<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q



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

              For the Quarterly Period Ended September 30, 1998
                                       OR

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

           For the transition period from __________ to __________.

                         Commission File Number 0-10096

                            STRIKER INDUSTRIES, INC.

               (Exact name of Company as specified in its charter)

           DELAWARE                                  76-0327659
 (state or other jurisdiction of      (I.R.S. Employer Identification Number)
 incorporation or organization)

                            ONE RIVERWAY, SUITE 2450
                              HOUSTON, TEXAS 77056
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (713) 622-4092
                (Company's telephone number, including area code)

                                 NOT APPLICABLE
                   (Former name if changed since last report)

Indicate by check mark whether the Company (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 Company 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 September 30, 1998, there were 4,370,922 shares of Common Stock, par value
$0.50 per share, outstanding and no shares of Preferred Stock, par value $0.50
per share, were outstanding.




                                  Page 1 of 18
<PAGE>   2





                     INDEX TO QUARTERLY REPORT ON FORM 10-Q



<TABLE>
<CAPTION>
PART I.              FINANCIAL INFORMATION                                  PAGE NO.
-------              ---------------------                                  --------
<S>          <C>                                                            <C>

Item 1.      Financial Statements

             Consolidated Balance Sheet                                       3

             Consolidated Statements of Operations                            4

             Consolidated Statements of Cash Flows                            5

             Notes to Consolidated Financial Statements                       6

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



PART II.     OTHER INFORMATION
--------     -----------------

Item 1.      Legal Proceedings                                               16

Item 2.      Changes in Securities                                           16

Item 3.      Defaults Upon Senior Securities                                 16

Item 4.      Submission of Matters to a
             Vote of Security Holders                                        16

Item 5.      Other Information                                               16

Item 6.      Exhibits and Reports on Form 8-K                                17


SIGNATURES                                                                   18
----------
</TABLE>





                                  Page 2 of 18
<PAGE>   3
                    STRIKER INDUSTRIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                      September 30,    December 31,
            Assets                                                        1998             1997
                                                                      ------------     ------------
<S>                                                                   <C>              <C>
Current assets:
   Cash and cash equivalents                                          $     84,886          151,941
   Restricted cash                                                          71,963             --
   Accounts receivable:
     Trade                                                                 195,335
     Employee                                                               65,554          180,000
     Other, net of bad debt allowance of 489,671
        for December 31, 1997                                                4,006            4,006
   Inventories:
     Raw materials                                                          20,298            1,365
     Finished goods                                                        142,209
   Prepaid expenses and other current assets                               222,570          158,130
                                                                      ------------     ------------

              Total current assets                                         806,821          495,442

Property and equipment, net                                             13,659,899       13,988,832

Deferred costs and other, net                                              295,522           72,782
                                                                      ------------     ------------

              Total assets                                            $ 14,762,242       14,557,056
                                                                      ============     ============


            Liabilities and Stockholders' Deficit

Current liabilities:
   Current portion of long term debt                                  $    441,755          746,624
   Current obligations under capital leases                                  7,854            7,650
   Trade accounts payable                                                2,546,872        2,875,965
   Accrued liabilities                                                     938,752          703,113
                                                                      ------------     ------------
              Total current liabilities                                  3,935,233        4,333,352

Long-term liabilities:
   Zero coupon notes payable                                            13,542,523       10,507,965
   Term loans, net of current portion                                      677,299          920,450
   Subordinated term loan, net of current portion                          742,797             --
   Capital lease obligation                                                  4,956           10,919
   Subsidiary equity repurchase obligation                                 451,633             --
   Minority Interest in subsidiary                                       1,650,761             --
                                                                      ------------     ------------

              Total long-term liabilities                               17,069,969       11,439,334
                                                                      ------------     ------------

Stockholders' deficit:
   Preferred stock, $.20 par value, 5,000,000 shares authorized,
     none issued                                                              --               --
   Common stock, $0.50 par value, 25,000,000 shares authorized,
     4,370,922 shares issued and outstanding                             2,187,862        2,187,862
   Stock subscriptions receivable                                         (275,000)        (275,000)
   Warrants                                                                    667               --
   Additional paid-in capital                                           12,879,413       14,938,085
   Accumulated deficit                                                 (20,595,365)     (17,632,301)
   Foreign currency translation adjustment                                (365,537)        (359,276)
   Less treasury stock at cost; 4,800 shares                               (75,000)         (75,000)
                                                                      ------------     ------------
              Total stockholders' deficit                               (6,242,960)      (1,215,630)

Commitments and contingencies
                                                                      ------------     ------------
              Total liabilities and stockholders' deficit             $ 14,762,242       14,557,056
                                                                      ============     ============
</TABLE>


See accompanying notes to consolidated financial statements.




                                  Page 3 of 18
<PAGE>   4

                   STRIKER INDUSTRIES, INC., AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                For the periods ended September 30, 1998 and 1997


<TABLE>
<CAPTION>
                                                                    For the Quarter                   Year to Date
                                                                   Ended September 30,             Ended September 30,
                                                                ---------------------------     ---------------------------
                                                                   1998            1997            1998            1997
                                                                -----------     -----------     -----------     -----------
<S>                                                             <C>             <C>             <C>             <C>
Revenues                                                        $   267,658     $    11,262     $   267,658     $ 1,506,399

Cost of sales                                                       902,982         234,960       1,915,309       2,582,767
                                                                -----------     -----------     -----------     -----------


            Gross margin                                           (635,324)       (223,698)     (1,647,651)     (1,076,368)

Selling, general and administrative expenses                        494,932         783,549       1,343,727       2,557,138
                                                                -----------     -----------     -----------     -----------

            Operating loss                                       (1,130,256)     (1,007,247)     (2,991,378)     (3,633,506)
                                                                -----------     -----------     -----------     -----------

Other income (expense):
    Interest expense, net                                          (243,412)       (241,689)       (586,291)     (1,225,949)
    Gain on fully reserved debt settlement                             --              --           110,380            --
    Minority interest in net loss of consolidated subsidiary        177,647            --           407,911            --
    Other income/(expense)                                             --              --            96,315            --
                                                                -----------     -----------     -----------     -----------

            Loss before income taxes                             (1,196,021)     (1,248,936)     (2,963,063)     (4,859,455)

Income taxes                                                           --              --              --              --
                                                                -----------     -----------     -----------     -----------

            Net loss                                            $(1,196,021)    $(1,248,936)    $(2,963,063)    $(4,859,455)
                                                                ===========     ===========     ===========     ===========

    Basic and diluted net loss per common share                 $      (.27)    $      (.29)    $      (.68)    $     (1.11)
                                                                ===========     ===========     ===========     ===========
</TABLE>



See accompanying notes to consolidated financial statements.






                                  Page 4 of 18
<PAGE>   5


                   STRIKER INDUSTRIES, INC., AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

              For the nine months ended September 30, 1998 and 1997


<TABLE>
<CAPTION>
                                                                             Nine Months Ended September 30,
                                                                             -------------------------------
                                                                                  1998              1997
                                                                             -------------     -------------
<S>                                                                          <C>               <C>        
Cash flows from operating activities:
    Net loss                                                                    (3,370,975)      (4,859,455)
    Adjustments to reconcile net loss to net cash
      used in operating activities:
        Depreciation                                                               633,271          505,529
        Amortization                                                               399,557          717,081
        Changes in assets and liabilities:
          Increase in accounts receivable                                          (80,889)        (120,963)
          (Increase) decrease in inventories                                      (161,142)         181,801
          (Increase) decrease in prepaid expenses and other current assets         (90,165)         101,801
          Increase (decrease) in accounts payable and accrued liabilities         (247,374)         758,776
                                                                              ------------     ------------
                 Net cash used in operating activities                          (2,917,717)      (2,715,430)
                                                                              ------------     ------------

Cash flows from investing activities:
    Purchases of property and equipment                                           (304,339)        (131,826)
    Proceeds from disposition of property and equipment                               --             75,000
    Purchase of certificate of deposit                                             (71,963)            --
                                                                              ------------     ------------
                 Net cash used in investing activities                            (376,302)         (56,826)
                                                                              ------------     ------------
Cash flows from financing activities:
    Repayment of original issue discount notes                                    (373,652)      (1,978,000)
    Proceeds from Canadian subordinated loan agreement                           1,082,861             --
    Proceeds from revolving lines of credit                                           --          1,807,562
    Repayment of revolving lines of credit                                            --         (1,895,069)
    Repayments of fixed asset line of credit                                      (233,301)        (332,400)
    Principal payments on capital leases                                            (5,759)         (25,637)
    Deferred and other costs paid                                                 (223,852)        (167,528)
    Proceeds from the issuance of warrants                                             667             --
    Proceeds from subordinated notes payable                                          --          5,081,532
    Proceeds from issuance of zero coupon notes payable                          2,980,000             --
                                                                              ------------     ------------
                 Net cash provided by financing activities                       3,226,964        2,490,460
                                                                              ------------     ------------
Net increase (decrease) in cash                                                    (67,055)        (281,796)

Cash and cash equivalents, beginning of period                                     151,941          292,485
                                                                              ------------     ------------
Cash and cash equivalents, end of quarter                                           84,886           10,689
                                                                              ============     ============
</TABLE>


See accompanying notes to consolidated financial statements.





                                  Page 5 of 18
<PAGE>   6

                   STRIKER INDUSTRIES, INC., AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
Striker Industries, Inc., its wholly owned subsidiaries and its 75 percent
ownership interest in the accounts of its indirect Canadian subsidiary. All
material intercompany accounts and transactions have been eliminated. The
minority interest reflected on the Balance Sheet and in the Statement of
Operations reflect a 25% equity position of an unrelated third party in the
Company's indirect Canadian Subsidiary, Striker Paper Canada, Inc. only.

Interim Financial Information

The consolidated interim financial statements included herein are unaudited;
however, they include all adjustments of a normal recurring nature which, in the
opinion of management, are necessary to present fairly the consolidated
financial position of the Company at September 30, 1998, the consolidated
results of operations for the three and nine months ended September 30, 1998 and
1997 and cash flows for the nine months ended September 30, 1998 and 1997.

Earnings (Loss) Per Common Share

In 1997, the Company adopted the provisions of SFAS No. 128, "Earnings Per
Share." SFAS No. 128 established standards for computing and presenting income
(loss) per common share. It replaces primary and fully diluted income (loss) per
common share with basic and diluted income (loss) per common share. Basic income
(loss) per common share excludes dilution and is computed by dividing income
(loss) available to common stockholders by the weighted average number of common
shares outstanding for the period. Diluted income (loss) per common share
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock. When dilutive, stock options and
warrants are used in the computation of diluted earnings (loss) per common share
as share equivalents using the treasury stock method.

The number of weighted average shares outstanding used in computing the earnings
(loss) per share was 4,370,922 for the three and nine months ended September 30,
1998 and 4,365,026 and 4,365,026 for the three and nine months ended September
30, 1997, respectively. Basic and diluted earnings (loss) per share are the same
for each of these quarters.

Cash Flow Information

For purposes of reporting cash flows, cash and cash equivalents include cash and
short-term investments which mature within three months of their date of
purchase.



                                  Page 6 of 18
<PAGE>   7
2.   DEBT:

<TABLE>
<CAPTION>
The Company's debt consisted of the following at:          September 30,       December 31,
                                                               1998               1997
                                                           --------------     --------------
<S>                                                        <C>                <C>           
      Zero Coupon Notes, 2.25% due 12/31/05                $   14,323,500     $   10,702,500
      Unamortized Discount on Zero Coupon Notes                  (780,977)          (194,535)
      Original Issue Discount Notes                                37,551            380,276
      Stephens Facility:
         Term loan, prime (8.5%) +3.5%, due 5/31/01               446,000            534,650
         Revolving line of credit, prime + 3.5%                    61,004             23,148
      Canadian Facilities:
         Term loan, prime (6.0%)+ 2.5% due 4/01/01                574,499            729,000
         Subordinated term loan, 20.0% due 4/14/01              1,082,861
         Unamortized Discount of
         subordinated term loan                                  (340,064)
      Capitalized lease obligations bearing interest at
         rates from 10% to 24% maturing between 1998
         and 2000, secured by underlying machinery
         and computer equipment                                    12,810             18,569
                                                           --------------     --------------
                                                               15,417,184         12,193,608
      Less- Current maturities                                   (449,609)          (754,274)
                                                           --------------     --------------
                                                           $   14,967,575     $   11,439,334
                                                           ==============     ==============
</TABLE>

CREDIT FACILITIES:

On March 13, 1998, the Company (as guarantor) and its indirect Canadian
subsidiary, Striker Paper Canada, Inc. ("Striker Canada") accepted a
supplemented and amended Offer of Finance from Striker Canada's term loan
lender, Laurentian Bank of Canada. Under the amended Offer of Finance, the
maturity date on Striker Canada's term loan facilities with the lender remains
April 1, 2001. In addition, Striker Canada was required to prepay all principal
and interest requirements of the term loans through July 31, 1998. Striker
Canada resumed monthly principal and interest payments beginning August 1, 1998.

On March 20, 1998, the Company's indirect Canadian subsidiary, Striker Paper
Canada, Inc. ("Striker Canada"), executed (i) a Subordinated Loan Agreement with
First Ontario Labour Sponsored Investment Fund Ltd. ("FOF") providing a three
year term credit facility to Striker Canada in the maximum principal amount of
$1,500,000 Canadian and (ii) a Commercial Demand Line of Credit Agreement with
Credit Union Central of Ontario Limited and So-Use Credit Union Limited
providing a revolving line of credit to Striker Canada in the aggregate amount
of $800,000 Canadian based on eligible accounts receivable. The first advance in
the amount of $1,250,000 Canadian under the FOF term loan facility was received
by Striker Canada on April 14, 1998.



                                  Page 7 of 18
<PAGE>   8

As a condition of the Subordinated Loan Agreement, FOF was issued 3,756,912
shares of common stock of Striker Canada, which represents a 25% equity position
in Striker Canada. In connection with the FOF financing, the Company formed a
new wholly-owned Canadian subsidiary, Striker Holdings Canada, Inc. (Holdings
Canada), to which the Company transferred its remaining seventy-five percent
ownership position in Striker Canada. In addition, the Company signed a
guarantee requiring that, upon default under the Subordinated Loan Agreement or
at maturity of the FOF credit facility, the Company repurchase FOF's 25%
ownership interest in Striker Canada for a minimum of $1,000,000 Canadian.

The Subordinated Loan Agreement provides for payment of interest at the rate of
20% per annum on all outstanding amounts but, giving effect to the discount
amortization and the guarantee repurchase obligation amortization, the effective
interest rate increases to 46.67% for the first year reducing the second and
third years based on a reduction of the term credit facility. It also provides
for a twelve-month grace period on principal payments and for the reduced
payment of one-half of the monthly-accrued interest during the grace period.

In addition, the Subordinated Loan Agreement requires Striker Canada to pay FOF
a monthly monitoring fee of $3,000 Canadian during the term of the credit
facility. FOF is also entitled to elect two board members to Striker Canada's
Board of Directors.

On August 18, 1998, the Subordinated Loan Agreement was amended to reflect an
increase of $150,000 Canadian in the maximum principal amount of the three year
term credit facility, making the new maximum principal amount of the facility
$1,650,000 Canadian. In addition, the Amendment provided for (i) waiver and/or
an amended schedule for additional advances to Striker Canada under the credit
facility, (ii) an amended principal repayment schedule, (iii) amended credit
facility advance conditions, (iv) certain additional borrower reporting
conditions, and (v) certain revised financial convenants. As of the date of this
Report, Striker Canada has received additional advances aggregating $325,000
Canadian under the amended Subordinated Loan Agreement. Striker Canada
anticipates that the additional $75,000 Canadian available will be received
prior to December 1, 1998.

In conjunction with the amendment of the Subordinated Loan Agreement, the Share
Pledge Agreement dated March 20, 1998 was also amended on August 18, 1998 to
provide for the pledge to FOF by Holdings Canada, parent corporation of Striker
Canada, of all additional common shares of Striker Canada issued to Holdings
Canada, which shares are to be held by FOF under the same terms and conditions
as other pledged shares of Striker Canada are held by FOF under the Share Pledge
Agreement.



                                  Page 8 of 18
<PAGE>   9

SUBORDINATED DEBT:

Striker Industries, Inc. Notes:

With respect to the Original Issue Discount Note (the"OID Notes") issued by the
Company to finance the failed Transaction, (See Note 3 to Notes To Consolidated
Financial Statements below) as of the date of this Report, the Company has one
$37,551 partial payment remaining to be paid. It is expected that this payment
will be made before December 31, 1998. The OID Notes balance of $37,551 and
$380,276 has been classified as current debt at September 30, 1998 and December
31, 1997, respectively. The OID Notes are secured by a second and subordinate
lien and security interest on the assets of each of the Company's U.S.
subsidiaries, including its Stephens, Arkansas plant, junior in priority to the
lien on the same assets held by its senior lender. This lien and security
interest will be released upon payment of the $37,551 remaining of the debt. The
OID Notes are also guaranteed by each of the Company's U.S. subsidiaries. It is
also secured by a lien and security interest on the assets of the Company's
indirect Canadian subsidiary, either junior in time or subordinated to the
subsidiary's senior lenders in Canada.

 Subsidiary Zero Coupon Notes Due 12/31/05:

In July, August and September 1998, subsidiaries of the Company booked $821,000
of additional indebtedness owing to holders of their Zero Coupon Notes due
December 31, 2005. The Zero Coupon Notes carry a minimum interest rate of 2.25%,
with a maximum interest rate of 10.25%, solely dependent upon the discretion of
the Board of Directors. Principal and interest are not due until maturity of the
Notes.

Interest paid for all debt instruments for the three and nine months ended
September 30, 1998 was $36,534 and $110,417, respectively. Interest paid for all
debt instruments for the three and nine months ended September 30, 1997 was
$21,146 and $137,060, respectively.

3.  CONTINGENCIES:

On April 25, 1996, the Company signed an agreement to combine in a merger
transaction (the Transaction) with the indirect parent corporation of one of the
largest privately owned manufacturers of asphalt shingles and built up roofing
(GS Roofing). The closing of the transaction had been extended in writing by
mutual agreement of the parties to April 21, 1997, provided that (i) a
Registration Statement required to raise the equity component of the financing
required for closing was filed with the Securities and Exchange Commission
(which document was filed with the Securities and Exchange Commission December
26, 1996) and (ii) the merger became effective on or before April 21, 1997 or
within incremental five business day periods of time thereafter so long as bona
fide marketing efforts were being conducted by the underwriters with a view to
such Registration Statement becoming effective on or before April 30, 1997.



                                  Page 9 of 18
<PAGE>   10
On or about February 4, 1997, via facsimile transmission the President of GS
Roofing sent a notice to the Company of GS Roofing's repudiation of the
Transaction. Subsequent to that date, the Company made protracted attempts to
reinstate the Transaction, without success. Accordingly, management ultimately
retained counsel and filed a suit styled Striker Industries, Inc., David A.
Collins and Matthew D. Pond vs. Newgen Holdings, Inc., Gen Holdings, Inc., GS
Roofing Products Company, Inc., Donald F. Smith and Maredon-I, Ltd. pending at
the date of this Report in the 133rd Judicial District Court of Harris County,
Texas alleging, among other things, a breach of contract by the defendants
resulting from the defendants' repudiation of the binding agreements between the
Company and the defendants providing for the Transaction, which action by the
defendants severely impaired the Company's ability to complete the equity and
debt offerings which were a critical part of the Transaction. Pre-trial
discovery has commenced and depositions have begun. A date for trial has been
set for early January, 1999. The Company is unable at present to express any
opinion regarding the probable outcome of this litigation.

In addition, following extensive negotiations and the inability of the Company's
Canadian subsidiary to reach agreement on an employment termination package with
the former manager of the Thorold Mill, suit was filed on or about April 7, 1997
in Ontario Province, Canada by the former Mill manager against Striker Paper
Canada, Inc. claiming damages of $142,000 Canadian for alleged wrongful
dismissal and $50,000 Canadian for alleged mental distress. Striker Canada filed
a Statement of Defense and Counterclaim on September 30, 1997. The Counterclaim
seeks damages in the amount of $150,000 Canadian from the plaintiff for his
fraudulent or negligent misrepresentation in failing to disclose information
within his knowledge to Striker Canada during the negotiations for Striker
Canada's purchase of the Thorold Mill. No further action has been taken in this
proceeding as of the date of this Report.

4. SUSPENSION OF OPERATIONS AT THE STEPHENS MILL:

As of the date of this Report, operations at the Company's Stephens Mill remain
suspended. It is Management's present intention to resume operations at the
Stephens Mill in due course. Management is reviewing capital improvement
projects that would allow the Stephens Mill to operate efficiently and
profitably upon reactivation. The resumption of operations is subject to the
Company raising the funds necessary to complete the capital improvements and
repairs and maintenance that will enable the Stephens Mill to operate
efficiently and profitably. Management is reviewing alternative methods of
resuming operations at the Stephens Mill including strategic partnerships or
joint ventures. While Management is reviewing all available options to
accomplish its objective, there can be no assurances that it will be successful
and that the Stephens Mill will be able to resume operations

5. RESUMPTION OF OPERATIONS AT THE THOROLD MILL:

On January 16, 1997, the Company experienced a fire at its Thorold Mill. The
fire-damaged repairs were completed on or about May 30, 1997. Prior to resuming
operations, capital projects were identified that Management believes will
increase operating efficiencies in an 




                                 Page 10 of 18
<PAGE>   11

effort to achieve profitable operations. During the period from late April, 1998
to early July, 1998, the Company completed repairs and maintenance that were
necessary prior to start-up. In addition, during this same time period,
previously identified capital projects with an immediate benefit were completed.
The Company was able to resume operations on or about July 9, 1998. Striker
Canada received the first tranche funding of $1,250,000 Canadian on April 14,
1998 pursuant to the terms of the Subordinated Loan Agreement in order to
facilitate the cash requirements of the Thorold Mill start-up.

6. OTHER INCOME:

During March 1998, the Company entered into a Settlement and Mutual Release
Agreement with the owners of the Company's former subsidiary (sold April 1,
1996), Striker Services Corporation (SSC) and related parties on all outstanding
claims of the Company against all parties. As the balance owed the Company by
SSC had been fully reserved and expensed to bad debt effective December 31,
1996, the Company recognized a gain on the consideration received of
approximately $110,000 for the quarter ended March 31, 1998.

In response to vendor's collection efforts, the Company has negotiated several
settlements of outstanding balances due vendors at amounts less than face value.
These vendor concessions, a total of approximately $96,000, have been treated as
other income on the statement of operations for the quarter ended September 30,
1998.

7. YEAR 2000:

The Company has reviewed its business software and hardware which has resulted
in plans to either replace or upgrade all essential software and hardware at an
estimated cost of $75,000. The Company does not believe that its vendors and
customers year 2000 compliance issues will have any material effect or impact
the respective relationships.

8. FORWARD-LOOKING STATEMENTS:

The words "anticipate," "believe," "expect," "plan," "intend," "estimate,"
"project," "will," "may" and similar expressions are intended to identify
forward-looking statements. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to be correct.

9.   SUBSEQUENT EVENTS:

The Union representing the wage based employees at the Thorold Mill notified
Management of the Union's desire to begin negotiations in order to ratify a new
collective agreement as the existing collective agreement is set to expire at
December 31, 1998. There have been no formal discussions as of the date of this
Report. Management anticipates that a new collective agreement will be agreed to
and ratified by the union members. Management does not anticipate any material
changes from the collective agreement currently existing.



                                 Page 11 of 18
<PAGE>   12

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

This discussion should be read in conjunction with the financial statements of
the Company included elsewhere in this Form 10-Q:

Results of Operations

<TABLE>
<CAPTION>
                                             Three Months Ended              Nine Months Ended
                                                September 30,                  September 30,
                                            1998            1997            1998            1997
                                         -----------     -----------     -----------     -----------
<S>                                      <C>             <C>             <C>             <C>        
   Revenue                               $   267,658     $    11,262     $   267,658     $ 1,506,399
   Cost of Sales                             902,982         234,960       1,915,309       2,582,767
                                         -----------     -----------     -----------     -----------
   Gross Margin                             (635,324)       (223,698)     (1,647,651)     (1,076,368)
   Selling, general and
   administrative                            494,932         783,549       1,343,727       2,557,138
                                         -----------     -----------     -----------     -----------
   Operating loss                         (1,130,256)     (1,007,247)     (2,991,378)     (3,633,506)
   Interest Expense, net                    (243,412)       (241,689)       (586,291)     (1,225,949)
   Other income                                 --              --           206,695            --
   Minority  interest  in net loss of
   consolidated subsidiary                   177,647            --           407,911            --
                                         -----------     -----------     -----------     -----------
   Net loss before income taxes           (1,196,021)     (1,248,936)     (2,963,063)     (4,859,455)
                                         ===========     ===========     ===========     ===========
</TABLE>

COMPARISON OF QUARTERS ENDED SEPTEMBER 30, 1998 AND 1997

Sales for the quarter ended September 30, 1998 totaled $267,658 as compared to
sales of $11,262 for the quarter ended September 30, 1997. For the quarter ended
September 30, 1998, operations were resumed at the Thorold Mill only and sales
began in September. The Stephens Mill remained idle for the entire quarter. For
the quarter ended September 30, 1997, both Mills were idled for the entire
quarter with the Stephens Mill generating minor sales from existing inventory.

Gross margin decreased to negative $635,324 for the quarter ended September 30,
1998 from negative gross margin of $223,698 for the quarter ended September 30,
1997. The decrease in gross margin is primarily due to unabsorbed production
costs incurred during the resumption of operations coupled with sales not
beginning until the end of the quarter.



                                 Page 12 of 18
<PAGE>   13
Selling, general and administrative expenses decreased by $288,617 to $494,932
for the quarter ended September 30, 1998, from $783,549 for the quarter ended
September 30, 1997. This decrease is primarily due to (i) a decrease in the
professional fees in 1998 and (ii) a reduction in office expenses and reduced
salary and related expenses due to the reduced operations in 1998.

Interest expense, net, increase slightly to $243,412 for the quarter ended
September 30, 1998, from $241,689 for the quarter ended September 30, 1997. This
increase is primarily due to the interest, deferred financing cost amortization
and discount amortization related to the new Canadian Subordinated Loan
Agreement coupled with an increase in the principal amount of the Zero Coupon
Notes.

COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997

Sales for the nine months ended September 30, 1998 totaled $267,658 as compared
to sales of $1,506,399 for the nine months ended September 30, 1997. For the
nine months ended September 30, 1998, operations were resumed at the Thorold
Mill only during the quarter and sales began in September. The Stephens Mill
remained idle for the entire nine months. For the nine months ended September
30, 1997, the Thorold Mill was idled for the entire period and the Stephens Mill
was idled for four months of the period.

Gross margin decreased to a negative $1,647,651 for the nine months ended
September 30, 1998 from a negative gross margin of $1,076,368 for the nine
months ended September 30, 1997. The decrease in gross margin is primarily due
to no sales until September in 1998 and unabsorbed production costs related to
the resumption of operations at the Thorold Mill and as a result of both mills
being idled for most of 1998.

Selling, general and administrative expenses decreased by $1,213,411 to
$1,343,727 for the nine months ended September 30, 1998, from $2,557,138 for the
nine months ended September 30, 1997. This decrease is primarily due to (i) a
decrease in the professional fees in 1998 and (ii) a reduction in office
expenses and reduced salary and related expenses due to the reduced operations
in 1998.

Interest expense, net, decreased to $586,291 for the nine months ended September
30, 1998, from $1,225,949 for the nine months ended September 30, 1997. This
decrease is due to the reduction of interest rates related to the Zero Coupon
Notes, a decrease in credit facility activity and a decrease in the amortization
of deferred financing costs partially offset by interest related to the new
Subordinated Loan Agreement in Canada.

Because the Company has been in a loss position for financial and income tax
reporting purposes, no current or deferred income tax benefits have been
provided due to the uncertainty of realization.



                                 Page 13 of 18
<PAGE>   14
CASH FLOWS - COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1998 AND SEPTEMBER
30, 1997

Cash flows used by operating activities increased to $2,917,717 for the nine
months ended September 30, 1998 from $2,715,430 for the nine months ended
September 30, 1997. This increase is primarily due to the increases in accounts
receivable, inventory and prepaid assets. These increases primarily relate to
the resumption of operations at the Thorold Mill.

Cash flows used by investing activities increased to $376,302 for the nine
months ended September 30, 1998 from cash flows used in investing activities of
$56,826 for the nine months ended September 30, 1997. This increase is primarily
due to the purchases of machinery and equipment related to the start-up of the
Thorold Mill.

Cash flows provided by financing activities increased to $3,226,964 for the nine
months ended September 30, 1998 from $2,490,460 for the nine months ended
September 30, 1997. This increase is primarily due to the funding of the new
Canadian Subordinated Loan Agreement.

LIQUIDITY AND CAPITAL RESOURCES

For the quarter ended September 30, 1998, the Company had an operating loss and
continues to experience liquidity concerns.

For the nine months ended September 30, 1998, the Company raised over $3,500,000
of subordinated debt to fund working capital needs and retire a substantial
portion of the OID Notes. In addition, approximately $1,200,000 of the
subordinated debt was used in association with the term credit facility
described below to assist in attaining the resumption of operations at the
Thorold Mill.

On March 20, 1998, Striker Canada executed (i) a Subordinated Loan Agreement
with First Ontario Labour Sponsored Investment Fund Ltd. ("FOF") providing a
three year term credit facility to Striker Canada in the maximum principal
amount of $1,500,000 Canadian and (ii) a Commercial Demand Line of Credit
Agreement with Credit Union Central of Ontario Limited and So-Use Credit Union
Limited providing a revolving line of credit to Striker Canada in the aggregate
amount of $800,000 Canadian based on eligible accounts receivable. On August 18,
1998, the Subordinated Loan Agreement was amended to reflect an increase of
$150,000 Canadian in the credit facility, making the new maximum principal
amount of the facility $1,650,000 Canadian. See Note 2 to Notes To Consolidated
Financial Statements above for a more complete description of the August 18,
1998 Amendment to the Subordinated Loan Agreement.

Although the Company has experienced a decrease in current liabilities for the
nine months ended September 30, 1998 from the year ended December 31, 1997, the
Company has a working capital deficit of $3,128,412 at September 30, 1998. The
decrease in current liabilities 




                                 Page 14 of 18
<PAGE>   15

is primarily due to a substantial reduction in the OID notes due to repayment
and a reduction in accounts payable.

On January 16, 1997, the Company experienced a fire at its Thorold Mill. The
repairs and rebuilding of the plant and its equipment were completed on or about
May 30, 1997. The Company completed the additional repairs and capital projects
necessary to commence resumption of operations on or about July 9, 1998.

As of the date of this Report, only the Company's Stephens Mill is idled.
Management has identified several substantial capital projects that are
necessary at the Stephens Mill in order to commence operation and attain
efficiencies needed for profitable operation. However, for the Company to
benefit fully from improvements made or to be made to its plants, they must
operate at capacity. Management is committed to seek and obtain the necessary
financing to resume operations, but not to resume operations in any instance
until the financing for each plant is in place and the capital projects have
been completed.

Several events from the prior year continue to affect the Company. During 1996
and early 1997, the Company devoted substantial amounts of cash to acquisition
activities for the Transaction. The Company raised over $3,000,000 in
subordinated debt to pay for the costs of the Transaction. Due to the
substantial amounts of cash used for acquisition activities and the intention to
pay all of the payables at the Transaction closing, accounts payable were aged
beyond their terms. Due to the significant resources devoted to the Transaction
and the subsequent repudiation of the Transaction, the Company's ability to
repay debt, pay past-due accounts payable, finance needed capital projects and
continue operations has been gravely impaired.

The factors listed above have led to the ongoing working capital deficit. The
Company must closely monitor operations and continue to identify and implement
capital projects that will improve efficiencies and lower costs. However, there
can be no assurance that such cost reductions will allow the Company to achieve
profitability.

Management does not believe its existing funds and its existing financial
arrangements will adequately fund the cash needs of the Company's operations
during the next year and for the start-up of the Stephens Mill. To meet working
capital requirements and expand its business, the Company will need to borrow
additional amounts and/or restructure its existing debt. The Company currently
has three existing credit lines, two consisting of a revolving line of credit
and a term loan collateralized by receivables, inventories, and fixed assets and
one consisting of a term loan collateralized by fixed assets. The Company is
pursuing additional financing arrangements that might include private or public
sales of equity or debt securities. However, there can be no assurance that any
of these strategies will be achieved or that the Company will be able to exist
as a going concern.




                                 Page 15 of 18
<PAGE>   16
PART II  -  OTHER INFORMATION

Item 1.  Legal Proceedings.

During the quarter ended September 30, 1998, pre-trial discovery, including the
taking of depositions of the parties, continued in Cause No. 97-07032, styled
Striker Industries, Inc., David A. Collins and Matthew D. Pond v. Newgen
Holding, Inc., Gen Holding, Inc., GS Roofing Products Company, Inc., Donald F.
Smith, and Maredon-I, Ltd., pending in the 133rd Judicial District Court of
Harris County, Texas. See Note 3 to Notes to Consolidated Financial Statements
for a description of the factual basis underlying the alleged wrongful
repudiation of the Transaction more fully described therein and made the basis
of this pending legal proceeding.

Item 2.  Changes in Securities.

         None.

Item 3.  Defaults Upon Senior Securities.

         None reportable under this Item 3 of the Company's Quarterly Report for
         the quarter ended September 30, 1998.

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

         None.

Item 5.  Other Information.

         None.



                                 Page 16 of 18
<PAGE>   17
Item 6.  Exhibits and Reports on Form 8-K

    (a)  Exhibits:

    4.1           Amendment to Subordinated Loan Agreement dated August 18, 1998
                  between the Company's indirect Canadian subsidiary, Striker
                  Paper Canada, Inc. ("Striker Canada"), and First Ontario
                  Labour Sponsored Investment Fund Ltd. ("FOF"), amending the
                  Subordinated Loan Agreement dated March 20, 1998 between
                  Striker Canada and FOF (filed as Exhibit 4.2 to the Company's
                  Form 10-Q for the quarter ended June 30, 1998 and incorporated
                  herein by reference).

    4.2           Amendment to Share Pledge Agreement dated August 18, 1998
                  between the Company's indirect Canadian subsidiary, Striker
                  Paper Canada, Inc. ("Striker Canada"), and First Ontario
                  Labour Sponsored Investment Fund Ltd. ("FOF"), amending the
                  Share Pledge and Proxy Arrangement Agreement dated March 20,
                  1998 between Striker Canada and FOF (filed as Exhibit 4.7 to
                  the Company's Form 10-Q for the quarter ended June 30, 1998
                  and incorporated herein by reference).

    27            Financial Data Schedule

    (b)  Reports on Form 8-K:

No reports on Form 8-K were filed by the Company during the quarter ended
September 30, 1998:




                                 Page 17 of 18
<PAGE>   18
SIGNATURES:

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


                                             STRIKER INDUSTRIES, INC.



DATE:       November 19, 1998                BY:     David A. Collins
       ------------------------------           -------------------------------
                                                     David A. Collins
                                                     Chief Executive Officer





                                                 
DATE:       November 19, 1998                BY:     Paul B. Edmiston
       ------------------------------           -------------------------------
                                                     Paul B. Edmiston
                                                     Chief Financial Officer






                                 Page 18 of 18
<PAGE>   19

                                 EXHIBIT INDEX


<TABLE>
<CAPTION>
EXHIBIT
  NO.         DESCRIPTION
--------      -----------
<S>           <C>
    4.1           Amendment to Subordinated Loan Agreement dated August 18, 1998
                  between the Company's indirect Canadian subsidiary, Striker
                  Paper Canada, Inc. ("Striker Canada"), and First Ontario
                  Labour Sponsored Investment Fund Ltd. ("FOF"), amending the
                  Subordinated Loan Agreement dated March 20, 1998 between
                  Striker Canada and FOF (filed as Exhibit 4.2 to the Company's
                  Form 10-Q for the quarter ended June 30, 1998 and incorporated
                  herein by reference).

    4.2           Amendment to Share Pledge Agreement dated August 18, 1998
                  between the Company's indirect Canadian subsidiary, Striker
                  Paper Canada, Inc. ("Striker Canada"), and First Ontario
                  Labour Sponsored Investment Fund Ltd. ("FOF"), amending the
                  Share Pledge and Proxy Arrangement Agreement dated March 20,
                  1998 between Striker Canada and FOF (filed as Exhibit 4.7 to
                  the Company's Form 10-Q for the quarter ended June 30, 1998
                  and incorporated herein by reference).

   27             Financial Data Schedule
</TABLE>