.

In January  2000,  the Company  capitalized  to property,  plant and  equipment,
certain costs associated with the construction of a carbon ash burnout unit. The
unit  was to be used  for  the  separation  of  carbon  from  fly ash and in the
continuing  research and  development  efforts related to the improvement of the
carbon separation technology.

During the third quarter 2000, the Company  determined that the technology being
tested  by the  carbon  ash  burnout  unit was no  longer  commercially  viable.
Furthermore,  the Company decided to pursue a different  technology to eliminate
the effects of high carbon content.  Consequently,  the Company  determined that
the  carbon  ash  burnout  unit  would no longer be  utilized  for its  intended
purpose.  Thus,  in  accordance  with SFAS 121, the Company  determined  that an
impairment  loss  existed.  However,  certain  components  of the  unit  will be
utilized in the CCP division and the  remaining  components  of the unit will be
abandoned and sold. The  approximate  fair value of the components to be used in
the CCP division and the amount  estimated to be received for the remaining unit
when sold is $100,000.

The company  measured  the  impairment  loss to be the amount that the  carrying
value  exceeded the estimated  fair value of the asset.  An  impairment  loss of
approximately  $0.4 million is recognized in operating income and is included in
the aggregate total for depreciation and amortization in the Company's unaudited
consolidated statements of operations and comprehensive income.

                                       7
<PAGE>
4.       New Product Development Costs

New product development costs consist of scientific research and development and
market development expenditures. Expenditures of $1,628,309 and $551,187 for the
nine months and quarter ended  September 30, 2000,  respectively,  were made for
research and development  activities  covering basic scientific research and the
application  of  scientific  advances  to the  development  of new and  improved
products and  processes.  Expenditures  of $1,409,474  and $566,575 for the nine
months and quarter ended September 30, 1999, respectively,  were made for market
development  activities  related to  promising  new and  improved  products  and
processes  identified  during research and development  activities.  The Company
expenses all new product development costs as they are incurred.

5.       Inventories

Inventories  are valued at lower of cost  (computed  on the  average,  first-in,
first-out method), or net realizable value. Inventories consist of:


                                        September 30,           December 31,
                                            2000                    1999
                                     -------------------- ---------------------
                  Raw Materials           $ 1,066,091          $    234,073
                  Finished Goods            5,790,529             3,821,352
                                     -------------------- ---------------------
                                           $6,856,620          $  4,055,425
                                     ==================== =====================


6.   Intangible Assets

Intangible assets consist of the following:

                                           September 30,          December 31,
                                                2000                  1999
                                         --------------------- -----------------
           Goodwill                         $ 83,610,925            $64,313,512
           Contracts                          99,999,788             98,522,146
           Patents and licenses                3,787,431              2,787,431
           Assembled work force                2,815,233              2,700,233
                                         --------------------- -----------------
                                             190,213,377            168,323,322
           Less accumulated amortization     (20,938,241)           (14,370,775)
                                         --------------------- -----------------
                                           $ 169,275,136           $153,952,547
                                         ===================== =================


Amortization  is  provided  over the  estimated  period  of  benefit,  using the
straight-line method, ranging from 8 to 25 years.

7.     Long-term Debt

Long-term debt consists of the following:

                                                September 30,      December 31,
                                                    2000               1999
                                               ---------------- ----------------
         10% Senior Subordinated Notes due 2008   $100,000,000    $ 100,000,000
         Secured Credit Facility                    55,000,000       33,500,000
                                               ---------------- ----------------
                                                  $155,000,000    $ 133,500,000
                                               ================ ================

                                       8
<PAGE>
The Company  financed  the 1998 and 1999  Acquisitions  through the  issuance of
$100.0 million of 10% Senior  Subordinated  Notes due 2008 and borrowings on its
Secured Credit  Facility (as  subsequently  amended and  restated).  The Company
financed the acquisition of Palestine by obtaining a $15,000,000 increase in the
Secured Credit Facility on May 26, 2000 (discussed below). Operating and capital
expenditures have been financed  primarily through cash flow from operations and
borrowings under the Secured Credit Facility.

On May 26, 2000, the Secured Credit  Facility was amended and restated to, among
other  things,  increase  the  borrowings  available  to the Company  from $50.0
million to $65.0 million.

This increase in the funds available to the Company was accomplished through the
addition of a Tranche B feature,  pursuant to which two of the existing lenders,
Bank of America,  N.A. and Zions First  National  Bank (the "Tranche B Lenders")
agreed  to  provide  the  additional  $15.0  million  in  funding.  No amount is
available pursuant to the Tranche B revolving loans unless all amounts under the
Tranche  A  (existing)  revolving  loans  have  been  borrowed  in full  and are
outstanding.  Under the amended and restated  Secured  Credit  Facility,  at the
option of the  Company,  both the  Tranche A  Revolving  Loans and the Tranche B
Revolving Loans may be maintained as Eurodollar Loans or Base Rate Loans.

Eurodollar  loans will bear  interest  at a per annum rate equal to the rate per
annum  (rounded  upwards,  if  necessary,  to the  nearest  1/100 of 1  percent)
determined by the  Administrative  Agent to be equal to the quotient by dividing
(a) Interbank  Offered Rate for such Eurodollar Loan for such Interest Period by
(b) 1 minus the Reserve  Requirement  for such Eurodollar Loan for such Interest
Period,  and by then adding  thereto the  applicable  LIBOR  margin  (which is a
percentage ranging from 1.75% to 2.50%,  depending  primarily upon the Company's
Leverage  Ratio).  All  capitalized  terms are  defined  in the  Secured  Credit
Facility.

Base Rate Loans will bear  interest  at a per annum rate equal to the rate which
is the higher of (a) the  Federal  Funds rate for such day plus  one-half of one
percent  (0.5%) and (b) the Prime rate for such day and by then  adding  thereto
the  applicable  ABR Margin  (which is a percentage  ranging from 0.50% to 1.25%
depending  primarily upon the Company's  Leverage Ratio). Any change in the Base
Rate due to a change in the  Federal  Funds  Rate or to the Prime  Rate shall be
effective on the effective  date of such change.  All  capitalized  terms are as
defined in the Secured Credit Facility.

The Company will also pay certain fees with respect to any unused portion of the
amended and restated Secured Credit Facility.

The amended and  restated  Secured  Credit  Facility  maintains  the term of the
original  Secured  Credit  Facility  obtained on March 4, 1998, is guaranteed by
ISG, existing, and future subsidiaries of the Company (the "Guarantors"), and is
secured by a first priority security interest in all of the capital stock of the
Company  and all of the  capital  stock  of each of the  Guarantors,  as well as
certain present and future assets and properties of the Company and any domestic
subsidiaries.

On August 8, 2000, the amended and restated  secured credit  agreement dated May
26, 2000 was amended in order to modify certain debt covenants  contained in the
credit agreement.  Primarily,  a minimum  consolidated  Earnings Before Interest
Expense,  Income Tax Expense,  Depreciation  Expense,  and Amortization  Expense
(EBITDA)  debt  covenant was added.  The minimum  consolidated  EBITDA  covenant
requires  the  Company to  maintain  a minimum  EBITDA  amount for every  fiscal
quarter through June 30, 2003 at minimum levels set forth in the agreement.

The  amended and  restated  Secured  Credit  Facility  continues  to require the
Company to not exceed a maximum leverage ratio, or drop below a minimum interest
coverage ratio, a minimum  consolidated EBITDA level, and to comply with certain
other financial and non-financial covenants, as defined in the agreement.

At September 30, 2000,  $10.0 million was unused and available under the Secured
Credit Facility.

                                       9
<PAGE>
8.       Reportable Segments

As discussed in note 2, the Company operates in two reportable segments: the CCP
division  and  the  building  materials  division.  The  CCP  division  consists
primarily of three operating units that manage and market CCPs in North America.
The building materials division consists of six legal entities,  Best,  Osborne,
Terrazzo,  Magna Wall,  Don's,  and  Palestine.  The  Company's  two  reportable
segments  are  managed  separately  based on  fundamental  differences  in their
operations.

The Company evaluates performance based on profit or loss from operations before
depreciation,  amortization,  income taxes and interest  expense  (EBITDA).  The
Company  derives  a  majority  of its  revenues  from CCP  sales  and the  chief
operating  decision  makers  rely on  EBITDA to assess  the  performance  of the
segments and make  decisions  about  resources to be allocated to the  segments.
Accordingly,  EBITDA is  included in the  information  reported  below.  Certain
expenses are  maintained at the  Company's  corporate  headquarters  and are not
allocated to the segments.  Such expenses  primarily  include interest  expense,
corporate overhead costs, certain  non-recurring gains and losses and intangible
asset  amortization.  Inter-segment  sales,  which  historically  have  not been
material,   are  generally   accounted  for  at  cost  and  are   eliminated  in
consolidation.

The building  materials  division includes  financial data for Best only for the
three and nine months ended  September  30, 1999,  as Osborne,  Terrazzo,  Magna
Wall, Don's and Palestine were acquired subsequent to the third quarter of 1999.
The building  materials division includes financial data for Don's and Palestine
for the three and nine months  ended  September  30, 2000 from their  respective
acquisition  dates.  The CCP  division  includes  financial  data for the Hanson
acquisition from September 15, 2000 through September 30, 2000. Amounts included
in the "Other" column include financial information for the Company's corporate,
R&D and other administrative business units.

Information about reportable segments, and reconciliation of such information to
the consolidated  totals as of and for the three and nine months ended September
30, 2000 and September 30, 1999, is as follows:
<TABLE>
<CAPTION>

                                                        Building
                                        CCP             Materials           Other          Consolidated
                                                                                              Total
                                   ---------------- ---------------- ----------------- -------------------
Three months ended 9/30/00:
<S>                                  <C>             <C>               <C>                <C>
Revenue                              $42,376,943     $14,071,204         $  133,953        $  56,582,100
EBITDA                                 9,822,088       2,022,906         (2,690,393)           9,154,601
Total Assets                          57,142,521      48,140,650        149,350,186          254,633,357
Expenditures for PP&E                    387,539         439,916            122,483              949,938

Three months ended 9/30/99:
Revenue                              $43,571,882     $ 5,284,869          $  38,092         $ 48,894,843
EBITDA                                12,077,289         730,946         (1,734,389)          11,073,846
Total Assets                          56,941,995      17,642,612        153,022,457          227,607,064
Expenditures for PP&E                  1,490,947         113,951            241,089            1,845,987
</TABLE>
<TABLE>
<CAPTION>

                                                        Building
                                        CCP             Materials           Other          Consolidated
                                                                                              Total
                                   ---------------- ---------------- ----------------- -------------------
Nine months ended 9/30/00:
<S>                                  <C>            <C>                <C>                <C>
Revenue                              $103,429,165   $  32,034,375      $   329,327        $135,792,867
EBITDA                                 22,600,842       4,317,149       (8,658,034)         18,259,957
Total Assets                           57,142,521      48,140,650      149,350,186         254,633,357
Expenditures for PP&E                   3,781,141       1,322,738          389,019           5,492,898

Nine months ended 9/30/99:
Revenue                              $102,406,799   $  15,386,775      $   669,819        $118,463,393
EBITDA                                 25,313,047       2,432,421       (6,044,668)         21,700,800
Total Assets                           56,941,995      17,642,612      153,022,457         227,607,064
Expenditures for PP&E                   6,033,868         227,902          580,330           6,842,100

</TABLE>
                                       10

<PAGE>

9.    Subsequent Events

On February 24, 1999,  the Company  entered into an option  agreement to acquire
the stock of Tatum  Industries,  Inc.  (Tatum).  As part of that agreement,  the
Company  agreed to loan  Tatum  approximately  $50,000  per month for  operating
expenses and loan servicing.  Tatum's note to the Company accrues interest at 8%
and is payable on demand.

On September 30, 2000,  the  principal  balance of the note  approximately  $1.1
million. Additionally, the Company leased Tatum's building and equipment and the
Company  incurred  approximately  $0.1 million of leasehold  improvements to the
property.

On October 27, 2000, the Company  advised Tatum that the Company was terminating
the option agreement;  however,  the Company continues to lease the building and
equipment under a month-to-month lease.

On November 13,  2000,  the Company  advised  Tatum that the note to the Company
will be due and  payable on January  14,  2001.  Currently,  Tatum is  reviewing
alternatives to facilitate  repayment of the note, one of which is the potential
sale of Tatum to a third party.  Because the Company has not  determined at this
point,  due to the recent  demand  notification,  that it is probable that Tatum
will be unable to repay the note, no write offs or allowances have been recorded
within the accompanying  financial  statements.  However,  if Tatum is unable to
find alternative sources of financing,  the Company may be required to write off
or reserve  against  all or a portion  of the note  receivable  balance.  To the
extent  that the  Company  terminates  its lease in the  future,  the  leasehold
improvements also will be required to be written off.


                                       11
<PAGE>

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

The  following  discussion  and analysis of financial  condition  and results of
operations   should  be  read  in  conjunction  with  the  Unaudited   Condensed
Consolidated Financial Statements and Notes thereto included elsewhere herein.

General

ISG Resources,  Inc. (the "Company") is the leading manager and marketer of coal
combustion  products  ("CCPs")  throughout North America.  The Company generates
revenues  from  marketing  products to its  customers  and  providing  materials
management,  engineering and construction services to its clients. The Company's
strategic   objectives  include  the  maintenance  and  expansion  of  long-term
contractual  relationships,  the  increase  in  product  sales and  applications
through  cross-marketing and further  technological  advances and the pursuit of
strategic acquisitions.

In 1999, the Company  acquired the stock of Best Masonry & Tool Supply ("Best"),
Mineral  Specialties,  Inc.  ("Specialties"),  Irvine Fly Ash, Inc.  ("Irvine"),
Lewis  W.  Osborne,   Inc.   ("Osborne"),   United  Terrazzo  Supply  Co.,  Inc.
("Terrazzo"),  and  Magna  Wall,  Inc.  ("Magna  Wall")  and  sold  all  of  the
outstanding stock of Pneumatic.

On March 2, 2000,  the Company  acquired  directly  and  indirectly  through ISG
Manufactured  Products,  Inc., a newly  formed  wholly-owned  subsidiary  of the
Company, all of the partnership interest of Don's Building Supply L.L.P. (Don's)
for approximately $5.9 million in cash.

On May 31, 2000, the Company  completed the acquisition of all outstanding stock
of Palestine  Concrete Tile Company,  Inc. and certain  associated real property
(collectively,   "Palestine")   for   approximately   $18.5   million  in  cash.
Additionally,   the  Company   paid  off   outstanding   debt  of  Palestine  of
approximately $1.0 million.  Palestine is a Texas corporation  primarily engaged
in the manufacture and  distribution of concrete block. The Company financed the
acquisition  of  Palestine by  obtaining a  $15,000,000  increase in the Secured
Credit  Facility  on May 26,  2000  and  receiving  an  equity  contribution  of
$9,745,000 from its parent, Industrial Services Group, Inc. ("ISG") on April 19,
2000.

On September 15, 2000, the Company acquired certain fixed and intangible  assets
from Hanson Aggregates West, Inc.  ("Hanson").  Hanson is a subsidiary of Hanson
PLC, a leading international building materials company with operations in North
America and Europe.  The Company  negotiated a purchase price of $2.1 million in
cash for equipment and other fixed assets, as well as contracts with three Texas
and  Louisiana  power plants.  ISG will utilize the assets  purchased to provide
materials  management  services for the utility contracts  acquired in the asset
acquisition.

The Palestine and Don's acquisitions (the "2000  Acquisitions"),  as well as the
acquisitions of Best, Mineral Specialties,  Irvine, Osborne, Terrazzo, and Magna
Wall (the "1999 Acquisitions"),  were accounted for under the purchase method of
accounting  and,  accordingly,  the  results  of  operations  of the  respective
companies have been included in the consolidated  financial statements since the
respective  acquisition dates. In addition, the results of operations related to
the three  Hanson  utility  contracts  have been  included  in the  consolidated
results of operations since the respective asset acquisition date.  Accordingly,
the  financial  condition  and results of  operations  of the Company  after the
Acquisitions are not directly  comparable to the historical  financial condition
and results of operations.

The  Company's  revenues  are  subject  to a pattern  of  seasonal  fluctuation,
concurrent  with the  construction  industry.  Because  certain of the Company's
products  are used as raw  materials  in other  products,  the amount of revenue
generated during the year generally depends upon a number of factors,  including
the level of road and other  construction  using  concrete,  weather  conditions
affecting the level of  construction,  general  economic  conditions,  and other
factors beyond the Company's control.

                                       12
<PAGE>
Results of Operations

Three Months Ended  September 30, 2000 compared to Three Months Ended  September
30, 1999

Revenues. Revenues were $56.6 million in the third quarter of 2000, representing
an increase of $7.7 million or 15.7%,  as compared to revenues of $48.9  million
in the third quarter of 1999. Product revenues increased to $47.2 million in the
third  quarter  of 2000  from  $38.6  million  in the  third  quarter  of  1999,
representing an increase of $8.6 million or 22.3%. Service revenues decreased to
$9.4  million  in the third  quarter  of 2000 from  $10.3  million  in the third
quarter of 1999, representing a decrease of $.9 million or 8.7%. The increase in
product  revenues in the third  quarter of 2000 is due primarily to the 1999 and
2000 Acquisitions. The decrease in service revenues in the third quarter of 2000
is due primarily to a decrease in revenues generated from construction  projects
due to the conclusion of several of those projects in 1999 or early 2000.

Cost of Product  Revenues,  Excluding  Depreciation.  Cost of product  revenues,
excluding  depreciation,  was  $35.1  million  in the  third  quarter  of  2000,
representing  an  increase  of $10.3  million or 41.5% , as  compared to cost of
product revenues, excluding depreciation,  of $24.8 million in the third quarter
of 1999. This increase is due primarily to two factors: 1) the inclusion of cost
of product  revenues of the 1999 and 2000  Acquisitions  since their  respective
dates of acquisition; and 2) the increased cost of material in the CCP division.
As a  percentage  of  product  revenues,  cost of  product  revenues,  excluding
depreciation,  increased to 74.4% in the third quarter of 2000 from 64.2% in the
third  quarter of 1999.  This  increase was  primarily  due to lower  margins on
product revenues  derived from the 1999 and 2000  Acquisitions and lower margins
in the CCP division due to the increase in the cost of materials.

Cost of Service  Revenues,  Excluding  Depreciation.  Cost of service  revenues,
excluding  depreciation,  was  $6.3  million  in  the  third  quarter  of  2000,
representing a decrease of $1.5 million or 19.2%, as compared to cost of service
revenues, excluding depreciation,  of $7.8 million in the third quarter of 1999.
This  decrease  reflects the fact that service  revenues  decreased in the third
quarter  of 2000 as  compared  to the  third  quarter  of 1999  and the  cost of
providing those services also decreased.  Furthermore, many of the projects that
generated  lower  margins  were  concluded in 1999.  As a percentage  of service
revenues, cost of service revenues,  excluding depreciation,  decreased to 67.4%
in the third quarter of 2000 from 75.7% in the third quarter of 1999.

Depreciation and Amortization. Depreciation and amortization was $4.2 million in
the third quarter of 2000, representing an increase of $1.0 million or 31.3%, as
compared to depreciation  and  amortization of $3.2 million in the third quarter
of 1999. This increase resulted  primarily from the depreciation of fixed assets
and amortization of goodwill and other intangible assets recorded as a result of
the 1999 and 2000 Acquisitions.

Selling,   General   and   Administrative   Expenses.   Selling,   general   and
administrative expenses ("SG&A") were $5.7 million in the third quarter of 2000,
representing  an increase of $1.0 million or 21.3%, as compared to SG&A expenses
of $4.7 million in the third  quarter of 1999.  This  increase in SG&A  expenses
reflects  incremental  SG&A costs  resulting  from the operation of the 1999 and
2000 Acquisitions as well as an increase in sales and marketing efforts.

New Product  Development.  New product  development  costs consist of scientific
research and development and market development  expenditures.  Expenditures for
scientific  research and development  during the third quarter of 2000 decreased
slightly to $0.4 million as compared to  expenditures of $0.5 million during the
third  quarter  of 1999.  Expenditures  of $0.1  million  were  made for  market
development  during the third  quarter of 2000  compared to $0.1  million in the
third quarter of 1999. Continuing expenditures for new product development costs
demonstrates  the Company's  commitment to developing and marketing  value added
products that utilize CCPs and related materials.

                                       13
<PAGE>
Interest  Expense.  Interest  expense  increased  to $4.1  million  in the third
quarter of 2000 from $3.4 million in the third  quarter of 1999,  primarily as a
result of an increase in  outstanding  indebtedness  and an increase in interest
rates.

Income Taxes.  Income tax expense was $0.6 million in the third quarter of 2000,
representing  a decrease  of $1.4  million  or 70%,  as  compared  to income tax
expense of $2.0 million in the third quarter of 1999. This decrease reflects the
decrease  in  taxable  income in the third  quarter of 2000.  Taxable  income is
calculated  considering  non-deductible  amortization expense related to most of
the Company's acquisitions.

Net Income.  As a result of the factors discussed above, net income decreased to
$0.3 million in the third quarter of 2000 from $2.4 million in the third quarter
of 1999.

Nine Months Ended September 30, 2000 compared to Nine Months Ended September 30,
1999

Revenues.  Revenues  were  $135.8  million  in the  first  nine  months of 2000,
representing  an increase of $17.3 million or 14.6%,  as compared to revenues of
$118.5 million in the first nine months of 1999.  Product revenues  increased to
$110.7  million in the first nine months of 2000 from $91.1 million in the first
nine months of 1999, representing an increase of $19.6 million or 21.5%. Service
revenues  decreased to $25.1 million in the first nine months of 2000 from $27.4
million  in the first  nine  months of 1999,  representing  a  decrease  of $2.3
million or 8.4%.  The  increase in product  revenues in the first nine months of
2000 is due primarily to the addition of product  revenues derived from the 1999
and 2000  Acquisitions.  The decrease in service revenues reflects a decrease in
revenue generated from construction projects due to the conclusion of several of
these projects in 1999 and early 2000.

Cost of Product  Revenues,  Excluding  Depreciation.  Cost of product  revenues,
excluding  depreciation,  was $81.8  million in the first  nine  months of 2000,
representing  an  increase  of $20.9  million or 34.3% , as  compared to cost of
product  revenues,  excluding  depreciation,  of $60.9 million in the first nine
months of 1999. This increase is due primarily to two factors:  1) the inclusion
of cost of  product  revenues  of the  1999 and 2000  Acquisitions  since  their
respective  dates of  acquisition;  and 2) the increased cost of material in the
CCP division.  As a percentage of product  revenues,  cost of product  revenues,
excluding depreciation, increased to 73.9% in the first nine months of 2000 from
66.8% in the first nine months of 1999. This increase was primarily due to lower
margins on product  revenues  derived  from the 1999 and 2000  Acquisitions  and
lower margins in the CCP division due to the increase in the cost of materials.

Cost of Service  Revenues,  Excluding  Depreciation.  Cost of service  revenues,
excluding  depreciation,  was $17.4  million in the first  nine  months of 2000,
representing  a decrease of $2.6  million or 13%, as compared to cost of service
revenues,  excluding depreciation,  of $20.0 million in the first nine months of
1999.  This decrease  reflects the fact that service  revenues  decreased in the
first nine months of 2000 as compared to the same period in 1999 and the cost of
providing those services also decreased.  Furthermore, many of the projects that
generated  lower  margins  were  concluded in 1999.  As a percentage  of service
revenues, cost of service revenues,  excluding depreciation,  decreased to 69.5%
in the first nine  months of 2000 as  compared to 73.0% in the first nine months
of 1999.

Depreciation and  Amortization.  Depreciation and amortization was $11.0 million
in the first nine months of 2000,  representing  an increase of $1.7  million or
18.3%, as compared to depreciation and amortization of $9.3 million in the first
nine months of 1999. This increase  resulted  primarily from the depreciation of
fixed assets and amortization of goodwill and other  intangible  assets recorded
as a result of the 1999 and 2000 Acquisitions.

Selling,   General   and   Administrative   Expenses.   Selling,   general   and
administrative  expenses ("SG&A") were $17.2 million in the first nine months of
2000,  representing  an increase of $2.7  million or 18.6%,  as compared to SG&A
expenses  of $14.5  million in the first nine months of 1999.  This  increase in
SG&A expenses  reflects  incremental  SG&A costs resulting from the operation of
the 1999 and 2000  Acquisitions  as well as an increase  in sales and  marketing
efforts.

                                       14
<PAGE>
New Product  Development.  New product  development  costs consist of scientific
research and development and market  development  expenditures.  Expenditures of
$1.3 million were made for scientific  research and development during the first
nine months of 2000 compared to  expenditures  of $1.1 million  during the first
nine  months  of  1999.  Expenditures  of $0.3  million  were  made  for  market
development  during the first nine months of 2000  compared to  expenditures  of
$0.3 million  during the first nine months of 1999.  The increase in new product
development  costs  demonstrates  the Company's  commitment  to  developing  and
marketing value added products that utilize CCPs and related materials.

Interest Expense.  Interest expense increased to $11.5 million in the first nine
months of 2000 from $9.9 million in the first nine months of 1999,  primarily as
a result of an increase in outstanding  indebtedness and an increase in interest
rates.

Income  Taxes.  Income tax  benefit  was $.6 million in the first nine months of
2000, as compared to income tax expense of $1.6 million in the first nine months
of 1999.  This change reflects the decrease in taxable income in the nine months
of  2000,  primarily  resulting  from  increased  interest  expense  as  well as
decreasing   product   margins.   Taxable   income  is  calculated   considering
non-deductible   amortization   expense   related  to  most  of  the   Company's
acquisitions.

Net Income (loss).  As a result of the factors discussed above, the net loss was
$3.7  million in the first nine months of 2000 as compared to net income of $0.9
million in the first nine months of 1999.

Property, Plant and Equipment

Property,  plant and equipment  amounts are carried at cost.  Costs  assigned to
property, plant and equipment of acquired businesses are based on estimated fair
values  at the date of  acquisition.  Depreciation  of plant  and  equipment  is
calculated using the straight-line method over the estimated useful lives of the
assets.  Expenditures  related to  construction  in  progress  are  included  in
property, plant and equipment.  Costs incurred which materially increase values,
change capacities or extend useful lives are capitalized in property,  plant and
equipment. Routine maintenance and repairs are charged against current operation
expense. Upon sale or retirement, the costs and related accumulated depreciation
are eliminated from property, plant and equipment and any resulting gain or loss
is included in income.

In  accordance  with the  Financial  Accounting  Standards  Board  Statement  of
Financial  Accounting  Standards  No.  121  "Accounting  for the  Impairment  of
Long-Lived  Assets and for  Long-Lived  Assets to be  Disposed  Of" (SFAS  121),
certain  long-lived  assets  and  certain  identifiable  intangibles,  including
goodwill,  to be held and used by the Company, are periodically  reviewed by the
Company for impairment whenever events or changes in circumstances indicate that
the  carrying  amount of the assets may not be  recoverable,  and an estimate of
future  undiscounted  cash flows is less than the carrying  amount of the asset.
Accordingly,  when indicators of impairment are present, the Company adjusts the
net book value of the underlying  asset if the sum of the expected  undiscounted
future cash flows is less than book value.

In January  2000,  the Company  capitalized  to property,  plant and  equipment,
certain costs associated with the construction of a carbon ash burnout unit. The
unit  was to be used  for  the  separation  of  carbon  from  fly ash and in the
continuing  research and  development  efforts related to the improvement of the
carbon separation technology.

During the third quarter 2000, the Company  determined that the technology being
tested  by the  carbon  ash  burnout  unit was no  longer  commercially  viable.
Furthermore,  the Company decided to pursue a different  technology to eliminate
the effects of high carbon content.  Consequently,  the Company  determined that
the  carbon  ash  burnout  unit  would no longer be  utilized  for its  intended
purpose.  Thus,  in  accordance  with SFAS 121, the Company  determined  that an
impairment  loss  existed.  However,  certain  components  of the  unit  will be
utilized in the CCP division and the  remaining  components  of the unit will be
abandoned and sold. The  approximate  fair value of the components to be used in
the CCP division and the amount  estimated to be received for the remaining unit
when sold is $100,000.

                                       15
<PAGE>
The company  measured  the  impairment  loss to be the amount that the  carrying
value  exceeded the estimated  fair value of the asset.  An  impairment  loss of
approximately  $0.4 million is recognized in operating income and is included in
the aggregate total for depreciation and amortization in the Company's unaudited
consolidated statements of operations and comprehensive income.

Liquidity and Capital Resources

The Company  financed  the 1998 and 1999  Acquisitions  through the  issuance of
$100.0 million of 10% Senior  Subordinated  Notes due 2008 and borrowings on its
Secured Credit  Facility (as  subsequently  amended and  restated).  The Company
financed the acquisition of Palestine by obtaining a $15,000,000 increase in the
Secured Credit Facility on May 26, 2000 (discussed below). Operating and capital
expenditures have been financed  primarily through cash flow from operations and
borrowings under the Secured Credit Facility.

The Secured Credit  Facility has been amended a number of times.  Most recently,
on May 26, 2000, the Secured Credit  Facility was amended and restated to, among
other  things,  increase  the  borrowings  available  to the Company  from $50.0
million to $65.0 million.

This increase in the funds available to the Company was accomplished through the
addition of a Tranche B feature,  pursuant to which two of the existing lenders,
Bank of America,  N.A. and Zions First  National  Bank (the "Tranche B Lenders")
agreed  to  provide  the  additional  $15.0  million  in  funding.  No amount is
available pursuant to the Tranche B revolving loans unless all amounts under the
Tranche  A  (existing)  revolving  loans  have  been  borrowed  in full  and are
outstanding.  Under the amended and restated  Secured  Credit  Facility,  at the
option of the  Company,  both the  Tranche A  Revolving  Loans and the Tranche B
Revolving Loans may be maintained as Eurodollar Loans or Base Rate Loans.

Eurodollar  loans will bear  interest  at a per annum rate equal to the rate per
annum  (rounded  upwards,  if  necessary,  to the  nearest  1/100 of 1  percent)
determined by the  Administrative  Agent to be equal to the quotient by dividing
(a) Interbank  Offered Rate for such Eurodollar Loan for such Interest Period by
(b) 1 minus the Reserve  Requirement  for such Eurodollar Loan for such Interest
Period,  and by then adding  thereto the  applicable  LIBOR  margin  (which is a
percentage ranging from 1.75% to 2.50%,  depending  primarily upon the Company's
Leverage  Ratio).  All  capitalized  terms are  defined  in the  Secured  Credit
Facility.

Base Rate Loans will bear  interest  at a per annum rate equal to the rate which
is the higher of (a) the  Federal  Funds rate for such day plus  one-half of one
percent  (0.5%) and (b) the Prime rate for such day and by then  adding  thereto
the  applicable  ABR Margin  (which is a percentage  ranging from 0.50% to 1.25%
depending  primarily upon the Company's  Leverage Ratio). Any change in the Base
Rate due to a change in the  Federal  Funds  Rate or to the Prime  Rate shall be
effective on the effective  date of such change.  All  capitalized  terms are as
defined in the Secured Credit Facility.

The Company will also pay certain fees with respect to any unused portion of the
amended and restated Secured Credit Facility.

The amended and  restated  Secured  Credit  Facility  maintains  the term of the
original Secured Credit Facility obtained on March 4, 1998, and is guaranteed by
ISG and existing future subsidiaries of the Company (the  "Guarantors"),  and is
secured by a first priority security interest in all of the capital stock of the
Company  and all of the  capital  stock  of each of the  Guarantors,  as well as
certain present and future assets and properties of the Company and any domestic
subsidiaries.

On August 8, 2000, the amended and restated  secured credit  agreement dated May
26, 2000 was amended in order to modify certain debt covenants  contained in the
credit agreement.  Primarily,  a minimum  consolidated  Earnings Before Interest
Expense,  Income Tax Expense,  Depreciation  Expense,  and Amortization  Expense
(EBITDA)  debt  covenant was added.  The minimum  consolidated  EBITDA  covenant
requires the Company to maintain a minimum  EBITDA  amount as of the last day of
every fiscal  quarter  through June 30, 2003 at minimum  levels set forth in the
agreement.

                                       16
<PAGE>
The  amended and  restated  Secured  Credit  Facility  continues  to require the
Company to not exceed a maximum leverage ratio, or drop below a minimum interest
coverage ratio, a minimum  consolidated EBITDA level, and to comply with certain
other financial and non-financial covenants, as defined in the agreement.

At September 30, 2000,  the Company had no cash and cash  equivalents  and $10.0
million in  availability  under the Secured Credit  Facility.  In addition,  the
Company had working capital of approximately  $15.7 million, an increase of $6.7
million from December 31, 1999. The Company intends to make capital expenditures
over the next  several  years  principally  to  construct  storage,  loading and
processing   facilities  for  CCPs  and  to  replace  certain  existing  capital
equipment. During the nine months ended September 30, 2000, capital expenditures
amounted  to  approximately  $5.1  million.  Capital  expenditures  made  in the
ordinary  course of  business  will be funded by cash flow from  operations  and
borrowings under the Secured Credit Facility.

The  Company  anticipates  that its  principal  use of cash will be for  working
capital requirements, debt service requirements and capital expenditures.  Based
upon current and anticipated levels of operations, the Company believes that its
cash flow from  operations,  together with amounts  available  under the Secured
Credit  Facility,  will be adequate  to meet its  anticipated  requirements  for
working capital, capital expenditures and interest payments for the next several
years. There can be no assurance,  however,  that cash flow from operations will
be sufficient  to service the Company's  debt and the Company may be required to
refinance  all or a  portion  of  its  existing  debt  or to  obtain  additional
financing.  These increased  borrowings may result in higher interest  payments.
There can be no assurance  that any such  refinancing  would be possible or that
any additional  financing could be obtained.  The inability to obtain additional
financing could have a material adverse effect on the Company.

Subsequent Events

On February 24, 1999,  the Company  entered into an option  agreement to acquire
the stock of Tatum  Industries,  Inc.  (Tatum).  As part of that agreement,  the
Company  agreed to loan  Tatum  approximately  $50,000  per month for  operating
expenses and loan servicing.  Tatum's note to the Company accrues interest at 8%
and is payable on demand.

On September 30, 2000,  the  principal  balance of the note  approximately  $1.1
million. Additionally, the Company leased Tatum's building and equipment and the
Company  incurred  approximately  $0.1 million of leasehold  improvements to the
property.

On October 27, 2000, the Company  advised Tatum that the Company was terminating
the option agreement;  however,  the Company continues to lease the building and
equipment under a month-to-month lease.

On November 13,  2000,  the Company  advised  Tatum that the note to the Company
will be due and  payable on January  14,  2001.  Currently,  Tatum is  reviewing
alternatives to facilitate  repayment of the note, one of which is the potential
sale of Tatum to a third party.  Because the Company has not  determined at this
point,  due to the recent  demand  notification,  that it is probable that Tatum
will be unable to repay the note, no write offs or allowances have been recorded
within the accompanying  financial  statements.  However,  if Tatum is unable to
find alternative sources of financing,  the Company may be required to write off
or reserve  against  all or a portion  of the note  receivable  balance.  To the
extent  that the  Company  terminates  its lease in the  future,  the  leasehold
improvements also will be required to be written off.

                                       17
<PAGE>

                               ISG Resources, Inc.

                                  -------------


                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

                  None

Item 2.  Changes in Securities and Use of Proceeds

                  None

Item 3.  Defaults upon Senior Securities

                  None

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

                  None

Item 5.  Other Information

                  None

Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits

            Item                                                      Exhibit
             No.                    Item Title                          No.
             ---   -----------------------------------------            ---

            (2)    Plan of acquisition, reorganization,
                   arrangement, liquidation or succession:
                   Not Applicable

            (3)    Articles of Incorporation and By-Laws:
                   Not Applicable

            (4)    Instruments defining the rights of
                   security holders, including indentures:
                   Not Applicable

           (10)    Material Contracts:  Not Applicable

           (11)    Statement regarding computation of per
                   share  earnings  is  not  required   because  the  relevant
                   computations  can be clearly  determined  from the material
                   contained in the Financial Statements included herein.


                                       18
<PAGE>
            (15)   Letter re unaudited interim financial
                   information:  Not Applicable

            (18)   Letter re change in accounting
                   principles:  Not Applicable

            (19)   Report furnished to security holders:
                   Not Applicable

            (22)   Published report regarding matters
                   submitted to vote of security holders:
                   Not Applicable

            (23)   Consents of expert and counsel:
                   Not Applicable

            (24)   Power of attorney:  Not Applicable

            (27)   Financial Data Schedule                                27

            (99)   Additional Exhibits:  First Amendment to
                   Credit Agreement dated August 8, 2000

(b)      Reports on Form 8-K

                  A report on Form 8-K was filed by  Registrant on September 29,
         2000 with respect to an Asset Purchase Agreement with Hanson Aggregates
         West, Inc.

                                       19
<PAGE>



                                   SIGNATURES

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

Date: November 14, 2000                  ISG RESOURCES, INC.


                                         /s/ J. I. Everest, II
                                         ------------------------------
                                         J. I. Everest, II
                                         Chief Financial Officer and Treasurer

                                         (As  both a duly  authorized  officer
                                         of the  Company  and as  principal
                                         financial officer of the Company)




                                       20