SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    Form 10-Q

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

         For the quarterly period ended October 31, 2000.

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

For the transition from________________ to________________

                         Commission file number 0-16158

                           TreeSource Industries, Inc.
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)


            Oregon                                          93-0832150
-------------------------------                  -------------------------------
(State or other jurisdiction of                  (I.R.S. Employer Identification
 incorporation or organization)                   No.)


          10260 S.W. Greenburg Road, Suite 900, Portland, Oregon 97223
--------------------------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

(Registrant's telephone number, including area code)   (503) 246-3440
                                                     ------------------

         Indicate by check mark  whether the  Registrant  (1) has filed  reports
required to be filed by Section 13 or 15 (d) of the  Securities  Exchange Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
                                             ---  ---
         The number of shares  outstanding of Registrant's  Common Stock, no par
value, at November 30, 2000 was 11,162,874.





                                       1
<PAGE>



                           TREESOURCE INDUSTRIES, INC.

                                      INDEX
                                                                         Page
                                                                        Number



PART I.     FINANCIAL INFORMATION...........................................3

Item 1.        Financial Statements.........................................3

Item 2.        Management's Discussion and Analysis of Financial Condition and
               Results of Operations.......................................14


PART II.    OTHER INFORMATION..............................................20

Item 1.        Legal Proceedings...........................................20

Item 3.        Defaults Upon Senior Securities.............................20

Item 6.        Exhibits and Reports on Form 8-K............................21














                                       2
<PAGE>





                          PART I. FINANCIAL INFORMATION

Item 1.           Financial Statements

                  TREESOURCE INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
                    (in Thousands, Except Per-Share Amounts)
                                   (Unaudited)

                                        THREE MONTHS            SIX MONTHS
                                           ENDED                  ENDED
                                         OCTOBER 31,             OCTOBER 31,
                                    ---------------------  --------------------
                                       2000        1999       2000       1999
                                    ---------   ---------  ---------  ---------

NET SALES                           $  40,040   $  59,535  $  86,172  $ 127,168

COST OF SALES                          39,347      55,974     87,366    112,991
                                    ---------   ---------  ---------  ---------

GROSS PROFIT (LOSS)                       693       3,561     (1,194)    14,177

SELLING, GENERAL AND
  ADMINISTRATIVE EXPENSES               2,547       2,624      5,414      5,866
REORGANIZATION CHARGES                    629         877      1,281        877
                                    ---------   ---------  ---------  ---------

OPERATING INCOME (LOSS)                (2,483)         60     (7,889)     7,434

OTHER INCOME (EXPENSE)
     Interest expense                     (27)       (718)       (57)    (1,832)
     Miscellaneous                         61          33        148        119
                                    ---------   ---------  ---------  ---------

                                           34        (685)        91     (1,713)
                                    ---------   ---------  ---------  ---------

INCOME (LOSS) BEFORE INCOME TAXES      (2,449)       (625)    (7,798)     5,721

PROVISIONS FOR INCOME TAXES (BENEFIT)      --         100         --        100
                                    ---------   ---------  ---------  ---------

NET INCOME (LOSS)                      (2,449)       (725)    (7,798)     5,621

PREFERRED DIVIDENDS                        --          --         --         --
                                    ---------   ---------  ---------  ---------

NET INCOME (LOSS) APPLICABLE

  TO COMMON STOCKHOLDERS            $  (2,449)  $    (725) $  (7,798)  $  5,621
                                    =========   =========  =========   ========
NET INCOME (LOSS) PER COMMON SHARE
   - BASIC                             ($0.22)      $0.06     ($0.70)     $0.50
                                      =======      ======    =======      =====

   - DILUTED                           ($0.22)      $0.06     ($0.70)     $0.49
                                      =======      ======    =======      =====

              The accompanying notes are an integral part of these
                       consolidated financial statements.



                                       3
<PAGE>




                  TREESOURCE INDUSTRIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                     ASSETS
                                 (in Thousands)
                                   (Unaudited)


                                                    OCTOBER 31,       APRIL 30,
                                                       2000             2000
                                                   ------------     ------------
CURRENT ASSETS
   Cash and cash equivalents                       $      6,110     $      1,871
   Restricted cash                                          930            1,616
   Accounts receivable, net                               6,895           12,462
   Inventories                                            8,224           15,800
   Prepaid expenses                                       2,431            2,535
   Income tax refund receivable                              --               86
   Assets held for sale                                   4,967            5,433
   Timber, timberlands and timber-related assets          2,698            2,196

                                                   ------------     ------------
      Total current assets                               32,255           42,000


NOTES AND ACCOUNTS RECEIVABLE                                 4                5

PROPERTY, PLANT AND EQUIPMENT, at cost
   Land                                                   1,507            1,527
   Buildings and improvements                             8,633            8,673
   Machinery and equipment                               48,568           47,448
                                                   ------------     ------------

                                                         58,708           57,648
      Less accumulated depreciation                      46,497           44,385

                                                   ------------     ------------
                                                         12,211           13,263
   Construction in progress                                 159              101

                                                   ------------     ------------
                                                         12,370           13,364

DEFERRED TAX ASSET                                          750              750
OTHER ASSETS                                              1,683            1,244

                                                   ------------     ------------
                                                   $     47,062     $     57,363
                                                   ============     ============






              The accompanying notes are an integral part of these
                       consolidated financial statements.



                                       4
<PAGE>




                  TREESOURCE INDUSTRIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                      LIABILITIES AND STOCKHOLDERS' EQUITY
                    (in Thousands, Except Share Information)
                                   (Unaudited)



                                                    OCTOBER 31,       APRIL 30,
                                                       2000             2000
                                                   ------------    ------------
CURRENT LIABILITIES
   Accounts payable                                $      4,969    $      5,476
   Accrued expenses                                       7,351           7,902
   Timber contracts payable                                  --             147
   Current borrowings                                        65             499

                                                   ------------    ------------
      Total current liabilities                          12,385          14,025

LONG-TERM DEBT, less current maturities                     148             183

LIABILITIES SUBJECT TO COMPROMISE                        49,131          49,959

COMMITMENTS AND CONTINGENCIES                                --              --

STOCKHOLDERS' EQUITY
  Preferred Stock, 10,000,000 shares authorized
     Series A, 270,079 shares outstanding                20,688          20,688
     Series B, 6,111 shares outstanding                     333             333
  Common Stock, no par value, 40,000,000
     shares authorized,
     11,162,874 issued and outstanding                   28,761          28,761
  Additional paid-in capital                                 15              15
  Retained deficit                                      (64,399)        (56,601)

                                                   ------------    ------------
                                                        (14,602)         (6,804)

                                                   ------------    ------------
                                                   $     47,062    $     57,363
                                                   ============    ============









              The accompanying notes are an integral part of these
                       consolidated financial statements.




                                       5
<PAGE>



                  TREESOURCE INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (in Thousands)
                                   (Unaudited)
<TABLE>
                                                                SIX MONTHS ENDED OCTOBER 31,
                                                                ----------------------------
                                                                    2000            1999
                                                                ------------    ------------
<S>                                                             <C>             <C>
CASH FROM OPERATING ACTIVITIES:
  Net income (loss)                                             $     (7,798)   $      5,621
  Adjustments to reconcile net income (loss) to
     cash provided by operating activities:
    Loss (gain) on sale of assets                                         10              --
    Depreciation, depletion and amortization                           1,343           2,197
    Accounts receivable                                                6,068          (1,039)
    Inventories                                                        7,493          (3,018)
    Prepaid expenses                                                     104          (3,840)
    Timber, timberlands and timber-related assets - current             (643)           (177)
    Payables and accruals                                             (1,148)          1,529
    Income taxes                                                          86              --
                                                                ------------    ------------
     Cash from operating activities                                    5,515           1,273
                                                                ------------    ------------
CASH FROM INVESTING ACTIVITIES:
  Notes and accounts receivable                                            1              18
  Acquisition of property, plant and equipment                          (488)           (569)
  Proceeds from the sale of fixed assets                                 127              --
  Net book value of retirements                                           --               7

                                                                ------------    ------------
     Cash from investing activities                                     (360)           (544)
                                                                ------------    ------------

CASH FROM FINANCING ACTIVITIES:
  Proceeds (payments) from borrowings                                   (458)            106
  Principal payments on long-term debt                                  (748)             --
  Other assets                                                          (396)              5

                                                                ------------    ------------
     Cash from financing activities                                   (1,602)            111
                                                                ------------    ------------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS                                                            3,553             840

CASH BALANCE AT BEGINNING OF PERIOD                                    3,487           2,131

                                                                ------------    ------------
CASH BALANCE AT END OF PERIOD                                   $      7,040    $      2,971
                                                                ============    ============

CASH PAID DURING THE PERIOD FOR:
  Interest                                                      $         56    $         10
  Income taxes                                                  $         --    $        100

</TABLE>



              The accompanying notes are an integral part of these
                       consolidated financial statements.



                                       6
<PAGE>



                  TREESOURCE INDUSTRIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE 1 - SUMMARY OF FINANCIAL STATEMENT PREPARATION

     On September 27, 1999 the Company filed for voluntary  reorganization under
chapter 11 of the U.S.  Bankruptcy Code (the "Code").  The Company  continues to
operate its business as a debtor-in-possession.  As a debtor-in-possession under
the Code, the Company is authorized to operate its business subject to the terms
of a cash collateral  order,  but may not engage in transactions  outside of the
ordinary course of business without Court approval.

     On April 12, 2000 the Company filed an Amended Joint Plan of Reorganization
(the "Plan") in U.S.  Bankruptcy  Court (the "Court")  that, if confirmed by the
Court,  would result in the  cancellation  of the Company's  current  classes of
common and preferred  stock and  eliminate  any value  remaining in these equity
securities.  The Company's  senior secured  lenders have a security  interest in
substantially  all the assets of the  Company.  Under the proposed  Plan,  these
senior  secured  lenders  would  exchange a portion of their claims  against the
Company for new equity  securities  to be issued by the Company  pursuant to the
Plan.  The  proposed  Plan  also  sets up a  defined  pool of funds  from  which
unsecured trade  creditors would be paid. The percentage  recovery for unsecured
trade creditors would depend on a number of factors, including the resolution of
disputed claims. On May 17, 2000 the Company  successfully  petitioned the Court
to delay the Plan  confirmation  hearing for 120 days due to poor lumber  market
conditions.   The  Company  is   currently   negotiating   a  revised   plan  of
reorganization  with the secured lenders that may result in significant  changes
in the Plan.  On November  30, 2000 the Company  petitioned  the Court to extend
through March 31, 2001 the period of  exclusivity  (the time period in which the
Company has the sole right to present a plan of reorganization), which otherwise
expired on  November  30,  2000.  The  Company's  motion to extend the period of
exclusivity is scheduled to be heard by the Court on December 22, 2000.

     In the opinion of  management,  the  consolidated  financial  statements of
TreeSource  Industries,   Inc.  and  subsidiaries  presented  herein,   assuming
continued  operations  under  chapter 11,  includes all  adjustments,  which are
solely of a normal recurring nature or related to the bankruptcy,  necessary for
a fair  presentation of the financial  position,  results of operations and cash
flows for the interim periods presented. Certain reclassifications may have been
made to the prior period  results and balances to conform to the current  period
classifications.  Most  obligations  outstanding  at the time of the  chapter 11
filing  have been  reclassified  as  non-current  liabilities  under the caption
"Liabilities  Subject  to  Compromise".  No  adjustments,  other  than the Court
approved  settlement  in July  2000 with CIT,  have  been  made to  reflect  any
settlement of obligations resulting from the reorganization proceedings.


                                       7
<PAGE>



     The financial  statements  should be read with  reference to  "Management's
Discussion  and  Analysis of  Financial  Condition  and  Results of  Operations"
contained in this report, and the "Notes to Consolidated  Financial  Statements"
set forth in the  Company's  Annual Report on Form 10-K for the year ended April
30,  2000 filed with the  Securities  and  Exchange  Commission.  The results of
operations for the current interim periods are not necessarily indicative of the
results to be expected for the current year.

     Restricted  cash  represents  proceeds from the sale of certain assets that
would  normally be remitted to the secured  lenders to pay down debt. Due to the
bankruptcy  filing,  these funds  cannot be paid until the Court  approves  such
payment.

     Due to the filing for protection under chapter 11, there exists substantial
doubt about the Company's ability to continue as a going concern.  The financial
statements do not include any adjustment related to the carrying value of assets
or liabilities should the Company be unable to continue as a going concern.


NOTE 2 - INVENTORIES

     Inventories  are valued at the lower of cost or market.  Cost is determined
using the average cost and  first-in,  first-out  (FIFO)  methods.  A summary of
inventory by principal product classification follows (in thousands):


                                                    October 31,      April 30,
                                                       2000             2000
                                                   ------------    ------------
         Logs                                      $      2,455    $      6,571
         Lumber                                           4,764           8,109
         Supplies and Other                               1,005           1,120
                                                   ------------    ------------
                                                   $      8,224    $     15,800
                                                   ============    ============




                                       8
<PAGE>




NOTE 3 - STOCKHOLDERS'  EQUITY

Stockholders'  equity at October 31, 2000 consists of the following:

     Series A Preferred Stock,  $100 per share liquidation  preference;  500,000
shares authorized; 270,079 shares issued and outstanding, limited voting rights;
cumulative  dividends  payable  quarterly  in advance at the prime rate,  with a
minimum  rate of 6% and a maximum rate of 9%;  convertible  into Common Stock at
$7.50 per share after April 30, 1999;  redeemable  at original  issue price plus
any accrued  dividends at the option of the Board of  Directors,  in the form of
cash or in exchange  for senior  unsecured  debt with a 12%  coupon.  Subject to
certain  conditions,  the holders of the Series A Preferred Stock have the right
to obtain voting  control of the  Company's  Board of Directors in the event the
Company misses three consecutive  quarterly  dividend  payments,  four quarterly
dividend  payments  within  twenty-four  months  or a total of  eight  quarterly
dividend  payments.  As of October  31, 2000 the Company was in arrears on seven
consecutive quarterly dividend payments totaling approximately $3,933,000.

     Series B Preferred Stock,  $100 per share liquidation  preference;  500,000
shares authorized;  6,111 shares issued and outstanding;  limited voting rights;
convertible into 212,693 shares of Common Stock;  dividends payable only if paid
on the Company's  Common Stock;  redeemable at original issue price plus accrued
dividends at the option of the Board of  Directors  after all Series A Preferred
Stock has been redeemed.

     Series C Junior  Participating  Preferred Stock, $100 per share liquidation
preference;  400,000 shares  authorized;  no shares issued or outstanding;  each
share has 100 votes,  voting together with Common Stock;  dividends payable only
if paid on the  Company's  Common Stock at 100 times the Common  Stock  dividend
rate.  This class of  Preferred  Stock was  authorized  in  connection  with the
Shareholder Rights Plan adopted by the Company on March 4, 1998.

     Common Stock, no par value; 40,000,000 shares authorized; 11,162,874 shares
issued and outstanding.  Before giving effect to any shares that might be issued
pursuant to the  management  incentive  Stock Option Plan or  conversion  of any
Series A Preferred  Stock,  the total number of common shares would  increase to
11,375,567   shares  if  the  shares  of  Series  B  Preferred  Stock  remaining
outstanding at October 31, 2000 were converted to Common Stock.

     If the  proposed  Plan is  confirmed  by the  Court the  Company's  current
classes of common and preferred  stock will be cancelled and any value remaining
in these equity securities will be eliminated.



                                       9
<PAGE>



NOTE 4 - NET INCOME (LOSS) PER SHARE

     The calculations of net income (loss) per share for the three and six-month
periods  ended  October 31, 2000 and 1999 are  summarized  below (in  thousands,
except per-share data):
<TABLE>

                                                            Three Months Ended             Six Months Ended
                                                               October 31,                   October 31,
                                                      ----------------------------    ----------------------------
                                                          2000             1999          2000              1999
                                                      -----------      -----------    -----------      -----------
<S>                                                   <C>              <C>            <C>              <C>
Net income (loss) applicable to common shareholders   $  (2,449)       $      (725)   $    (7,798)     $     5,621
                                                      ===========      ===========    ===========      ===========

Weighted average shares outstanding
     - Basic                                               11,163           11,163         11,163           11,163

Additional shares assumed from:
     - Conversion of Series B Preferred Stock                  --               --             --               --
     - Exercise of stock options                               --               --             --               --
                                                      -----------      -----------    -----------      -----------

Average number of shares and equivalents outstanding
     - Diluted                                             11,163           11,163         11,163           11,163
                                                      ===========      ===========    ===========      ===========
Net income (loss) per common share
     - Basic                                          $  (0.22)         $ (0.06)      $   (0.70)       $   0.50
                                                      ===========      ===========    ===========      ===========

     - Diluted                                        $  (0.22)         $ (0.06)      $   (0.70)       $   0.49
                                                      ===========      ===========    ===========      ===========
</TABLE>

NOTE 5 - LIABILITIES SUBJECT TO COMPROMISE

     Under the Code,  a claim is treated  as secured  only to the extent of such
creditor's  collateral,  and the  balance of the claim is treated as  unsecured.
Generally,  unsecured and  under-secured  debt does not accrue  interest after a
chapter 11 filing,  while a fully  secured claim  continues to accrue  interest.
Accordingly,  interest expense totaling approximately $1,076,000 was not accrued
during the quarter ended October 31, 2000 as management believes these debts are
under-secured. See Note 6 for additional information.

     Amounts  included  under the caption  "Liabilities  Subject to  Compromise"
represent claims that are unsecured or where, in the opinion of management,  the
value of the corresponding collateral is estimated to be less than the amount of
the debt.  Included  under this caption at October 31, 2000, and April 30, 2000,
are the following (in thousands):

                                                    October 31,      April 30,
                                                       2000            2000
                                                   ------------    ------------
         Trade, interest and
           other miscellaneous claims              $      6,152   $       6,242
         Secured notes                                      261             261
         Unsecured notes                                  1,007           1,007
         Senior secured debt                             41,711          42,449
                                                   ------------    ------------
                                                   $     49,131   $      49,959
                                                   ============   ==============


                                       10
<PAGE>



     Unsecured and under-secured claims may be liquidated and discharged at less
than their  face  value.  It is  impossible  at this time to predict  the actual
amount of recovery  that each  creditor may realize,  since the valuation of the
Company's  assets and its claims  may be  subject to  adjustment  as part of the
bankruptcy proceedings.

     As a result of the chapter 11 proceedings,  TreeSource Industries, Inc. and
its subsidiaries are in default on substantially all of their  pre-petition debt
agreements.  Acceleration  of this  debt is stayed  subject  to the  chapter  11
proceedings.  Such debt cannot be paid or  restructured  until the conclusion of
the proceedings, unless ordered by the Court.

NOTE 6 - BORROWINGS

     Long-term  borrowings  and the Line of Credit  consist of the following (in
thousands):
<TABLE>
                                                                  October 31,     April 30,
                                                                    2000            2000
                                                                ------------    ------------
<S>                                                             <C>             <C>
Senior secured debt, bearing interest at 10%; principal
payable in quarterly installments of $1 million beginning
March 15, 1999, and a final payment in December
2004; secured by substantially all assets of the
Company.                                                        $     41,711    $     42,449

Secured notes, interest at 9% and 10%; payable on
various dates; secured by various assets.                                261             261

Unsecured senior subordinated notes, net of discount
of $264 thousand at October 31, 2000 and April 30, 2000;
8% coupon,  effective  interest  rate of 13.3%;  semi-
annual interest payments due each June 30 and
December 31; principal due in full June 30, 2005.                      1,007           1,007

Obligations under capital leases.                                        213             243
                                                                ------------    ------------
                                                                      43,192          43,960

Less current maturities.                                                 (65)            (60)
Less liabilities subject to compromise.                              (42,979)        (43,717)
                                                                ------------    ------------
                                                                $        148    $        183
                                                                ============    ============
</TABLE>

     As discussed in Note 5, TreeSource  Industries,  Inc. and its  subsidiaries
are in default on substantially  all of their  pre-petition debt agreements as a
result of the chapter 11 filing.  Acceleration  of these debts is stayed subject
to the chapter 11 proceedings.  Such debt cannot be paid or  restructured  until
the conclusion of the chapter 11 proceedings,  unless ordered by the Court.  All
of the Company's  borrowings,  with the exception of any borrowings  against the
debtor-in-possession working capital secured revolving line of credit (the "Line
of Credit") and certain  capital lease  obligations,  have been  reclassified as
"Liabilities Subject to Compromise".


                                       11
<PAGE>


     The  Company  obtained a $16  million  Line of Credit in October  1999 that
matures  upon the  earliest  of April 5, 2001 or the  effective  date of a final
order of  reorganization.  Borrowings  under the Line of Credit  fluctuate daily
based on cash  needs and are  subject  to  customary  covenants  and  collateral
reserves.  The  weighted  average  rate of  interest on  outstanding  short-term
borrowings on the Line of Credit was 9.5%. The Line of Credit allows the Company
to borrow  from time to time up to $14  million  (the  remaining  $2  million is
reserved  pursuant  to the  terms of the  Line of  Credit),  including  up to $5
million in letters of credit. As of October 31, 2000 there were no borrowings on
the Line of Credit and $1,850,000 in letters of credit outstanding.

     The  Company may be unable to meet its  liquidity  needs if it is unable to
confirm a plan of  reorganization  by,  extend the maturity  date of its Line of
Credit beyond, or obtain alternate financing by, April 4, 2001.

NOTE 7 - PROVISION FOR INCOME TAXES

     The income tax  provision is based on the  estimated  effective  annual tax
rate for each fiscal year.  The provision  includes  anticipated  current income
taxes payable,  the tax effect of anticipated  differences between the financial
reporting and tax basis of assets and liabilities,  and the expected utilization
of net operating loss ("NOL") carry-forwards.

     The federal and state income tax  provision  consists of the  following (in
thousands):

                                                SIX MONTHS ENDED OCTOBER 31,
                                                ----------------------------
                                                    2000            1999
                                                ------------    ------------
Income (loss) before income taxes               $     (7,798)   $      5,721
                                                ============    ============
Provision for income taxes:
   Federal                                      $        --     $        100
   State                                                 --               --
                                                ------------    ------------
                                                $        --     $        100
                                                ============    ============

   Current                                      $        --     $        100
   Deferred                                              --               --
                                                ------------    ------------
                                                $        --     $        100
                                                ============    ============



                                       12
<PAGE>


     The Company's  remaining adjusted NOLs at April 30, 2000 were approximately
$40  million  for  federal  income  tax and $28  million  for state  income  tax
purposes.  These  carry-forwards  expire  in 2007  and  2012,  respectively.  As
discussed in Note 1, the Company has filed for  voluntary  reorganization  under
chapter 11 of the Code,  which could impact the  availability  of the NOLs to be
used to offset future income.  The Company may use a substantial  portion of the
NOLs  prior  to  emerging  from  bankruptcy  due to  debt  forgiveness  and  the
conversion  of  debt  to  equity  proposed  in the  Plan.  Due to the  potential
limitations   of  the  NOLs   associated   with  the  bankruptcy  and  potential
reorganization  plans,  the Company has fully reserved for its available NOLs at
October 31,  2000.  Management  periodically  reviews the above  factors and may
change the amount of valuation allowance as facts and circumstances dictate.


NOTE 8 - COMMITMENTS AND CONTINGENCIES

     The  Company is  involved in certain  litigation  primarily  arising in the
normal  course of its  business.  The Company's  liability,  if any,  under such
pending litigation could have a material impact upon the Company's  consolidated
financial condition or results of operations. See "Legal Proceedings".

     The  Company  is  subject  to many  federal,  state and  local  regulations
regarding waste disposal and pollution control.  Various  governmental  agencies
have  enacted,   or  are   considering,   regulations   regarding  a  number  of
environmental issues that may require material expenditures in the future. These
include regulations  regarding log yard management,  disposal of log yard waste,
kiln process waste water,  and air emissions  from hog fuel fired  boilers.  The
potential  expenditures  required  for the  Company  to  comply  with  any  such
regulations  could have a material adverse impact on its consolidated  financial
condition and results of operations.


                                       13
<PAGE>




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

Results of Operations
---------------------

     On a  quarter-to-quarter  basis, the Company's  financial  results have and
will vary widely, due to seasonal  fluctuations and market factors affecting the
demand for logs,  lumber, and other wood products.  Therefore,  past results for
any given year or quarter are not necessarily indicative of future results.

     Lumber market conditions  remained generally weak during the second quarter
of fiscal 2001 due to the oversupply of lumber in the North American market. The
average price of the industry benchmark green fir 2x4 standard and better lumber
decreased 2%, from $296 per unit in the quarter ended July 31, 2000, to $290 per
unit in the quarter  ended  October 31, 2000.  The average price of the industry
benchmark  #2 fir saw log also  decreased  12% from $612 to $540 per unit during
these same periods.  Because the decrease in log costs  exceeded the decrease in
lumber prices,  industry  margins and the Company's  gross profit  improved.  In
response  to the  prolonged  weak  lumber  market,  particularly  for kiln dried
hemlock and other whitewood  species,  the Company  reduced  operating hours and
took downtime at most facilities and curtailed  production and reduced  staffing
to low levels at its facilities in Morton, Washington, and North Powder, Oregon.
The Company  anticipates  restarting these two facilities when market conditions
become more  economically  favorable.  The  Company  also  curtailed  production
indefinitely  at, and is currently  seeking to sell, its Central  Point,  Oregon
mill,  which had net sales of $3.4 million  through  October 31, 2000, and $20.5
million,  $17.4 million, and $13.2 million in fiscal years ended 2000, 1999, and
1998, respectively.

     On September 27, 1999, the Company filed for voluntary reorganization under
chapter 11 of the U.S.  Bankruptcy Code (the "Code").  The Company  continues to
operate its business as a debtor-in-possession.  As a debtor-in-possession under
the Code, the Company is authorized to operate its business subject to the terms
of a cash collateral  order,  but may not engage in transactions  outside of the
ordinary course of business  without Court approval.  The costs  associated with
the  reorganization  totaled $629,000 during the quarter ended October 31, 2000.
Interest  expense  for the quarter was  approximately  $1,076,000  lower than it
otherwise  would  have been due to the  filing  for  reorganization.  During the
reorganization  period,  the Company is allowed  relief from payment of interest
charges on all pre-petition  debt, but is required to accrue interest expense on
claims  that are,  in the  opinion of  management,  fully  secured.  No interest
expense has been  recorded  since  September  27, 1999 on the  Company's  senior
secured debt or unsecured senior  subordinated notes because management believes
these claims are  under-secured.  (See "Defaults Upon Senior  Securities").  The
Company  filed for  reorganization  in response to a  protracted  period of weak
lumber markets  combined with the Company's  high level of debt and  substantial
preferred stock dividend obligations.


                                       14
<PAGE>



The cash generated by operations was not sufficient to enable the Company to pay
its commitments and continue operating.

     On April 12, 2000 the Company filed an Amended Joint Plan of Reorganization
(the "Plan") in U.S.  Bankruptcy  Court (the  "Court")  that if confirmed by the
Court,  would result in the  cancellation  of the Company's  current  classes of
common and preferred  stock and  eliminate  any value  remaining in these equity
securities.  The Company's  senior secured  lenders have a security  interest in
substantially  all the assets of the  Company.  Under the proposed  Plan,  these
senior  secured  lenders  would  exchange a portion of their claims  against the
Company for new equity  securities  to be issued by the Company  pursuant to the
Plan.  The  proposed  Plan  also  sets up a  defined  pool of funds  from  which
unsecured trade  creditors would be paid. The percentage  recovery for unsecured
trade creditors would depend on a number of issues,  including the resolution of
disputed claims. On May 17, 2000 the Company  successfully  petitioned the Court
to delay the Plan  confirmation  hearing for 120 days due to poor lumber  market
conditions.   The  Company  is   currently   negotiating   a  revised   plan  of
reorganization with the secured lenders, which may result in significant changes
in the Plan. On November 30, 2000 the Company petitioned the Court to extend the
period of  exclusivity  (the time period in which the Company has the sole right
to present a plan of  reorganization),  which expired on November 30, 2000.  The
Company's motion to extend the period of exclusivity is scheduled to be heard by
the Court on December 22, 2000.


     In October, the Company auctioned the equipment at its Burke mill site. The
assets that were sold in this auction had been  previously  written down and are
included in "Assets held for sale" on the balance sheet.  Proceeds from the sale
of assets totaling approximately $501,000 were received on November 3, 2000, and
are held as "restricted  cash".  As of October 31, 2000,  $500,000 of restricted
cash is held in a certificate of deposit with a 60-day maturity from the date of
purchase.  The  remaining  balance is held as cash on deposit in a money  market
account at the Company's  financial  institution.  Restricted  cash is stated at
cost plus accrued  interest,  which  approximates  market  value.  The Company's
practice is to invest cash with financial institutions that meet certain minimum
capital  surplus  and credit  rating  requirements.  Receipts  from sales of the
assets classified as "Assets held for sale" on the balance sheet will be held as
"restricted  cash" until either a plan of  reorganization  is confirmed or until
their disbursement is ordered by the Court.



                                       15
<PAGE>




     The following table sets forth the percentages  that certain  expenses bear
to net sales, and the period-to-period percentage change for each item:
<TABLE>


                                          INCOME AND EXPENSE ITEMS AS                       PERCENTAGE
                                             A PERCENT OF NET SALES                    INCREASE (DECREASE)
                                   -------------------------------------------    -----------------------------
                                                                                  Three Months      Six Months
                                    Three Months Ended     Six Months Ended           Ended           Ended
                                       October 31,           October 31,            10/31/00         10/31/00
                                   --------------------- ---------------------
                                                                                       to               to
                                      2000       1999       2000       1999         10/31/99         10/31/99
                                   ---------- ---------- ---------- ----------    ------------     ------------
<S>                                 <C>        <C>        <C>        <C>              <C>              <C>
Net sales                           100.0 %    100.0 %    100.0 %    100.0 %          (32.7) %         (32.2) %

Cost of sales                        98.3       94.0      101.4       88.9            (29.7)           (22.7)
                                   ---------- ---------- ---------- ----------    ------------     ------------
Gross Profit (Loss)                   1.7        6.0       (1.4)      11.1            (80.5)              NM


Selling, general and

     Administrative expense           6.4        4.4        6.3        4.6             (2.9)            (7.7)

Reorganization charges                1.6        1.5        1.5        0.7            (28.3)            46.1
                                   ---------- ---------- ---------- ----------    ------------     ------------

  Operating income (loss)            (6.2)       0.1       (9.2)       5.8               NM               NM

Interest expense                     (0.1)      (1.2)      (0.1)      (1.4)           (96.2)           (96.9)
Miscellaneous                         0.2        0.1        0.2        0.1             84.8             24.4
                                   ---------- ---------- ---------- ----------    ------------     ------------

Income (loss) before income taxes    (6.1)      (1.0)      (9.0)       4.5            291.8               NM



Provision for income taxes (benefit)  0.0        0.2        0.0        0.1           (100.0)          (100.0)
                                   ---------- ---------- ---------- ----------    ------------     ------------

Net income (loss)                    (6.1) %    (1.2) %    (9.0)  %    4.4 %          237.8 %             NM %
                                   ========== ========== ========== ==========
NM - Not Meaningful
Note - percentages may not add due to rounding.
</TABLE>


Comparison  of Three  Months  Ended  October 31, 2000 and 1999
--------------------------------------------------------------

     Net sales for the three  months  ended  October  31, 2000  decreased  $19.5
million  (33%),  as compared to the three  months ended  October 31, 1999.  This
decrease was principally  caused by a 27% decrease in lumber sales volume and an
8% decrease in the weighted average net lumber sales price.

                                       16
<PAGE>


     Gross profit for the quarter  ended October 31, 2000 was 1.7% of net sales,
compared  to 6.0% of net sales for the quarter  ended  October  31,  1999.  Unit
manufacturing  costs in the three months ended October 31, 2000  increased 1% as
compared  to  the  three  months  ended  October  31,  1999,  primarily  due  to
market-related production curtailments.

     Selling,  general and administrative expenses for the quarter ended October
31, 2000  decreased by 2.9% as compared to the quarter  ended  October 31, 1999,
excluding  reorganization  charges.  This decrease has resulted from cost-saving
measures, which include the closure of certain facilities.

     Reorganization charges for the quarter ended October 31, 2000 are comprised
primarily of fees for professional services related to the bankruptcy.

     As of October 31, 2000,  the Company had available an estimated $48 million
in federal net operating losses ("NOLs") and $36 million in state NOLs to offset
future taxable income. Due to the bankruptcy, substantial doubt exists regarding
the Company's  ability to fully  utilize  these NOLs.  As a result,  the Company
fully reserved for the NOLs generated  during the three months ended October 31,
2000 and 1999. The Company periodically reviews the above factors and may change
the amount of valuation allowance as facts and circumstances dictate.

Comparison  of Six Months Ended  October 31, 2000 and 1999
----------------------------------------------------------

     Net sales for the six months ended  October 31, 2000  decreased $41 million
(32%),  as compared to the six months ended October 31, 1999.  This decrease was
principally  caused by a 25%  decrease in lumber sales volume and a 10% decrease
in the weighted  average net lumber sales price.

     Gross  profit for the six months  ended  October 31, 2000 was (1.4%) of net
sales,  compared to 11% of net sales for the six months ended  October 31, 1999.
Unit manufacturing  costs for the six months ended October 31, 2000 increased 3%
as  compared  to the  six  months  ended  October  31,  1999,  primarily  due to
market-related production curtailments.

     Selling,  general  and  administrative  expenses  for the six months  ended
October 31, 2000  decreased by 7.7% as compared to the six months ended  October
31, 1999,  excluding  reorganization  charges.  This  decrease has resulted from
cost-saving measures, which include the closure of certain facilities.


                                       17
<PAGE>


     Reorganization  charges  for the six  months  ended  October  31,  2000 are
comprised primarily of fees for professional services related to the bankruptcy.

     As of October 31, 2000,  the Company had available an estimated $48 million
in federal NOLs and $36 million in state NOLs to offset future  taxable  income.
Due to the bankruptcy,  substantial doubt exists regarding the Company's ability
to fully  utilize these NOLs.  As a result,  the Company fully  reserved for the
NOLs  generated  during the six months  ended  October  31,  2000 and 1999.  The
Company  periodically  reviews  the above  factors  and may change the amount of
valuation allowance as facts and circumstances dictate.

Liquidity and Capital Resources
-------------------------------

     Cash and cash equivalents  increased by  approximately  $3.5 million during
the six months ended October 31, 2000 to $6.1 million, excluding $0.9 million in
restricted cash. The increase in cash,  despite  substantial  operating  losses,
resulted  primarily from the combined $13.5 million  decrease in inventories and
accounts  receivable  from both the  curtailment  of operations at the Company's
Burke, Central Point, Morton, and North Powder facilities and a general decrease
in inventories at the Company's other locations. In addition the Company has not
paid  interest  or  principal  on  its  senior  secured  debt  and  subordinated
debentures, or dividends on its Series A Preferred Stock since March 1999.

     For the six months ended  October 31, 2000,  the Company spent $0.5 million
for  capital  improvements  to its  facilities.  The  Company  had  no  material
commitments for capital spending at October 31, 2000.

     The Company is currently operating as a  debtor-in-possession  under a cash
collateral order approved by the Court, pursuant to a number of conditions.  The
cash  collateral  order allows the Company to use funds from  operations and its
$16 million  debtor-in-possession  working  capital  secured  revolving  line of
credit (the "Line of Credit") for normal operating purposes. The cash collateral
order also  grants a security  interest in  substantially  all the assets of the
Company to the  pre-petition  senior secured lenders and  post-petition  secured
debtor-in-possession lenders. The current cash collateral order expires December
31,  2000.  If the  Company is unable to obtain a new cash  collateral  order by
January 1, 2001,  the Company  may not be able to meet its short term  liquidity
needs.  The Company's  pre-petition  senior  secured  creditors have in the past
agreed to such a new cash collateral order during these bankruptcy  proceedings.
However,  there is no guarantee the pre-petition secured creditors will agree to
a new cash collateral order.

     The Company  historically  has not had a line of credit or working  capital
financing  available to it, and,  therefore,  has relied on cash provided by its
operations to fund its working  capital needs. In October of 1999, in connection
with  filing for  voluntary  reorganization,  the Company  obtained  the Line of
Credit,  which will mature  upon the  earlier of April 4, 2001 or the  effective
date of a final order of reorganiation,  to provide for day-to-day liquidity and
seasonal  log  inventory  increases.  As of  October  31,  2000  there  were  no
borrowings  on  the  Line  of  Credit  and   $1,850,000  in  letters  of  credit
outstanding.


                                       18
<PAGE>



The Company may be unable to meet its liquidity needs if it is unable to confirm
a plan of  reorganization  by,  extend the  maturity  date of its Line of Credit
beyond, or obtain alternate financing by, April 4, 2001.

     The Company does not invest in market risk sensitive instruments.


Factors Affecting  Forward-Looking Statements
---------------------------------------------

     The  statements  contained  in  this  report  that  are not  statements  of
historical  fact may include  forward-looking  statements (as defined in Section
27A of the  Securities  Act of 1933,  as amended) that involve a number of risks
and  uncertainties.  Moreover,  from time to time the  Company  may issue  other
forward-looking  statements.  The  following  factors are among the factors that
could  cause  actual  results  to  differ  materially  from the  forward-looking
statements   and  should  be  considered  in  evaluating   any   forward-looking
statements:  the  uncertain  outcome of the  Company's  chapter  11 filing;  the
approval of the Company's plan of reorganization;  adverse operating conditions;
fluctuations in quarterly results; availability of logs; court approval of a new
cash collateral order; renewal and court approval of a revolving line of credit;
technological  change;  manufacturing  risks;  federal  and  state  regulations;
ability to utilize the NOLs; and the additional factors listed from time to time
in the  Company's  SEC  reports,  including,  but not limited to, the  Company's
annual report on Form 10-K for the year ended April 30, 2000.




                                       19
<PAGE>




                           PART II. OTHER INFORMATION

Item 1.           Legal Proceedings

     On September 27, 1999,  TreeSource  Industries,  Inc. and a majority of its
subsidiaries filed a voluntary  petition for reorganization  under chapter 11 of
the U.S.  Bankruptcy Code. The proceeding was filed in the U.S. Bankruptcy Court
for the Western District of Washington in Seattle (the "Bankruptcy  Court"). The
jointly  administered  proceeding is titled:  "TreeSource  Industries,  Inc., et
al.", Case Numbers 99-10932, 99-10937 through 99-10961.

     The Company and its Trask River Lumber  subsidiary were named defendants in
a claim for wages and penalties filed in U.S. District Court for the District of
Oregon on February 17, 1999 (Allen,  Blount,  et al., vs. WTD Industries,  Inc.,
Trask  River  Lumber and Bruce L.  Engel).  Although  the case was stayed by the
Company's  chapter 11 filing,  the plaintiffs  filed a class Proof of Claim. The
Court has agreed to certify a class and the parties  have agreed to a settlement
of the class  member's  wage  claims.  Any  claims  allowed by the Court will be
treated  in  accordance  with the  terms  of the  Company's  chapter  11 plan of
reorganization.

     The Company and its Central Point Lumber  subsidiary were named  defendants
in a claim for damages filed in Circuit Court of the State of Oregon for Jackson
County on August 27, 1999. The plaintiff alleges retaliatory  wrongful discharge
and loss of wages as a result of filing a worker's  compensation claim.  (Donald
D. Leiter II vs.  TreeSource  Industries,  Inc. and Central Point Lumber).  This
action is currently stayed due to the Company's chapter 11 filing.

Item 3.           Defaults Upon Senior Securities

     Due to the Company's  inability to meet certain of its financial  covenants
and its filing for  reorganization,  the Company is not in  compliance  with its
obligations  under its senior secured debt agreement and ceased making  interest
and  principal  payments on its senior  secured debt in March 1999. On September
27, 1999 the Company filed for voluntary  reorganization under chapter 11 of the
U.S.  Bankruptcy  Code in the U.S.  District  Court of the  Western  District of
Washington:  In re TreeSource  Industries,  Inc., et al (Case Nos.  99-10932 and
99-10937  through  99-10961).  As of November 30, 2000, the Company has not paid
eight  consecutive  quarterly  dividend  payments due to holders of its Series A
Preferred Stock, totaling approximately  $4,541,000 and is in arrears on payment
of   approximately   $7,700,000   in  interest  on  its  senior   secured  debt.
Additionally,  the Company is in arrears on payment of approximately $178,000 in
interest  to  non-affiliated  parties  on its 8%  unsecured  senior  notes as of
November  30, 2000.  During the  reorganization  period,  the Company is allowed
relief from payment of interest charges on all pre-petition debt but is required
to accrue  interest  expense on claims that are,  in the opinion of  management,
fully secured. No interest expense has been recorded since September 27, 1999 on
the  pre-petition  senior secured debt or unsecured  senior  subordinated  debt,
because management believes the claims of these debt holders are under-secured.


                                       20
<PAGE>


Item 6.           Exhibits and Reports on Form 8-K

         (a)  Exhibits

              The Index to Exhibits is located on page 23.

         (b)  Reports on Form 8-K

              No reports on Form 8-K were filed during the quarter ended October
              31, 2000.



                                       21
<PAGE>






                                   SIGNATURES

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






                                          TreeSource Industries, Inc.
                                          (Registrant)

                                          /s/ Jess R. Drake
                                          -----------------------------------
                                          Jess R. Drake
                                          President, Chief Executive Officer
                                          and Director

                                          /s/ Robert W. Lockwood
                                          -----------------------------------
                                          Robert W. Lockwood
                                          Vice President - Finance and Chief
                                          Financial Officer







December 14, 2000




                                       22
<PAGE>



                           TreeSource Industries, Inc.

                                Index to Exhibits


                                                                      Sequential
                                                                        Number
                                                                        System
                                                                         Page
                                                                        Number


3.1       Fourth  Restated  Articles of  Incorporation  of  Registrant
          adopted effective November 27, 1992, as amended(1)

3.2       Second Restated Bylaws of the Registrant  adopted  effective
          November 27, 1992(2)

27        Financial Data Schedule(3)




















(1)       Incorporated  by  reference  to the  exhibit  of  like  number  to the
          Registrant's  quarterly  report  on Form  10-Q for the  quarter  ended
          October 31, 1998.

(2)       Incorporated  by  reference  to the  exhibit  of  like  number  to the
          Registrant's  annual  report on Form 10-K for the year ended April 30,
          1993.

(3)       This  schedule has been  submitted in  electronic  form  prescribed by
          EDGAR.