UNITED STATES
                        SECURITES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-QSB

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

                 {X} QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                      OF THE SECURTIES EXCHANGE ACT OF 1934

                  For the Quarterly Period Ended June 30, 1997

                                       OR

                 { } TRANSITION REPORT UNDER SECTION 13 OR 15(d)
                               OF THE EXCHANGE ACT

                         Commission File Number 0-22388

                               EIF HOLDINGS, INC.
        -----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)


               HAWAII                                99-0273889
   -------------------------------              -------------------
   (State or other jurisdiction of               (I.R.S. Employer
    incorporation or organization)              Identification No.)


                           15201 Pipeline Lane, Ste. B
                       Huntington Beach, California 92649
                    ----------------------------------------
                    (Address of principal executive offices)

                                 (714) 897-9000
                           ---------------------------
                           (Issuer's telephone number)

                                 Not applicable
--------------------------------------------------------------------------------
(Former name,former address and former fiscal year if changed since last report)

Check whether the issuer(1) filed all reports required to be filed by Section 13
or 15(d) of the  Exchange  Act during  the past 12  months(or  for such  shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.

                            Yes        No   X
                                -----     -----

State the number of shares outstanding of each of the issuer's classes of common
equity, as the latest practicable date.

               Class                           Outstanding at December 10, 1997
               -----                           -------------------------------
     Common stock, no par value                           24,618,201


Transitional Small Business Disclosure Format (Check one):

Yes     ; No  X
   -----    -----

<PAGE>

                                EIF HOLDINGS INC.

                                Table of Contents

PART I.  FINANCIAL INFORMATION                                              Page

Item 1.  Financial Statements (Unaudited)

         Consolidated Balance Sheets as of June 30, 1997
           and September 30, 1996........................................... 3

         Consolidated Statements of Operations for the Three and Nine
           Months Ended June 30, 1997 and 1996.. ........................... 4

         Consolidated Statements of Cashflow for the Nine
           Months Ended June 30, 1997 and 1996.............................. 5

         Notes to Consolidated Interim Financial Statements................. 6

Item 2.  Management's Discussion and Analysis of Financial Condition and
           Results of Operations............................................ 8


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings.................................................. 11

Item 5.  Other Information.................................................. 11

Item 6.  Exhibits and Reports on Form 8-K................................... 12

         Signatures......................................................... 13

                                     Page 2

<PAGE>

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS


                               EIF HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEETS


                                                     June 30,      September 30,
                                                       1997            1996
                                                   ------------    ------------
                                                    (Unaudited)      (Audited)
          ASSETS
Current assets:
   Cash........................................... $    137,166    $    178,231
   Accounts receivable, net.......................    2,576,823       7,299,059
   Note Receivable................................    2,500,000            --
   Costs and estimated earnings on contracts
    in progress in excess of billings.............      104,349         326,343
   Supplies inventory.............................      271,892         478,370
   Prepaid assets.................................      142,147          85,816
                                                   ------------    ------------
        Total current assets......................    5,732,377       8,367,819

Machinery and equipment, net......................      698,212       1,275,087

Other noncurrent assets:
   Goodwill.......................................      766,070         881,680
   Other assets...................................       26,846          50,917
                                                   ------------    ------------
                                                        792,916         932,597
                                                   ------------    ------------
   Total assets................................... $  7,223,505    $ 10,575,503
                                                   ============    ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
  Accounts payable and accrued expenses........... $  2,551,308    $  6,428,112
  Notes payable...................................    3,278,385       1,856,751
  Billings in excess of costs and estimated
   earnings on contracts in progress..............       21,022         737,476
  Note payable due to shareholder.................    8,215,926       4,908,317
  Reserve for contingencies.......................    1,349,000            --
  Net Liabilities of Discontinued Operations......    2,156,568            --
  Current maturities of long-term debt............         --           144,311
                                                   ------------    ------------
        Total current liabilities.................   17,572,209      14,074,967

Long term debt...................................          --            73,882

Stockholders' deficit
  Common stock...................................     3,019,246       3,019,246
  Additional paid-in capital.....................       804,696         804,696
  Accumulated deficit............................   (14,172,646)     (7,397,288)
                                                   ------------    ------------
        Total stockholders' deficit..............   (10,348,704)     (3,573,346)
                                                   ------------    ------------
   Total liabilities and stockholders' deficit...  $  7,223,505    $ 10,575,503
                                                   ============    ============

The  balance  sheet at  September  30,  1996 has been  derived  from the audited
financial  statements  at that date but does not include all of the  information
and footnotes required by generally accepted accounting  principles for complete
financial statement presentation.

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

                                     Page 3
<PAGE>

<TABLE>
<CAPTION>

                               EIF HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                                        Three Months Ended              Nine Months Ended
                                                             June 30,                        June 30,
                                                   ----------------------------    ----------------------------
                                                       1997             1996           1997            1996
                                                   ------------    ------------    ------------    ------------
<S>                                                <C>             <C>             <C>             <C>

Revenue........................................... $  3,857,837    $  7,863,783    $ 10,246,244    $ 19,160,454

Cost of services..................................    2,275,368       5,886,902       6,025,219      13,606,949
                                                   ------------    ------------    ------------    ------------
 Gross profit.....................................    1,582,469       1,976,881       4,221,025       5,553,505

Selling, general and administrative expenses......    1,670,694       2,684,248       6,322,318       7,919,916
                                                   ------------    ------------    ------------    ------------
                                                        (88,225)       (707,367)     (2,101,293)     (2,366,411)
Other:
 Other (income)expense............................       22,419           3,653          22,419         (47,378)
 Interest Expense.................................      361,996          93,596       1,105,012         302,873
                                                   ------------    ------------    ------------    ------------
Loss before income taxes..........................     (472,640)       (804,616)     (3,228,724)     (2,621,906)

Income taxes......................................         --              --              --              --
                                                   ------------    ------------    ------------    ------------
 Loss from continuing operations.................. $   (472,640)   $   (804,616)   $ (3,228,724)   $ (2,621,906)

Discontinued operations, net of income taxes:
 Loss from operations.............................      (88,614)           --        (5,758,582)           --
 Loss on disposal of assets from
     discontinued operations......................     (158,630)           --          (158,630)           --
 Gain on sale of Kelar Controls, Inc..............    2,370,580            --         2,370,580            --
                                                   ------------    ------------    ------------    ------------
                                                      2,123,336            --        (3,546,632)           --
                                                   ------------    ------------    ------------    ------------
Net income (loss)................................. $  1,650,696    $   (804,616)   $ (6,775,356)   $ (2,621,906)
                                                   ============    ============    ============    ============

Net income (loss) per share:
 Continuing operations............................ $      (0.02)   $      (0.03)   $      (0.13)   $      (0.13)
Discontinued operations:
 From operations.................................. $      (0.00)   $       --      $      (0.23)   $       --
 From disposition................................. $       0.09    $       --      $       0.09    $       --
                                                   ------------    ------------    ------------    ------------
Net income (loss) per share....................... $       0.07   $       (0.03)   $      (0.27)   $      (0.13)
                                                   ============    ============    ============    ============

Weighted average number of common
  shares outstanding..............................   24,618,201      24,618,201      24,618,201      20,056,157
                                                   ============    ============    ============    ============
</TABLE>


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

                                     Page 4
<PAGE>

                               EIF HOLDINGS, INC.
                       CONSOLIDATED STATEMENTS OF CASHFLOW
                                   (UNAUDITED)

                                                        Nine Months ended
                                                             June 30,
                                                   ----------------------------
                                                       1997           1996
                                                   ------------    ------------

Net cash used in operating activities............. $ (6,798,727)    $(3,362,602)

Cash flow from investing activities
    Purchase of machinery and equipment...........     (198,228)       (165,308)
    Net liabilities in discontinued operations....    2,156,568            --
                                                   ------------    ------------

Net cash provided by (used in) investing
  activities......................................    1,958,340        (165,308)

Cash flow from financing activities
   Change in Cash Overdraft.......................         --           211,969
   Net advances on notes payable..................      685,595         905,942
   Net advances on notes due to shareholder.......    4,187,609            --
   Proceeds from sale of common stock.............         --         1,000,000
   Net (payments) proceeds on long-term debt......      (73,882)      1,448,574
                                                   ------------    ------------

Net cash provided by financing activities.........    4,799,322       3,566,485
                                                   ------------     -----------

Net (decrease) increase in cash...................      (41,065)         38,575

Cash, beginning of period.........................      178,231          70,775
                                                   ------------    ------------

Cash, end of period............................... $    137,166   $    109,350
                                                   ============    ============

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

On June 30, 1997, the Company sold all of the issued and  outstanding  shares of
Kelar  Controls  to Regal  Oak  Properties,  Inc.  in  return  for a  $2,500,000
Promissory Note.

During the nine months ended June 30,  1996,  the Company  acquired  $150,512 of
machinery and equipment under capitalized leases.


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

                                     Page 5
<PAGE>

                               EIF HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE 1 - BASIS OF PRESENTATION

The accompanying  unaudited interim consolidated  financial statements have been
prepared by EIF Holdings,  Inc., (the  "Company"),  in accordance with generally
accepted  accounting  principles pursuant to Regulation SB of the Securities and
Exchange  Commission.  Certain  information  and footnote  disclosures  normally
included in audited financial  statements  prepared in accordance with generally
accepted  accounting  principles  have been  condensed or omitted.  Accordingly,
these interim  consolidated  financial  statements should be read in conjunction
with the  Company's  consolidated  financial  statements  and  related  notes as
contained in Form 10-KSB for the year ended  September  30, 1996. In the opinion
of  management,  the  interim  consolidated  financial  statements  reflect  all
adjustments,   including  normal  recurring  adjustments,   necessary  for  fair
presentation of the interim periods presented. The results of operations for the
three month period ended are not necessarily indicative of results of operations
to be expected for the full year.

The accompanying  consolidated  financial statements include the accounts of the
Company and its wholly-owned subsidiaries; P.W. Stephens Services, Inc. and P.W.
Stephens Contractors,  Inc. collectively referred to as "P.W. Stephens St. Louis
and P.W.  Stephens  Residential,  Inc.,  (which was formerly  combined with P.W.
Stephens  Contractors,  Inc.  and QHI  Stephens  Inc.  and  referred to as "P.W.
Stephens").  The P.W. Stephens  Contractors,  Inc. and QHI Stephens Contractors,
Inc.  subsidiaries  were discontinued in May 1997 and have been accounted for as
discontinued operations for all current periods reported under this Form 10-QSB.
Kelar Controls, Inc. was divested on June 30, 1997, accordingly their operations
are reflected through that date on the interim financial statements.

Net Income  (Loss) Per Share  Information.  The net loss per share  amounts have
been  computed by  dividing  net loss by the  weighted-average  number of common
shares outstanding during the respective periods.

In February 1997, The Financial  Accounting Standards Board Issued Statement No.
128,  Earnings Per Share,  which is required to be adopted on December 31, 1997.
At that time,  the Company will be required to change the method  currently used
to compute  earnings per share and to restate all prior  periods.  Under the new
requirements for calculating  primary earnings per share, the dilutive effect of
stock options will be excluded.  The impact of statement 128 on the  calculation
of fully diluted earnings per share is not expected to be material.

Reclassifications.  Certain  reclassifications  have  been  made to  prior  year
financial statements to conform with the current year presentation.

NOTE 2 - DISCONTINUED OPERATIONS

Resulting  from  ongoing  losses,  and in keeping  with the  Company's  focus on
specializing in industrial maintenance services, management made the decision in
May 1997 to discontinue  the commercial  asbestos  abatement  operations of P.W.
Stephens Contractors,  Inc. and QHI Stephens,  Inc. The discontinued  operations
have been  segregated  from  continuing  operations  in the current year interim
financial statements included on this Form 10-QSB.

Revenue from the discontinued operations for the nine months ended June 30, 1997
was $6,975,974 compared to $9,883,907 for the same period in the prior year. The
decline in revenue was the result of the Company's  decision not to accept major
new jobs for  several  months  while the  commercial  asbestos  operations  were
evaluated.  The  total  net loss for the  discontinued  operations  for the nine
months ended June 30, 1997 was  $5,917,212  compared to $1,421,575  for the same
period in 1996. The increased loss was the combined  result of ongoing losses on
several  large  jobs,  an  increase  in reserves  for  accounts  receivable  and
contingencies relating to the decision to discontinue the operations.

                                     Page 6
<PAGE>

The following table  summarizes the net liabilities  related to the discontinued
operations:

                                                    June 30,
                                                      1997
                                                 ------------
  Current assets................................ $  2,295,975
  Property and equipment, net...................      140,720
  Current liabilites............................   (4,593,263)
                                                 ------------
    Net liabilities related to discontinued
     operations................................. $ (2,156,568)
                                                 ============

Included in the current  liabilites  at June 30, 1997 is a provision for loss on
discontinued operations of $300,000 which consists of estimated costs associated
with the disposal and operating  losses expected  through February 28, 1998, the
phase out period.  During the current quarter, the Company sold certain property
and  equipment  with a net book value of  $258,933  related to the  discontinued
operations  that  could  not be used in the  existing  businesses.  The  Company
received proceeds of $99,950 for the sale of those assets resulting in a loss on
disposition  of assets in the amount of  $158,983.  The  remaining  property and
equipment consists of vehicles that will be utilized in the ongoing operations.

NOTE 3 - BUSINESS DIVESTITURE

As of June 30,  1997,  the Company  completed  the sale of all of the issued and
outstanding shares of Kelar Controls, Inc. (Kelar) to Regal Oak Properties, Inc.
for $2,500,000.  Pursuant to the Acquisition  Agreement,  the Company received a
Promissory  Note for the full  purchase  price.  The note is  payable in one (1)
installment due June 30, 1998,  accrues interest at 10% per annum and is secured
by performance bonds.

NOTE 4 - TRANSACTIONS WITH SHAREHOLDER

During the fiscal year ended September 30, 1996, the Company entered into a line
of credit with a major shareholder, American Eco Corporation (AEC). The original
line of credit carried a maximum borrowing amount of $5,250,000, interest at the
prime rate plus 2% per  annum,  was  unsecured  and  matures  on July 31,  1997.
Discussions  are continuing  regarding the potential  exchange of the AEC credit
line for additional  shares of the Company's  common stock. In conjunction  with
those  discussions,  AEC has proposed an extension  and  amendment to the credit
facility.  Until an amendment  is  formalized,  AEC has allowed the  outstanding
borrowing  amount to exceed the  maximum  borrowing  amount  under the  original
credit  facility.  Prior to any exchange of part or all of the line of credit to
common stock,  the terms of the exchange must be negotiated and the Company must
receive  shareholder  approval to increase its authorized  number of outstanding
shares. There is no assurance that this can be achieved.

Pursuant to an agreement  effective October 1, 1996 between AEC and the Company.
AEC has agreed to provide  certain  services to the  Company in  exchange  for a
management fee to be paid on a quarterly basis.  The services include  providing
the Company  with  management  guidance as well as  guaranteeing  certain of the
Company's  obligations  with its  creditors,  in order to allow the  Company  to
receive  favorable  terms  with its  creditors.  The  agreement  provides  for a
quarterly payment of $1,000,000.  AEC stopped providing  management services for
the Company upon the  appointment  of Frank Fradella as President and CEO of the
Company in May 1997.  Therefore the  management  fee was pro-rated for the third
quarter and amounted to $300,000.  For the nine month period ended June 30, 1997
total management fees amounted to $2,300,000. AEC continues to guarantee certain
of the Company's obligations.


NOTE 5 - NOTES PAYABLE

On  December  1,  1996 the  Company  executed  a  certain  Promissory  Note (the
"Original  Note") in the principal sum of $300,000 payable to a certain investor
group.  The Original Note carried interest of 12% per annum with a maturity date
of March 13, 1997. On April 17, 1997 the Original Note was Renewed, Extended and
Enlarged  which  extended  the  maturity  date to July 1, 1997 and  allowed  the
Company to borrow an aditional $100,000. All other terms under the Original Note
remained unchanged.  In connection with the note and renewal and extension,  the
Company  committed to issue 350,000 warrants to purchase the common stock of the
Company subject to shareholder  approval of an increase in the authorized number
of outstanding shares.

On September 30, 1996 the Company  obtained a $1,300,000 line of credit facility
from an investor group.  The terms of the revolving  credit facility provide for
an interest rate of 10% per annum and matures on March 1, 1998. The  outstanding
balance under the facility as of June 30, 1996 was $1,030,000.


NOTE 6 - RESERVE FOR CONTINGENCIES

See Part II, Item 1.  Legal Proceedings.

                                     Page 7
<PAGE>

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

The Company has included on this Form 10-QSB certain forward-looking statements.
Forward-looking  statements  are  statements  relating to the  Company's  plans,
goals, objetives, strategies, future performance and events as well as any other
statement  or  representation  other than those  relating  to  historical  data.
Forward-looking  statements  inherently  possess risks and  uncertainties.  As a
result, although the Company's forward-looking  statements are expressed in good
faith, the Company's actual results could differ materially.

The results of operations  for the three and nine months ended June 30, 1997 are
not  necessarily  indicative of the Company's  results for future  periods.  The
following  discussion should be read in conjunction with the unaudited financial
statements  and the  notes  included  herein  as well as the  audited  financial
statements and the notes thereto for the year ended September 30, 1996.

General

The  Company  has been  engaged in the  business  of  asbestos  abatement,  lead
abatement,  soil and hazardous waste  remediation and industrial  cleaning.  The
Company  services  commercial,  industrial and residential  customers  primarily
located in the midwest and on the west coast of the United States. The Company's
objective is to become a full service  industrial  maintenance  and  remediation
provider to  customers  throughout  the United  States.  The Company  expects to
achieve its  objective  by  expanding  the service  territories  of its existing
operations and to obtain additional geographic presence through acquisitions.

In May 1997,  Frank J.  Fradella  was named  President  and CEO of the  Company.
Shortly after his appointment,  Mr. Fradella and American Eco Corporation  (AEC)
began  implementing  a plan to stablize the Company's  operations  and financial
position and to provide it with the resources  necessary to allow  management to
pursue its new strategic  direction.  Several steps of this plan were  completed
during the third quarter.  The first step taken was to discontinue the Company's
commercial  asbestos  operations  (P.W.  Stephens  Contractors,   Inc.  and  QHI
Stephens,  Inc.)  which  conistently  generated  losses  and had been a drain on
capital  resources.  The remaining  operations  then  experienced a reduction in
administrative  staffing levels and overhead costs of approximately 35% in order
to position those  operations to generate  positive cash flows. AEC has proposed
for an increase of $9,750,000 in the Company's  Line of Credit to $15,000,000 in
order to allow the  Company to meet  certain  of its  existing  obligations.  In
conjunction  with  the  proposed  increase  in the Line of  Credit,  AEC and the
Company are discussing the possibility of allowing AEC to convert its obligation
from the  Company  into  common  stock  subject to  shareholder  approval  of an
increase in the authorized  shares of the Company's  common stock.  No assurance
can be made that the  shareholders  will approve such an increase.  In line with
the Company's strategy to focus in the specialize maintenance services industry,
the  Company  sold all of the  issued  and  outstanding  common  shares of Kelar
Controls, Inc. to Regal Oak. Pursuant to the Aquisition Agreement dated June 30,
1997, the Company sold its interest in Kelar for  $2,500,000.  In addition,  the
Company  secured  new  financial  management  to  help  stablize  the  Company's
financial   reporting  function  which  was  being  negatively   impacted  by  a
computerized  accounting system  conversion which took  approximately six months
longer than anticipated to complete.

                                     Page 8
<PAGE>

                             Results of Operations

Revenue:

Revenue for the nine months ended June 30, 1997  increased  10.5% to $10,246,000
from  $9,277,000  for the same period in 1996.  The  increase in revenue was the
combined  result of an increase in revenue from Kelar of 65.0% to $1,088,000,  a
12.3%  increase  in revenue  from P.W.  Stephens  St.Louis to  $4,564,258  and a
decrease in revenue of (8.0%) to $4,588,000 from P.W. Stephens Residential.  The
increase  in Kelar's  revenue  was  primarily  the result of an  increase in the
current  quarter from a large ongoing  energy savings  contract  compared to the
same period in 1996. The decrease in revenue for P.W.  Stephens  Residential for
the nine month period was offset by a 20% increase in the current  quarter.  The
revenue for both the three and nine months ended June 30, 1997 were  affected by
the normal  fluctuations  in being  awarded new  contracts and the timing of the
commencement  of new work.  The increase in revenue for P.W.  Stephens St. Louis
was primarily due to an increased sales effort  implemented  over the nine month
period  which has  resulted  in the  awarding  of new  contracts  in the current
quarter.

Gross Profit:

Gross  Profit as a  percentage  of revenue for the three and nine month  periods
ended  June 30,  1997 was 41.0% and 41.2%  respectively,  compared  to 37.0% and
40.0% for the same  periods  in 1996.  P.W.  Stephens  St.  Louis and Kelar both
experienced an increase in its gross profit margins compared to the same periods
in the prior year while P.W. Stephens  Residential's gross pofit margin remained
consistent.  The  increase in Kelar's  gross  profit for the current  nine month
period of 10% was due to an  increase  in revenue  from  shared  energy  savings
contracts.  Once initial work is completed and expensed,  these projects produce
ongoing  revenue while  incurring  minimal  costs.  St. Louis has  maintained an
increase in its gross profit margin of  approximately  5% throughout the current
year compared to the prior year  resulting  from the  recognition of operational
efficiencies implemented in the prior year.

Selling, general and administrative expenses:

Selling,  general  and  administrative  expenses  (SG&A)  for the three and nine
months ended June 30, 1997 were $1,471,000 and $6,122,000  respectively compared
to  $1,578,000  and  $4,657,000  for the same  periods  in the prior  year.  The
increase  in SG&A  expenses  for the  current  quarter is  primarily  due to the
$300,000 of additional  management fees incurred during the period. For the nine
month  period  ended June 30,  1997 the  increase  in SG&A was the result of the
$2,300,000  management fees incurred,  an increase in litigation and contingency
reserves of $1,049,000  and an increase in the reserve for trade  receivables of
$220,000.  Without the impact of these items, the Company's SG&A as a percentage
of revenue has decreased 24.8% resulting from the cost  containment  initiatives
implemented during the current year.

Other Expenses

Interest  expense  during  the three and nine  months  ended  June 30,  1997 was
$362,000  and  $1,105,000  respectively compared to $94,000 and $303,000 for the
same periods in 1996.  The increase was primarily due to additional  outstanding
borrowings  under  the  line  of  credit  from  its  shareholder,  American  Eco
Corporation and the utilization of certain factoring arrangements.

Net Loss

The net loss for the three months ended June 30, 1997 increased to  ($1,759,000)
compared to a net loss of  ($1,522,000)  during the same period in 1996.  Losses
during the current period reflect the combined result of an increase in interest
expense,   the  additional   management   fees  incurred  and  the  increase  in
contingencies and trade receivable reserves recognized in the current year.

                                     Page 9
<PAGE>

Discontinued Operations

Revenue from the discontinued operations for the nine months ended June 30, 1997
was $6,975,974 compared to $9,883,907.  The decline in revenue was the result of
the  Company's  decision  not to accept new jobs for  several  months  while the
commercial  asbestos  operations were evaluated.  The total net loss,  including
loss on disposal of assets, for the discontinued  operations for the nine months
ended June 30, 1997 was $6,217,212 compared to $1,421,575 for the same period in
1996.  The increased  loss was the combined  result of ongoing losses on several
large jobs, an increase in reserves for accounts  receivable  and  contingencies
relating to the decision to discontinue the operations.


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

Borrowings  from American Eco Corporation  (AEC) remained the Company's  primary
source of funding. As of June 30, 1997 the balance due to AEC was $8,215,926, an
increase of $1,035,284 and $3,307,609 for the three and nine month periods ended
June 30, 1997  compared to the  September  30, 1996 fiscal year end amount.  The
original  terms of the AEC  facility  carried  a  maximum  borrowing  amount  of
$5,250,000,  interest  at the prime rate plus 2% per annum,  was  unsecured  and
matured on July 31, 1997.  There have been proposals  regarding an extension and
amendment to the credit facility.  Until an amendment  agreement can be reached,
AEC has allowed the outstanding  amount to exceed the maximum  borrowing  amount
under the original  credit  facility.  Discussions  are  continuing  regarding a
potential exchange of the AEC credit line for additional shares of the Company's
common  stock.  Prior to any  exchange  of part or all of the line of  credit to
common stock,  the terms of the exchange must be negotiated and the Company must
receive  shareholder  approval to increase its authorized  number of outstanding
shares. There is no assurance that this can be achieved.

The Company  continued to utilize  factoring  arrangements  as a source of funds
during the  quarter  ended June 30,  1997.  P.W.  Stephens  St.  Louis  factored
contract  receivables  during the period in the  amount of  $227,638.  Under the
terms of the  factoring  arrangement,  the Company  receives 65% of the factored
receivables  at  an  annual  effective   interest  rate  of  approximately  58%.
Management  does not intend to utilize  factoring  arrangements as a significant
source of funds on an ongoing basis.

The Company also  received  funds from an amendment and extension of an existing
Promissory Note with an investor group.  The face value of the original note was
$300,000  with an interest  rate of 12% and a maturity  date of March 13,  1997.
During the quarter  ended June 30,  1997,  the note was extended to July 1, 1997
and amended to allow the Company to borrow an  additional  $100,000.  As part of
the original note,  amendment and extension,  the Company also commited to issue
350,000  warrants to purchase  the  Company's  common stock which are subject to
shareholder  approval  of an increase in the  authorized  number of  outstanding
shares.

On June 30, 1997, the Company sold its interest in Kelar Controls for $2,500,000
to Regal Oak Properties,  Inc. Regal Oak financed the transaction by issuing the
Company a Promissory  Note with an interest rate of 10% which is due and payable
in one (1)  installment  on June 30, 1998. The payment is secured by performance
bonds.

Neither the Company nor any of its subsidiaries  have a bank line of credit from
which to borrow. As part of the Company's strategic  initiatives,  and as stated
in the  Management  Agreement  between  AEC and the  Company,  AEC has agreed to
assist the Company in obtaining favorable  financing,  including but not limited
to providing any necessary guarantees.  There is no assurance that financing can
be achieved. The Company believes,  however, that the additional funds available
under the AEC line of credit,  the proceeds  from the sale of Kelar and the cash
flows  resulting  from the remaining  operations  will be sufficient to meet the
obligations  from  the  discontinued  operations  and  the  Company's  operating
requirements until such time as other sources of financing can be obtained.

                                    Page 10
<PAGE>
PART II   OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

The nature and scope of the Company's business  operations bring it into regular
contact  with the  general  public,  a  variety  of  businesses  and  government
agencies.  These  activities  inherently  subject  the Company to the hazards of
litigation,  which are defended in the normal course of business. The Company is
currently  involved  in  several   litigations  and   investigations   including
regulatory  compliance.  Although  the  outcome of these  claims is not  clearly
determinable at the present time,  Management believes that such proceedings are
either adequately covered by insurance, or if uninsured, by the estimated losses
it has recorded to date.  The resolution of such claims,  however,  could have a
material  effect on the  Company's  results of  operations  or cash  flows.  The
reserves for litigation and contingencies recorded by the Company as of June 30,
1997 total $1,349,400.

ITEM 5.   OTHER INFORMATION

DISCONTINUED OPERATIONS

See Note 2 Discontinued Operations in PART I., Item 1.  Financial Statements.

DIVESTITURE

See Note 3 Business Divestiture in PART I., Item 1.  Financial Statements.


                                     Page 11
<PAGE>

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K
          --------------------------------

(a)   EXHIBITS

      Exhibit 10.1    Acquisition Agreement by and between the Company and
                      Regal Oak Properties, Inc. dated June 30, 1997 for the
                      sale of Kelar Controls, Inc.

      Exhibit 10.2    Secured Promissory Note between the Company and Regal Oak
                      Properties, Inc. dated June 30, 1997.

      Exhibit 10.3    Security Agreement Pledge between the Company and Regal
                      Oak Properties, Inc. dated June 30, 1997.

      Exhibit 10.4    Renewal,  Extension and  Enlargement  Promissory Note
                      between the Company and Truman Harty dated April 4, 1997.

      Exhibit 27.     Financial Data Schedule

(b)   REPORTS ON FORM 8-K

      No reports on Form 8-K were filed during the quarter ended
      June 30, 1997.




                                     Page 12
<PAGE>


                                   SIGNATURES

In accordance with the  requirements of the Exchange Act, the Registrant  caused
this  report  to be  signed  on its  behalf  by the  undersigned,  thereto  duly
authorized.

                                    EIF HOLDINGS, INC.
                                    ------------------
                                    Registrant


January 13, 1998               By: /S/ J. Drennan Lowell
                                    -----------------------------
                                    J. Drennan Lowell
                                    Vice President, Chief Financial Officer,
                                    Treasurer and Secretary



                                    Page 13
<PAGE>

                               EIF HOLDINGS, INC.

                                 EXHIBIT INDEX


         Exhibit           Description                                     Page
         -------           -----------                                     ----

      Exhibit 10.1    Acquisition Agreement by and between the Company
                      and Regal Oak Properties, Inc. dated June 30, 1997
                      for the sale of Kelar Controls, Inc.................  15

      Exhibit 10.2    Secured Promissory Note between the Company and
                      Regal Oak Properties, Inc. dated June 30, 1997......  36

      Exhibit 10.3    Security Agreement Pledge between the Company and
                      Regal Oak Properties, Inc. dated June 30, 1997......  38

      Exhibit 10.4    Renewal, Extension and Enlargement Promissory
                      Note between the Company and Truman Harty dated
                      April 4, 1997.......................................  45

      Exhibit 27.     Financial Data Schedule.............................  46




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