Commission File Number 0-22745

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                                   FORM 10-QSB

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 1997

                           JANUS AMERICAN GROUP, INC.
        (Exact Name of Small Business Issuer as Specified in Its Charter)

                DELAWARE                                        13-2572712
    (State or other jurisdiction of                           (I.R.S. Employer
     incorporation or organization)                          Identification No.)

       2300 Corporate Blvd., N.W.
               Suite 232
          Boca Raton, Florida                                   33431-8596
(Address of principal executive office)                         (Zip Code)

       Registrant's telephone number, including area code: (561) 994-4800

                             Janus Industries, Inc.
                                  (Former name)

     Check whether issues (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes _X_  No ___
                                                               
     Number of shares of Common Stock outstanding as of November 13, 1997:
8,691,735.181

Transitional Small Business Disclosure Format (Check One):  Yes |_|  No |X|

<PAGE>

                           JANUS AMERICAN GROUP, INC.

                                   FORM 10-QSB

                  FOR QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997

Part I.   Financial Information                                         Page No.

          Item 1.  Financial Statements                                     3

          Item 2.  Management's Discussion and Analysis of 
                   Financial Condition and Results of Operations           18

Part II.  Other Information                                                23

          Item 4.  Submission of Matters to a Vote of Security Holders     23

          Item 6.  Exhibits and Reports on Form 8-K                        24

Signature Page                                                             25

Index to Exhibits                                                          26

<PAGE>

                         PART I - FINANCIAL INFORMATION

     Item 1. Financial Statements.

                   JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES

                          INDEX TO UNAUDITED CONDENSED
                        CONSOLIDATED FINANCIAL STATEMENTS

                                                                          PAGE
                                                                          ----
HISTORICAL FINANCIAL STATEMENTS:
  CONDENSED CONSOLIDATED BALANCE SHEETS
    SEPTEMBER 30, 1997 AND DECEMBER 31, 1996                                4

  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996                           5

  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996                          6

  CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
    NINE MONTHS ENDED SEPTEMBER 30, 1997                                    7

  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996                           8

  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                     9-12

PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS:
  INTRODUCTION TO THE UNAUDITED PRO FORMA CONDENSED COMBINED
  FINANCIAL STATEMENTS                                                      13

  PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
    NINE MONTHS ENDED SEPTEMBER 30, 1997                                    14

  PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
    NINE MONTHS ENDED SEPTEMBER 30, 1996                                    15

  NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS              16-17

                                      * * *


                                        3


<PAGE>

                   JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    SEPTEMBER 30, 1997 AND DECEMBER 31, 1996

                                                      September     December
                        ASSETS                        30, 1997      31, 1996
                                                     -----------    ---------
                                                     (Unaudited)
Current assets:
    Cash and cash equivalents                        $12,788,468    $ 6,580,836
    Cash restricted for payments to redeem pre-
        ferred stock of subsidiary                                      673,200
    Accounts receivable                                  460,226         83,100
    Current portion of mortgage notes receivable         120,488
    Other current assets                                 913,610        184,734
                                                     -----------    -----------
          Total current assets                        14,282,792      7,521,870
Property and equipment, net of accumulated de-
    preciation and amortization                       34,799,804        582,693
Mortgage notes receivable, net of current
  portion                                              5,590,477
Goodwill, net of accumulated amortization              6,474,049        860,966
Deferred costs of proposed acquisition                                   74,692
Other assets                                           1,790,230          7,096
                                                     -----------    -----------
          Totals                                     $62,937,352    $ 9,047,317
                                                     ===========    ===========
     LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Payable for redemption of preferred stock
        of subsidiary                                               $   673,200
    Current portion of long-term debt                $   574,953
    Accounts payable                                     911,840        149,020
    Accrued expenses                                     851,409        159,655
    Dividends payable                                    341,476
                                                     -----------    -----------
          Total current liabilities                    2,679,678        981,875
Long-term debt, net of current portion                19,535,475
Deferred tax liabilities                                 382,000
                                                     -----------    -----------
           Total liabilities                          22,597,153        981,875
                                                     -----------    -----------
Minority interest                                      1,798,732         43,837
                                                     -----------    -----------
Commitments and contingencies
Stockholders' equity:
    Preferred stock:
        Series A; par value $.01 per share;
           5,000,000 shares authorized; none issued
        Series B; par value $.01 per share;
           12,000,000 shares authorized; 10,451.88
           shares issued and outstanding                     105
    Common stock, par value $.01 per share;
        15,000,000 shares authorized; 11,880,867
        and 8,080,868 shares issued                      118,809         80,809
    Additional paid-in capital                        43,134,932     13,061,256
    Accumulated deficit                               (3,396,080)    (4,245,730)
    Treasury stock - 3,189,132 and 2,849,850
        shares, at cost                               (1,316,299)      (874,730)
                                                     -----------    -----------
           Total stockholders' equity                 38,541,467      8,021,605
                                                     -----------    -----------
           Totals                                    $62,937,352    $ 9,047,317
                                                     ===========    ===========

See Notes to Condensed Consolidated Financial Statements.


                                        4


<PAGE>

                   JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
                                   (Unaudited)

                                                         1997          1996
                                                      ----------     ----------
Revenues:
    Hotel revenues:
        Room and related services                     $6,089,861
        Food and beverage                                913,181
        Management fees                                  447,369
        Other                                            223,203
                                                      ----------
           Total hotel revenues                        7,673,614
    Sales                                              1,050,081    $   175,021
                                                      ----------    -----------
           Total revenues                              8,723,695        175,021
                                                      ----------    -----------
Costs and expenses:
    Direct hotel operating expenses:
        Room and related services                      1,280,648
        Food and beverage                                787,866
        Selling and general expenses                     222,154
                                                      ----------
           Total direct hotel operating expenses       2,290,668
    Occupancy and other operating expenses             1,608,370        169,373
    Selling, general and administrative expenses       2,460,089        985,600
    Depreciation of property and equipment               587,863         36,991
    Amortization of intangible assets                    109,207         24,054
                                                      ----------    -----------
           Total costs and expenses                    7,056,197      1,216,018
                                                      ----------    -----------
Operating income (loss)                                1,667,498     (1,040,997)

Other income (expense):
    Interest income                                      430,929        125,334
    Other income                                          25,317          3,544
    Interest expense                                    (801,728)          (873)
                                                      ----------    -----------
Income (loss) before state income taxes and
    minority interest                                  1,322,016       (912,992)

Provision for state income taxes                           3,473
                                                      ----------    -----------
Income (loss) before minority interest                 1,318,543       (912,992)

Minority interest                                        127,417         37,868
                                                      ----------    -----------
Net income (loss)                                      1,191,126       (950,860)

Less preferred dividend requirements                     341,476         19,800
                                                      ----------    -----------
Net income (loss) applicable to common stock          $  849,650    $  (970,660)
                                                      ==========    ===========
Net income (loss) per common share                          $.12          $(.19)
                                                            ====          =====

Weighted average common shares outstanding             7,144,180      5,075,418
                                                       =========      =========

See Notes to Condensed Consolidated Financial Statements.


                                        5


<PAGE>

                   JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
                                   (Unaudited)

                                                        1997            1996
                                                     ----------      -----------

Revenues:
    Hotel revenues:
        Room and related services                    $3,892,101
        Food and beverage                               590,219
        Management fees                                 245,322
        Other                                           165,940
                                                     ----------
           Total hotel revenues                       4,893,582
    Sales                                               318,852      $  175,021
                                                     ----------      ----------
           Total revenues                             5,212,434         175,021
                                                     ----------      ----------
Costs and expenses:
    Direct hotel operating expenses:
        Room and related services                       829,100
        Food and beverage                               529,531
        Selling and general expenses                    142,176
                                                     ----------
           Total direct hotel operating expenses      1,500,807
    Occupancy and other operating expenses              765,114         169,373
    Selling, general and administrative expenses      1,440,124         432,372
    Depreciation of property and equipment              313,854          28,452
    Amortization of intangible assets                    55,633          24,054
                                                     ----------      ----------
           Total costs and expenses                   4,075,532         654,251
                                                     ----------      ----------

Operating income (loss)                               1,136,902        (479,230)

Other income (expense):
    Interest income                                     256,314          49,378
    Other income                                          5,677           3,544
    Interest expense                                   (479,058)           (873)
                                                     ----------      ----------

Income (loss) before state income taxes and
    minority interest                                   919,835        (427,181)

Provision for state income taxes                         79,730
                                                     ----------      ----------
Income (loss) before minority interest                  840,105        (427,181)

Minority interest                                        95,570          12,623
                                                     ----------      ----------

Net income (loss)                                       744,535        (439,804)

Less preferred dividend requirements                    210,827           6,600
                                                     ----------      ----------

Net income (loss) applicable to common stock         $  533,708      $ (446,404)
                                                     ==========      ==========

Net income (loss) per common share                         $.06           $(.09)
                                                           ====           =====

Weighted average common shares outstanding            8,691,735       5,224,612
                                                      =========       =========

See Notes to Condensed Consolidated Financial Statements.


                                        6


<PAGE>

                   JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES

            CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                      NINE MONTHS ENDED SEPTEMBER 30, 1997
                                   (Unaudited)

<TABLE>
<CAPTION>
                     Preferred Stock    Common Stock                                 Treasury Stock
                     ---------------    ----------------                            -----------------  
                          Number              Number               Additional                  Number  
                            of                 of                   Paid-in     Accumulated      of                   
                          Shares    Amount    Shares     Amount     Capital       Deficit      Shares      Amount         Total
                          ------    ------    ------     ------     -------       -------      ------      ------         -----
                                                                                                                      
<S>                      <C>         <C>    <C>         <C>       <C>          <C>           <C>         <C>           <C>        
Balance, January                                                                                                      
    1, 1997                                 8,080,868   $ 80,809  $13,061,256  $(4,245,730)  2,849,850   $ (874,730)   $ 8,021,605
                                                                                                                      
Net income                                                                       1,191,126                               1,191,126
                                                                                                                      
Contributions to                                                                                                      
    capital from                                                                                                      
    United States                                                                                                     
    Lines, Inc. and                                                                                                   
    United States                                                                                                     
    Lines (S.A.),                                                                                                     
    Inc. Reorganiza-                                                                                                  
    tion Trust                                                      7,412,542                                            7,412,542
                                                                                                                      
Shares issued to                                                                                                      
    acquire hospi-                                                                                                    
    tality business      10,451.88   $105   3,799,999     38,000   22,763,772                                           22,801,877
                                                                                                                      
Repurchase of com-                                                                                                    
    mon stock                                                                                  339,282     (441,569)      (441,569)
                                                                                                                      
Repurchase of                                                                                                         
    276,400 warrants                                                 (102,638)                                            (102,638)
                                                                                                                     
Preferred stock                                                                                                       
    dividends                                                                     (341,476)                               (341,476)
                         ---------   ----  ----------   --------  -----------  -----------   ---------  -----------    -----------
Balance, September                                                                                                    
    30, 1997             10,451.88   $105  11,880,867   $118,809  $43,134,932  $(3,396,080)  3,189,132  $(1,316,299)   $38,541,467
                         =========   ====  ==========   ========  ===========  ===========   =========  ===========    ===========
</TABLE>

See Notes to Condensed Consolidated Financial Statements.


                                       7
<PAGE>

                   JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                  NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
                                   (Unaudited)
                                                         1997            1996
                                                      -----------    -----------

Operating activities:
    Net income (loss)                                 $ 1,191,126    $ (950,860)
    Adjustments to reconcile net income (loss) to
        net    cash provided by (used in) operating
        activities:
        Depreciation and amortization                     587,863        36,991
        Amortization of intangible assets                 109,207        24,054
        Minority interest                                 127,417        37,868
        Deferred income taxes                             (30,000)
        Other                                                 489
        Changes in operating assets and liabilities:
           Accounts receivable                           (147,115)       (5,969)
           Other current assets                          (477,734)       (3,350)
           Other assets                                  (456,430)        1,250
           Accounts payable and accrued expenses          246,238      (125,290)
                                                      -----------   -----------
               Net cash provided by (used in) 
                  operating activities                  1,151,061      (985,306)
                                                      -----------   -----------
Investing activities:
    Acquisitions of businesses, net of noncash
        consideration and cash acquired                (1,325,129)     (701,631)
    Purchases of property and equipment                  (409,494)      (59,465)
    Proceeds from sale of property and equipment           13,000
    Collections of notes receivable                        47,317
                                                      -----------   -----------
               Net cash used in investing activities   (1,674,306)     (761,096)
                                                      -----------   -----------
Financing activities:
    Decrease in restricted cash                           631,830
    Repurchase of common stock                           (441,569)
    Repurchase of warrants                               (102,638)
    Reduction of payable for redemption of pre-
        ferred stock of subsidiary                       (631,830)
    Contributions to capital from United States
        Lines, Inc. and United States Lines (S.A.),
        Inc. Reorganization Trust, including
        $78,478 and $6,427 attributable to minority
        interest                                        7,491,020     6,321,962
    Proceeds from long-term borrowings                     26,136
    Repayments of long-term borrowings                   (242,072)
                                                      -----------   -----------
               Net cash provided by financing 
                  activities                            6,730,877     6,321,962
                                                      -----------   -----------
Increase in cash and cash equivalents                   6,207,632     4,575,560
Cash and cash equivalents, beginning of period          6,580,836     2,053,437
                                                      -----------   -----------
Cash and cash equivalents, end of period              $12,788,468   $ 6,628,997
                                                      ===========   ===========
Supplemental disclosure of cash flow data:
    Interest paid                                     $   790,979   $       873
                                                      ===========   ===========

See Notes to Condensed Consolidated Financial Statements.


                                        8


<PAGE>

                   JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 1 - Unaudited interim financial statements:

           In the opinion of management,  the accompanying  unaudited  condensed
           consolidated financial statements reflect all adjustments, consisting
           of  normal  recurring  accruals,  necessary  to  present  fairly  the
           financial  position of Janus American  Group,  Inc.  (formerly  Janus
           Industries,  Inc.) and  Subsidiaries  (the "Company") as of September
           30, 1997,  its results of operations  and cash flows for the nine and
           three  months  ended  September  30, 1997 and 1996 and its changes in
           stockholders'  equity for the nine months ended  September  30, 1997.
           Certain  terms used herein are  defined in the  audited  consolidated
           financial  statements of the Company as of December 31, 1996 and 1995
           and  for  the  years  then  ended  (the  "Audited   Janus   Financial
           Statements")  included in the Company's Form 10-SB  previously  filed
           with the  Securities  and  Exchange  Commission.  Accordingly,  these
           unaudited condensed  consolidated financial statements should be read
           in conjunction  with the Audited Janus  Financial  Statements and the
           other financial statements included in the Form 10-SB. 

           The  results  of  operations  for the nine  and  three  months  ended
           September 30, 1997 are not  necessarily  indicative of the results of
           operations for the full year ending December 31, 1997.

Note 2 - Acquisitions:

           On April 24, 1997, the Company  entered the  hospitality  business by
           acquiring  the following  from  affiliates of Louis S. Beck and Harry
           Yeaggy  (the   "Sellers"):   (i)  seven  hotels  (of  which  six  are
           wholly-owned and one is 85%-owned),  (ii) a hotel management  company
           and  substantially  all  of  the  assets  thereof  other  than  seven
           management  contracts and (iii) financial  participations in the form
           of mortgages on one  additional  hotel and a campground.  The hotels,
           the  management  company and the  mortgages are referred to herein as
           the "Beck-Yeaggy Group."

           The  consideration   exchanged  by  the  Company  (which  is  further
           described  in Note 9 of the  notes  to the  Audited  Janus  Financial
           Statements in the Form 10-SB) for the assets and  liabilities  of the
           Beck-Yeaggy  Group  and  the  other  direct  acquisition  costs  were
           comprised as follows:

           Issuance of:
              10,451.88 shares of Series B preferred stock     
                  with a liquidating and estimated fair value
                  of $1,000 per share                             $10,451,880
              3,799,999 shares of common stock with an
                  estimated fair value of $3.25 per share          12,349,997
                                                                  -----------
                  Total value of shares issued                     22,801,877
           Cash paid to the Sellers to repay short-term
              loans                                                   793,803
           Legal, accounting and other costs related to
              the purchase                                            637,170
                                                                  -----------
                   Total purchase price to be allocated           $24,232,850
                                                                  ===========


                                        9


<PAGE>

                  JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 2 - Acquisitions (continued):

           The acquisition was accounted for as a purchase and, accordingly, the
           results of operations of the Beck-Yeaggy  Group have been included in
           the accompanying  consolidated statements of operations subsequent to
           April 30, 1997 (the effective date of the  acquisition for accounting
           purposes). In addition, total acquisition costs were allocated to the
           assets acquired and liabilities assumed based on their estimated fair
           values on the date of acquisition,  with the excess of cost over such
           fair values allocated to goodwill, as shown below:

           Cash                                                     $    31,152
           Accounts receivable                                          230,011
           Other current assets                                         209,772
           Property and equipment                                    34,400,000
           Mortgage notes receivable                                  5,758,282
           Goodwill                                                   5,726,959
           Other assets                                               1,331,004
           Accounts payable                                            (561,530)
           Other current liabilities                                   (605,436)
           Long-term debt                                           (20,326,364)
           Deferred tax liabilities                                    (412,000)
           Minority interest in the 85%-owned hotel                  (1,549,000)
                                                                    -----------
                Total purchase price allocated                      $24,232,850
                                                                    ===========

           On July 15,  1996,  the  Company  acquired  the oil and gas  services
           business and certain assets of Pre-Tek Wireline Service Company, Inc.
           ("Pre-Tek") and assumed certain of its  liabilities.  The acquisition
           was  accounted  for as a purchase  and,  accordingly,  the results of
           Pre-Tek's   operations   have  been  included  in  the   accompanying
           consolidated  statements of  operations  subsequent to July 15, 1996,
           the  effective  date  of  the  acquisition.  Information  as  to  the
           consideration  exchanged by the Company and the  allocation  of total
           acquisition  costs to the assets acquired and liabilities  assumed is
           set  forth in Note 3 of the  notes  to the  Audited  Janus  Financial
           Statements in the Form 10-SB.

           The following  unaudited pro forma  information  shows the results of
           operations  for the nine months ended  September 30, 1997 and 1996 as
           though the  Beck-Yeaggy  Group and  Pre-Tek  had been  acquired as of
           January 1, 1996:

                                                        1997            1996  
                                                    -----------     -----------
             Total revenues                         $12,310,000     $11,661,000
             Net income (loss)                          881,000        (202,000)
             Net income (loss) applicable
                 to common stock                        295,000        (808,000)
             Net income (loss) per common
              share                                         .03            (.09)
             Weighted average number of
                common shares outstanding             8,814,509       9,031,017

             
                                    10


<PAGE>

                   JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 2 - Acquisitions (concluded):

           In addition to combining the historical  results of operations of the
           Company and the historical  pre-acquisition  results of operations of
           the  Beck-Yeaggy  Group  and  Pre-Tek,   the  pro  forma  results  of
           operations include adjustments that, among other things, reflect: the
           elimination of the net revenues derived from management  contracts of
           the  Beck-Yeaggy  Group  that  were  not  acquired  by  the  Company;
           depreciation  and amortization of property and equipment based on the
           fair values of assets acquired; the amortization of goodwill; the net
           effects of changes to  compensation  and  related  expenses  based on
           revised  employment and lease agreements;  and the issuance of shares
           of preferred and common stock (net of shares returned) as part of the
           consideration for the acquisitions.

           The  Company  recognizes  revenues  from room and  related  services,
           management fees and engineering and wireline  logging  services on an
           accrual basis as earned.  Food and beverage  revenues are  recognized
           when goods are sold.

Note 3 - Long-term debt:

           Long-term debt at September 30, 1997 consisted of the following:

              Fixed rate mortgage notes payable in monthly  
                  installments, including interest at rates 
                  ranging from 8.875% to 10%;  the mortgage  
                  notes mature from August 2000 through  
                  January 2016                                       $10,738,995

              Variable rate mortgage notes payable   
                  in monthly installments, including interest
                  at rates  varying with the prime commercial lending
                  rate, rates on U.S. Treasury  securities and other
                  defined  indexes (the effective rates at June 30, 
                  1997 ranged from 8.73% to 9.5%); the mortgage notes
                  mature from March 1998 through April 2006            9,195,376

              Equipment notes with various maturities
                  through June 2001 and interest at rates
                  ranging from 7% to 15%                                 176,057
                                                                     -----------
              Total long-term debt                                    20,110,428
              Less current portion                                       574,953
                                                                     -----------
              Long-term debt, net of current portion                 $19,535,475
                                                                     ===========

           Long-term  debt is secured by the mortgage notes  receivable  held by
           the Company and substantially all of its property and equipment.


                                       11



<PAGE>

                   JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 4 - Capital contribution:

           During the nine months ended  September 30, 1997, the  Reorganization
           Trust  transferred  cash in excess of its projected  liabilities  and
           administrative  requirements  totaling  $7,491,020 to the Company, of
           which $6,741,918 (90%) was deemed a capital contribution to Janus and
           $749,102  (10%) was deemed a capital  contribution  to JIS (including
           $78,478  attributable  to the  minority  interest  in the JIS  common
           stock).

Note 5 - Income taxes:

           As  further  described  in Note 5 of the notes to the  Audited  Janus
           Financial  Statements in the Form 10-SB,  management believes that as
           of December  31, 1996,  Janus had  estimated  available  adjusted net
           operating loss  carryforwards  for Federal income tax and alternative
           minimum tax purposes of at least $500,000,000,  subject to review and
           possible  adjustment  by the  Internal  Revenue  Service.  These loss
           carryforwards,  which expire  primarily during 1999 through 2001, may
           be used to offset future taxable income,  if any, of Janus as well as
           the Reorganization Trust, subject to certain limitations.

           All of the tax loss  attributes  referred  to above  have been  fully
           reserved,  for  financial  statement  purposes,  through a  valuation
           allowance  rather than  reflected as deferred tax assets at September
           30, 1997 and 1996 due to the lack of a sustained  historical  taxable
           income  stream  and  the  other  uncertainties   referred  to  above.
           Accordingly,  no  provision  or credit for Federal  income  taxes was
           recorded in the nine and three month periods ended September 30, 1997
           and 1996.

           The  provision  for  state  income  taxes for the nine  months  ended
           September  30, 1997 was reduced by a credit for prior year income tax
           refunds of $76,257.

                                      * * *


                                       12


<PAGE>

                           JANUS AMERICAN GROUP, INC.

           UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

On April  24,  1997,  Janus  American  Group,  Inc.  ("Janus")  consummated  the
acquisition of a 100% equity  interest in six hotels and an 85% equity  interest
in a seventh hotel (the "Hotels"),  a 100% equity interest in a hotel management
company (the "Management  Company") and  substantially all of the assets thereof
other than seven  management  contracts  and 100%  interests in  mortgages  (the
"Mortgages") on one additional  hotel and a campground,  all of which were owned
by  corporations  and  partnerships  that  were,  effectively,  wholly-owned  or
controlled  by Louis S. Beck and Harry  Yeaggy (the  "Sellers")  during the year
ended  December 31, 1996 and the period from January 1, 1997 through the date of
acquisition.  The Hotels,  the Management Company and the Mortgages are referred
to herein as the "Beck-Yeaggy Group." On July 15, 1996, the Company acquired the
oil and gas industry services business of Pre-Tek Wireline Service Company, Inc.
and  its  wholly-owned  subsidiary  ("Pre-Tek").  Janus  has  accounted  for the
acquisitions  of the  Beck-Yeaggy  Group and Pre-Tek  pursuant  to the  purchase
method of accounting in its historical  financial  statements based on effective
acquisition dates of April 30, 1997 and July 15, 1996, respectively.

The accompanying  unaudited pro forma condensed  statement of operations for the
nine months  ended  September  30, 1997  combines  the  historical  consolidated
statement of operations of Janus and its  subsidiaries for the nine months ended
September 30, 1997 (including the  Beck-Yeaggy  Group for the period from May 1,
1997 to September 30, 1997 and Pre-Tek for the entire period) and the historical
combined  statement of operations of the  Beck-Yeaggy  Group for the period from
January 1, 1997 to April 30, 1997 as if the acquisitions had been consummated as
of January 1, 1996. The accompanying  unaudited pro forma condensed statement of
operations for the nine months ended  September 30, 1996 combines the historical
consolidated  statement of operations of Janus and its subsidiaries for the nine
months ended September 30, 1996 (including  Pre-Tek for the period from July 16,
1996 to September 30, 1996), the historical consolidated statement of operations
of  Pre-Tek  for the  period  from  January  1,  1996 to July  15,  1996 and the
historical  combined  statement of operations of the  Beck-Yeaggy  Group for the
nine months ended  September 30, 1996 as if the  acquisitions of Pre-Tek and the
Beck-Yeaggy Group had been consummated as of January 1, 1996.

The accompanying unaudited pro forma condensed combined financial statements are
based on the  assumptions and adjustments  described in the  accompanying  notes
which  management  believes are  reasonable.  The unaudited pro forma  condensed
combined  financial  statements  do not purport to  represent  what the combined
results of operations  actually would have been if the acquisitions  referred to
above  had  occurred  as of  January  1, 1996  instead  of the  actual  dates of
consummation or what the financial  position and results of operations  would be
for any future  periods.  The unaudited pro forma condensed  combined  financial
statements and the  accompanying  notes should be read in  conjunction  with the
audited  and  unaudited   historical  financial  statements  of  Janus  and  its
subsidiaries, the Beck-Yeaggy Group and Pre-Tek included elsewhere herein and in
the Form 10-SB.


                                       13


<PAGE>

                           JANUS AMERICAN GROUP, INC.

         UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
                      NINE MONTHS ENDED SEPTEMBER 30, 1997

<TABLE>
<CAPTION>
                                                     Historical
                                            -----------------------------
                                            Janus and            The
                                             Subsid-         Beck-Yeaggy
                                             iaries             Group
                                           (1/1/97 to        (1/1/97 to       Pro Forma         Pro Forma
                                            9/30/97)          4/30/97)       Adjustments         Combined
                                            --------          --------       -----------         --------
<S>                                         <C>              <C>              <C>                 <C>        
Revenues:                                  
    Hotel revenues                          $7,003,042       $3,183,155                         $10,186,197
    Management fees                            447,369          497,153       $(142,760)(B)         801,762
    Other hotel related revenues               223,203           49,009                             272,212
    Sales                                    1,050,081                                            1,050,081
                                            ----------       ----------       ---------         -----------
           Total revenues                    8,723,695        3,729,317        (142,760)         12,310,252
                                            ----------       ----------       ---------         -----------
                                                                                               
Costs and expenses:                                                                            
    Direct hotel operating expenses          2,290,668        1,276,024          13,073 (C)       3,579,765
    Occupancy and other operating                                                              
        expenses                             1,608,370          551,474          23,217 (D)       2,183,061
    Selling, general and administrative                                                          
        expenses                             2,460,089        1,092,923          97,034 (D)       3,650,046
    Depreciation and amortization              587,863          286,436         107,786 (E)         982,085
    Amortization of intangible assets          109,207                           47,725 (F)         156,932
                                            ----------       ----------       ---------         -----------
           Total costs and expenses          7,056,197        3,206,857         288,835          10,551,889
                                            ----------       ----------       ---------         -----------
                                                                                               
Operating income                             1,667,498          522,460        (431,595)          1,758,363
Other income (expense):                                                                        
    Interest and other income                  456,246          149,640                             605,886
    Interest expense                          (801,728)        (612,750)                         (1,414,478)
                                            ----------       ----------       ---------         -----------
                                                                                               
Income before income taxes and                                                                 
     minority interest                       1,322,016           59,350        (431,595)            949,771
Provision (credit) for income taxes              3,473                          (21,000)(G)         (17,527)
                                            ----------       ----------       ---------         -----------
                                                                                               
Income before minority interest              1,318,543           59,350        (410,595)            967,298
Minority interest                              127,417                          (40,994)(H)          86,423
                                            ----------       ----------       ---------         -----------
                                                                                               
Net income                                   1,191,126           59,350        (369,601)            880,875
Less preferred dividend requirements           341,476                          244,832 (I)         586,308
                                            ----------       ----------       ---------         -----------
                                                                                               
Net income applicable to common stock       $  849,650       $   59,350       $(614,433)        $   294,567
                                            ==========       ==========       =========         ===========
                                                                                               
Net income per common share                       $.12                                                 $.03
                                                  ====                                                 ====
                                                                                               
Weighted average number of shares                                                              
    outstanding                              7,144,180                                            8,814,509
                                             =========                                            =========
</TABLE>

See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.


                                       14

<PAGE>

                           JANUS AMERICAN GROUP, INC.
         UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
                      NINE MONTHS ENDED SEPTEMBER 30, 1996

<TABLE>
<CAPTION>
                                         Historical
                                ---------------------------
                                                   Pre-Tek
                                                    and                                     The Beck-
                                                 Subsidiary                       Janus       Yeaggy
                                 Janus and       (1/1/96 to     Pro Forma       Pro Forma     Group       Pro Forma       Pro Forma 
                                Subsidiaries      7/15/96)      Adjustments      Combined    Historical   Adjustments     Combined
                                ------------      --------      -----------      --------    ----------   -----------     --------
<S>                              <C>              <C>            <C>          <C>           <C>         <C>             <C>         
Revenues:
    Hotel revenues                                                                          $10,037,524                 $10,037,524
    Management fees                                                                           1,234,083 $  (456,676)(B)     777,407
    Other hotel related
        revenues                                                                                124,587                     124,587
    Sales                        $   175,021      $ 546,741                   $   721,762                                   721,762
                                 -----------      ---------                   -----------   ----------- -----------     ----------- 
           Total revenues            175,021        546,741                       721,762    11,396,194    (456,676)     11,661,280
                                 -----------      ---------                   -----------   ----------- -----------     ----------- 
Costs and expenses:
    Direct hotel operating
        expenses                                                                              3,462,407      30,074 (C)   3,492,481
    Occupancy and other oper-
        ating expenses               169,373        349,759                       519,132     1,409,518     (41,475)(D)   1,887,175
    Selling, general and ad-
        ministrative expenses        985,600        410,725                     1,396,325     2,551,245     208,528 (D)   4,156,098
    Depreciation and amorti-
        zation                        36,991        151,952      $(88,211)(A)     100,732       655,353     231,647 (E)     987,732
    Amortization of intang-
        ible assets                   24,054         82,947       (52,571)(A)      54,430                   107,381 (F)     161,811
                                 -----------      ---------      --------     -----------   ----------- -----------     ----------- 
           Total costs and ex-
             penses                1,216,018        995,383      (140,782)      2,070,619     8,078,523     536,155      10,685,297
                                 -----------      ---------      --------     -----------   ----------- -----------     ----------- 

Operating income (loss)           (1,040,997)      (448,642)      140,782      (1,348,857)    3,317,671    (992,831)        975,983
Other income (expense):
    Interest and other income        128,878                                      128,878       364,462                     493,340
    Interest expense                    (873)       (85,411)                      (86,284)   (1,451,875)                 (1,538,159)
    Other expense                                   (38,086)                      (38,086)                                  (38,086)
                                 -----------      ---------      --------     -----------   ----------- -----------     ----------- 
Income (loss) before minor-
    ity interest                    (912,992)      (572,139)      140,782      (1,344,349)    2,230,258    (992,831)       (106,922)
Minority interest                     37,868                                       37,868                    56,968 (H)      94,836
                                 -----------      ---------      --------     -----------   ----------- -----------     ----------- 
Net income (loss)                   (950,860)      (572,139)      140,782      (1,382,217)    2,230,258  (1,049,799)       (201,758)
Less preferred dividend
    requirements                      19,800                                       19,800                   586,308 (I)     606,108
                                 -----------      ---------      --------     -----------   ----------- -----------     ----------- 
Net income (loss) applic-
    able to common stock         $  (970,660)     $(572,139)     $140,782     $(1,402,017)  $ 2,230,258 $(1,636,107)    $  (807,866)
                                 ===========      =========      ========     ===========   =========== ===========     =========== 

Net loss per common share              $(.19)                                       $(.27)                                    $(.09)
                                       =====                                        =====                                     =====
Weighted average number
    of shares outstanding          5,075,418                                    5,231,018                                 9,031,017
                                   =========                                    =========                                 =========
</TABLE>

See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.



                                       15
<PAGE>

                           JANUS AMERICAN GROUP, INC.

      NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

Purchases of the Beck-Yeaggy Group and Pre-Tek:

Information  with  respect  to the  cost  incurred  by  Janus  to  purchase  the
Beck-Yeaggy  Group on April 30, 1997 (the effective date of the acquisition used
for accounting purposes) and the allocation of such costs in accordance with the
purchase  method  of  accounting  is set  forth  in Note 2 of the  notes  to the
unaudited  condensed   consolidated   financial  statements  of  Janus  included
elsewhere herein.

Information  with respect to the cost  incurred by Janus to purchase  Pre-Tek on
July 15, 1996 and the  allocation of such costs in accordance  with the purchase
method of  accounting  is set forth in Note 3 of the notes to the Audited  Janus
Financial Statements in the Form 10-SB.

Information with respect to pro forma adjustments for the effects of the assumed
acquisitions  of the  Beck-Yeaggy  Group  and  Pre-Tek  as of  January  1,  1996
(including the effects of certain  agreements  related to such  acquisitions) on
the  results of  operations  of Janus and its  subsidiaries  for the nine months
ended September 30, 1997 and 1996 is set forth below.

Pro  Forma  Adjustments  to  the  Unaudited  Condensed  Combined  Statements  of
Operations for the nine months ended September 30, 1997 and 1996:

     (A)  To record the effects  arising  from the  allocation  of the  purchase
          price for the  acquisition of Pre-Tek on historical  depreciation  and
          amortization  of property and  equipment  based on the fair values and
          estimated  useful  lives  of the  assets  acquired  and on  historical
          amortization  of goodwill  based on an  estimated  benefit  period for
          goodwill arising from the acquisition of Pre-Tek of 15 years.

     (B)  To eliminate the net revenues derived from management contracts of the
          Beck-Yeaggy Group that were not acquired by Janus.

     (C)  To  record  the  additional  cost to be  incurred  as a result  of the
          revisions to the agreement with Hospitality  Employee Leasing Program,
          Inc. that became effective upon the consummation of the acquisition of
          the Beck-Yeaggy Group.

     (D)  To record  the net  effects of changes  to  compensation  and  related
          expenses based on revised  employment and lease agreements that became
          effective upon the  consummation of the acquisition of the Beck-Yeaggy
          Group  and the  elimination  of the costs of  consultants  who will no
          longer be employed and certain other nonrecurring costs.

     (E)  To record the effects  arising  from the  allocation  of the  purchase
          price  for the  acquisition  of the  Beck-Yeaggy  Group on  historical
          depreciation  and  amortization of property and equipment based on the
          fair values and estimated useful lives of the assets required.


                                       16


<PAGE>

                           JANUS AMERICAN GROUP, INC.

      NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

     (F)  To record the effects  arising  from the  allocation  of the  purchase
          price  for the  acquisition  of the  Beck-Yeaggy  Group on  historical
          amortization of goodwill based on a minimum  estimated  benefit period
          for goodwill arising from the acquisition of the Beck-Yeaggy  Group of
          40 years.

     (G)  To adjust state  income tax  provisions  and credits  based on the pro
          forma  income or loss before  income  taxes and related  carryforwards
          applicable to each state.  No provisions or credits for Federal income
          taxes have been  recorded  on the pro forma net income or loss  before
          income  taxes  based  on  the   availability  of  net  operating  loss
          carryforwards  due to the  uncertainties  related to their  future use
          (see  Note 5 of the  notes  to the  condensed  consolidated  financial
          statements herein).

     (H)  To  record  the  minority  interest  in the net  income  (loss) of the
          85%-owned hotel.

     (I)  To  record  the  dividends  attributable  to the  shares  of  Series B
          preferred  stock  issued  as  part  of the  consideration  paid to the
          Sellers.


                                       17

<PAGE>

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

General

     The following discussion of the Company's historical results of operations,
changes in liquidity and capital resources and liquidity and capital resources
as of September 30, 1997 and for nine months ended September 30, 1997 and 1996
should be read in conjunction with the unaudited consolidated financial
statements of the Company and the notes thereto and the Unaudited Pro Forma
Condensed Combined Financial Statements of Janus American Group, Inc. and
Subsidiaries and the notes thereto included elsewhere herein. The term "Company"
means Janus American Group, Inc. ("Janus") collectively with its subsidiaries JI
Subsidiary, Inc. ("JI Subsidiary"), Pre-Tek Wireline Service Company, Inc.
('Wireline") and KFE Wireline, Inc. ("KFE"). References to the operations of
"Pre-Tek" in this discussion are to the combined operations of Wireline and
Wireline's subsidiary, KFE.

     Janus and JI Subsidiary are the successors to United States Lines, Inc.
("U.S. Lines") and United States Lines (S.A.), Inc. ("U.S. Lines (S.A)"), which
emerged from a Chapter 11 bankruptcy in 1990. The Plan of Reorganization which
was approved by the creditors of U.S. Lines and U.S. Lines (S.A.) and the United
States Bankruptcy Court for the Southern District of New York, contemplated that
Janus and JI Subsidiary would seek out acquisition opportunities for each of the
reorganized companies in order to utilize their respective anticipated available
net operating loss carryforwards ("NOLs") for Federal income tax purposes.

     The Company acquired the business of Pre-Tek, an oil and gas engineering
services and wireline logging company based in Bakersfield, California, in July
1996. On April 24, 1997, the Company acquired, from affiliates of Louis S. Beck
("Beck") and Harry Yeaggy ("Yeaggy"), certain assets relating to the hospitality
business comprised of (i) six hotels and an 85% partnership interest in a
partnership which owns a hotel (collectively, the "Owned Hotels"), (ii) a hotel
management company, with 21 hotels under management inclusive of the Owned
Hotels (hereinafter the hotels which are managed, but not owned by the Company,
are referred to as the "Managed Hotels" and the Owned Hotels and the Managed
Hotels are collectively referred to as the "Hotels"), (iii) a management fee
sharing arrangement with Summit Hotel Management Company and (iv) two loans, one
of which is secured by a first mortgage on a hotel and the other of which is
secured by a first mortgage on a campground and both of which are personally
guaranteed by Messrs. Beck and Yeaggy (the acquired businesses and assets are
collectively the "Beck-Yeaggy Group"). Management is diligently pursuing a
program for additional acquisitions through the use of a combination of cash,
capital stock and, when necessary, borrowing.


                                       18
<PAGE>

Nine Months Ended September 30, 1997 Compared With Nine Months Ended 
September 30, 1996 

     Historical and Pro Forma Results of Operations

     The acquisitions of the Beck-Yeaggy Group and Pre-Tek were accounted for as
purchases and, accordingly, the Company's historical results of operations for
the nine months ended September 30, 1997 and 1996 include the results of
operations of the Beck-Yeaggy Group subsequent to April 30, 1997 and Pre-Tek
subsequent to July 15, 1996 (the respective effective dates of acquisition for
accounting purposes). Accordingly, the Company's historical results of
operations for the nine months ended September 30, 1997 are not directly
comparable to those of 1996.

     To present more comparable information, unaudited pro forma combined
results of operations for the nine months ended September 30, 1997 and 1996 are
set forth below. In addition to combining the historical results of operations
of the Company and the historical pre-acquisition results of operations of the
Beck-Yeaggy Group for the periods from January 1, 1997 to April 30, 1997 and
January 1, 1996 to September 30, 1996 and the historical pre-acquisition results
of operations of Pre-Tek for the period from January 1, 1996 to July 15, 1996 as
if the acquisitions had been consummated on January 1, 1996 , the pro forma
results of operations include adjustments that, among other things, reflect: the
elimination of the net revenues derived from management contracts of the
Beck-Yeaggy Group that were not acquired by the Company; depreciation and
amortization of property and equipment based on the fair values of assets
acquired; the amortization of goodwill; the net effects of changes to
compensation and related expenses based on revised employment and lease
agreements; and the issuance of shares of preferred and common stock (net of
shares returned) as part of the consideration for the acquisitions.

     The pro forma combined net income of the Company was $880,875 for the nine
months ended September 30, 1997 as compared to a net loss of $201,758 during the
same period of 1996. The increase in net income was primarily the result of
decreases in compensation expense and professional fees, an increase in hotel
revenues, Pre-Tek sales, interest and other income and state tax refunds from
prior years which were received in 1997. 

     Room revenue increased $133,312 to $8,844,403 in 1997. The 1.5% increase
was attributable primarily to an increase in room rates from Owned Hotels. The
average rate increased from $47.93 in 1996 to $49.82 for 1997 as the occupancy
percentage decreased 1.7% in 1997 to 66.7% from 68.4% in 1996.

     Food and beverage revenues are principally a function of the number of
guests who stay at each Owned Hotel, local walk-in business and catering sales.
The $15,361 increase in food 


                                       19

<PAGE>

and beverage sales from $1,326,433 for the nine month period ended September 30,
1996 to $1,341,794 for the comparable period in 1997 is related to an increase
in the menu prices at the Owned Hotel, Best Western Kings Quarters.

     Management fee income increased from $777,407 in 1996 to $801,762 in 1997
as room revenues increased at Managed Hotels where the management fees are
calculated as a percentage of room revenues.

     Other hotel related revenues increased in 1997 from $124,587 in 1996 to
$272,212 for 1997. The increase was directly related to the co-marketing of
Kings Island and Kings Dominion amusement park tickets with room rentals which
generate $.50 to $3.00 per ticket in additional income.

     Sales generated by Pre-Tek increased from $721,762 in 1996 to $1,050,081 in
1997 primarily as a result of increases in well perforation and bond logging
revenues.

     Direct hotel operating expenses increased by $87,284 from $3,492,481 in
1996 to $3,579,765 in 1997. Direct room and related services costs increased as
room revenue increased. Food and beverage costs increased as food and beverage
sales increased. However, restaurant and lounge departmental profitability
decreased as a result of increases in labor costs.

     Occupancy and other operating expenses increased to $2,183,061 in 1997 from
$1,887,175 in 1996. Operating expenses at Owned Hotels decreased by
approximately $19,119 as repairs and maintenance expense and utility expenses
decreased. Operating expenses for Pre-Tek increased $315,005 from $519,132 in
1996 to $834,137 in 1997 and is primarily attributable to the direct costs
associated with generating additional sales.

     Selling, general and administrative expenses decreased by $506,052 to
$3,650,046 in 1997 from $4,156,098 in 1996 as a result of a reduction in
compensation expenses and professional fees.

     Interest and other income increased $112,546 to $605,886 in 1997 from
$493,340 in 1996 as the amount of funds invested increased in 1997.

     Interest expense decreased from $1,538,159 in 1996 to $1,414,478. The
decrease was related to a decrease in the amount of long-term debt secured by
the Owned Hotels.

     The charges to operations for minority interest remained stable from 1996
to 1997.

     The decline in preferred stock dividends from $606,108 for 1996 to $586,308
for 1997 resulted from the effects of the redemption of the Company's Series A
Preferred Stock during 1996.


                                    20

<PAGE>

     Historical Changes in Liquidity and Capital Resources

     Total assets increased from $9,047,317 at December 31, 1996 to $62,937,352
at September 30, 1997. The increase in total assets was the result of the
acquisition of the Beck-Yeaggy Group.

     Property, plant and equipment, goodwill, notes receivable, long-term debt,
paid-in-capital, preferred stock and common stock all fluctuated as a result of
the acquisition. The increase in cash and cash equivalents of $6,207,632 is
predominantly attributable to contributions from the United States Lines, Inc.
and United States Lines (S.A.), Inc. Reorganization Trust (the "Reorganization
Trust").

Liquidity and Capital Resources at September 30, 1997

     The following discussion reflects the liquidity and capital resources of
the Company after the acquisition of the Beck-Yeaggy Group by the Company. The
Company's principal sources of liquidity are cash on hand (including escrow
deposits and replacement reserve), cash from operations, earnings on invested
cash and, when required, principally in connection with acquisitions, borrowings
(consisting primarily of loans secured by mortgages on real property owned or to
be acquired by the Company). The Company's continuing operations are funded
through cash generated from its hotel operations. Acquisitions of hotels are
expected to be financed through a combination of cash on hand, internally
generated cash, issuance of equity securities of Janus and borrowings, some of
which is likely to be secured by assets of the Company. The Company has no
committed lines of credit and there can be no assurance that credit will be
available to the Company or if available that such credit will be available on
terms and in amounts satisfactory to the Company. The ability of the Company to
issue its common or preferred stock is materially restricted by the requirements
of the Code if the Company wishes to preserve its NOLs.

     At September 30, 1997, the Company had $12,788,468 in cash and cash
equivalents.

     During the nine months ended September 30, 1997, the Company invested
$409,494 in capital improvements in connection with the Owned Hotels. The
Company plans to spend an additional $550,000 on such capital improvements over
the three month period ending December 31, 1997.

     Capital for improvements to Owned Hotels has been and is expected to be
provided by a combination of internally generated cash and, if necessary and
available, borrowings. The Company expects to spend annually approximately 4% to
5% of revenues from Owned Hotels for ongoing capital expenditures in each year.
The Company believes, based on its operating experience, that these types of
capital investments will enhance the competitive position of the Owned Hotels
and thereby enhance the Company's competitive position. Changes in the
competitive environment for a specific Owned Hotel may dictate higher or lower
capital expenditures.


                                       21
<PAGE>

     The Company maintains a number of commercial banking relationships but does
not currently have committed lines of credit. It is in active negotiations with
lending institutions which might extend credit facilities to the Company for
capital purposes including capital that might be required for the acquisition of
additional hotels or management contracts. There can be no assurance such
negotiations will be successful.

     The Company anticipates that it will be able to secure the capital required
to pursue its acquisition program through a combination of borrowing, internally
generated cash and utilization of its common and/or preferred stock to the
extent such utilization does not jeopardize the Company's NOLs. There can be no
assurance however that the Company will be able to negotiate sufficient
borrowings to accomplish its acquisition program on terms and conditions
acceptable to the Company, or at all. Further, any such borrowings may contain
covenants that impose limitations on the Company which could constrain or
prohibit the Company from making additional acquisitions as well as its ability
to pay dividends or to make other distributions, incur additional indebtedness
or obligations or to enter into other transactions which the Company may deem
beneficial. Additionally, factors outside of the Company's control could affect
its ability to secure additional funds on terms acceptable to the Company. Those
factors include, without limitation, any increase in the rate of inflation
and/or interest rates, localized or general economic dislocations, an economic
down-turn and regulatory changes constricting the availability of credit.

     The Company has benefited and continues to benefit as the recipient of
moneys disbursed by the Reorganization Trust as the Reorganization Trust
accumulates moneys in excess of its reasonably required reserves and projected
operating expenses. On April 25, 1997 and August 19, 1997, the Company received
contributions from the Reorganization Trust aggregating $7,491,020. While there
is no objective formula to determine the extent to which Reorganization Trust
assets exceed projected liabilities and administrative requirements thereby
making additional cash available for contribution to the Company, management of
the Company believes that there will be future contributions. This belief is
based upon the decrease of the Reorganization Trust's administrative expenses
through reductions in personnel and office space, which is related to the
decreasing volume of unsettled claims of former unsecured creditors of U.S.
Lines and U.S. Lines (S.A.). The amount of excess cash available for
contribution to the Company will be dependent upon the remaining duration of
Reorganization Trust activity necessary to resolve outstanding claims,
particularly the asbestos and other late-manifesting personal injury claims, and
the amount of professional fees associated with this activity. Accordingly, no
assurance can be given as to the amount or timing of additional contributions
from the Reorganization Trust, if in fact there are any additional
contributions.

     The Company's long-term debt at September 30, 1997 totals $20,110,428.
Mortgage debt totals $19,934,371, which consists of $10,738,995 in fixed rate,
fully self-amortizing mortgage loans and $9,195,376 in adjustable rate (3-5 year
adjustment period) mortgage loans. Such adjustable rate loans have maturity
dates range from March 1998 to April 2006. Interest rates on mortgage debt range
from 8.875% to 10.00% with a weighted average interest rate of 9.3% effective at
October 1, 1997. The approximate scheduled repayments of principal on the


                                       22

<PAGE>

long-term debt of the Company are: from October 1, 1997 through December 31,
1997 -- $145,000; 1998 -- $2,115,000; 1999 -- $591,000; 2000 -- $627,000.
Management of the Company currently believes that the cash flow from the
Company's hotel operations will be sufficient to make the required amortization
payments. Balloon payments required to be made at the maturity of the
non-self-amortizing loans are expected to be made from cash on hand at the time
or from the proceeds of refinancing. There can be no assurance that the Company
will be able to obtain financing, or financing on terms satisfactory to it.

     Seasonality. Demand at many of the hotels is affected by seasonal patterns.
Demand for hotel rooms in the industry generally tends to be lower during the
first and fourth quarters and higher in the second and third quarters.
Accordingly, the Company's revenues reflect this seasonality.

Forward Looking Statements

     When used in this and in future filings by the Company with the Securities
and Exchange Commission, in the Company's press releases and in oral statements
made with the approval of an authorized executive officer of the Company, the
words or phrases "will likely result," "expects," "plans," "will continue," "is
anticipated," "estimated," "project" or "outlook" or similar expressions
(including confirmations by an authorized executive officer of the Company of
any such expressions made by a third party with respect to the Company) are
intended to identify forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. The Company wishes to caution
readers not to place undue reliance on any such forward-looking statements, each
of which speak only as of the date made. Such statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from historical earnings and those presently anticipated or projected. The
Company has no obligation to publicly release the result of any revisions which
may be made to any forward-looking statements to reflect anticipated or
unanticipated events or circumstances occurring after the date of such
statements.

                           PART II - OTHER INFORMATION

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

     On September 29, 1997, the Company held an annual meeting of shareholders.
At the meeting, the following matters were approved by the shareholders by the
following votes:

     1. Election of Directors

               Name                          For                Withheld
               ----                          ---                --------
         Louis S. Beck                     6,392,228               0
         Richard P. Lerner                 6,392,228               0
         C. Scott Bartlett, Jr.            6,392,228               0
         Lucille Hart-Brown                6,392,228               0


                                       23
<PAGE>

     2. Ratification of the appointment of J.H. Cohn LLP as independent public
accountants:

                        For             Against           Abstain
                        ---             -------           -------
                     6,005,588             0              386,640

     3. Approval of the grant of stock appreciation rights to non-officer
directors.

                        For             Against           Abstain
                        ---             -------           -------
                     6,005,588             0              386,640

     4. Approval of amendment to the Company's Restated Certificate of
Incorporation, as amended to change the Company's name to Janus American Group,
Inc.

                        For             Against           Abstain
                        ---             -------           -------
                     6,005,588             0              386,640

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

          (a) Exhibits

              Exhibit Number            Description
              --------------            -----------
                   3.1                  Restated Certificate of
                                        Incorporation, as amended

          (b) Reports on Form 8-K:

              There were no reports on Form 8-K filed by the Company during the 
quarter ended September 30, 1997.


                                       24
<PAGE>

                                    SIGNATURE

     In accordance with the requirements f the Securities Exchange Act of 1934,
as amended, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


Dated: November 14, 1997                          JANUS AMERICAN GROUP, INC.


                                                  By:/s/ James E. Bishop
                                                     ---------------------------
                                                     James E. Bishop, President

Dated: November 14, 1997                          


                                                     /s/ Richard A.Tonges
                                                     ---------------------------
                                                     Richard A.Tonges, Treasurer
                                                     and Vice President of 
                                                     Finance (Principal 
                                                     Financial and Accounting
                                                     Officer)


                                       25
<PAGE>

                                Index to Exhibits

Exhibit Number               Description

3.1                          Restated Certificate of Incorporation, as amended


                                       26