<PAGE>
 
================================================================================


                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                   FORM 10-Q
                                        
                  QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTER ENDED DECEMBER 31, 1997              COMMISSION FILE NO. 0-16102


                     EASTERN ENVIRONMENTAL SERVICES, INC.
            (Exact name of Registrant as specified in its charter)


                                   DELAWARE
        (State or other jurisdiction of incorporation or organization)

                                  59-2840783
                     (I.R.S. Employer Identification No.)

            1000 CRAWFORD PLACE, SUITE 400, MOUNT LAUREL, NJ  08054
                   (Address of Principal Executive Offices)

       REGISTRANT'S TELEPHONE NO., INCLUDING AREA CODE:  (609) 235-6009


Indicate by checkmark 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 report), and (2) has been subject to such filing
requirements for the past 90 days.  Yes   X     No ____
                                        ----           


Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock:

          As of February 10, 1998   23,058,249 Shares of Common Stock

================================================================================
<PAGE>
 
                     EASTERN ENVIRONMENTAL SERVICES, INC.

                                   FORM 10-Q
                        QUARTER ENDED DECEMBER 31, 1997



                                   CONTENTS

<TABLE> 
<CAPTION> 
                                                                         PAGE
<S>                                                                      <C> 
PART I - FINANCIAL INFORMATION
 
Item 1 - Financial Statements
 
   Condensed Consolidated Balance Sheets - December 31, 1997
     and June 30, 1997 (Restated)                                          1
 
   Condensed Consolidated Statements of Operations for the three
     months ended December 31, 1997 and 1996 (Restated)                    3
 
   Condensed Consolidated Statements of Operations for the six
     months ended December 31, 1997 and 1996 (Restated)                    4
 
   Condensed Consolidated Statement of Stockholders' Equity
     for the six months ended December 31, 1997                            5
 
   Condensed Consolidated Statements of Cash Flows for the
     six months ended December 31, 1997 and 1996 (Restated)                6
 
   Notes to Condensed Consolidated Financial Statements                    7
 
Item 2 - Management's Discussion and Analysis of
         Financial Condition and Results of Operations                    10
 
PART II - OTHER INFORMATION
 
Item 2 - Changes in Securities                                            15
Item 6 - Exhibits and Reports on Form 8-K                                 16
</TABLE> 
 
<PAGE>
 
                        PART I - FINANCIAL INFORMATION
                          Item 1 Financial Statements

                     EASTERN ENVIRONMENTAL SERVICES, INC.

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (UNAUDITED)



<TABLE>
<CAPTION>
 
 
 
                                                               DECEMBER 31,      JUNE 30,
                           ASSETS                                  1997            1997
                                                             ---------------  -------------  
                                                                                (RESTATED)
<S>                                                          <C>              <C> 
Current assets:
 Cash and cash equivalents                                      $  5,231,625   $  4,327,824
 Accounts receivable, less allowance for doubtful
   accounts of $2,660,000 and $1,938,000                          21,689,297     14,995,160
 Deferred income taxes                                             1,410,000      3,369,014
 Prepaid expenses and other current assets                         3,660,110      4,891,017
                                                             ---------------  -------------   
Total current assets                                              31,991,032     27,583,015

Property and equipment:
 Land                                                             12,200,635      7,356,298
 Landfill sites                                                   84,504,765     33,780,283
 Buildings and leasehold improvements                             10,141,599      7,337,783
 Vehicles                                                         30,789,474     23,569,507
 Machinery and equipment                                          25,842,594     19,960,249
 Furniture and fixtures                                            2,180,206      1,536,847
                                                             ---------------  -------------   
Total property and equipment                                     165,659,273     93,540,967
Accumulated depreciation and amortization                         30,663,542     25,222,460
                                                             ---------------  -------------   
                                                                 134,995,731     68,318,507
 
Excess cost over fair market value of net assets acquired,
 net of $1,656,000 and $875,000 accumulated amortization          71,285,712     60,302,159

Other intangible assets, net of $5,323,000 and
 $3,550,000 accumulated amortization                              14,412,328      6,594,967

Notes receivable from shareholders/officers                          432,902        432,902
 
Other assets (including $556,000 and $533,000 of restricted
 cash on deposit for landfill closure and
 insurance bonding)                                                3,052,190      2,476,576
                                                             ---------------  -------------    
TOTAL ASSETS                                                    $256,169,895   $165,708,126
                                                             ===============  =============   
</TABLE>

                                       1

<PAGE>
 
<TABLE>
<CAPTION>
 
                                                               DECEMBER 31,      JUNE 30,
            LIABILITIES AND STOCKHOLDERS' EQUITY                   1997            1997
                                                             ---------------  -------------    
                                                                                (RESTATED)
<S>                                                          <C>              <C> 
Current liabilities:
  Accounts payable                                             $  7,439,366    $  9,067,337
  Accrued expenses and other current liabilities                 12,990,512      10,967,045
  Income taxes payable                                               63,446         773,218
  Current portion of accrued landfill closure and other
   environmental costs                                            2,078,000       2,228,000
  Current portion of long-term debt                               1,235,245       2,075,059
  Current portion of capital lease obligations                    1,238,789       1,474,656
  Deferred revenue                                                3,452,693       2,968,306
                                                             ---------------  -------------     
Total current liabilities                                        28,498,051      29,553,621
 
Deferred income taxes                                             2,880,576       5,716,590
Long-term debt, net of current portion                           51,197,650      59,608,730
Capital lease obligations, net of current portion                 1,258,993       1,843,914
Accrued landfill closure and other environmental costs           11,318,127       6,891,219
Other liabilities                                                13,221,023       9,151,246
 
Stockholders' equity:
  Common stock, $.01 par value:
   Authorized shares - 50,000,000
   Issued and outstanding shares 22,991,532 and 16,867,987          229,915         168,680
  Additional paid-in capital                                    140,994,498      50,119,596
  Retained earnings                                               6,647,321       2,730,789
                                                             ---------------  -------------    
                                                                147,871,734      53,019,065
  Less treasury stock at cost - 39,100 common shares                (76,259)        (76,259)
                                                             ---------------  -------------     
Total stockholders' equity                                      147,795,475      52,942,806
                                                             ---------------  -------------     
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                     $256,169,895    $165,708,126
                                                             ===============  =============    
</TABLE>

See accompanying notes.

                                       2
<PAGE>
 
                     EASTERN ENVIRONMENTAL SERVICES, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED
                                                         DECEMBER 31,
                                                 ---------------------------
                                                     1997            1996
                                                 ---------------  ----------
                                                                  (RESTATED)
<S>                                              <C>              <C>  
Revenues                                          $39,104,944    $23,475,598
Cost of revenues                                   24,078,355     17,328,599
Selling, general and administrative expenses        5,712,901      2,996,648
Depreciation and amortization                       3,041,203      1,253,144
Merger costs                                        2,225,000             --
                                                 ---------------  ---------- 

Operating income                                    4,047,485      1,897,207
 
Interest expense, net                                (278,628)      (549,297)
Other income (expense)                                 94,811         95,738
                                                 ---------------  ----------
Income before income taxes                          3,863,668      1,443,648
 
Income tax expense - See Note 5                     1,742,000         32,978
                                                 ---------------  ----------
 
Net income                                        $ 2,121,668    $ 1,410,670
                                                 ===============  ==========

Basic earnings per share                                 $.09           $.10
                                                 ===============  ==========
 

Weighted average number of shares outstanding      22,844,793     14,499,545
                                                 ===============  ==========
 

Diluted earnings per share                               $.09           $.09
                                                 ===============  ==========

Weighted average number of shares outstanding      24,400,127     15,337,261
                                                 ===============  ==========
</TABLE>

                                       3
<PAGE>
 
                     EASTERN ENVIRONMENTAL SERVICES, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                       SIX MONTHS ENDED
                                                         DECEMBER 31,
                                                   ------------------------    
                                                       1997          1996
                                                   ------------   ---------
                                                                 (RESTATED)
<S>                                               <C>            <C>  
Revenues                                          $77,959,150    $41,348,532
Cost of revenues                                   49,437,429     31,139,743
Selling, general and administrative expenses       11,455,113      5,512,913
Depreciation and amortization                       5,424,432      1,966,010
Merger costs                                        2,725,000      1,856,340
                                                  -----------    -----------  
 
Operating income                                    8,917,176        873,526
 
Interest expense, net                                (977,794)      (688,313)
Other income (expense)                                273,564         86,271
                                                  -----------    -----------  
Income before income taxes                          8,212,946        271,484
 
Income tax expense - See Note 5                     3,556,000        712,992
                                                  -----------    -----------  
 
Net income (loss)                                 $ 4,656,946    $  (441,508)
                                                  ===========    ===========  

 
Basic earnings (loss) per share                          $.21          $(.03)
                                                  ===========    ===========  
 
Weighted average number of shares outstanding      21,681,129     13,640,798
                                                  ===========    ===========  
 
 
Diluted earnings (loss) per share                        $.20          $(.03)
                                                  ===========    ===========  
 
Weighted average number of shares outstanding      23,228,066     13,640,798
                                                  ===========    ===========  
</TABLE>

                                       4
<PAGE>
 
                     EASTERN ENVIRONMENTAL SERVICES, INC.

           CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                  (UNAUDITED)



<TABLE>
<CAPTION>
                                             ADDITIONAL
                                  COMMON       PAID-IN       RETAINED     TREASURY
                                   STOCK       CAPITAL       EARNINGS      STOCK         TOTAL
                                ---------   -----------    -----------  ----------    ---------
<S>                              <C>        <C>            <C>           <C>         <C>
Balance at
 June 30, 1997 (Restated)         $168,680  $ 50,119,596    $2,730,789    $(76,259)  $ 52,942,806
 
Exercise of
 common stock
 options and warrants                3,537     1,739,707            --          --      1,743,244
 
Income tax benefit from
 exercise of non-qualified
 stock options                          --     1,245,469            --          --      1,245,469
 
Proceeds from sale of
 5,175,000 shares
 of common stock,
 less commissions and
 issuance expenses of
 $6,579,880                         51,750    85,224,620            --          --     85,276,370
 
Common stock issued for
 acquisition accounted for as
  a pooling of interests             2,167       140,833            --          --        143,000
 
Revaluation of common
 stock issued in purchase
 acquisition                            --    (2,203,966)           --          --     (2,203,966)
 
Transactions of pooled
 company                                --            --      (617,150)         --       (617,150)
 
Common stock issued
 to satisfy debt obligation            158       291,421            --          --        291,579
 
Common stock issued
 in purchase acquisitions            3,623     4,436,818            __          --      4,440,441
 
Dividends paid to former
 stockholders of pooled companies       --            --      (123,264)         --       (123,264)
 
Net income                              --            --     4,656,946          --      4,656,946
                                 ---------  ------------   -----------  ----------   ------------ 
Balance at
 December 31, 1997                $229,915  $140,994,498    $6,647,321    $(76,259)  $147,795,475
                                 =========  ============   ===========  ==========   ============
</TABLE>

See accompanying notes.

                                       5
<PAGE>
 
                     EASTERN ENVIRONMENTAL SERVICES, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                SIX MONTHS ENDED
                                                                  DECEMBER 31,
                                                         -----------------------------
                                                               1997           1996
                                                         --------------   ------------
                                                                          (RESTATED)
<S>                                                      <C>             <C> 
OPERATING ACTIVITIES
Net income (loss)                                         $  4,656,946   $   (441,508)
Adjustments to reconcile net income (loss)
 to net cash provided by operating activities:
   Depreciation and amortization                             5,424,432      1,966,010
   Provision for losses on receivables                         711,864        431,567
   Landfill closure costs                                      350,499         95,195
   Deferred income taxes                                      (680,000)       651,561
   Gain on sale of property and equipment                      (79,188)          (399)
   Changes in operating assets and liabilities:
    Accounts receivable                                     (3,992,720)    (3,501,548)
    Accounts payable                                        (3,056,022)       291,729
    Accrued expenses                                        (3,102,569)     1,680,057
    Income taxes                                               405,747         (2,600)
    Deferred revenue                                           421,595      1,035,536
    Prepaid expenses and other current assets                1,111,782        342,966
    Other                                                     (441,563)      (201,447)
                                                         -------------   ------------
Net cash provided by operating activities                    1,730,803      2,347,119
 
INVESTING ACTIVITIES
Acquisition of businesses, net of cash acquired            (44,082,331)   (34,309,203)
Proceeds from sale of property and equipment                   605,501         28,476
Development of landfill sites                               (5,259,781)    (1,275,711)
Purchase of property and equipment                          (9,778,577)    (3,054,802)
Payments for intangibles                                      (816,713)      (540,000)
Landfill closure and insurance bonding deposits               (549,650)       (79,802)
                                                         -------------   ------------
Net cash used in investing activities                      (59,881,551)   (39,231,042)
 
FINANCING ACTIVITIES
Proceeds from revolving line of credit, long-term debt
 and capital lease obligations                              35,622,082     34,706,083
Payments on revolving line of credit, long-term debt
 and capital lease obligations                             (63,463,883)    (6,264,533)
Payments on note payable to shareholder/officer                     --        (31,000)
Proceeds from the incorporation of Apex                             --      3,250,000
Proceeds from issuance of common stock, net of
 expenses and commissions                                   87,019,614     10,221,503
Cash dividends paid to former stockholders of
 pooled companies                                             (123,264)      (270,405)
                                                         -------------   ------------
Net cash provided by financing activities                   59,054,549     41,611,648
                                                         -------------   ------------
Net increase in cash and cash equivalents                      903,801      4,727,725
Cash and cash equivalents at beginning of period             4,327,824      1,706,965
                                                         -------------   ------------
Cash and cash equivalents at end of period                $  5,231,625   $  6,434,690
                                                         =============   ============
</TABLE>

See accompanying notes.

                                       6
<PAGE>
 
                     EASTERN ENVIRONMENTAL SERVICES, INC.

             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

1. BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

The accompanying unaudited condensed consolidated financial statements include
the accounts of Eastern Environmental Services, Inc. and its wholly owned
subsidiaries (the "Company").  All significant intercompany accounts and
transactions have been eliminated in consolidation.  These condensed
consolidated financial statements reflect all adjustments (consisting of normal
recurring accruals), which in the opinion of management, are necessary for a
fair presentation of results of operations for the interim periods presented.
The Company has restated the previously issued financial statements for the
three months and six months ended December 31, 1996 to reflect mergers with the
Donno Company, Inc. and Affiliates ("Donno"), on January 31, 1997, Apex Waste
Services, Inc. ("Apex"), on March 31, 1997, and Hamm's Sanitation, Inc., and
H.S.S., Inc. ("Hamm's") on December 1, 1997 which were accounted for using the
"pooling of interests" method. Additionally, the balance sheet at June 30, 1997,
has been restated to reflect the Hamm's merger. The results of operations for
the three and six month periods ended December 31, 1997 are not necessarily
indicative of the operating results for the full year. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. These interim financial statements should be read in conjunction with
the audited financial statements and notes contained in the Company's Annual
Report on Form 10-K for the year ended June 30, 1997.

2. SIGNIFICANT ACCOUNTING POLICIES

In 1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 128, Earnings Per Share.  Statement 128, replaced the
previously reported primary and fully diluted earnings per share with basic and
diluted earnings per share.  Unlike primary earnings per share, basic earnings
per share excludes any dilutive effects of options, warrants, and convertible
securities.  Diluted earnings per share is very similar to the previously
reported fully diluted earnings per share.  All earnings per share amounts for
all periods have been presented, and where necessary, restated to conform to the
Statement 128 requirements.

3.   BUSINESS COMBINATIONS

From July 2, 1996 to December 31, 1997, the Company expanded its waste
collection and hauling operations through the acquisition of twenty five
businesses.  The aggregate of these business acquisitions is significant to the
company. Twenty of the twenty five acquisitions completed were accounted for
using the purchase method of accounting. Accordingly, assets acquired and
liabilities assumed have been recorded at their estimated fair values at the
dates of acquisition and their results of operations are included in the
accompanying condensed consolidated statements of operations since the date of
acquisition.  The excess of purchase price over the estimated fair market value
of identifiable net assets acquired is being amortized on a straight-line basis
over forty years from the date of acquisition.  The purchase price allocations
are based on preliminary estimates as of the acquisition dates and are finalized
within one year from the date of acquisition.

On July 9, 1997, the Company acquired substantially all of the assets and
assumed certain liabilities of Reuben Smith Rubbish Removal Service, Inc.
("Reuben Smith") in exchange for 92,369 unregistered shares of the Company's
common stock and the assumption of $574,000 of debt.  Reuben Smith, which
conducts a waste collection business in Atlantic City, New Jersey, was
integrated into Super Kwik, the Company's southern New Jersey regional
collection operation. This transaction was accounted for as a purchase.

On August 15, 1997, the Company completed the purchase of all the stock of
Pappy's, Inc. ("Pappy's") for total consideration of approximately $12,000,000
in cash.  Pappy's operates as the Oak Avenue Landfill and is permitted to accept
construction and demolition debris and other residual wastes.  The facility is
located north of Baltimore, Maryland. In addition to local waste, Pappy's will
accept waste for the Company's various collection operations located in New
York, New Jersey, and Pennsylvania markets. This transaction was accounted for
as a purchase.

                                       7
<PAGE>
 
On August 20, 1997, the Company purchased all of the stock of Soil Remediation
of Philadelphia, Inc. ("SRP") in exchange for 270,000 unregistered shares of the
Company's common stock.  SRP provides remediation services for petroleum
contaminated soil. This transaction was accounted for as a purchase.

On August 14, 1997, the Company completed its merger with Waste X and
approximately 216,667 unregistered shares of the Company's common stock were
issued in exchange for all outstanding stock of Waste X. An additional issuance
of the Company's common stock of up to 30% of the total consideration given may
be issuable pending the resolution of certain specific and general 
contingencies. Waste X operates a municipal solid waste collection business in
the Miami and Ft. Lauderdale, Florida markets and was integrated into the
Company's South Florida regional operation. The transaction has been accounted
for using the pooling of interests method, and accordingly, the accompanying
condensed consolidated financial statements include the accounts of Waste X for
the three months and six months ended December 31, 1997. Periods prior to the
consummation of the merger were not restated to include the accounts and
operations of Waste X as combined results are not materially different from the
results as presented.

On December 1, 1997, the Company completed its merger with Hamm's Sanitation,
Inc., and H.S.S., Inc. (collectively "Hamm's") and 715,032 unregistered shares
of the Company's common stock were issued in exchange for all the outstanding
stock of Hamm's.  Hamm's provides municipal solid waste collection services to
approximately 21,000 commercial and residential customers in several
northwestern New Jersey counties.  The transaction has been accounted for using
the pooling of interests method of accounting and, accordingly, the accompanying
condensed consolidated financial statements include the accounts of Hamm's for
all periods presented.

On December 1, 1997, the Company acquired from Delmarva Capital Technology all
of the outstanding stock of Pine Grove, Inc. ("Pine Grove"), its wholly owned
subsidiary, for approximately $46 million.  The purchase price was comprised of
approximately $34.3 million in cash and the assumption of approximately $11.7
million of debt.  Pine Grove, Inc. owns 100% of the outstanding stock of Pine
Grove Landfill, Inc., a 174 acre subtitle D solid waste disposal facility
located in east-central Pennsylvania, and Pine Grove Hauling Company, an
integrated solid waste collection company servicing residential and commercial
customers.  This transaction was accounted for using the purchase method of
accounting.

On December 31, 1997, the Company acquired substantially all the assets of
Berger Waste Management, Inc. ("Berger") in exchange for $200,000 in cash.  The
assets consisted primarily of vehicles, containers and customer lists.  Berger,
which conducted a waste collection business in Illinois, was integrated into
Olney Sanitary System, Inc., the Company's Illinois collection operation.  This
transaction was accounted for using the purchase method of accounting.

The combined and separate results of operations of the Company and Hamm's for
the six months ended December 31, 1997 were as follows (in thousands):

<TABLE>
<CAPTION>
                        Eastern       
Six months ended     Environmental    
December 31, 1997    Services, Inc.  Hamm's   Adjustments(1) Combined   
-------------------  --------------  -------  -----------    --------
<S>                  <C>             <C>      <C>            <C>
Revenues                    $69,589   $8,370         -         $77,959
Net income                  $ 5,569   $1,038   $(1,950)        $ 4,657
</TABLE>

(1) merger costs relating to the acquisition of Hamm's of $1,950,000.

Combined and separate results of operations of the Company, the Donno Companies,
Apex, and Hamm's for the six months ended December 31, 1996 were as follows (in
thousands):


<TABLE>
<CAPTION>
                         Eastern      
Six months ended      Environmental     Donno                                
December 31, 1996    Services, Inc.   Companies   Apex    Hamm's   Combined  
-------------------  ---------------  ---------  -------  -------  ---------  
<S>                  <C>              <C>        <C>      <C>      <C>
Revenues                    $21,984      $6,537   $4,376   $8,452   $41,349
Net income (loss)           $  (845)     $  146   $  132   $  125   $  (442)
</TABLE>

                                       8

<PAGE>

4.   USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements.  Actual results could
differ from those estimates.  Such estimates include the Company's accounting
for closure and post-closure obligations; amortization of landfill development
costs; and estimates of reserves such as the allowance for doubtful accounts
receivable, and the Company's estimate of merger costs.

5.   INCOME TAXES

The Company has recorded income tax provisions of $1.7 million and $3.6 million
for the three and six months ended December 31, 1997 respectively.  These
provisions primarily relate to the recording of federal and state tax
liabilities at statutory rates, adjusted for certain non-deductible items.

6.   EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per
share:

<TABLE> 
<CAPTION> 
                                                     3 Months Ended                       6 Months Ended
                                               --------------------------            ------------------------
                                               12/31/97          12/31/96            12/31/97        12/31/96          
                                               --------          --------            --------        --------
<S>                                           <C>               <C>                 <C>             <C> 
Numerator: 
  Net income (loss)                           $  2,121,668      $ 1,410,670         $ 4,656,946     $  (441,508)
                                              ============      ============        ============    ============               

Denominator:
  Denominator for basic earnings 
    per share-weighted average shares           22,844,793       14,499,545          21,681,129      13,640,798

  Effect of dilutive options and warrants        1,555,334          837,716           1,546,937               -
                                              ------------      -----------         -----------     ------------        

Denominator for diluted earnings per
 share                                          24,400,127       15,337,261          23,228,066      13,640,798  
                                              ============      ============        ============    ============  
Basic earnings (loss) per share                       $.09             $.10                $.21           $(.03)
                                              ============      ============        ============    ============               
Diluted earnings (loss) per share                     $.09             $.09                $.20           $(.03)
                                              ============      ============        ============    ============               
</TABLE> 

7.   SUBSEQUENT EVENTS



Subsequent to December 31, 1997, the Company acquired the assets of seven
collection companies in separate transactions.  Total consideration under the
agreements consists of approximately 110,000 unregistered shares of the
Company's stock, and cash of approximately $5.1 million to the sellers.  These
transactions will be accounted for using the purchase method of accounting.

Also subsequent to December 31, 1997, the Company entered into a merger
agreement with the shareholders of the Stamato Companies. This transaction is
subject to customary due diligence procedures and contain federal and state
regulatory approvals. Total consideration under the agreement consists of
approximately $31 million of common stock of the Company and the assumption of
approximately $8 milion of debt in exchange for all issued and outstanding stock
of the Stamato companies. The Stamato companies provide collection services to
commercial and residential customers in several nothern New Jersey counties.
This transaction is expexted to be accounted for as a pooling of interests.

                                       9
 
<PAGE>

On February 12, 1998, the Company acquired The Kelly Run Landfill from USA Waste
Services, Inc. Consideration under the agreement consisted of 250,000
unregistered shares of common stock of the Company in exchange for all the
issued and outstanding shares of Kelly Run Landfill. This transaction will be
accounted for using the purchase method of accounting.

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

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 1997 COMPARED TO THE
                      SIX MONTHS ENDED DECEMBER 31, 1996.

REVENUES

The Company is a non-hazardous solid waste management company specializing in
the collection, transportation, and disposal of residential, industrial,
commercial, and special waste, principally in the eastern United States. The
Company's revenues for the six months ended December 31, 1997 were comprised of
approximately 82% solid waste collection and transportation operations,
approximately 10% solid waste disposal operations, and approximately 8% other
waste management services.

The Company's solid waste collection operations earn revenues from fees
collected from residential, commercial, and industrial collection and transfer
station customers. Solid waste collection is provided under two primary types of
arrangements depending on the customers being served. Collection services for
commercial and industrial customers are generally performed under one to three
year service agreements. Collection services for residential customers generally
are performed under contracts with, or franchises granted by, municipalities or
regional authorities that grant the Company rights to service all or a portion
of the residents in their jurisdictions, except in rural areas where the Company
usually contracts directly with the customer. Such contracts or franchises
generally range in duration from one to three years. Recently, some
municipalities have bid their residential collection contracts based on the
volume of waste collected versus the number of households serviced. Residential
collection fees are either paid by the municipalities out of tax revenues or
service charges or paid directly by residents receiving the services.

As part of its solid waste collection operations, the Company's six owned or
operated transfer stations receive solid waste collected primarily by its
various collection operations, compact the waste and transfer it to larger
vehicles for transport to landfills. This procedure reduces the Company's costs
by improving its use of collection personnel and equipment.

The Company's solid waste landfills earn revenues from disposal fees charged to
third parties and from disposal fees charged to the Company's collection and
transportation operations that dispose of solid waste at the Company's
landfills. These landfills receive solid waste from the Company's own collection
companies and transfer stations, as well as from independent collection
operators. For the six months ended December 31, 1997, approximately 23% of the
Company's revenue generated from collection operations represented solid waste
collected by the Company that was delivered for disposal at its own landfills,
and approximately 31% of the Company's revenue generated from landfill disposal
operations represented solid waste disposed of at the Company's landfills that
was delivered by the Company.

The Company's prices for solid waste collection, transportation, and disposal
services are typically determined by the volume, weight, or type of waste
collected, as well as other factors including the competitive pricing
environment. The Company's ability to pass on cost increases may be limited by
the terms of its contracts.

COST OF REVENUES

Cost of revenues consists primarily of tipping fees paid to third party
landfills, accruals for future landfill closure and post-closure costs, direct
labor and related taxes and benefits, subcontracted transportation and equipment
rental charges, maintenance and repairs of equipment and facilities,
environmental compliance costs and site maintenance costs for landfills, fuel,
and landfill assessment fees and taxes.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses consist primarily of management,
clerical and administrative salaries and costs and overhead, professional
services, facility rentals and associated costs, financial assurance bonding
premiums, and costs relating to marketing and sales.

The Company capitalizes direct incremental costs associated with purchase
acquisitions. Indirect development and acquisition costs, such as executive
salaries, corporate overhead, public relations, and other corporate services and
overhead are expensed as incurred. The Company also charges as an expense any
unamortized capitalized expenditures relating to proposed acquisitions that will
not be consummated.

At December 31, 1997, capitalized costs related directly to proposed
acquisitions that were not yet consummated were $492,000.   The Company
periodically reviews the future realization of these capitalized project costs
and makes provisions against capitalized costs that are associated with projects
that are not likely to be completed.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization consists primarily of depreciation of buildings,
vehicles, and machinery and equipment, amortization of capitalized direct
landfill development costs, and amortization expense related to intangible
assets including goodwill. Property and equipment is depreciated over the
estimated useful lives of the assets using the straight line method. Intangible
assets, including goodwill, are amortized over their useful lives using the
straight line method.

Certain direct engineering, legal, permitting, construction, and other costs
associated with expansion of landfills, together with related interest costs,
are capitalized and are amortized over the estimated useful life of the site
using the unit of production method as airspace is consumed. Successful
permitting of additional landfill disposal capacity improves the Company's
profitability by increasing the airspace over which the Company may amortize
capitalized costs of the landfill. At December 31, 1997, capitalized costs
related directly to the acquisition and expansion of existing and future
landfills and cell development were $84.5 million.


                                      10

<PAGE>
 
The Company's policy is to charge as an expense any unamortized capitalized
expenditures and advances relating to any landfill that is permanently closed or
any landfill expansion project that is abandoned.

MERGER COSTS

In connection with acquisitions accounted for under the pooling of interests
method, the Company records various merger costs including transaction-related
expenses, contractual costs and certain transition costs including the cost to
bring the acquired assets into conformity with corporate safety and operational
standards.

OTHER INCOME (EXPENSE)

Other income and expense, which includes gains and losses on the sale of
equipment, has not historically been material to the Company's results of
operations.

TAXES

The tax provision of $3.6 million for the six months ended December 31, 1997,
principally relates to the recording of federal and state tax liabilities at
statutory rates, adjusted for certain non-deductible items.  The tax provision
at December 31, 1996, principally relates to the completion of the merger with
Super Kwik, Inc., and reflects the recording of a deferred tax liability as of
the date of the merger, the date Super Kwik's S Corporation election was
terminated.


RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 1997 COMPARED TO THE
                      SIX MONTHS ENDED DECEMBER 31, 1996.

The following table presents the percentage each item in the consolidated
statements of operations bears to total revenues.

<TABLE>
<CAPTION>
                                                 SIX MONTHS ENDED
                                                   DECEMBER 31,
                                                   ------------    
                                               1997          1996
                                            ---------     ----------
                                                          (RESTATED)
<S>                                         <C>           <C>  
Revenues                                        100.0       100.0
 
Cost of revenues                                 63.4        75.3
Selling, general and administrative expenses     14.7        13.3
Depreciation and amortization                     7.0         4.8
Merger costs                                      3.5         4.5
                                            ---------     ----------
 
Operating income                                 11.4         2.1
 
Interest expense, net                            (1.3)       (1.7)
Other income (expense)                            0.4         0.2
                                            ---------     ----------
 
Income before income taxes                       10.5         0.6
 
Income tax expense                                4.5         1.7
                                            ---------     ---------- 
Net income (loss)                                 6.0        (1.1)
                                            =========     ==========
</TABLE>

                                      11

<PAGE>
 
Revenues for the six months ended December 31, 1997, were $78.0 million compared
to $41.3 million for the six months ended December 31, 1996, an increase of
$36.7 million, or 89%. The principal factor affecting the increase in revenues
was the impact of acquisitions accounted for as purchases made in the past
twelve months, primarily consisting of Pappy's, Inc., Pine Grove, Inc., and
several solid waste collection companies in the New York and Florida markets,
which contributed aggregate revenues of $19.7 million for the six months ended
December 31, 1997. The acquisitions of Super Kwik, Inc., Donno Company, Inc.,
and Hamm's which have been accounted for as poolings of interests, contributed
revenue of $29.0 million for the six months ended December 31, 1997 compared to
$26.5 million for the six months ended December 31, 1996, an increase of $2.5
million. Additionally, Apex Waste Services, Inc. contributed revenues of $8.7
million for the six months ended December 31, 1997, as compared to $4.4 million
for the six months ended December 31, 1996. The primary reason for this increase
is that, although this was accounted for as a pooling of interests, Apex did not
commence operations until October 1, 1996, thus it had no impact on the revenues
or expenses of the Company for the quarter ended September 30, 1996. Also,
because R&A Bender, Inc. was acquired December 10, 1996, it contributed only
$526,000 to revenues for the six months ended December 31, 1996, as compared to
revenues of $4.4 million for the six months ended December 31, 1997.

Cost of revenues for the six months ended December 31, 1997, were $49.4 million
compared to $31.1 million for the six months ended December 31, 1996, an
increase of $18.3 million. Cost of revenues as a percentage of revenues for the
six months ended December 31, 1997, was 63.4% compared to 75.3% for the same
period in fiscal 1997. This decrease in percentage was primarily due to (1) the
acquisition by the Company of three landfills, which operate at higher margins
than the Company's other operations, (2) economies of scale relating to the
Company's increase in size over the period, and (3) operating efficiencies.

Selling, general and administrative expenses for the six months ended December
31, 1997, were $11.5 million compared to $5.5 million for the six months ended
December 31, 1996, an increase of $6.0 million or 109%. These expenses as a
percentage of revenues for the six months ended December 31, 1997, were 14.7%
compared to 13.3% for the same period in fiscal 1997. The slight increase as a
percentage of revenues reflects the increased infrastructure, including
accounting, finance, legal and administration, necessary to integrate the
acquisitions consummated. This increase was partially offset by the elimination
of redundant overhead as acquisitions in certain geographic areas are
consolidated.

Depreciation and amortization totaled $5.4 million, or 7.0% of revenues, for the
six months ended December 31, 1997, versus $2.0 million, or 4.8% of revenues,
for the same period in fiscal 1997.  This increase was primarily due to
increased depreciation and landfill amortization as a result of businesses and
assets acquired as well as amortization of goodwill and other intangibles
associated with the acquisitions.

Merger costs incurred during the six months ended December 31, 1997, were $2.7
million, related to the acquisitions of Waste X Services, Inc., a solid waste
collection company acquired on August 14, 1997, Hamm's, acquired on December 1,
1997, and an additional charge for Apex, which was acquired on March 31, 1997.
These acquisitions were accounted for as poolings of interests.  Merger costs
for the same period in fiscal 1997 were $1.9 million and related to the
acquisition of Super Kwik, Inc.

The tax provision of $3.6 million for the six months ended December 31, 1997,
principally relates to the recording of federal and state tax liabilities at
statutory rates, adjusted for certain non-deductible items.  The tax provision
for the six months ended December 31, 1996, principally relates to the
completion of the merger with Super Kwik, Inc., and reflects the recording of a
deferred tax liability as of the date of the merger, the date Super Kwik's S
Corporation election was terminated.


 RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 1997 COMPARED TO
                   THE THREE MONTHS ENDED DECEMBER 31, 1996

As a result of the factors discussed above, the results of operations for the
three months ended December 31, 1997, compared to the three months ended
December 31, 1996, reflects an increase in revenues of $15.6 million.
Additionally, net income for the three months ended December 31, 1997 was $2.1
million as compared to $1.4 million for the same period in fiscal 1997.

                                      12

<PAGE>
 
LIQUIDITY AND CAPITAL RESOURCES

The Company's business requires substantial amounts of capital. The Company's
capital requirements include acquisitions, equipment purchases, and capital
expenditures for cell construction and expansion of its landfills. The Company
plans to meet these capital needs from various financing sources, including
borrowings, internally generated funds, and the issuance of common stock.

As of December 31, 1997, the Company had working capital of $3.5 million,
including cash and cash equivalents of $5.2 million. For the first six months of
fiscal 1998, net cash provided by operations was approximately $1.7 million, net
cash provided by financing activities was approximately $59.1 million (including
net proceeds of $85.3 million from the Company's recently completed public
offering of common stock) and net cash used in investing activities was
approximately $59.9 million resulting in an increase in cash and cash
equivalents of $0.9 million during this period. Capital expended during the
period, included: (1) $44.9 million relating to acquisitions, (2) $9.8 million
for the purchase of operating equipment and real estate, and (3) $5.2 million
related to the permitting and development of landfill space.

On September 25, 1996, the Company entered into a revolving credit facility with
BankBoston, N.A. (formerly known as First National Bank of Boston) and Bank of
America Illinois to provide for borrowings up to $30 million (the ''Credit
Facility''). The Credit Facility, which was increased to $50 million on January
27, 1997 and to $100 million on May 8, 1997 (revised in October 1997 to provide
borrowings up to $150 million pursuant to the revised and expanded credit
agreement), is available for repayment of debt, funding of acquisitions, working
capital, and for up to $50 million in letters of credit. As of February 10,
1998, approximately $17.3 million in letters of credit were outstanding under
the Credit Facility. Also, at February 10, 1998, there were $37 million of
borrowings under the Credit Facility.

At the Company's option, the interest rate on any loan under the Credit Facility
may be based on an adjusted prime rate or Eurodollar rate, as defined in the
loan agreement.  On February 10, 1998, the applicable interest rate was 6.37%.
The facility expires on October 2002. The Credit Facility requires the payment
of a commitment fee, payable in arrears, based in part on the unused balance and
provides for certain restrictions on, among other things, the ability of the
Company to incur borrowings, sell assets, acquire assets, make capital
expenditures or pay cash dividends. The facility also requires the maintenance
of certain financial ratios, including interest coverage ratios and balance
sheet and cash flow leverage ratios, and requires profitable operations. The
facility is collateralized by all the stock of the Company's subsidiaries,
whether now owned or hereafter acquired.

In August 1997, the Company completed a secondary public offering in which it
issued 5,175,000 shares of Common Stock at $17.75 per share.  The net proceeds
of $85.3 million after deducting underwriting discounts, commissions and other
offering expenses were used to reduce outstanding debt under the Company's
revolving credit agreement by $57.5 million with the remainder used for
acquisitions, capital expenditures and working capital.

To date the Company has required substantial amounts of capital and it expects
to continue to expend substantial amounts to support its acquisition program and
the expansion of its disposal and transportation operations. The Company
estimates aggregate capital expenditures, exclusive of acquisitions of
businesses, of approximately $25 million for the year ending June 30, 1998.
The Company has addressed its capital needs through private and public offerings
of Common Stock and by establishing a revolving credit facility. The Company
believes that the revolving credit facility, the funds expected to be generated
from operations, the net proceeds of the recently completed  public offering and
possible future equity offerings will provide adequate cash to fund the
Company's working capital and other cash needs for the foreseeable future.

The Company has financial obligations related to closure and post-closure
monitoring and maintenance of the Company's landfills. While the exact amount of
future closure and post-closure obligations cannot be determined, the Company
estimates that the costs of final closure of the currently permitted and
operating areas at the Company's landfills will be approximately $19.3 million,
of which $4.1 million has been accrued as of December 31, 1997. The Company
makes an accrual for these costs based on consumed airspace in relation to
Management's estimate of total available airspace of the landfills. In addition,
the Company has accrued $3.5 million for post-closure obligations as of December
31, 1997.

                                      13

<PAGE>
 
The Company maintains a bonding facility pursuant to certain statutory
requirements regarding financial assurance for the closure and post-closure
monitoring cost requirements for its Kentucky, West Virginia, Pennsylvania,
Florida, and Maryland disposal facilities. Bonds outstanding at December 31,
1997 were $1.7 million for the Kentucky landfill, $214,000 for the West Virginia
landfill, $7.2 million for the Pennsylvania landfills, and $220,000 for the
Maryland landfill. The bonds are collateralized by irrevocable letters of credit
and trust fund deposits. Additionally, the Company has on deposit $430,000 as
financial assurance for landfill closure and post-closure obligations for closed
disposal areas. The trust fund and the certificates of deposit are restricted
from current operations and are included within other noncurrent assets. The
Company's Kentucky landfill bonding requirement will increase by $3.0 million
for closure and $300,000 for post-closure of the expansion area permitted
October 14, 1996 (reissued February 26, 1997). The Company anticipates that the
West Virginia bonding requirements will substantially increase when West
Virginia's solid waste program is approved by the federal government. Financial
assurance requirements could increase to approximately $3.1 million for closure
and $3.7 million for post-closure monitoring and care. In connection with the
Illinois landfill, which the Company has exercised an option to acquire, the
Company has agreed to indemnify a surety providing financial assurance for
closure and post-closure care requirements for an unlined landfill located
adjacent to the Illinois landfill in the amount of $646,000 in the event the
owner of the adjacent landfill defaults on its closure and/or post-closure care
obligations. Additional collateral requirements may be imposed upon the Company
as a result of additional landfill acquisitions or changes in current
regulations which may adversely effect its profitability. The Company
anticipates providing financial assurance incrementally, as permitted by
regulations, over the life of a facility as disposal cells are constructed and
certified for acceptance of waste.

SEASONALITY AND INFLATION

The Company's revenues tend to be somewhat higher in the spring and summer
months. This is primarily attributable to the fact that (i) the volume of waste
relating to construction and demolition activities tends to increase in the
spring and summer months and (ii) the volume of industrial and residential waste
in the regions in which the Company operates tends to decrease during the winter
months. In addition, particularly harsh weather conditions may affect the
Company's operations by interfering with collection, transportation, and
disposal operations, delaying the development of landfill capacity, and/or
reducing the volume of waste generated by the Company's customers.

The Company believes that inflation and changing prices have not had, and are
not expected to have, any material adverse effect on its results of operations
in the near future.


PART II
OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES

  (C)      Private Placements:

     On December 1, 1997, the Company completed its merger with Hamm's
     Sanitation, Inc. ("Hamm's") and H.S.S., Inc. ("H.S.S.") with 715,032 shares
     of common stock of the Company, par value $.01 per share issued in exchange
     for all issued and outstanding shares of Hamm's and H.S.S.

     Under the private placements described above, the Company has agreed to
     register one-third of the Shares for resale under the Securities Act of
     1933 (the "Act"). The sale of the Shares was exempt from the registration
     provisions of the Act pursuant to Section 4(2) of the Act and/or Regulation
     D promulgated under the Act for transactions not involving a public
     offering, based on the fact that the private placements were made to
     accredited investors who had access to financial and other relevant data
     concerning the Company, its financial condition, business and assets. The
     securities sold in the private placements may not be reoffered or resold
     absent registration under the Act or available exemptions from such
     registration requirements.

                                      14
<PAGE>

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits:   
 
          10.65  First Amendment dated November 18, 1997 to the Amended and
                 Restated Revolving Credit Agreement dated October 27, 1997
                 between the Company, its subsidiaries, Bank Boston, N.A.,
                 Banque Paribas, Bank of America National Trust and Savings
                 Association, Fleet Bank, N.A., and Summit Bank.
               
          10.66  Amendment No. 1 to Amended and Restated Employment Contract
                 dated December 17, 1997 by and between the Company and Dennis
                 M. Grimm.
               
          10.67  Eastern Environmental Services, Inc. 1997 Stock Option Plan.
               
          27     Financial Data Schedules (Electronic filed only).



     (b)  Current Reports on Form 8-K or 8-K/A:
 
          On October 10, 1997, the Company filed a report on Form 8-K/A dated
          August 15, 1997, under Item 7, to provide audited financial statements
          of the businesses acquired for the year ended December 31, 1996 and
          unaudited pro forma financial information for the year ended June 30,
          1997 with respect to its acquisition of Pappy, Inc.

          The Company filed reports on Form 8-K, dated October 17, 1997 and
          December 1, 1997 under Item 2, to report the pending and completed
          acquisition of the outstanding shares of stock of Pine Grove, Inc.
          Financial statements of Pine Grove, Inc. and pro forma financial
          information of the Company required under "Item 7: Financial
          Statements and Exhibits" were filed on Form 8-K/A Amendment No. 1 on
          February 17, 1998.

          The Company filed a report on Form 8-K, dated October 27, 1997, under
          Item 5, to report a revision to the Company's existing Revolving
          Credit Facility.

          On November 3, 1997, the Company filed a report on Form 8-K/A dated
          August 20, 1997, under Item 7, to provide audited financial statements
          of the business acquired for the year ended December 31, 1996 and
          certain unaudited pro forma financial information for the year ended
          June 30, 1997 with respect to its acquisition of Soil Remediation of
          Philadelphia, Inc. ("SRP").

          The Company filed a report on Form 8-K, dated December 1, 1997, under
          Item 2, to report the acquisition and merger with Hamm's Sanitation,
          Inc. ("Hamm's") and H.S.S., Inc. ("H.S.S.").  Historic financial
          statements of the businesses acquired and pro forma financial
          information of the Company were not required due to the transaction
          being below the financial statement filing requirements as per
          applicable regulations under the Securities Exchange Act of 1934.

                                      15
<PAGE>
 
 
                                  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 thereto duly authorized.



          EASTERN ENVIRONMENTAL SERVICES, INC.


          BY: /s/ Louis D. Paolino, Jr.
             --------------------------------------------
             Louis D. Paolino, Jr., Chairman


          BY: /s/ Gregory M. Krzemien
             ----------------------------------------
             Gregory M. Krzemien, Chief Financial Officer


DATE:   February 17, 1998

                                      16

<PAGE>
 
                                 EXHIBIT INDEX

       Exhibit   
       No.       Description
       -------   -----------
 
       10.65     First Amendment dated November 18, 1997 to the Amended and
                 Restated Revolving Credit Agreement dated October 27, 1997
                 between the Company, its subsidiaries, Bank Boston, N.A.,
                 Banque Paribas, Bank of America National Trust and Savings
                 Association, Fleet Bank, N.A., and Summit Bank.
               
       10.66     Amendment No. 1 to Amended and Restated Employment Contract
                 dated December 17, 1997 by and between the Company and Dennis
                 M. Grimm.
               
       10.67     Eastern Environmental Services, Inc. 1997 Stock Option Plan.
               
       27        Financial Data Schedules (Electronic filed only).