FORM 10-QSB

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



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


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


             For  the  quarterly   period  ended September 30, 1998.

                           Commission File No. 1-8129.


                              US 1 INDUSTRIES, INC.
             (Exact name of registrant as specified in its charter)


          Indiana                                            95-3585609
(State of Incorporation)                  (I.R.S. Employer Identification No.)



   1000 Colfax, Gary, Indiana                                   46406
(Address of principal executive offices)                      (Zip Code)

      Registrant's telephone number, including area code: (219) 944-6116

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


As of  November  4, 1998,  there  were  10,618,224  shares of common  stock were
outstanding.


TOTAL OF SEQUENTIALLY
NUMBERED PAGES:    14



<PAGE>





Part I

Item 1. FINCNCIAL STATEMENTS.




                     US 1 INDUSTRIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
              September 30, 1998 (UNAUDITED) AND DECEMBER 31, 1997

ASSETS
                                                   September 30,   December 31,
                                                         1998           1997
                                                     (Unaudited)
CURRENT ASSETS:
   Cash                                             $         0    $   298,079
   Accounts receivable--trade less allowance for
     doubtful accounts of $369,808 and $195,298       4,266,554      5,066,256
   Other receivables                                    419,135        336,919
   Deposits                                             146,643        154,068
   Prepaid expenses                                      69,365         83,731
                                                    ------------   ------------
      Total current assets                            4,901,697      5,939,053
                                                    ------------   ------------
FIXED ASSETS:
   Equipment                                            298,796         52,996
   Less accumulated depreciation and amortization       (76,778)       (12,682)
                                                    ------------   ------------
      Net fixed assets                                  222,018         40,314
                                                    ------------   ------------
ASSETS HELD FOR SALE:
   Land                                                 195,347        423,226
   Valuation allowance                                 (141,347)      (141,347)
                                                    ------------   ------------
      Net assets held for sale                           54,000        281,879
                                                    ------------   ------------
TOTAL ASSETS                                        $ 5,177,715    $ 6,261,246
                                                    ============   ============


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





<PAGE>



                     US 1 INDUSTRIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
               SEPTEBER 30, 1998 (UNAUDITED) AND DECEMBER 31, 1997

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)

                           SEPTEMBER 30, DECEMBER 31,
                                    1998 1997
                                                     (Unaudited)
CURRENT LIABILITIES:
   Accounts payable                                 $ 2,533,003    $ 3,181,713
   Accrued expenses                                     160,237        137,454
   Short-term debt                                    2,899,683      3,292,945
   Insurance and claims                                 221,533        241,607
   Accrued interest                                     266,758        140,824
   Accrued compensation                                  16,734         38,302
   Estimated fuel and other taxes                        80,202        273,901
                                                     -----------    -----------
      Total current liabilities                       6,178,151      7,306,746
                                                     -----------    -----------
LONG-TERM DEBT                                        2,566,028      2,599,815

REDEEMABLE PREFERRED STOCK,
     authorized 5,000,000 shares; no par value,
     Series A shares outstanding: 1,094,224
     Liquidation preference $0.3125 per share.          807,254        753,254

SHAREHOLDERS' EQUITY (DEFICIENCY):

   Common stock authorized 20,000,000 shares;
     no par value; shares outstanding:
     September 30, 1998 and December 31, 1997 were
     10,618,224 and 10,573,780, respectively.        40,844,296     40,844,296
   Accumulated deficit                              (44,957,872)   (45,036,724)
   Accumulated other comprehensive loss                (260,141)      (206,141)
                                                    ------------    ----------
      Total shareholders' equity (deficiency)        (4,373,717)    (4,398,569)
                                                    ------------    ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY          $ 5,177,715    $ 6,261,246
                                                    ============   ===========


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




<PAGE>

<TABLE>


                                             US 1 INDUSTRIES, INC. AND SUBSIDIARIES
                                         CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                  THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
<CAPTION>

                                                Three Months Ended           Nine Months Ended
                                                  September 30,                  September 31,
                                                 1998          1997            1998         1997
                                                 ----          ----            ----         ----
<S>                                       <C>           <C>           <C>             <C>

OPERATING REVENUES                        $ 7,681,683   $ 6,440,892   $  22,889,671   $17,096,558
                                          ------------  ------------    ------------  ------------
OPERATING EXPENSES:
   Purchased transportation                 5,758,520     5,146,788      17,437,037    13,260,572
   Insurance and claims                       242,788       190,042         744,513       569,596
   Salaries, wages, and other                 297,152       314,872         820,846       926,630
   Commissions                                808,536       616,118       2,352,806     1,662,373
   Operating supplies and expense             350,944       188,585         775,718       619,111
   Operating taxes and licenses                13,810        34,952          52,497       101,608
   Communications and utilities                21,674        36,424          77,272       106,311
   Rents                                       21,390        14,945          63,694        62,586
   Depreciation and amortization               58,543         1,734          64,096         5,780
                                          ------------  ------------    ------------   -----------
     Total operating expenses               7,573,357     6,544,460      22,388,449    17,314,567
                                          ------------  ------------    ------------   -----------
OPERATING INCOME                              108,326      (103,568)        501,222      (218,009)
                                          ------------  ------------    ------------   -----------
NON-OPERATING INCOME (EXPENSE):
   Interest income                              4,748           473           5,527         1,809
   Interest expense                          (189,448)      (93,836)       (518,787)     (253,353)
   Other income                                14,516        (8,876)         29,835        39,435
                                          ------------  ------------    ------------   -----------
     Total non-operating (expense)           (170,184)     (102,239)       (483,425)     (212,109)
                                          ------------  ------------    ------------   -----------
NET INCOME (LOSS) BEFORE
    EXTRAORDINARY ITEM                        (61,858)     (205,807)         17,797      (430,118)

EXTRAORDINARY ITEM
    GAIN ON SALE OF REAL ESTATE                61,055                        61,055
                                          ------------   ----------     ------------   ----------
NET INCOME (LOSS)                                (803)     (205,807)         78,852      (430,118)

DIVIDENDS ON PREFERRED SHARES                  18,000        15,307          54,000
45,307
                                          ------------   -----------    ------------   -----------
NET INCOME (LOSS) TO COMMON SHARES            (18,803)     (221,114)         24,852      (475,425)
                                          ============  ============    ============  ============

EARNINGS (LOSS) PER COMMON SHARE
      Continuing operations                    (0.006)       (0.02)          0.002        (0.045)
      Preferred Dividend                       (0.002)       (0.001)        (0.006)       (0.005)
      Extraordinary item                        0.006                        0.006
                                          ------------  ------------    ------------  ------------
      Net Income (Loss) per common share
               From continuing operations      (0.002)       (0.021)         0.002        (0.050)
                                          ============  ============    ============  ============

WEIGHTED AVERAGE NUMBER OF COMMON SHARES   10,618,224    10,615,936      10,618,224    10,615,936
                                          ============  ============    ============  ============
</TABLE>


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



<PAGE>



                     US 1 INDUSTRIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                  NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                   (UNAUDITED)

                                                Nine Months Ended September 30,
                                                           1998         1997

CASH FLOWS FROM OPERATING ACTIVITIES:

Net Income (loss)                                      $  17,797    $(430,118)
Adjustments to reconcile net income (loss) to net
  cash provided from (used for) operations:
  Depreciation and amortization                           64,069        5,780
  Gain on Sale of Real Estate                             61,055
    Changes in operating assets and liabilities:
    Accounts receivable - trade                          799,702    (2,382,447)
    Other receivables                                    (82,216)     (545,554)
    Prepaid assets                                        14,366       (63,484)
    Deposits                                               7,425          (234)
    Accounts payable                                    (648,710)    1,261,232
    Accrued expenses                                      22,783         5,939
    Accrued interest                                     125,934        40,472
    Insurance and claims                                 (20,074)       32,217
    Other accrued compensation                           (21,568)      (11,420)
    Fuel and other taxes                                (193,699)      (38,294)
                                                        ----------   ----------
   Net Cash used for operating activities                 58,023   (2,125,911)
                                                        ----------   ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property and equipment                   (245,800)      (47,525)
  Proceeds from the sale of Real Estate                 229,879
                                                        ----------   ----------
   Net cash used for investing activities                 17,921       (47,525)
                                                        ----------   ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net borrowings under line of credit                   (393,262)    1,453,566
  Proceeds from other related party long term loans      (33,787)    1,629,419
  Repayment of other related party short term loans                   (654,800)
  Proceeds from issuance of common stock                                20,000
                                                        ----------   ----------
   Net cash provided from financing activities          (427,049)    2,448,185
                                                        ----------   ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS    (298,079)      274,749
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD           298,079       225,541
                                                        ----------   ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD              $        0     $ 500,290
                                                        ==========   ==========


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

<PAGE>



                     US 1 INDUSTRIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997


1. BASIS OF PRESENTATION

The  accompanying  consolidated  balance  sheet as of September 30, 1998 and the
consolidated  statements of operations and cash flows for the nine month periods
ended  September  30,  1998 and 1997  are  unaudited,  but,  in the  opinion  of
management,  include all  adjustments  necessary for a fair  presentation of the
financial position and the results of operations for such periods.  The December
31, 1997 balance sheet data was derived from audited financial statements. These
statements should be read in conjunction with the Company's audited consolidated
financial  statements for the year ended December 31, 1997 and the notes thereto
included in the Company's Annual Report on Form 10-KSB.  Certain information and
footnote  disclosures  normally  included in  financial  statements  prepared in
accordance with generally accepted  accounting  principles have been omitted, as
permitted  by  the  requirements  of the  Securities  and  Exchange  Commission,
although the Company  believes that the disclosures  included in these financial
statements are adequate to make the information  not misleading.  The results of
operations  for the  nine  months  ended  September  30,  1998  and 1997 are not
necessarily indicative of the results for a full year.


2. GOING CONCERN

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern.  The Company has  experienced
operating  losses and negative cash flows in recent years. At September 30, 1998
and December 31, 1997, the Company's  current  liabilities  exceeded its current
assets by $1.2  million and $1.3  million,  respectively.  While this  situation
continues to improve, the Company's future depends heavily on revenue growth and
control of  operating  expenses so that  sufficient  cash flow is  generated  to
satisfy its indebtedness.  Revenue growth and the resulting  improved cash flows
would  enable the Company to reduce its third party debt and improve its working
relationships with potential agents and independent contractors.  The Company is
exploring  options to raise capital and various other potential  transactions to
improve  this  situation.  Recent  poor  results  and  negative  cash flows from
operations,  continue to raise substantial doubts about the Company's ability to
continue  as a going  concern.  The  financial  statements  do not  include  any
adjustments that might result from the outcome of this uncertainty.



<PAGE>


                     US 1 INDUSTRIES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)



3.       EARNINGS PER COMMON SHARE

The Company  calculates  earnings per share in accordance  with the Statement of
Financial  Accounting  Standards  No. 128  effective for both interim and annual
financial statement periods. As required by this statement,  the company adopted
the standards for computing and presenting  earnings per share (EPS) and for all
prior period earnings per share data presented.

Following are the reconciliation of the numerators and denominators of the basic
and diluted EPS. There were no outstanding options these periods.



Numerator                                              1998            1997
       Income (Loss) from continuing operations   $   17,797     $  (103,986)
       Dividends on preferred shares                 (54,000)        (30,602)
                                                     --------        --------
       Net Income (Loss) available to common         (36,203)       (134,588)
          Shareholders for basic and diluted EPS
                                                     --------       ---------
Denominator
       Weighted average common shares              10,618,224      10,573,780
          Outstanding for basic and diluted EPS






4.        SHORT-TERM DEBT

Short-term debt at September 30, 1998 and December 31, 1997 comprises:


                                          September 30,        December 31,
                                                 1998               1997
                                              ----------         ----------
Line of credit                                $2,842,522         $3,188,581
Current portion of long-term debt                 57,161             54,364
Note on Kansas City Property                                         50,000
                                              ----------         ----------
         Total                                $2,899,683         $3,292,945
                                              ==========         ==========

Under its  revolving  line of credit  agreement  the  Company may borrow up to a
maximum  of  $3,300,000.  Borrowings  are  limited to 80% of  eligible  accounts
receivable  and bear interest at the prime rate (8.00% at September 30, 1998 and
8.25% at December 31,  1997,  respectively)  plus 2.75% and 3.25%  respectively.
Advances under the line of credit agreement are  collateralized by the Company's
accounts receivable, property and other assets.

The line of credit is subject to  termination  upon  various  events of default,
including failure to remit timely payments of interest, fees and principal,  any
adverse  change in the business of the Company or the  insecurity  of the lender
concerning  the ability of the Company to repay its  obligations as and when due
or failure to meet certain financial  covenants.  Financial  covenants  include:
minimum net worth  requirements,  total debt  service  coverage  ratio,  capital
expenditure  limitations,  restrictions on compensation  levels of key officers,
and prohibition of additional  indebtedness without prior  authorization.  As of
December  31, 1997 the Company was in  violation  of the debt  service  coverage
ratio covenant. At September 30, 1998, the company is not in violation of any of
the financial covenants of the agreement as amended.






<PAGE>


                     US 1 INDUSTRIES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)




5.  LONG-TERM DEBT

Long-term debt at September 30, 1998 and December 31, 1997 comprises:

                                                  September 30,   December 31,
                                                       1998          1997
                                                     ---------   ------------
Mortgage note payable to August Investment
  Partnership  collateralized by land,
  interest at prime + .75%,  interest only
  payments  required,  principal balance
  due July 31, 1999                                $  250,000     $  250,000

Mortgage note payable to  Antonson/Kilber
 collateralized  by land,  interest at prime
 + .75%, interest only payments required,
 principal balance due July 3, 2003                   500,000        500,000

Mortgage note payable to AIFE,
 collateralized by land,  interest at 9%, monthly
 repayments of $5,000, including interest,
 remaining principal balance due July 31, 1999        229,971        221,475

TIP trailer settlement payments of principal
 only of $1,000 per month, principal due
 February, 2003                                        74,400         83,400

Due to August  Investment  Partnership
 interest at prime + .75%,  interest only
 payments required, principal balance due
 January, 1999                                        100,000        100,000

Due to Antonson/Kibler interest at prime + .75%,
 interest only payments required, principal
 balance due January, 1999                          1,468,818      1,499,304
                                                   ----------       --------
     Total debt                                     2,684,244      2,654,179
Less current portion                                   57,161         54,364
                                                   ----------      ---------
Total long-term debt                              $ 2,566,028   $  2,599,815
                                                   ==========     ==========




<PAGE>


                     US 1 INDUSTRIES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


7.  COMMITMENTS  AND CONTINGENCIES

Over the past few years,  the Company has had a  significant  number of lawsuits
instituted or threatened against it as a result of its poor financial  condition
and its  inability to meet  certain  financial  obligations.  For the most part,
these suits have been  settled  through  cash  payments  of a reduced  amount or
through the  institution of payment plans.  The undisputed  claims that have not
been settled are reflected as liabilities in the Company's financial  statements
and are included in accrued  expenses in the accompanying  consolidated  balance
sheets.


The Company  believes  it has  adequately  reserved  for these  claims  however,
additional  liability is possible and the ultimate  disposition  of these claims
may have a material adverse effect on the Company's results of operations,  cash
flows and financial position.

The Company  carries  insurance for public  liability and property  damage,  and
cargo  loss  and  damage  through  various  programs.  The  Company's  insurance
liabilities  are based upon the best  information  currently  available  and are
subject  to  revision  in  future  periods  as  additional  information  becomes
available. Management believes it has adequately provided for insurance claims.



<PAGE>




Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATION.

Results of Operations

The consolidated  financial  statements and related notes contained elsewhere in
this Form  10-QSB and in the  Company's  Form  10-KSB for its fiscal  year ended
December 31, 1997 are essential to an  understanding  of the comparisons and are
incorporated  by reference into the discussion  that follows.  The  consolidated
financial  statements have been prepared assuming that the company will continue
as a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty. See note 2.

Three month period 1998 Compared to 1997

The  Company's  operating  revenues  increased  from $6.4  million for the three
months ended  September 30, 1997 to $7.7 million for the same period in 1998, an
increase of 19%. The increase in operating  revenues  resulted from the addition
of Carolina National  Transportation in January 1997 and their continued growth.
The total operating expenses increased from $ 6.6 million to $ 7.6 million. Most
of the components of operating expenses increased proportionally to the increase
in sales except "Operating  Supplies and Expense".  The increase in this expense
was due to the  closure  of the Sugar  Creek  office of  Keystone  Lines.  Their
principal  customer  went out of  business  during the  second  quarter of 1998.
During the third quarter  Keystone  wrote off the  receivable of that  customer.
Operating Expense increased approximately $ 110,000 as a result.

Control of expenses  improved such that operating  income (loss) improved from a
deficit $(103,568) to a positive $ 108,326.

During the third quarter ended September 30, 1998 Carolina  National lost one of
it's larger  agents and closed the office of another.  The result was that sales
were $700,000 less than planned for and the operating income was approximately $
90,000 less than expected.







<PAGE>




Nine Month Period 1998 Compared to 1997

The Company's operating revenues increased from $17.1 million for the first nine
months of 1997 to $22.8  million  for the same period in 1998.  The  increase in
operating   revenues   resulted   from  the  start  up  of   Carolina   National
Transportation in January 1997.

Three of the companies expense items tend to vary in direct proportion to sales.
They are Purchased  Transportation,  Commissions to agents,  and Insurance.  The
rest of the expenses tend to remain fixed relative to sales.

During the first 9 months of 1997  variable  expenses  were 89.5% of sales while
during the first 9 months of 1998 variable  expenses were 90.1% of sales.  Fixed
expenses  were $1.8 million both  periods.  The  increased  sales less  variable
expenses  resulted in operating  (loss) of $ (114,441) for 1997 and an operation
income of $ 392,896 for 1998.

Interest expense increased from 159,000 in 1997 to 329,000 in 1998. This was due
to  increased  borrowing  to fund the  startup of  Carolina  National.  Carolina
National  has  reached the point where it is close to  breakeven  so  additional
borrowing to fund losses and startup expenses are not expected.

Year 2000 Compliance

The   inability   of   computers,   software  and  other   equipment   utilizing
microprocessors  to  recognize  and properly  process  data fields  containing a
two-digit year is commonly referred to as the year 2000 compliance issue. As the
year 2000 approaches,  such systems may be unable to accurately  process certain
date-based information.

The Company  expects to begin the  conversion  and  modification  and testing of
existing systems and software in the near future.  The company also has plans to
communicate  with customers,  vendors and other third parties with which it does
significant  business to determine their year 2000 compliance  readiness.  There
can be no  guarantee  that  our  systems  or  that  of  other  entities  will be
sufficiently compliant and not have an adverse effect on the Company

Subsequent Events

A possible  defalcation  has been  discovered in the Gulfport office of Keystone
Brokerage   a  company   subsidiary.   Management   and  their   attorneys   are
investigating.  The maximum the loss could be is $ 200,000.  Management  has not
been able to accurately determine the extent of the loss at this time.


Future Prospects

The  Company's  management  remains  cautiously   optimistic  about  its  future
prospects. Revenue for each month in 1998 has increased over revenue in the same
month of the prior year.  While Carolina  National closed two offices during the
third quarter,  they have subsequently  opened two new offices and the prospects
for  additional  offices  is good.  However,  the  Company's  future  depends on
continuing to increase its revenues,  improving its control over operations, and
bringing its new operations up to more profitable levels.

The company has  excessive  debt.  Management is exploring  the  possibility  of
converting debt to equity as one way to improve the situation.  The common stock
of US1,  which was delisted  from the New York Stock  Exchange  during the third
quarter is currently  trading on what is called the "Bulletin Board" market.  In
order for the stock to trade on the "NASDAQ Small Capitalized  Cos." market",  a
shareholders  equity of $ 1,250,000 is one requirement.  Management is exploring
steps that would enable US1 to qualify.

<PAGE>




Liquidity and Capital Resources

As of September 30, 1998, the Company's  financial position remains  precarious.
The  Company  had a deficit  in  shareholders'  equity of $4.6  million  and its
current liabilities of $6.0 million exceeded its current assets by $1.3 million.
The Company has experienced  significant operating losses in prior years leaving
the Company in its current position.  The Company's  borrowing from the partners
of AIP and the Company's  president to alleviate the current cash  shortages has
enabled the Company to continue in operation.  Accounts  receivable were reduced
by $ 799,702 due to  increased  collection  efforts.  Funds  obtained  from that
effort  together  with  proceeds  from  the  sale of real  estate,  net  income,
depreciation,  and other items were used to reduce accounts payable by $ 648,710
and reduce other loans by $ 365,994.  While the Company's  current  situation is
not good, plans are to continue to grow the Company and improve profits.


Shareholders  and  potential  investors  in the Company are  cautioned  that the
Company's  financial  condition  remains  precarious.  An increase in  operating
performance is essential to its long-term survival. Unfortunately,  there can be
no assurance that this will be achieved.



<PAGE>




PART II. OTHER INFORMATION


Item 6(b).  Reports on Form 8-K

One Report on Form 8-K has been filed  during the  quarter.  It  pertains to the
resignation of Coopers & Lybran as the Companies auditor.



SIGNATURES

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


US 1 Industries, Inc.


Michael E. Kibler
President



Harold Antonson
Chief Financial Officer

November 15, 1998