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

                                   FORM 10-QSB
                  Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


                  For the quarterly period ended March 31, 1999


                           JANUS AMERICAN GROUP, INC.
                 (Name of Small Business Issuer in its Charter)



      DELAWARE                                            13-2572712
(State or Other Jurisdiction of                           (IRS Employer
incorporation or organization)                            Identification No.)

                                 

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



       Registrant's telephone number, including area code: (561) 997-4800


                             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 March 31, 1999: 8,671,092



Transitional Small Business Disclosure Format:  Yes |_| No |X|





                                  Page 1 of 32
<PAGE>


                           JANUS AMERICAN GROUP, INC.

                                   FORM 10-QSB

                    FOR QUARTERLY PERIOD ENDED MARCH 31, 1999



Part I.   Financial Information                                        Page No.

          Item 1.   Financial Statements                                  4-24

          Item 2.   Management's Discussion and Analysis
          Of Financial Condition and Results of Operations               25-30

Part II.  Other Information

          Item 6.  Exhibits and Reports on Form 8-K                         31

Signature Page                                                              32





















                                       2

<PAGE>



                   JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES

                                    INDEX TO
                        CONSOLIDATED FINANCIAL STATEMENTS


                                                                          Page

HISTORICAL FINANCIAL STATEMENTS:

     UNAUDITED CONSOLIDATED BALANCE SHEETS
       MARCH 31, 1999 AND DECEMBER 31, 1998                                 4

     UNAUDITED CONSOLIDATED STATEMENTS
       OF OPERATIONS
          THREE MONTHS ENDED MARCH 31, 1999
          AND MARCH 31, 1998                                                5

     UNAUDITED CONSOLIDATED STATEMENT OF
       OF STOCKHOLDERS' EQUITY
          THREE MONTHS ENDED MARCH 31, 1999                                 6

     UNAUDITED CONSOLIDATED STATEMENTS
       OF CASH FLOWS
          THREE MONTHS ENDED MARCH 31, 1999
          AND MARCH 31, 1998                                                7

     NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
     STATEMENTS                                                          8-21

PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS;

     INTRODUCTION TO THE UNAUDITED PRO FORMA
     CONSOLIDATED FINANCIAL STATEMENTS                                     22

     UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS
     OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1999
     AND MARCH 31, 1998                                                    23

     NOTES TO ADJUSTED UNAUDITED PRO FORMA CONSOLIDATED
     FINANCIAL STATEMENTS                                                  24








                                       3
<PAGE>

<TABLE>
                           JANUS AMERICAN GROUP, INC.
<CAPTION>
                      UNAUDITED CONSOLIDATED BALANCE SHEET
                   AS AT MARCH 31, 1999 AND DECEMBER 31, 1998


                                     ASSETS

                                                                        March 31,         December 31,
                                                                             1999                 1998
<S>                                                                        <C>                   <C>
Current assets:
  Cash and cash equivalents                                          $ 11,752,011         $ 12,383,741
  Restricted cash for preferred stock of subsidiary; debt
    service and real estate taxes                                       1,107,131              802,746
  Accounts receivable                                                     661,051            1,422,327
  Current portion of notes receivable                                     275,642              322,043
  Other current assets                                                    198,165              239,206
                                                                      -----------          -----------
     Total current assets                                              13,994,000           15,170,063

Property and equipment, net of accumulated depreciation
  and amortization                                                     99,523,273           74,550,300
Notes receivable                                                          453,194              453,194
Mortgage notes receivable                                               3,308,935            5,425,046
Goodwill, net of accumulated amortization                               6,494,369            6,536,996
Deferred tax asset                                                        800,126              680,126
Other assets                                                            5,865,598            5,868,067
                                                                      -----------          -----------

     Total                                                           $130,439,495         $108,683,792
                                                                      ===========          ===========


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Payable for redemption of preferred stock                          $     36,071         $     41,370
  Current portion of long-term debt                                     4,566,210            2,683,504
  Accounts payable                                                      2,435,591            1,495,253
  Accrued expenses                                                      2,268,218            1,910,248
  Dividends payable                                                           -                    -
                                                                      -----------          -----------
     Total current liabilities                                          9,306,090            6,130,375

Long-term debt, net of current portion                                 73,023,777           60,582,883     
Deferred tax liabilities                                                      -                    -
                                                                      -----------          -----------
     Total liabilities                                                 82,329,867           66,713,258

Minority interest                                                       2,441,211            1,773,960

Commitments and contingencies

Stockholders' equity:
  Preferred stock:
    Series B; par value $.01 per share; 20,000 shares
      authorized; 16,788.08 and 10,451.88 shares issued
      and outstanding                                                         168                  105
  Common stock, par value $.01 per share; 15,000,000
    shares authorized; 11,883,220 shares issued                           118,833              118,833
  Additional paid-in capital                                           52,074,257           45,738,120
  Accumulated deficit                                                  (5,108,542)          (4,244,185)
  Treasury stock - 3,212,128 and 3,192,128 common shares,
    at cost                                                            (1,416,299)          (1,416,299)
                                                                      -----------          -----------
     Total stockholders' equity                                        45,668,417           40,196,574
                                                                      -----------          -----------

     Total                                                           $130,439,495         $108,683,792
                                                                      ===========          ===========
</TABLE>



                                       4
<PAGE>

<TABLE>

                           JANUS AMERICAN GROUP, INC.
<CAPTION>

                 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
                      FOR THE THREE MONTHS ENDED MARCH 31,

                                                                        1999                1998
<S>                                                                    <C>                   <C>
Revenues:
     Hotel revenues:
        Room and related services                                     $ 7,436,508        $1,836,667
        Food and beverage                                               2,381,785           293,046
        Management fees                                                   561,993           375,131
        Other                                                             217,532            30,528
                                                                       ----------         ---------
               Total revenues                                          10,597,818         2,535,372
                                                                       ----------         ---------

Cost and expenses:
     Direct hotel operating expenses:
        Room and related services                                       1,921,078           523,182
        Food and beverage                                               1,863,205           252,180
        Selling and general expenses                                      455,956           127,150
                                                                       ----------         ---------
                 Total direct hotel operating expense                   4,240,239           902,512
      Occupancy and other operating expenes                             1,617,727           421,348
      Selling, general and administrative expenses                      2,518,090           919,336
      Depreciation of property and equipment                            1,275,046           341,724
      Amortization of intangible assets                                    78,426            50,982
                                                                       ----------         ---------
                Total costs and expenses                                9,729,528         2,635,902
                                                                       ----------         ---------

Operating income (loss)                                                   868,290         (100,530)

Other income (expense)
      Interest income                                                     197,048           246,449
      Other income                                                         20,000               -
      Interest expense                                                 (1,671,070)         (458,422)
                                                                       ----------         ---------

Income (loss) before state income taxes and
      minority interest                                                 (585,732)          (312,503)

Provision (credit) for federal income taxes                                   -                 -
Provision for deferred income taxes                                           -                 -
Provision (credit) for state and local income taxes                           -                 -
                                                                       ----------         ----------

Income (loss) before minority interest                                   (585,732)          (312,503)

Minority interest                                                           9,823            (39,751)
                                                                       ----------         ----------

Net income (loss)                                                        (595,555)          (272,752)

Less preferred dividend requirements                                      268,802            197,583
                                                                       ----------          ---------

Net income (loss) applicable to common stock                            $(864,357)        $ (470,335)

Net income (loss) per common share-Basic                                    (0.10)             (0.05)
                                                                             ====               ====

Net income (loss) per common share-Assuming dilution                        (0.10)             (0.05)
                                                                             ====               ====

Basic weighted average common shares outstanding                        8,682,858          8,691,735
                                                                        =========          =========

Weighted average common shares outstanding-assuming dilution            8,682,858          8,691,735
                                                                        =========          =========
</TABLE>


                                       5
<PAGE>

<TABLE>

                           JANUS AMERICAN GROUP, INC.
<CAPTION>
            UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                    FOR THE THREE MONTHS ENDED MARCH 31, 1999


                                                              Preferred               Common                                  
                                                                Stock                 Stock
                                                            ----------------     ----------------                   
                                                             Number              Number                            Additional  
                                                               of                  of               Comprehensive    Paid-in   
                                                             Shares   Amount     Shares    Amount       Income       Capital   
                                                            ----------------     ----------------  ----------------------------
<S>                                                            <C>       <C>       <C>       <C>           <C>          <C>    
Balance January 1. 1999                                     10,451.88    $105  11,883,220  $118,833                $45,738,120 
Shares issued to acquire hospitality business                6,336.20      63                                       $6,336,137 
Comprehensive Income:                                                                                                          
     Net income (loss)                                                                                 $(595,555)             
     Decrease in net operating loss valuation allowance                                                                        
     Use of net operating loss carryforward against                                                                            
current tax exp.
                                                                                                        --------
Comprehensive Income                                                                                   $(595,555)             
                                                                                                        =========
Conversion of  warrants and payment of puts                                                                                    
Preferred Stock Dividends                                                                                                      
                                                             --------     ---  ----------   -------                 ----------
Balance at March 31, 1999                                    16788.08    $168  11,883,220  $118,833                $52,074,257 
                                                             ========     ===  ==========   =======                 ==========








                                                                            Treasury Stock
                                                                           --------------------
                                                                           Number
                                                            Accumulated      of
                                                              Deficit      Shares        Amount          Total
                                                           ------------------------------------      ------------
<S>                                                              <C>       <C>          <C>          <C>
Balance January 1. 1999                                     $(4,244,185)  3,192,128   $(1,416,299)    $40,196,574
Shares issued to acquire hospitality business                                                           6,336,200
Comprehensive Income:                                                                                         -
     Net income (loss)                                       (5,955,545)                                 (595,555)
     Decrease in net operating loss valuation allowance                                                       -
     Use of net operating loss carryforward against                                                           -
current tax exp.
                                                           
Comprehensive Income                                                         20,000                           -
                                                           
Conversion of  warrants and payment of puts                                                                   -
Preferred Stock Dividends                                     (268,802)                                  (268,802)
                                                             ----------   ---------    ----------      ----------
Balance at March 31, 1999                                   $(5,108,542)  3,212,128   $(1,416,299)    $45,668,417
                                                             ==========   =========    ==========      ==========


</TABLE>


                                       6
<PAGE>

<TABLE>

                                             JANUS AMERICAN GROUP, INC.
<CAPTION>
                                   UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND MARCH 31, 1998

                                                                         March 31,        March 31,
                                                                             1999             1998
<S>                                                                      <C>                 <C>
Operating activities:
Net income (loss)                                                     $  (595,555)     $  (272,752)
Adjustments to reconcile net income (loss) to
     net cash provided by (used in) operating
     activities:
     Depreciation and amortization                                      1,275,046          341,724
     Amortization of intangible assets                                     78,426           50,982
     Minority Interest                                                      9,823          (39,751)
     Deferred income taxes
     Discontinued operations                                                  -            (73,948)
     Changes in operating assets and liabilities:
          Accounts receivable                                             761,276          108,125
          Other current assets                                             41,041          372,766
          Other asset                                                     343,917         (249,814)
          Accounts payable and accrued expenses                           (98,787)        (605,480)
                                                                       ----------       ----------
              Net  cash provided by operating
                    activities                                          1,815,187         (368,148)
                                                                       ----------       ----------

Investing activities:
     Acquisition of hospitality business, net of
           noncash consideration and cash required                        462,008              -
     Increase in Notes Receivable                                               0           (4,276)
     Purchases of property and equipment                               (1,140,159)        (205,341)
     Gain on sale of subsidiary's net assets                                    0           14,161
     Collections of notes receivable                                       20,764           34,662
                                                                       ----------       ----------
               Net cash ( used in) investing activities                  (657,387)        (160,794)
                                                                       ----------       ----------

Financing activities:
     Dividends Paid                                                      (268,802)        (395,166)
     Decrease (increase) in restricted cash                              (304,385)         171,800
     Repurchase of common stock
     Repurchase of warrants                                                   -
     Conversion of warrants to common stock                                   -              8,823
     Proceeds from long-term borrowings                                       -                -
     Repayments of long-term borrowings                                (1,216,343)        (146,779)
                                                                      -----------       ----------
               Net cash provided by financing activities               (1,789,530)        (361,322)
                                                                       ----------       ----------

Increase (decrease) in cash and cash equivalents                         (631,730)        (890,264)

Cash and cash equivalents, beginning of period                         12,383,741       11,523,848
                                                                       ----------       ----------

Cash and cash equivalents, end of period                              $11,752,011      $10,633,584
                                                                       ==========       ==========

Supplemental disclosure of cash flow data:
     Interest paid                                                    $(1,671,070)     $  (458,422)
                                                                       ==========       ==========
     Income taxes paid Noncash transactions:
     Acquisition of hospitality business                              $ 6,336,200
                                                                       ==========       ==========

</TABLE>



                                       7
<PAGE>


                   JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES
                         NOTES TO UNAUDITED CONSOLIDATED
                              FINANCIAL STATEMENTS



Note 1--Unaudited interim financial statements:

         In the opinion of management,  the accompanying  unaudited 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"  or  "Janus") as of March 31,  1999,  its
         results of  operations  and cash flows for the three months ended March
         31, 1999 and 1998 and its changes in stockholders' equity for the three
         months ended March 31, 1999.  Certain  terms used herein are defined in
         the  audited  consolidated  financial  statements  of the Company as of
         December  31, 1998 and 1997 and for the years then ended (the  "Audited
         Janus  Financial  Statements")  included in the  Company's  form 10-KSB
         previously   filed  with  the  Securities   and  Exchange   Commission.
         Accordingly,  these unaudited  consolidated financial statements should
         be read in conjunction with the Audited Janus Financial  Statements and
         the other financial statements included in the Form 10-KSB.

         The results of operations for the three months ended March 31, 1999 are
         not  necessarily  indicative of the results of operations  for the full
         year ending December 31, 1999.

Note 2--Organization:

         As of March 31, 1999, the operations of Janus American Group,  Inc. and
         its' Subsidiaries ("Janus" or the "Company"), which until September 29,
         1997 had been named Janus Industries, Inc., were comprised primarily of
         the operations of eighteen  hotels (of which sixteen are  wholly-owned,
         one 85% owned and one 75% owned) and a hotel management company.

         In November 1986, the Company's predecessor,  United States Lines, Inc.
         ("USL"),  together with United States Lines (S.A.) Inc.  ("USL-SA") and
         two related  companies,  filed petitions under Chapter 11 of the United
         States Bankruptcy Code. In May 1989, the United States Bankruptcy Court
         for  the  Southern  District  of  New  York  (the  "Bankruptcy  Court")
         confirmed  a plan of  reorganization  with  respect to such  companies,
         which  was  later  amended  and  modified  pursuant  to an order of the
         Bankruptcy Court entered in February 1990 (the "Plan").






 
                                      8
<PAGE>
                  JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES
                         NOTES TO UNAUDITED CONSOLIDATED
                              FINANCIAL STATEMENTS


Note 3--Summary of significant accounting policies:

         Use of estimates:
                  The  preparation  of financial  statements in conformity  with
                  generally accepted  accounting  principles requires management
                  to make estimates and assumptions that affect certain reported
                  amounts and  disclosures.  Accordingly,  actual  results could
                  differ from those estimates.

         Principles of consolidation:
                  The unaudited  consolidated  financial  statements include the
                  accounts  of Janus and its  majority-owned  subsidiaries.  All
                  significant  intercompany  balances and transactions have been
                  eliminated in consolidation.

         Cash equivalents:
                  Cash   equivalents   generally   consist   of  highly   liquid
                  investments  with  maturities  of three  months  or less  when
                  acquired.

         Property and equipment:
                  Property  and  equipment  is stated at cost.  Depreciation  is
                  computed  using the  straight-line  method over the  estimated
                  useful lives of the assets.

         Goodwill:
                  Goodwill, which represents the excess of the costs of acquired
                  businesses  over the fair value of the net assets  acquired at
                  the respective  dates of  acquisition,  is amortized using the
                  straight-line  method over the  estimated  useful lives of the
                  asset (40 years).

         Impairment of long-lived assets:
                  The  Company  has  adopted  the  provisions  of  Statement  of
                  Financial  Accounting  Standards No. 121,  Accounting  for the
                  Impairment of Long-Lived  Assets and for Long-Lived  Assets to
                  be Disposed of ("SFAS 121"). Under SFAS 121, impairment losses
                  on  long-lived  assets,  such as property  and  equipment  and
                  goodwill,   are   recognized   when   events  or   changes  in
                  circumstances   indicate  that  the  undiscounted  cash  flows
                  estimated  to be  generated by such assets are less than their
                  carrying  value  and,  accordingly,  all or a portion  of such
                  carrying value may not be recoverable.  Impairment  losses are
                  then  measured by comparing  the fair value of assets to their
                  carrying  amounts.  As of March  31,  1999  there  was no such
                  impairment.

         Deferred loan costs:
                  Costs incurred to obtain long-term  financing are deferred and
                  amortized using the straight-line  method (which  approximates
                  the interest method) over the terms of the loans.


                                       9

<PAGE>
                  JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES
                         NOTES TO UNAUDITED CONSOLIDATED
                              FINANCIAL STATEMENTS


Note 3--Summary of significant accounting policies (continued):

         Revenue recognition:
               The  Company  recognizes  all  revenues  on an  accrual  basis as
               earned.

         Advertising costs:
                  The  costs  of  advertising  and  promotion  are  expensed  as
                  incurred.  Advertising  costs  charged to  operations,  all of
                  which were  attributable  to the Company's  hotel  operations,
                  amounted to $455,956  and  $127,150 for the three months ended
                  March 31, 1999 and 1998 respectively.

         Income taxes:
                  The Company  accounts for income  taxes  pursuant to the asset
                  and liability  method which  requires  deferred tax assets and
                  liabilities to be computed annually for temporary  differences
                  between the  financial  statement  and tax bases of assets and
                  liabilities that will result in taxable or deductible  amounts
                  in the future  based on enacted tax laws and rates  applicable
                  to the periods in which the temporary differences are expected
                  to   affect   taxable   income.   Valuation   allowances   are
                  established,  when necessary, to reduce deferred tax assets to
                  the amount  expected to be realized.  The income tax provision
                  or credit is the tax payable or refundable for the period plus
                  or minus the change  during the period in deferred  tax assets
                  and liabilities.  Income tax credits  attributable to benefits
                  from net  operating  loss  carryforwards  or  other  temporary
                  differences  that  existed  at the  time the  Company  adopted
                  fresh-start  accounting  are  reflected as a  contribution  to
                  stockholders'  equity in the period in which the tax  benefits
                  are realized.

                  The  Reorganization  Trust was  formed as part of the  "Plan".
                  (See Note 2).The  Reorganization  Trust is  considered to be a
                  grantor  trust  for  income  tax  purposes.  Accordingly,  any
                  taxable  income or loss  associated  with the  disposition  of
                  assets and the settlement of liabilities by the Reorganization
                  Trust are recorded in the Federal and state income tax returns
                  of the Company;  however,  such assets and liabilities are not
                  presented in these consolidated financial statements.

         Stock options:
               In accordance with the provisions of Accounting  Principles Board
               Opinion No. 25,  Accounting  for Stock Issued to  Employees,  the
               Company  will  recognize  compensation  costs as a result  of the
               issuance of stock options


                                       10

<PAGE>

                  JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES
                         NOTES TO UNAUDITED CONSOLIDATED
                              FINANCIAL STATEMENTS

Note 3--Summary of significant accounting policies (continued):

                  Stock options (continued):

                  based  on the  excess,  if  any,  of  the  fair  value  of the
                  underlying  stock at the  date of  grant  or  award  (or at an
                  appropriate  subsequent  measurement date) over the amount the
                  employee must pay to acquire the stock. Therefore, the Company
                  will not be required to  recognize  compensation  expense as a
                  result of any  grants of stock  options at an  exercise  price
                  that is equivalent to or greater than fair value.  The Company
                  will also make pro forma disclosures, as required by Statement
                  of Financial  Accounting  Standards  No. 123,  Accounting  for
                  Stock-Based  Compensation  ("SFAS 123"), of net income or loss
                  as if a fair  value  based  method  of  accounting  for  stock
                  options had been applied,  if such amounts  differ  materially
                  from the historical amounts.

         Reclassification:
                  Prior year  amounts  have been  reclassified  to conform  with
current year presentation.

         Income (loss) per common share:
                  Effective   December  31,  1997,   the  Company   adopted  the
                  provisions of Statement of Financial  Accounting Standards No.
                  128,  Earnings  per Share  ("SFAS  128"),  which  replaces the
                  presentation  of "primary" and  "fully-diluted"  income (loss)
                  per  common  share  required  under   previously   promulgated
                  accounting  standards  with the  presentation  of "basic"  and
                  "assuming dilution" income (loss) per common share.

                  Basic net  income  (loss) per common  share is  calculated  by
                  dividing  net  income  or  loss,   as  adjusted  for  required
                  preferred stock  dividends,  by the weighted average number of
                  common shares  outstanding  during the period. The calculation
                  of diluted  net income  (loss) per common  share is similar to
                  that of basic net income (loss) per common share,  except that
                  the   denominator  is  increased  to  include  the  number  of
                  additional  common shares that would have been  outstanding if
                  all  potentially  dilutive  common shares,  principally  those
                  issuable upon the exercise of stock options and warrants, were
                  issued during the period.

                  The Company's  reported net income  represents  its net income
                  available  to common  shareholders  for  purposes of computing
                  both measures.  The following reconciles shares outstanding at
                  the beginning of the year to average shares  outstanding  used
                  to compute both income per share measures.


                                       11

<PAGE>

                 JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES
                         NOTES TO UNAUDITED CONSOLIDATED
                              FINANCIAL STATEMENTS


Note 3--Summary of significant accounting policies (concluded):
<TABLE>
<CAPTION>

                                                   Quarter Ended             Quarter Ended
                                                   March 31, 1999           March 31, 1998
                                                   --------------           --------------
<S>                                                      <C>                      <C>
       Averages shares outstanding-basic              8,691,092                8,691,735

       Effect of dilutive securities-
       dilutive shares contingently
       issuable upon the exercise of
       stock options and warrants                           -                        -  
                                                      ---------                ---------

       Averages shares outstanding-
       Assuming dilution                              8,691,092                8,691,735
                                                      =========                =========
</TABLE>

Note 4--Acquisitions:

          On August 14, 1998, the Company  acquired four additional  hotels from
          commonly controlled sellers (the "Cornerstone Hotel Group"). The total
          purchase  price was  $44,110,500  in cash,  financed by four  mortgage
          loans in substantially the amount of the total purchase price, secured
          by  the  acquired  properties.   The  loans  are  cross-defaulted  and
          cross-collateralized  among the four hotels but  otherwise  of limited
          recourse to the Company.  The financing was for an initial term of ten
          years, based upon a 25-year amortization schedule, at a fixed interest
          rate of 8.09% per annum.

          The  acquisition  was accounted for as a purchase and was allocated as
          follows:



          Land                                                   $ 4,132,509

          Buildings                                               28,927,552

          Equipment                                                   52,500

          Furniture and fixtures                                   8,090,259

          Prepaids and escrow for product            
          improvement program                                      2,907,680
                                                                  ----------

               Total purchase price allocated                    $44,110,500
                                                                  ==========

         Effective  January 1, 1999 the Company  acquired seven additional hotel
         properties from affiliates of Louis S. Beck and Harry Yeaggy  ("Messrs.
         Beck and Yeaggy") and two additional  hotel  management  contracts with
         respect to the hotels known as Knights Inn West Palm Beach in West Palm
         Beach, Florida and Days Inn Inner Harbor in Baltimore,  Maryland ("Beck
         II").



                                       12

<PAGE>


                 JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES
                         NOTES TO UNAUDITED CONSOLIDATED
                              FINANCIAL STATEMENTS


Note 4--Acquisitions (concluded):

          The  consideration  exchanged  by the  Company  pursuant to the merger
          agreement with Beck II was the following:

         Issuance of:
                  6336.20 shares of Series B preferred  
                  stock with a liquidation
                  preference and estimated
                  fair value of $1,000 per share                     $6,336,200

         The  acquisition  was  reported  as a purchase  and,  accordingly,  the
         results of Beck II have been  included  in the  accompanying  unaudited
         consolidated  statements  of  operations  subsequent to January 1, 1999
         (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 as shown below.

               Cash                                                 $ 1,120,679
               Accounts Receivable                                       77,835
               Other Current Assets                                       4,088
               Property and Equipment                                25,107,860
               Deferred Tax Assets                                      120,000
               Other Assets                                             761,989
               Accounts Payable                                        (605,864)
               Other Current Liabilities                               (519,469)
               Liability to Seller or Affiliates                     (1,908,267)
               Long Term Debt                                       (17,165,224)
               Minority Interest in the 75% owned
                  hotel corporation                                    (657,427)
                                                                     ----------

                  Total Purchase Price Allocated                    $ 6,336,200
                                                                     ==========
  
          Unaudited information  reflecting the historical results of operations
          of the Company for the three months ended March 31, 1999 and pro forma
          results of  operations  for the three  months  ended March 31, 1998 as
          though  each of the  Cornerstone  Hotel  Group  and  Beck II had  been
          acquired  as of  January  1,  1998 are  included  herein  as Pro forma
          Consolidated Financial Statements.



                                       13
<PAGE>


                   JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES
                         NOTES TO UNAUDITED CONSOLIDATED
                              FINANCIAL STATEMENTS

Note 5--Mortgage notes receivable:

          The  Mortgages,  which were acquired on April 24, 1997 by the Company,
          are secured by a hotel in Juno  Beach,  Florida  and a  campground  in
          Kissimmee,  Florida, both of which are owned by entities controlled by
          Messrs. Beck and Yeaggy.  Messrs. Beck and Yeaggy have also personally
          guaranteed the Mortgages.  The Beck II purchase,  effective January 1,
          1999, included the Juno Beach, Florida,  property which was subject to
          a mortgage note to the Company  which  resulted in a  cancellation  of
          said Note.
<TABLE>
<CAPTION>

                                                                     March 31,           December 31,
                                                                        1999                    1998
<S>                                                                      <C>                    <C>
          Note  secured  by  hotel  property,   with                $      -              $2,141,749
          interest  at  .5%  above  specified  prime
          rate  (an   effective   rate  of  9.0%  at
          December 31, 1998)

          Note secured by campground, with interest                  3,396,244             3,417,006
          at 8%                                                      ---------             ---------
          

          Total long-term receivable                                 3,396,244             5,558,755
                                                                                            
          Less current portion                                          87,309               133,709
                                                                     ---------             ---------

          Long-term portion, net of current  portion                $3,308,935            $5,425,046
                                                                     =========             =========

</TABLE>

          The Campground  note is payable in monthly  installments  of principal
          and  interest  through  April  2003  with a final  installment  of all
          remaining  principal and interest in May 2003.  

          Principal  payments on the  Campground  note in each of the five years
          subsequent to December 31, 1998 are:

              Year Ending December 31                         Amount
                       1999                               $   85,586
                       2000                                   92,690
                       2001                                  100,384
                       2002                                  108,716
                       2003                                3,029,629







                                       14

<PAGE>

                   JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES
                         NOTES TO UNAUDITED CONSOLIDATED
                              FINANCIAL STATEMENTS


Note 5--Mortgage notes receivable (concluded):

                  The Company  derived  interest  income of $68,202 and $118,893
                  from the  Mortgages  during the three  months  ended March 31,
                  1999 and 1998 respectively.

Note 6--Property and equipment:

          Property  and  equipment  at March  31,  1999 and  December  31,  1998
          consisted of the following:
<TABLE>
<CAPTION>
         
                                                       Years of                March 31,        December 31,
                                                      Useful Life                 1998                1998
                                                      -----------                 ----                ----
<S>                                                       <C>                       <C>                <C>        
           Land                                                             $ 12,678,287        $10,167,507
       
           Hotels                                         30                  73,913,680         56,004,760
        
           Hotel furniture and fixtures:                   5                   8,412,099          3,125,877
         
           Hotel furniture and fixtures:                   9                   8,866,749          8,415,676
      
           Equipment and vehicles                          5                     174,238             83,212
     
           Other                                           5                      19,886             19,886
                                                                             -----------         ----------
    
                                                                             104,064,939         77,816,918
     
           Less accumulated depreciation and                                   
            amortization                                                       4,541,666          3,266,618
                                                                             -----------         ----------

           Totals                                                           $ 99,523,273        $74,550,300
                                                                             ===========         ==========
</TABLE>
         
Note 7-- Long-term debt:
<TABLE>
<CAPTION>
                                                                       March 31         December 31
                                                                           1999                1998
         Long-term debt consisted of the following:
<S>                                                                        <C>                 <C>
         Fixed rate mortgage notes payable in monthly
         installments, including interest at rates 
         ranging from 8.09% to 10%; the mortgage notes
         mature from August 2000 through January 2016                $62,838,773        $54,320,332

         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 December 31, 1997
         ranged from 8.73% to 9.5%);  the  mortgage notes
         mature from August 1999 through April 2006                   14,054,591          8,823,009


         Equipment notes with various maturities
         through December 2001 and interest at rates
         ranging from 8.98% to 15%                                       696,623            123,046
                                                                      ----------         ----------

         Total long-term debt                                         77,589,987         63,266,387

         Less current portion                                          4,566,210          2,683,504
                                                                      ----------         ----------

         Long-term debt, net of current portion                      $73,023,777        $60,582,883
                                                                      ==========         ==========
</TABLE>



                                       15
<PAGE>

                  JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES
                         NOTES TO UNAUDITED CONSOLIDATED
                              FINANCIAL STATEMENTS


Note 7-- Long-term debt (concluded):

         Long-term  debt  is  secured  by  the  Company's  notes,  property  and
         equipment.  Principal payments in years subsequent to December 31, 1998
         are as follows:

                  Year Ending December 31                       Amount

                           1999                                $4,566,210
                           2000                                 3,511,992
                           2001                                 1,973,184
                           2002                                 1,918,718
                           2003                                 2,029,292


Note 8--Commitments and contingencies:

         Employment agreements:
                  The Company entered into employment agreements whereby it will
                  be obligated to pay minimum  salaries to four of its executive
                  officers,   including   each  of  Messrs.   Beck  and  Yeaggy,
                  aggregating  $750,000  during  1998 and 1999 and  $250,000  in
                  2000.

         Concentration of credit risk:
                  Financial  instruments that potentially subject the Company to
                  concentrations  of credit risk consist  principally of cash in
                  banks, accounts receivable and the Mortgages.

                  The  Company  maintains  its  cash  balances  in bank  deposit
                  accounts  which,  at times,  may  exceed the  Federal  Deposit
                  Insurance  Corporation  coverage  limits thereby  exposing the
                  Company to credit  risk.  The Company  reduces its exposure to
                  credit  risk  by  maintaining  such  deposits  with  financial
                  institutions which management believes are high quality.

                  Exposure to credit risk with respect to trade  receivables  is
                  limited by the short  payment  terms and,  generally,  the low
                  balances  applicable  to such  instruments  and the  Company's
                  routine assessment of the financial strength of its customers.








                                       16

<PAGE>
                   JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES
                         NOTES TO UNAUDITED CONSOLIDATED
                              FINANCIAL STATEMENTS

Note 8--Commitments and contingencies (concluded):

                  Exposure  to credit  risk with  respect  to the  Mortgages  is
                  limited  because  they  are  secured  by real  estate  with an
                  estimated market value in excess of the mortgage balance.

         Litigation:
                  The Company is a party to various  legal  proceedings.  In the
                  opinion of management, these actions are routine in nature and
                  will not have a  material  adverse  effects  on the  Company's
                  consolidated financial statements in subsequent years.

Note 9--Income taxes:

         For  financial  statement  purposes,  there was a provision for Federal
         income taxes at March 31, 1999 and  December  31, 1998.  Benefits to be
         realized from the  utilization of the net operating loss  carryforwards
         generated prior to the Company's  reorganization  in February 1990 will
         be reported as an increase in additional  paid-in  capital and not as a
         credit  to  results  of  operations.  In  1998  the  Company  increased
         paid-in-capital by $2,566,000 as a result of such benefits.

         Section  382 of the  Internal  Revenue  Code  limits the amounts of net
         operating loss carryforwards usable by a corporation following a change
         of  more  than  50%  in  the  ownership  of the  corporation  during  a
         three-year period. As of March 31, 1999 management believes that such a
         change in ownership has not occurred.

         A reconciliation of the statutory Federal income tax rate of 34% to the
         effective tax rate for the provision for income taxes  attributable  to
         income from continuing operations follows:
<TABLE>
<CAPTION>

         Deferred taxes were comprised of the following:
                                                                        March 31      December 31
                                                                            1999             1998
<S>                                                                     <C>                <C>
            Deferred tax liabilities
               Depreciation and gain recognition                    $  1,885,874     $  1,885,874

            Deferred tax assets
               Net operating loss carryforwards                      165,375,000      165,355,000
               Valuation allowance                                   162,809,000      162,789,000

            Net deferred tax assets                                    2,566,000        2,566,000
                                                                     -----------      -----------

            Net deferred tax asset (liability)                      $    680,126     $    680,126
                                                                     ===========      ===========
</TABLE>


                                       17

<PAGE>

                   JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES
                         NOTES TO UNAUDITED CONSOLIDATED
                              FINANCIAL STATEMENTS

Note 9--Income taxes (concluded):

         Net operating loss  carryforwards  consist of federal  carryforwards of
         $486,400,000 principally expiring in years 2000 through 2011.

         The  Company's  actual tax rate  differs  from  statutory  rates due to
         goodwill,  income (loss) from the Reorganization  Trust and federal tax
         refunds.

Note 10--Fair value of financial instruments:

         The  Company's  financial  instruments  at  March  31,  1999  and  1998
         consisted of cash,  accounts  receivable,  mortgage  notes  receivable,
         accounts  payable and fixed and variable  rate  mortgage and  equipment
         notes  payable.  In the  opinion  of  management,  (i)  cash,  accounts
         receivable   and   accounts   payable   were  carried  at  values  that
         approximated  their fair values because of their short-term  maturities
         and (ii) mortgage  notes  receivable  and mortgage and equipment  notes
         payable  were  carried at values  that  approximated  their fair values
         because  they  had  interest  rates   equivalent  to  those   currently
         prevailing for financial instruments with similar characteristics.

Note 11--Minority interest:

         The Company owns 90% of  JISubsidiary,  85% of Kings Dominion Lodge and
         75% of Motel  Associates  of Pompano  Beach,  Inc.  The  balance of the
         minority interest in these consolidated  subsidiaries at March 31, 1999
         and December 31, 1998 and the changes in the minority  interest are set
         forth below:
<TABLE>
<CAPTION>

                                                                  Kings Dominion       Motel Assoc.of
                                               JISubsidiary            Lodge            Pompano Beach            Total
<S>                                               <C>                   <C>                 <C>                   <C>
         Balance at January 1, 1999              $ 91,113            1,682,848                  -             $1,773,961

         Initial allocation at the
         date of Acquisition
         of Beck II                                                                         657,427              657,427

         Net Income (loss)                            -                (47,102)              56,925                9,823
                                                   ------            ---------              -------            ---------

         Balance at March 31, 1999                 91,113            1,635,746              714,352            2,441,211
                                                   ======            =========              =======            =========

</TABLE>





                                       18
<PAGE>

                   JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES
                         NOTES TO UNAUDITED CONSOLIDATED
                              FINANCIAL STATEMENTS

Note 12--Stockholders equity:
               Capital stock:
                  Information regarding the capital stock of Janus follows:

                  -Preferred  stock, par value $.01 per share;  5,000,000 shares
                  authorized   at  March  31,  1999  and   December   31,  1998,
                  respectively,  of which  20,000  shares at March 31,  1999 and
                  12,000 shares at December 31, 1998 were  designated as "Series
                  B" (the  "Janus  Series B  preferred  stock");  16,788.08  and
                  10,451.80  shares  were  outstanding  at  March  31,  1999 and
                  December 31, 1998, respectively.

                  -Common  stock,  par value $.01 per share;  15,000,000  shares
                  authorized; and 11,880,867 shares issued at March 31, 1999 and
                  December  31,  1998;  and  3,189,132  shares  held as treasury
                  shares at March 31, 1999 and December  31,  1998.  At December
                  31,  1998 and 1997 the  Reorganization  Trust  held  shares of
                  Janus common stock for possible future  distribution under the
                  Plan which the Reorganization Trust was originally required to
                  vote in proportion  to the votes cast by the  Company's  other
                  stockholders.

                  On April  14,  1997,  the  Bankruptcy  Court  issued  an order
                  modifying the terms under which the Reorganization Trust votes
                  the shares of Janus  common stock it holds.  As a result,  the
                  Reorganization  Trust is now  required  to vote such shares in
                  proportion  to the  votes  cast  by  other  stockholders,  but
                  disregarding shares issued after March 16, 1997.

                  In January  1999 the Company  issued  6336.20  shares of Janus
                  Series B preferred stock as  consideration  for acquisition of
                  Beck II. Total outstanding at March 31, 1999 is 16,788.08.

                  Based on the  provisions  of Janus'  corporate  charter  and a
                  separate agreement between Janus and Messrs.  Beck and Yeaggy,
                  Messrs.   Beck  and  Yeaggy  are  prohibited  from  purchasing
                  additional  shares of Janus  common  stock  without  the prior
                  approval of the Board of Directors.

               Warrants:
                  In July 1996,  the Company  also  issued  warrants to purchase
                  500,000  shares of Janus  common  stock,  which were deemed to
                  have a nominal fair value,  as part of the  consideration  for
                  the acquisition of Pre-Tek. All of the warrants will expire on
                  July 15,  2001.  During  1997,  warrants to  purchase  276,400
                  shares were  repurchased  for $102,638.  At December 31, 1998,
                  warrants to purchase  110,626 shares were exercisable at $3.00
                  per share; warrants to purchase 55,312 shares were exercisable
                  at $4.00 per share;  and  warrants to purchase  55,309  shares
                  were exercisable at $5.00 per share. However, the warrants may
                  only be sold pursuant to an effective  registration  statement
                  under the securities  Act of 1933 or an appropriate  exemption
                  from such registration.


                                       19
<PAGE>
                   JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES
                         NOTES TO UNAUDITED CONSOLIDATED
                              FINANCIAL STATEMENTS

Note 12--Stockholders equity (concluded);
               Warrants (concluded):
                  Commencing  in  May  1999,  the  warrants  become  subject  to
                  redemption by the Company at $.25 per warrant on 30 days prior
                  written  notice if the market  price of the Janus common stock
                  equals or exceeds $10.00 per share for 10 consecutive  trading
                  days.

Note 13--Stock options and stock appreciation rights:

          During 1996, the  stockholders of the Company approved the adoption of
          the Janus Industries, Inc. 1996 Stock Option Plan (the "Option Plan").
          The  Option  Plan  provides  for  grants of  incentive  stock  options
          ("ISOs") and nonstatutory  stock options ("NSOs").  ISOs may be issued
          to any key employee or officer of the  Company;  NSOs may be issued to
          any key  employee  or officer of the  Company or any of the  Company's
          independent contractors,  agents or consultants other than nonemployee
          directors.  A committee of at least two  directors  (the  "Committee")
          will  determine  the dates on which  options  become  exercisable  and
          terminate  (provided  that  options may not expire more than ten years
          after  the  date  of  grant).  All  outstanding  options  will  become
          immediately  exercisable  in the event of a "change  in  control"  (as
          defined)  of the  Company.  The  exercise  price of any ISO must be at
          least 100% of the fair market  value on the date of grant (110% for an
          optionee that holds more than ten percent of the combined voting power
          of all  classes of stock of the  Company).  NSOs may be granted at any
          exercise price  determined by the Committee.  The Company has reserved
          300,000 shares of common stock for issuance under the Option Plan.

          The Option Plan  permits  the  Committee  to grant stock  appreciation
          rights  ("SARs") in connection with any option granted under the Plan.
          SARs  enable an  optionee  to  surrender  an option  and to  receive a
          payment in cash or common stock, as determined by the Committee,  with
          a value equal to the  difference  between the fair market value of the
          common stock on the date of  surrender  of the related  option and the
          option price.

          Options to purchase  4,000 shares at an exercise price of $2.75 remain
          outstanding at March 31, 1999.

          In 1998,  the Company  granted SARs with  respect to 25,000  shares of
          common  stock to a director at an  exercise  price of $2.48 per share,
          which will be exercisable at any time through December 17, 2003.




                                       20


<PAGE>
                   JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES
                         NOTES TO UNAUDITED CONSOLIDATED
                              FINANCIAL STATEMENTS

    Note 14--Other related party transactions:

        The Company engages in various transactions with other entities in which
        Mr.  Beck and Mr.  Yeaggy  have an  interest.  In  addition  to interest
        derived from the Mortgages  (see Note 5),  results of operations in 1999
        and 1998  include  revenues and  expenses  derived  from  related  party
        transactions as follows:

                                                          March 31      March 31
                                                              1999          1998

         Management fee income (a)                         $   -        $104,847
         Personnel leasing fees (b)                         46,749        14,320
         Management systems fees (c)                        21,000        12,500
         Rent for office facilities and equipment(c)        19,100         9,415
         Reimbursement for Management expenses             $   -        $496,562

          (a) The Company  managed 6 hotels for entities  controlled  by Messrs.
          Beck and  Yeaggy,  which were  subsequently  acquired  by the  Company
          effective January 1, 1999.

         (b)  The  Company  pays  administrative  fees to  Hospitality  Employee
         Leasing Program,  Inc. ("HELP"), a corporation  wholly-owned by Messrs.
         Beck and Yeaggy,  which  provides  the Company with  personnel  for the
         hotels it owns and manages.  In addition,  the Company  reimburses HELP
         for the actual payments it makes to or on behalf of such employees.

         (c)The Company pays rent and  management  systems fees for the use of a
         hotel  property  management  system and related  computer  hardware and
         software under an agreement  with Computel  Computer  Systems,  Inc., a
         corporation wholly-owned by Messrs. Beck and Yeaggy.

















                                       21
<PAGE>







                   JANUS AMERICAN GROUP, INC. AND SUBSIDIARIES
              UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS


Effective January 1, 1999 Janus American Group, Inc.  ("Janus")  consummated the
acquisition of six hotels, a 75% equity interest in a hotel corporation, and two
management  contracts  (collectively  "Beck II") that were effectively owned and
controlled by Louis S. Beck and Harry Yeaggy  ("Messrs.  Beck and  Yeaggy"),  as
more fully described in the Company's report on Form 8-K dated February 2, 1999,
as amended by Form 8-KA filed April 7, 1999.

On August 14,  1998,  Janus  consummated  the  acquisition  of four  hotels (the
"Cornerstone  Hotel Group") as more fully  described in the Company's  report on
Form 8-K dated August 28, 1998,  as amended by Form 8-KA filed October 16, 1998.
The  acquisition  included the profit from  operations  commencing July 1, 1998.
Janus has accounted for the acquisitions of the Cornerstone Hotel Group and Beck
II pursuant to the purchase  method of  accounting in its  historical  financial
statements  based on effective  acquisition  dates of January 1, 1999 and August
14, 1998 respectively.

The  accompanying  adjusted  unaudited  pro  forma  consolidated   statement  of
operations  for the three  months ended March 31, 1998  combines the  historical
consolidated statement of operations of Janus and its subsidiaries for the three
months ended March 31, 1998 (including the  Cornerstone  Hotel Group and Beck II
for the period from January 1, 1998 to March 31, 1998 as if the  acquisition was
consummated as of January 1, 1998.)

The accompanying unaudited pro forma consolidated financial statements are based
on the  assumptions and adjustments  described in the  accompanying  notes which
management  believes  are  reasonable.  The  unaudited  pro  forma  consolidated
financial  statements do not purport to represent what the consolidated  results
of operations  actually would have been if the acquisition of Cornerstone  Hotel
Group and Beck II referred to above had  occurred as of January 1, 1998  instead
of the actual date of consummation or what the financial position and results of
operations would be for any future periods. The unaudited pro forma consolidated
financial  statements and the  accompanying  notes should be read in conjunction
with the audited and unaudited  historical financial statements of Janus and its
subsidiaries included in the Form 10-KSB for the year ended December 31, 1998.












                                       22
<PAGE>


<TABLE>

                           JANUS AMERICAN GROUP, INC.
<CAPTION>
             UNAUDITED PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
                ADJUSTED FOR CORNERSTONE AND BECK II TRANSACTIONS
            FOR THREE MONTHS ENDED MARCH 31, 1999 AND MARCH 31, 1998


                                                                             Janus            Janus
                                                                          Historical         Proforma
                                                                            3/31/99          3/31/98
<S>                                                                           <C>              <C>
Revenues:
     Hotel revenues:
        Room and related services                                         $ 7,436,508      $ 7,541,260
        Food and beverage                                                   2,381,785        2,470,316
        Management fees                                                       561,993          375,131
        Other                                                                 217,532          220,643
                                                                           ----------       ----------
               Total revenues                                              10,597,818       10,607,350

Cost and expenses:
     Direct hotel operating expenses:
            Room and related services                                       1,921,078        2,112,051
            Food and beverage                                               1,863,205        2,030,884
            Selling and general expenses                                      455,956          464,770
                                                                           ----------       ----------
                 Total direct hotel operating                               4,240,239        4,607,705
expense
      Occupancy and other operating expenes                                 1,617,727        1,603,689
      Selling, general and administrative expenses                          2,518,090        2,310,569
      Depreciation of property and equipment                                1,275,046        1,187,456
      Amortization of intangible assets                                        78,426           75,761
                                                                           ----------       ----------
                Total costs and expenses                                    9,729,528        9,785,180

Operating income (loss)                                                       868,290          822,170

Other income (expense)
      Interest income                                                         197,048          197,349
      Other income                                                             20,000              -
      Interest expense                                                     (1,671,070)      (1,711,220)
                                                                           ----------       ----------

Income (loss) before state income taxes and
      minority interest                                                      (585,732)        (691,701)

Federal income tax(benefits)                                                      -                -
Provision for deferred income taxes                                               -                -
Provision (credit) for state and local income                                     -                -
taxes
                                                                           ----------       ----------
Total provision for income taxes                                                  -                -

                                                                           ----------       ----------
Income (loss) before minority interest                                       (585,732)       ($691,701)
Minority interest                                                               9,823          $30,400
                                                                           ----------       ----------
Income (loss) from continuing operations                                     (595,555)       ($722,101)
                                                                           ----------       ----------
Net income (loss)                                                            (595,555)        (722,101)
Less preferred dividend requirements                                          268,802          268,802
                                                                           ----------       ----------
Net income (loss) applicable to common stock                              $  (864,357)     $  (990,903)
                                                                           ==========       ==========

Net income (loss) per common share-Basic                                       (0.10)           (0.11)
Net income (loss) per common share-Assuming                                    (0.10)           (0.11)
dilution
Basic weighted avg. shares outstanding                                      8,682,858        8,691,735
                                                                           ==========       ==========
Basic weighted avg. shares outstanding-assuming                             
dilution                                                                    8,682,858        8,691,735
                                                                           ==========       ==========

</TABLE>


                                       23
<PAGE>



Purchases of the Cornerstone Hotel Group and Beck II:

Information  with  respect  to the  cost  incurred  by  Janus  to  purchase  the
Cornerstone  Hotel  Group on  August  14,  1998 and (the  effective  date of the
acquisition used for accounting  purposes) and Beck II effective January 1, 1999
and the  allocation  of such costs in  accordance  with the  purchase  method of
accounting  is set  forth in Note 4 of the notes to the  unaudited  consolidated
financial statements of Janus included elsewhere herein.

Pro Forma Adjustments to the Unaudited Consolidated Statements of Operations for
the three months ended March 31, 1998

(a)  To record the effect on interest  income  resulting from the  consolidating
     elimination of the Janus mortgage note receivable.

(b)  To eliminate  non-recurring general and administrative expenses of $463,596
     for management fees, director fees and auto leases and recording the effect
     of increased expenses of a regional accounting office.

(c)  To record the effects on  depreciation  expense arising from the allocation
     of purchase price of the Cornerstone  Hotel Group and Beck II between land,
     buildings, furniture, fixtures and equipment.

(d)  To record the effects on amortization expense arising from the amortization
     of loan fees,  franchise fees and prepaid fees incurred in the  acquisition
     of the Cornerstone Hotel Group and Beck II.

(e)  To record the  dividends  attributable  to the shares of Series B preferred
     stock  issued  as  part  of  the  consideration  paid  to  sellers  in  the
     acquisition of Beck II.

(f)  To record  additional  interest  expense of $329,627  based on  acquisition
     financing  of  $44,000,000  amortized  over 25 years at 8.09% offset by the
     reduction of interest expense of $49,100  resulting from the elimination as
     a result of the acquisition of the Juno mortgage payable to the Company.

(g)  To record the effect of a minority  interest of 25% in the Days Inn Pompano
     from January 1, 1998 to March 31, 1998.










                                       24

<PAGE>

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

Overview

Three Months Ended March 31, 1999 Compared to the Three Months Ended March 31,
1998

         Historical and Pro forma Results of Operations

         The acquisition of Beck II effective  January 1, 1999 (the "Beck-Yeaggy
Group"),  and the  acquisition  of the  Cornerstone  Group in August 1998,  were
accounted for as purchases.  Accordingly,  the Company's  historical  results of
operations  for the three  months  ended  March 31, 1999 and 1998  included  the
results  of  operations  of the  Beck-Yeaggy  Group  and the  Cornerstone  Group
subsequent to their effective dates of acquisition for accounting purposes.  For
that reason, the Company's historical results of operations for the three months
ended March 31, 1999 are not directly comparable to those for 1998.

         The Company had a net loss of  ($595,555) at March 31, 1999 compared to
a net loss of ($272,752)  at March 31, 1998.  The  difference  was primarily the
result of  acquisitions  of hotels  which  are out of season  from  January 1 to
Memorial Day weekend.

         The operations of the Company are comprised primarily of the operations
of owned hotels and the Company's  management of hotels owned by third  parties.
To present more comparable information related to operations,  the discussion of
results  of  operations  will  relate  to  the  Company's  unaudited  pro  forma
consolidated  results of continuing  operations for the three months ended March
31, 1999 and 1998. Pro forma  statements of operations  are included  within the
Notes to Unaudited Consolidated Financial Statements.

         The  unaudited  pro  forma  operating   information  is  based  on  the
assumptions  and adjustments  described in the attachments and which  management
believes are reasonable.  The unaudited pro forma consolidated  information does
not purport to represent what the  consolidated  results of operations  actually
would have been if the  acquisitions of Beck II and the Cornerstone  Hotel Group
had occurred as of January 1, 1998  instead of the actual date of  consummation,
or what the financial position and results of operations would be for any future
periods.  The unaudited  pro forma  consolidated  information  should be read in
conjunction with the audited  historical  financial  statements of Janus and its
subsidiaries included elsewhere herein.

         In addition to combining  the  historical  results of operations of the
Company and the historical  pre-acquisition results of operations of Beck II and
the  Cornerstone  Hotel Group for the periods  from January 1, 1998 to March 31,
1998 as if the acquisition had been consummated on January 1, 1998.  Adjustments
were made for depreciation 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 lease agreements and expense
sharing arrangements with a related party and revised employment  agreements and
the issuance of shares of preferred stock as part of the  consideration  for the
acquisition.  The provision for income taxes,  if applicable,  is based upon pro
forma income from operations and the statutory Federal and state rates.



                                       25

<PAGE>


         The pro forma  consolidated net loss from operations of the Company was
($595,555) for the three months ended March 31, 1999, as compared to net loss of
($722,101)  for the three months ended March 31, 1998.  The decrease in the loss
was primarily the result of decreases in direct operating expenses and increases
in management fee income offset by decreases in hotel revenue,  food revenue and
an increase in depreciation expense.

         Room and related services revenue  decreased  $104,752 to $7,436,508 in
1999. The decrease was  attributable  primarily to a decrease in occupancy.  The
average room rate  increased  from $54.88 in 1998 to $57.30 for 1999.  Occupancy
decreased in 1999 by 3.38% to 51.25%.

         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  $88,531  decrease in food and  beverage  sales from  $2,470,316  in 1999 to
$2,381,785  for  the  comparable  period  in 1999 is  related  to the  decreased
occupancy at the Company's four full-service  hotels offset by increases in menu
pricing.

         Management  fee income  increased  $186,862  in 1999 to  $561,993  as a
result  of  the  addition  of new  third  party  management  contracts  and  the
termination of a joint  marketing  venture  whereby fee income was shared with a
joint venture partner.

         Other hotel related  revenues were relatively flat for the three months
ended March 31, 1999.

         Direct hotel operating  expenses  decreased by $367,466 from $4,607,705
in 1998 to  $4,240,239  in 1999.  Direct room and related  services and food and
beverage costs decreased as a result of decreased payroll costs, the elimination
of contracted cleaning services and a reduction in the number of rooms sold.

         Occupancy and other operating expenses remained stable in 1999.

         Selling,  general and administrative  expenses increased by $207,521 to
$2,518,090 in 1999 from  $2,310,569 in 1998 as a result of the addition of staff
to meet  management  requirements,  commissions  for  management  contracts  and
shareholder services costs.

         Depreciation  increased by $87,590 in 1999 from $1,187,456 in 1998. The
increase was  attributable to depreciation for a full year on 1998 additions and
a half year on first quarter 1999 additions.

         Interest income remained stable as reductions in cash from the previous
year was offset by higher yields on investments.

         Interest  expense  decreased  from $1,711,220  in 1998 to $1,671,070 in
1999. The decrease was attributable to normal principal amortization.




                                       26
<PAGE>

         Minority  interest  decreased from $30,400 in 1998 to $9,823 in 1999 as
net loss  from the  Kings  Dominion  partnership  increased  in 1999 and the net
income from the Days Inn Pompano hotel decreased in 1999 from 1998.

Liquidity and Capital Resources

         The following  discussion  reflects the liquidity and capital resources
of the Company after giving effect to the transaction with affiliates of Messrs.
Beck and Yeaggy which closed effective January 1, 1999. 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  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 Internal  Revenue Code if the
Company wishes to preserve its NOLs.

         Historical Changes in Liquidity and Capital Resources

         Total  assets  increased  from  $108,683,792  at  December  31, 1998 to
$130,439,495  at March 31, 1999.  The increase in total assets was the result of
the  acquisition  of Beck II described in Note 4 of the  Unaudited  Consolidated
Financial Statements.

         Accounts  receivable,  property and  equipment,  other current  assets,
goodwill,  notes receivable,  other assets, accounts payable,  accrued expenses,
long-term debt, paid-in-capital and preferred stock all increased as a result of
the acquisitions.  The decrease in cash and cash equivalents from $12,383,741 in
1998 to $11,752,011  March 31, 1999 is attributable to capital  requirements for
improvements prior to reimbursement from replacement reserves and the operations
of the hotels out of season.

         At  March  31,  1999  the  Company  had  $11,752,011  in cash  and cash
equivalents.

         During  the  year  ended   December  31,  1998,  the  Company  and  its
predecessors  invested  approximately  $1,446,100  in  capital  improvements  in
connection  with the Owned  Hotels.  The  Company  plans to spend an  additional
$3,100,000  on such  capital  improvements  during the year ending  December 31,
1999, of which  $1,922,000  remains from the original  product  improvement plan
which  the  Company  agreed  to  in  connection  with  the  acquisition  of  the
Cornerstone Hotel Group and is currently reserved.

         Capital for improvements to Owned Hotels has been and is expected to be
provided by a combination  of internally  generated  cash,  reserve  replacement
accounts 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 additional  anticipated  improvements in
excess of the 4% to 5% are necessary to enhance the competitive  position of the
properties. The additional expenditures are mainly a result of the costs for new
facilities at Holiday Inn Independence, Holiday Inn North Canton and Holiday Inn
Hudson.


                                       27
<PAGE>


         The Company maintains a number of commercial banking  relationships and
maintains line of credit totalling $2,200,000 at March 31, 1999.

         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.  Further,  any such borrowings may contain  covenants
that impose  limitations  on the Company  that 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  that 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's  long-term  debt at March 31, 1999  totals  $77,589,987.
Mortgage debt totals  $76,893,364,  which consists of $62,838,773 in fixed rate,
fully  self-amortizing  mortgage loans and  $14,054,591 in adjustable  rate (3-5
year adjustment period) mortgage loans. Such adjustable rate loans have maturity
dates  ranging from August 1999 to April 2006.  Interest  rates on mortgage debt
range  from  8.09% to  9.75%  with a  weighted  average  interest  rate of 8.55%
effective at March 31, 1999. The approximate  scheduled  repayments of principal
on the  long-term  debt of the  Company  for the next five  years  are:  1999 --
$4,566,210;  2000 -- $3,511,992; 2001 -- $1,973,184; 2002 -- $1,918,718; 2003 --
$2,029,292. 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.

         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.  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 no  further  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.


                                       28
<PAGE>

         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.

Inflation

         Although  inflation has been relatively  stable over the past two years
and has not had any discernible effect on the Company's operations,  an increase
in the inflation rate could have a negative  effect on the Company's  ability to
secure additional  capital under terms and conditions  acceptable to the Company
or refinance  indebtedness secured by the Owned Hotels.  Increase in the rate of
inflation could materially adversely affect the ability of the Company to expand
its operations through the acquisition of Owned Hotels.

Year 2000 Issues

         The Company has conducted a review of its computer  systems to identify
the systems that could be affected by the "Year 2000" issue and has initiated an
implementation plan to resolve the issue. The Year 2000 problem is the result of
computer  programs being written using the two digits rather than four to define
the  applicable  year.  Any of the Company's  programs that have  time-sensitive
software  may  recognize a date using "00" as the year 1900 rather than the year
2000.  This  could  result in a major  system  failure or  miscalculations.  The
Company  presently  believes that, with  modifications to existing  software and
converting  to new  software,  the Year 2000 problem  will not pose  significant
operational  problems  for the  Company's  computer  systems as so modified  and
converted.  The Company anticipates  completing this work by September 30, 1999.
The Company is also in the process of working with each of its property  general
managers  to  complete  a plan in order to ensure  that all of the  computerized
operations of the Hotels for the year 2000 run properly.  All Hotels will have a
Year 2000 test prior to September 30, 1999 to ensure that the Year 2000 does not
cause any significant problems with the Hotels' ability to rent rooms.

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. 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


                                       29

<PAGE>

differ  materially from historical  earnings and those presently  anticipated or
projected. Such risks and other aspects of the Company's business and operations
are described in  "Management's  Discussion  and Analysis or Plan of Operation."
The Company has no  obligation  to publicly  release the result of any revisions
that may be made to any  forward-looking  statements to reflect  anticipated  or
unanticipated  events  or  circumstances   occurring  after  the  date  of  such
statements.

























                                       30

<PAGE>

                           PART II--OTHER INFORMATION



Item 2--Changes in Securities and Use of Proceeds

     (a)  Effective January 11, 1999 the Designations, Preferences and Rights of
          the Company's Preferred Stock, Series B, as set forth in the Company's
          Restated  Certificate  of  Incorporation,  as amended,  was amended to
          increase the number of shares in the Series B from 12,000 to 20,000.

     (b)  On February 2, 1999 the Company  issued 6,336 shares of its  Preferred
          Stock,  Series B, valued at $1,000 per share, as  consideraiton in the
          Beck II merger. The shares were issued as follows: 828 shares to Louis
          S. Beck;  3,924.15 shares to Elbe Financial  Group,  L.L.C., a company
          wholly-owned by Mr. Beck; and 1,584.05  shares to Harry G. Yeaggy.  No
          underwriters were involved nor were any commissions paid in connection
          with such  transaction.  The  Company  relied on  Section  4(2) of the
          Securities Act in making the foregoing private placement. No offer was
          made to any person other than Messrs.  Beck and Yeaggy,  the owners of
          Beck II.



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

     A.   Exhibits

          Exhibit 27:       Financial Data Schedule

     B.   Reports on Form 8-K

          (1)  Form 8-K dated  February 2, 1999  reporting  the  acquisition  of
               seven hotel properties

          (2)  Form 8-K/A dated February 1, 1999 amending and  supplementing the
               foregoing  report by inclusion of  financial  statements  and pro
               forma financial information







                                       31


<PAGE>
                                   SIGNATURES

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

                                         JANUS AMERICAN GROUP, INC.


Dated:      May 14, 1999                 /s/James E. Bishop 
      ------------------------           ---------------------------------------
                                         James E. Bishop
                                         President


Dated:      May 14, 1999                 /s/Richard A. Tonges
      ------------------------           ---------------------------------------
                                         Richard A. Tonges
                                         Treasurer and Vice President of Finance
                                         (Principal Financial and
                                         Accounting Officer)


































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