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

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

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

                  For the Quarterly Period Ended June 30, 1998

                                       OR

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

                         Commission File Number 0-22388

                               US Industrial Services, Inc.
        ----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

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

                                 54 Stiles Road
                                 Salem, NH 03079
                    ----------------------------------------
                    (Address of principal executive offices)

                                 (603) 890-3680
                           ---------------------------
                           (Issuer's telephone number)

                               EIF Holdings, Inc.
--------------------------------------------------------------------------------
(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  X  No
                                        ---    ---

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

               Class                          Outstanding at July 20, 1998
               -----                          -------------------------------
      Common stock, $0.01 par value                        3,461,820

Transitional Small Business Disclosure Format (Check one):

Yes      ; No   X
    -----     -----
                                  Page 1 of 18
<PAGE>

                          US INDUSTRIAL SERVICES, INC.

                                Table of Contents

PART I.  FINANCIAL INFORMATION                                              Page

Item 1.  Financial Statements (Unaudited)

         Consolidated Balance Sheets as of June 30, 1998
           and September 30, 1997............................................ 3

         Consolidated Statements of Operations for the Three and Nine 
           Months Ended June 30, 1998 and 1997............................... 4

         Consolidated Statements of Cash Flows for the Nine Months 
           Ended June 30, 1998 and 1997...................................... 5

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

Item 2.  Management's Discussion and Analysis of Financial Condition and
           Results of Operations.............................................10


PART II. OTHER INFORMATION                                                   

Item 4.  Submission of Matters to a Vote of Security Holders................. 15

Item 5.  Other Information................................................... 15

Item 6.  Exhibits and Reports on Form 8-K.................................... 15

         Signatures.......................................................... 16

                                  Page 2 of 18
<PAGE>


PART I.     FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

                          US INDUSTRIAL SERVICES, INC.
                          CONSOLIDATED BALANCE SHEETS
                                  (UNAUDITED)

                                                     June 30,     September 30,
                                                       1998            1997
                                                   ------------    ------------
          ASSETS
Current assets:
   Cash........................................... $  1,507,479    $    304,678
   Accounts receivable, net.......................   12,980,305       3,807,367
   Note receivable................................    2,814,800       2,562,500
   Securities available for sale..................    1,170,000       5,562,697
   Receivable officer.............................      120,507          70,000
   Costs and estimated earnings on contracts 
    in progress in excess of billings.............    1,149,746          52,003
   Prepaid assets and other current assets........    1,904,449         726,684
                                                   ------------    ------------
        Total current assets......................   21,647,286      13,085,929

Machinery and equipment, net......................    6,877,785         603,940

Other noncurrent assets:
   Goodwill, net..................................    4,177,076         755,597
   Receivable officer.............................      340,107         210,000
   Investments....................................      427,836            --
   Retention bonus agreements.....................      800,000            --
   Other assets...................................      700,662          20,520
                                                   ------------    ------------
                                                      6,445,681         986,117
                                                   ------------    ------------
   Total assets................................... $ 34,970,752    $ 14,675,986
                                                   ============    ============

          LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
  Accounts payable and accrued expenses........... $  6,275,675    $  2,408,077
  Notes payable...................................    1,703,754       1,695,120
  Billings in excess of costs and estimated
   earnings on contracts in progress..............      357,584         178,921
  Note payable due to shareholder.................   18,023,677      17,609,424
  Reserve for contingencies.......................    2,112,714       1,349,000
  Net liabilities for discontinued operations.....      870,604       1,776,041
  Current maturities of long-term debt............    9,074,427            --
  Income taxes payable............................      276,000            --
  Deferred income taxes...........................      211,000            --
                                                   ------------    ------------
                                                     38,905,435      25,016,583
Non-current liabilities:
  Long term debt.................................     5,166,476            --
  Deferred taxes.................................       362,000            --
                                                   ------------    ------------
                                                      5,528,476            --
                                                   ------------    ------------
       Total liabilities.........................    44,433,911      25,016,583

Stockholders' deficit
  Common stock...................................     3,019,246       3,019,246
  Additional paid-in capital.....................       804,696         804,696
  Unrealized holding loss on securities
   available for sale............................      (386,516)           --
  Accumulated deficit............................   (12,900,585)    (14,164,539)
                                                   ------------    ------------
        Total stockholders' deficit..............    (9,463,159)    (10,340,597)
                                                   ------------    ------------
   Total liabilities and stockholders' deficit...  $ 34,970,752    $ 14,675,986
                                                   ============    ============

The  balance  sheet at  September 30,  1997 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 of 18
<PAGE>
<TABLE>
<CAPTION>
 
                          US INDUSTRIAL SERVICES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                                        Three Months Ended               Nine Months Ended
                                                             June 30,                         June 30,
                                                   ----------------------------    ----------------------------
                                                        1998            1997           1998            1997
                                                   ------------    ------------    ------------    ------------
<S>                                                <C>             <C>             <C>             <C>   
Revenue........................................... $ 15,642,309    $  3,562,318    $ 36,658,878    $  9,157,892

Cost of revenue...................................   12,853,531       2,016,243      28,861,339       5,512,376
                                                   ------------    ------------    ------------    ------------
 Gross profit.....................................    2,788,778       1,546,075       7,797,539       3,645,516

Selling, general and administrative expenses......    1,833,280       1,475,046       5,839,715       5,673,711
                                                   ------------    ------------    ------------    ------------
                                                        955,498          71,029       1,957,824      (2,028,195)
Other:
 Other income (expense)...........................      684,619         (22,424)      1,109,292         (22,424)
 Interest expense.................................     (609,926)       (348,417)     (1,754,169)     (1,091,433)
                                                   ------------    ------------    ------------    ------------
 Income (loss) before income taxes................    1,030,191        (299,812)      1,312,947      (3,142,052)

Income taxes......................................       29,000            --            49,000           --
                                                   ------------    ------------    ------------    ------------
Income (loss) from continuing operations..........    1,001,191    $   (299,812)   $  1,263,947    $ (3,142,052)
                                                   
Gain (loss) from discontinued operations..........           -        1,950,508              -       (3,633,304)
                                                   ------------    ------------    ------------    ------------
Net income (loss)................................. $  1,001,191    $  1,650,696    $  1,263,947    $ (6,775,356)
                                                   ============    ============    ============    ============

Earnings per share - basic:

Net income (loss) before extraordinary items...... $       0.41    $     (0.12)    $       0.51    $      (1.28)

Gain (loss) from discontinued operations.......... $         -     $      0.79     $         -     $      (1.47)
                                                   ------------    ------------    ------------    ------------

Net income (loss) per share - basic............... $       0.41    $      0.67     $       0.51    $      (2.75)
                                                   ============    ============    ============    ============

Earnings per share - diluted:

Net income (loss) before extraordinary items...... $       0.33    $     (0.12)    $       0.49    $      (1.28)

Gain (loss) from discontinued operations.......... $         -     $      0.79     $         -     $      (1.47)
                                                   ------------    ------------    ------------    ------------

Net income (loss) per share - diluted............. $       0.33    $      0.67     $       0.49    $      (2.75)
                                                   ============    ============    ============    ============


</TABLE>

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

                                  Page 4 of 18
<PAGE>

                          US INDUSTRIAL SERVICES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                                                        Nine Months ended
                                                             June 30,
                                                   ----------------------------
                                                       1998            1997
                                                   ------------    ------------

Net cash used in operating activities net
    of effects of business acquired............... $ (3,006,076)   $ (4,642,159)

Cash flow from investing activities
    Proceeds from sale of marketable securities...    4,200,000            -- 
    Purchase of machinery and equipment...........   (1,010,463)       (198,228)
    Proceeds from sale of equipment...............      237,129            --
    Acquisition of business net of cash acquired..      192,253            --
                                                   ------------    ------------
Net cash provided by (used in)investing activities    3,618,919        (198,228)

Cash flow from financing activities
   Net advances on notes payable..................      150,654         685,595
   Net advances on notes due to shareholder.......      414,253       4,187,609
   Net proceeds (payments) on long-term debt......       25,051         (73,882)
                                                   ------------    ------------
Net cash provided by financing activities.........      589,958       4,799,322
                                                   ------------    ------------

Net increase (decrease)in cash....................    1,202,801         (41,065)
Cash, beginning of period.........................      304,678         178,231
                                                   ------------    ------------

Cash, end of period............................... $  1,507,479    $    137,166
                                                   ============    ============


Supplemental disclosure of Non-cash Investing and Financing Activities

During the nine months ended June 30, 1998,  the Company  assumed  $9,000,000 of
liabilities associated with the acquisition of a business.

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


                                  Page 5 of 18
<PAGE>    

                          US INDUSTRIAL SERVICES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE 1 - BASIS OF PRESENTATION 

The accompanying  unaudited interim consolidated  financial statements have been
prepared by US Industrial  Services,  Inc. (the "Company" or "USIS"),  (formerly
"EIF  Holdings,   Inc."),  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, 1997. 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 nine months ended June 30,
1998 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;  J.L.  Manta,  Inc.("Manta"),  P.W.
Stephens Residential,  Inc.("Residential"),  and P.W. Stephens Contractors, Inc.
and P.W. Stephens Services,  Inc. (collectively referred to as "St. Louis"). 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 prior year periods  reported  under this Form 10-QSB.  Kelar
Controls,  Inc.  was  divested on June 30, 1997,  and is also  accounted  for as
discontinued operations for all prior periods reported under this Form 10-QSB.

Net Income (Loss) Per Share Information. The net income (loss) per share amounts
have been computed by dividing net income (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 was required to be adopted on December 31, 1997.
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  sceurities.  Diluted earnings per share is
consistent with 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.

Fair Value of Financial Instruments: The Company's financial instruments consist
of cash and cash equivalents, marketable equity securities, accounts receivable,
accounts payable and notes payable. The Company believes that the carrying value
of these instruments on the accompanying  balance sheet  approximates their fair
value.

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


NOTE 2 - SECURITIES AVAILABLE FOR SALE

On September 30, 1997, 570,333 common shares of American Eco Corporation ("AEC")
were  issued  to the  Company  by AEC in lieu of  cash  in  conjunction  with an
Amendment  dated  September  30,  1997,  to the  existing  line of credit  which
increased the maximum  borrowing  amount under the line to $20,000,000.  Through
the nine months ended June 30, 1998, the Company received proceeds of $4,200,000
from the sale of 390,333 shares of AEC, resulting in net realized gains totaling
$392,919.  At June 30, 1998 unrealized holding losses of approximately  $387,000
have been included as a component of stockholders' deficit.

NOTE 3 - NOTE RECEIVABLE

On June 30, 1997, the Company sold all of the issued and  outstanding  shares of
stock in its  wholly  owned  subsidiary,  Kelar  Controls,  Inc.  to  Regal  Oak
Properties,  Inc. for  $2,500,000.  Pursuant to the acquisition  agreement,  the
Company  received a Promissory  Note for the full amount of the purchase  price,
bearing  interest at 10%, and secured by performance  bonds. The note matured on
June 30,  1998, and was paid in full including interest on August 19, 1998.

NOTE 4 - FIXED ASSETS

At the beginning of the second quarter,  the Company initiated an evaluation of
the useful  lives of trucks and  machinery  and  equipment  used in the recently
acquired industrial maintenance services operations.  The evaluation resulted in
an increase  in useful life from 5 years to 7 years on certain of the  machinery
and equipment and trucks to better reflect the equipments'  capacity.  The total
cost of these  assets is  $4,142,000  with a net book value of  $2,398,000.  The
effect  of  the  change  in  useful  life  decreases  the  monthly  depreciation
allocation by $21,700.

                                  Page 6 of 18
<PAGE>
NOTE 5 - TRANSACTIONS WITH AFFILIATES

On  February  18,  1998,  AEC  executed  a  "Third  Amendment"  to the  existing
$20,000,000  line of credit facility which is unsecured and carries  interest at
the prime rate plus 2% per annum.  The Third Amendment  extended the maturity to
August 18, 1998 from  February 18, 1998.  As of June 30, 1998,  the total amount
outstanding under the AEC facility was $18,023,677 including accrued interest of
$764,414. In the second quarter of 1998, the Company made an interest payment to
AEC in the amount of  $1,038,627.  The line of credit  facility  provides AEC an
option to convert the entire  outstanding  principal amount of the debt plus any
accrued  interest  outstanding at the time of conversion,  into common shares of
USIS  subject to  stockholder  approval  to  increase  the number of  authorized
shares.  The conversion  price for each common share is equal to 85% of the five
day  weighted  average  closing  price of the  common  shares  as  quoted in the
over-the-counter  "pink sheets" immediately prior to the conversion date. On May
4, 1998,  the  shareholders  approved a 1 for 10 reverse stock split,  which was
effected  on June 22,  1998.  On July 24,  1998,  AEC sold $17.9  million of its
outstanding  notes to an outside investor group,  which exercised its conversion
rights  on  July  27,  1998.  (See  NOTE  11 -  SUBSEQUENT  EVENTS  for  further
discussion.)

In connection  with the  acquisition of Manta,  the Company  issued  convertible
promissory notes totalling $2,235,312 to certain of Manta's former stockholders.
The convertible notes are non-interest  bearing and payable in installments with
a final payment due on November 18, 2000.  The notes allow for the conversion of
any  principal  payment  due  under the  Stockholder  Notes  into  shares of the
Company's common stock, at a conversion  price equal to the closing  transaction
price of the USIS Stock on the date of conversion.  The note  agreements  permit
conversion any time after June 30, 1998.
     
Concurrent with the closing of the Manta  acquisition,  the Company entered into
Retention Bonus  Agreements with certain Manta  Stockholders  and key employees.
The  Retention  Bonus  Agreements  provide for bonus  payments in the  aggregate
amount of  $900,000  to be made by the  Company  over a three year  period.  The
non-compete  provisions  associated with the Retention Bonus  Agreements  extend
over a six year period.


NOTE 6 - NOTES PAYABLE

On September 30, 1996 the Company  obtained a $1,300,000  line of credit from an
investor group. The original terms of the revolving credit facility provided for
an  interest  rate of 10% per annum and a maturity  date of March 1,  1998.  The
Company  is  currently  negotiating  an  amendment  to the line of credit  which
includes an extension. Interest subsequent to the maturity date has been accrued
at the rate of 12% per annum, in accordance with the agreement.  The outstanding
balance under the facility as of June 30, 1998 was $1,113,924.

In connection  with the financing of the Manta  acquisition the Company issued a
$6,500,000  Convertible  Promissory  Note to Deere Park Capital.  The Note bears
interest  at the rate of 5 1/4% per annum,  becomes  due on May 18,  1999 and is
secured by a pledge of all of the Manta Stock.  The Note is  convertible  into 5
1/4%  convertible  preferred stock at a conversion price of One Dollar $1.00 per
share, with such convertible  preferred stock convertible into USIS common stock
subject to approval of the  Company's  Stockholders  of an  amendment  to USIS's
charter  authorizing the requisite  amount of preferred and common stock. On May
4, 1998, the shareholders  approved a proposal to establish a class of preferred
stock,  and a  proposal  to effect a 1 for 10  reverse  stock  split,  which was
effected on June 22, 1998.

In February  1998,  the Company's  subsidiary,  JL Manta,  signed a $9.5 million
credit  facility with LaSalle  National Bank. A portion of the facility was used
to refinance  certain  indebtedness of JL Manta with the remainder  available to
meet working capital requirements. The facility is comprised of a $5,500,000 one
year renewable term loan used for capital  expenditures and a $4,000,000 working
capital  revolving  loan and letters of credit.  The  facility is secured by the
assets of Manta and guaranteed by the Company.  Total amounts  outstanding under
the capital note on June 30, 1998 were $4,753,000.  The total amount outstanding
under the working capital line at June 30, 1998 was $500,000.

                                  Page 7 of 18
<PAGE>


NOTE 7 - RECAPITALIZATION

Effective June 22, 1998, the Company effected a one-for-ten reverse stock split,
reducing the number of shares of  outstanding  common stock from  24,618,200  to
2,461,820.

Immediately    following   the   reverse-split,    the   Company   completed   a
recapitalization  and  reincorporation  through a merger  with  U.S.  Industrial
Services,  Inc. (USIS), a newly-formed  Delaware  corporation,  and wholly-owned
subsidiary of EIF. USIS became the surviving company, and all outstanding shares
of EIF common  stock were  exchanged on a  one-for-one  basis for shares of USIS
common  stock.  USIS has  25,000,000  shares  of $.01  par  value  common  stock
authorized,  and 2,461,820  shares were issued and outstanding at June 30, 1998.
USIS also has 20,000,000  shares of $.01 par value preferred  stock  authorized,
none of which is outstanding.

NOTE 8 - EARNINGS PER SHARE 

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

                                   3 months ended     9 months ended
                                   June 30, 1998      June 30, 1998
                                  ----------------   ----------------
Numerator for basic earnings per
share - Net income                   $1,001,191         $1,263,947

Effect of dilutive securities:
  Convertible debt                       51,932             51,932
                                   --------------      ------------
Numerator for diluted earnings
  per share                           1,053,123          1,315,879
                                   --------------      ------------
Denominator:
Denominator for basic earnings
  per share-weighted-average shares   2,461,820          2,461,820

Effect of dilutive securities:
  Convertible debt                      693,711            232,944
                                    ------------        -----------

Denominator for diluted earnings per
share-adjusted weighted-average
shares and assumed conversions        3,155,531          2,694,764
                                    ------------        ----------- 

Basic earnings per share                   $.41               $.51

Diluted earnings per share                 $.33               $.49

At June 30, 1997 and for the  quarter and nine months then ended,  there were no
dilutive securities outstanding,  thus there was no difference between the basic
and diluted earnings per share for those periods.

All  earnings  per share  amounts  presented  have been  restated to reflect the
one-for-ten reverse stock split discussed in NOTE 7 - RECAPITALIZATION.

NOTE 9 - RESERVE FOR CONTINGENCIES

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
adequately  covered  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 and/or cash flows.

                                  Page 8 of 18
<PAGE>

NOTE 10 - STOCK OPTION PLAN

On May 4, 1998,  the  Company's  1998 Stock  Option Plan (the Plan) was adopted,
providing  for the grant of options to  purchase up to  1,000,000  shares of its
common stock to employees,  officers,  directors and consultants of the Company.
The Plan  provides for the terms of each option  granted to be determined by the
Company's  Compensation  Committee of the Board of Directors,  however, the Plan
does require that  exercise  price of all options  granted shall be no less than
the fair market value of the common stock on the date of the grant.

The Company has elected to follow  Accounting  Principles  Board Opinion No. 25,
"Accounting for Stock Issued to Employees"  (APB25) and related  Interpretations
in accounting for its employee stock options  because,  as discussed  below, the
alternative  fair value  accounting  provided for under FASB  Statement No. 123,
"Accounting for Stock-Based Compensation",  requires the use of option valuation
models that were not developed for use in valuing employee stock options.  Under
APB25, because the exercise price of the Company's employee stock options equals
the  market  price  of the  underlying  stock  on the  date  of  the  grant,  no
compensation expense is recognized.

A summary of the Company's stock option  activity,  and related  information for
the three and nine months ended June 30, 1998 follows:

                                                    Weighted-Average
                                    Options          Exercise Price
Outstanding-beginning of period       -0-

Granted                              380,000              $4.77

Outstanding at June 30, 1998         380,000              $4.77

At June 30, 1998,  all  outstanding  options were at an exercise price of $4.77,
and based upon a three year vesting period, no options were exercisable.  During
the period ended June 30, 1998, no options were exercised, expired or forfeited.

NOTE 11 - SUBSEQUENT EVENTS

Effective  July 14, 1998,  AEC,  pursuant to a Stock  Purchase  Agreement  dated
February 2, 1996,  closed its purchase of 1,000,000  shares of USIS common stock
in exchange  for $1 million  which  reduced the  outstanding  balance  under the
Company's line of credit facility with AEC.

On July 24, 1998, AEC sold the remaining  balance  outstanding under the line of
credit to USIS  Acquisition,  LLC,  ("UALC"),  an outside investor group,  which
exercised  its rights under the  agreement to convert the debt to equity on July
27, 1998. The conversion  resulted in the issuance of 5,295,858 shares of common
stock to UALC, thus providing it with ownership of 60.4% of all outstanding USIS
common stock.  The following  pro-forma  financial  information  illustrates the
effect of the above debt to equity  conversions had such conversions taken place
on June 30, 1998:

     Total current assets                   $21,647,286
     Total assets                            34,970,752
     Total current liabilities               20,881,758
     Total liabilities                       26,410,234
     Total stockholders' equity               8,560,518
     Total outstanding common shares          7,826,010
     
See Form 8K filed by the Company on August 17, 1998 for further information.


                                  Page 9 of 18


<PAGE>


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


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,  objectives,  strategies,  future  performance  and events as well as any
other  statements  or  representations  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.


General

The Company  currently  operates in three  primary  segments of the  specialized
maintenance   services  industry;   Residential  provides  residential  asbestos
abatement services,  St. Louis provides  environmental  remediation services and
Manta provides  industrial  maintenance  services.  The other services  formerly
provided by the Company have been classified as  discontinued  operations in the
accompanying financial statements.  The following discussion and analysis relate
to the Company's continuing operations.  The results of operations for the three
and nine months ended June 30, 1998 are not necessarily indicative of results of
operations to be expected for the full year.

                        Three Months Ended June 30, 1998
                                  Compared to
                        Three Months Ended June 30, 1997

Revenue

Consolidated  revenue  for the three  months  ended June 30, 1998  increased  to
$15,642,000  from  $3,562,000 in the same period in the prior year. The increase
in revenue was  primarily  the result of the  inclusion of the activity from the
recently acquired industrial maintenance services operations.

Revenue from the residential  asbestos abatement  operations  decreased 28.2% in
the current quarter compared to the same quarter in the prior year. The decrease
in revenue  was the  combined  result of a decrease  in revenue in the San Diego
operations  resulting from the turnover of key marketing  personnel,  and a slow
down in the residential  asbestos  abatement  California  markets resulting from
higher than normal weather-related activity recognized in prior quarters.

Revenue from the environmental  remediation  services operations decreased 14.4%
in the  current  quarter  compared to the same  quarter in the prior  year.  The
decrease in revenue was primarily due to an unexpected temporary postponement of
work with a major  customer.  The  customer  has  postponed  all work  until its
ongoing labor disputes are resolved. The Company cannot estimate when work under
the contract will resume.


                                  Page 10 of 18
<PAGE>
Gross Profit

Gross profit as a percentage of revenue for the three months ended June 30, 1998
was 17.8%  compared  to 43.4% for the same period in 1997.  The  decrease in the
gross  profit  margin  was  primarily  due to the  inclusion  of the  industrial
maintenance services operations which recognized a gross profit margin of 14.6%.
Industrial maintenance services operations achieve lower margins due to a higher
mix  of  "cost  plus"  contracts,   which  provide  a  lower  margin,  but  have
significantly less profit risk than "fixed price" contracts.

The residential  asbestos abatement  operations  experienced a decrease in gross
margin  percentage  for the three months ended June 30, 1998 to 46.1% from 61.1%
for the same period in 1997. The decrease was the combined result of an increase
in the number of lead abatement projects requiring  subcontractors,  an increase
in insurance premiums and related costs, and consistent  indirect costs compared
to reduced revenue.

The results for  environmental  remediation  for the three months ended June 30,
1998 reflected a decrease in its gross margin to 20.0% compared to 23.4% for the
same period in 1997.  The lower  profit  margins  resulted  from the decrease in
revenue discussed above, and an increase in competitive bidding practices.

Selling, General And Administrative Expenses

Consolidated  selling,  general and administrative  expenses (sg&a)for the three
months ended June 30, 1998 were  $1,833,000  compared to $1,475,000 for the same
period in 1997.  Consolidated  sg&a as a  percentage  of  revenue  for the three
months ended June 30, 1998  decreased to 11.7% from 41.4% for the same period in
1997. The increase in the expenses and the decrease in the sg&a  percentages was
the result of the inclusion of the industrial  maintenance  services activity in
the  current  period.  In  addition,  the three  month  period in 1997  included
$300,000 of management fees with AEC.

Residential asbestos abatement sg&a expenses for the three months ended June 30,
1998 compared to the same period in 1997 remained consistent. As a percentage of
revenue, sg&a increased by 11.8% due to the decrease in revenue.

Environmental  remediation  services reflected a decrease in the current quarter
sg&a as a percentage of revenue of 3.6% compared to the same period in 1997. The
decrease  in the  sg&a  percentage  was  the  result  of the  continued  savings
recognized  by the prior  year  restructuring  efforts  and the  continued  cost
containment efforts made by those operations.

Other Income and Expenses

Other income for the three months ended June 30, 1998  includes the  recognition
of  realized  gains  on  the  sale  of  marketable  equity  securities  totaling
approximately  $393,000,  and $200,000 of income  recognized  from the Company's
existing  consulting  agreement.  Other  income also  includes  interest  income
accrued on a note receivable issued in connection with the sale of a business in
the prior year.

The  increase in other  income was  partially  offset by an increase in interest
expense in the current period.  Interest expense for the three months ended June
30, 1998 was  $610,000  compared to  $348,000  for the same period in 1997.  The
increase in  interest  expense in the current  period was  primarily  due to the
increased  amounts  outstanding  under the line of credit  with AEC.  Additional
interest  was  recognized  in the current  period from notes issued to finance a
business acquisition in a prior period,  service outstanding  borrowings from an
investor  group  and  from a bank  in  support  of  the  industrial  maintenance
operations.  As a result of the debt to equity conversion as discussed in NOTE 5
- TRANSACTIONS WITH AFFILIATES and NOTE 11 - SUBSEQUENT EVENTS, interest expense
will decrease  significantly in future periods.  Also see ITEM 2 - LIQUIDITY for
further discussion.

                                 Page 11 of 18
<PAGE>
Net Income From Discontinued Operations

The $1,951,000 net income from discontinued  operations  recognized in the three
months ended June 30, 1997 resulted from the  recognition of a $2.4 million gain
on the sale of Kelar  Controls,  Inc.,  partially  offset by other  losses  from
discontinued operations.


Net Income

The net income for the three months ended June 30, 1998 was $1,001,000  compared
to $1,651,000 for the same period in 1997. Net income from continuing operations
for the three months ended June 30, 1998 was  $1,001,000  compared to a net loss
from continuing operations for the three months ended June 30, 1997 of $300,000.

The  improvement in the results of continuing  operations is the combined result
of the contribution of $1,271,000 from the industrial  maintenance  business and
the  recognition  of other  income,  partially  offset by  increases in interest
expense and consolidated sg&a.

The decrease in net income for the quarter reflects the $1,951,000 of net income
recognized from discontinued  operations during the quarter ended June 30, 1997,
as described above.

                        Nine Months Ended June 30, 1998
                                  Compared to
                        Nine Months Ended June 30, 1997.

Revenue

Consolidated  revenue  for the nine  months  ended June 30,  1998  increased  to
$36,659,000  from  $9,158,000 in the same period in the prior year. The increase
in revenue was primarily  the result of the  inclusion of eight months  activity
from the industrial maintenance services operations.

Revenue from the residential  asbestos abatement  operations remained consistent
with the same period in the prior  year.  The  decrease  in the current  quarter
revenue was offset by the increase in second  quarter  revenue,  resulting  from
increased weather related insurance claims in the California markets.

Revenue from the environmental remediation services operations decreased 4.0% in
the nine  months  ended June 30,  1998  compared to the same period in the prior
year. The decrease was primarily due to the  postponement  of work under a major
contract in the current  quarter as  described  above.  Although  the Company is
unable to estimate when the work will commence, this contract is not expected to
have a material impact on Environmental's long-term revenue.

Gross Profit

Gross profit as a percentage  of revenue for the nine months ended June 30, 1998
was 21.3%  compared  to 39.8% for the same period in 1997.  The  decrease in the
gross  profit  margin was  primarily  due to the  inclusion  of the  industrial
maintenance services operations which generated a profit margin of 16.3%.

The residential  asbestos abatement  operations  experienced a decrease in gross
margin  percentage  in the first nine months of 1998 to 47.1% from 55.9% for the
same period in 1997.  The decrease is the result of an increase in the insurance
premiums  and  related  costs of the  operations  in the  current  year,  and an
increase in the number of lead  abatement  projects  entered into in the current
quarter, which earn lower margins, as described above.

The  results  for  environmental  remediation  for the first nine months of 1998
reflected  an  increase in its gross  margin to 26.5%  compared to 23.6% for the
same period in 1997 due primarily to gains  recognized on several  projects that
were completed in the first quarter of the current year, partially offset by the
lower margins earned during the current quarter, as described above.

Selling, General And Administrative Expenses

Consolidated  selling,  general and  administrative  expenses (sg&a)for the nine
months ended June 30, 1998 were  $5,840,000  compared to $5,674,000 for the same
period in 1997. Consolidated sg&a as a percentage of revenue for the nine months
ended June 30, 1998  decreased  to 15.9% from 62.0% for the same period in 1997.
The decrease  was due to the  inclusion  of  management  fees of $2.3 million in
1997, offset primarily by the inclusion of the industrial  maintenance  services
activity in the current period.  The management fees were incurred from AEC as a
result  of a  management  agreement  with  the  Company  to help  stabilize  its
operations.

Residential asbestos abatement sg&a expenses were consistent for the nine months
ended June 30, 1998 and 1997.

Environmental  remediation services has reflected a decrease in the current year
sg&a as a percentage  of revenue of 4.4%  compared to 1997.  The decrease in the
sg&a percentage is the result of the prior year restructuring and continued cost
containment efforts made by those operations.

                                 Page 12 of 18
<PAGE>

Other Income and Expenses

Other income for the nine months ended June 30, 1998 includes the recognition of
realized   gains  on  the  sale  of  marketable   equity   securities   totaling
approximately  $393,000,  and $200,000 of income  recognized  from the Company's
existing  consulting  agreement.  Other  income also  includes  interest  income
accrued on a note receivable issued in connection with the sale of a business in
the prior year.

The  increase in other  income was  partially  offset by an increase in interest
expense in the current period.  Interest  expense for the nine months ended June
30, 1998 was $1,754,000  compared to $1,091,000 for the same period in 1997. The
increase in  interest  expense in the current  period was  primarily  due to the
increased  amounts  outstanding  under the line of credit  with AEC.  Additional
interest  was  recognized  in the current  period from notes issued to finance a
business acquisition in a prior period,  outstanding borrowings from an investor
group and from a bank in support of the industrial maintenance operations.  As a
result of the debt to equity  conversion  as discussed in NOTE 5 -  TRANSACTIONS
WITH AFFILIATES and NOTE 11 - SUBSEQUENT EVENTS,  interest expense will decrease
significantly  in  future  periods.  Also see  ITEM 2 -  LIQUIDITY  for  further
discussion.

Net Income From Discontinued Operations

The  $3,633,000  net loss from  discontinued  operations  recognized in the nine
months  ended  June  30,  1997  resulted  from  the net  losses  of PW  Stephens
Contractors, Inc., partially offset by the recognition of a $2.4 million gain on
the sale of Kelar Controls, Inc.

Net Income (Loss)

The net income for the nine months ended June 30, 1998 was  $1,264,000  compared
to a net  loss of  $6,775,000  for the same  period  in 1997.  Net  income  from
continuing  operations  for the nine months  ended June 30, 1998 was  $1,264,000
compared to a net loss from continuing operations for the nine months ended June
30, 1997 of $3,142,000.

The  improvement in the results of continuing  operations is the combined result
of the contribution of $2,506,000 from the industrial  maintenance  business and
the  recognition  of other  income,  partially  offset by  increases in interest
expense and  consolidated  sg&a.  

The increase in net income for the nine months ended June 30, 1998  reflects the
recognition  of a net loss from  discontinued  operations of $3,633,000  for the
nine months ended June 30, 1997, as described above.

                                 Page 13 of 18
<PAGE>

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

During  the nine  months  ended  June  30,  1998  the  Company  used net cash of
$3,006,000 in operating  activities,  compared to net cash used in operations of
$4,642,000  for the same period in 1997.  The decrease in negative  cash flow is
primarily the result of the inclusion of the profitable  industrial  maintenance
operations,  the  shut  down  in  the  prior  year  of the  commercial  asbestos
operations  which were  experiencing  significant  losses,  and the efficiencies
gained from company-wide cost containment initiatives.


During the nine months ended June 30, 1998, the Company has received proceeds of
$4,200,000 from the sale of a portion of its AEC securities the Company received
in lieu of cash  under  the line of  credit  facility  with  AEC.  The  proceeds
received from the sale of securities  was allocated to reduce  existing debt and
to settle certain of the Company's  outstanding  obligations.

In February  1998,  the Company's  subsidiary,  JL Manta,  signed a $9.5 million
credit  facility with LaSalle  National Bank. A portion of the facility was used
to refinance  certain  indebtedness of JL Manta with the remainder  available to
meet working capital requirements. The facility is comprised of a $5,500,000 one
year renewable term loan used for capital  expenditures and a $4,000,000 working
capital  revolving  loan and letters of credit.  The  facility is secured by the
assets of Manta and guaranteed by the Company.  Total amounts  outstanding under
the term loan on June 30, 1998 were  $4,753,000.  The total  amount  outstanding
under the working capital line on June 30, 1998 was $500,000.

As described in NOTE 11 - SUBSEQUENT  EVENTS of the  financial  statements,  the
conversion of the Company's  line of credit debt to equity was completed on July
27,  1998,  and  resulted in a  significant  increase in the  Company's  working
capital.  As a result of the  conversion,  the Company's  current ratio improved
from  0.56  as of June  30,  1998,  to  approximately  1.04.  In  addition,  the
conversion  reduced the Company's  debt service  requirements  by  approximately
$150,000 per month.

The  Company  believes,  that  the  proceeds  from  the  sale  of its  remaining
securities  held for sale, the proceeds from the sale of a business  received in
August  1998,  the cash  flows from the  existing  operations  coupled  with the
financing  arrangements the Company currently has in place, subject to the above
discussion,  will be sufficient throughout the next twelve months to finance its
working capital needs, planned capital  expenditures,  debt service requirements
and the Company's current outstanding obligations.

                                  Page 14 of 18
<PAGE>
PART      II. OTHER INFORMATION

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On May 4, 1998,  the  Company  held its Annual  Meeting of  Stockholders  at its
corporate offices located at 54 Stiles Road, Salem NH. At the meeting there were
four matters submitted to a vote of stockholders.

1.   A vote was  conducted to approve the election of four  directors,  Frank J.
     Fradella,  Michael E. McGinnis,  Andreas O. Tobler and Michael J. Chakos to
     serve for the ensuing year or until their successors are duly elected.

2.   A vote was  conducted to authorize the Board of Directors to effect a stock
     split (any one falling within a range between and including a 1 for 5 and a
     1 for 10)of the Company's common stock.

3.   A vote was  conducted  to approve an Article of  Amendment  to  establish a
     class of Preferred Stock, $.01 par value, consisting 20,000,000 shares.

4.   A vote was conducted to approve an Agreement and Plan of Merger pursuant to
     which the Company  would change its state of  incorporation  from Hawaii to
     Delaware  and its name  through the merger of the Company  with and into US
     Industrial   Services,   Inc.,  a  Delaware  corporation  and  wholly-owned
     subsidiary of the Company.

The actual voting results for these matters is summarized below:


                                           Authority                Broker
1.  Board of Directors            For       Withheld    Abstain    Non-Votes
    ----------------------   ------------  ----------  ----------  ----------
    Frank J. Fradella         13,015,053      65,890           0           0    
    Michael E. McGinnis       13,016,553      64,390           0           0
    Adreas O. Tobler          13,016,553      64,390           0           0
    Michael J. Chakos         13,016,553      64,390           0           0


                                                                    Broker
2.  Proposals                     For       Withheld    Abstain    Non-Votes
    ----------------------   ------------  ----------  ----------  ----------
    1. Reverse Stock Split    12,819,743     203,200      58,000           0   
    
    2. Preferred Stock 
       Authorization          12,894,828      90,815      95,300           0
   
    3. USIS Merger            12,992,643      49,900      38,400           0



ITEM 5.  OTHER INFORMATION

In conjuction  with the debt  conversions  as described in NOTE 5 - TRANSACTIONS
WITH AFFILIATES,  and NOTE 11 - SUBSEQUENT  EVENTS,  Albert V. Furman III became
Chairman of the Board and Chief Executive  Officer.  Mr. Furman is currently the
manager of USIS  Acquisition,  LLC, the Director and Chairman of the  Investment
Committee of Texas Heritage Bancorp and the President of Georgetown Golf Company
since 1991.  Mr. Furman has replaced Frank J. Fradella who has resigned from the
positions of Chairman of the Board and Chief Executive Officer of the Company to
assume  the   responsibilities  of  President  and  Director  of  AEC.  Also  in
conjunction  with UALC's  acquired  interest in USIS, C. Thomas  Mulligan became
Chief Financial Officer,  General Counsel and acting Secretary and Treasurer for
the  Company.  Prior  to  joining  the  Company,  Mr.  Mulligan  specialized  in
environmental  litigation at the law firm of Dehay & Elliston, LLP. Mr. Mulligan
has  replaced  J.  Drennan  Lowell  who  resigned  from  the  positions  of Vice
President, Chief Financial Officer, Treasurer and Secretary.


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBITS

    Exhibit 27.    Financial Data Schedule

(b) REPORTS ON FORM 8-K

A  report  on Form  8-K for the  event  of June  22,  1998  was  filed  with the
Securities   and  Exchange   Commission   on  June  26,  1998  relating  to  the
recapitalization and reincorporation of the Company.

    
                                 Page 15 of 18
<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.

                                    US INDUSTRIAL SERVICES, INC.
                                    ------------------
                                    Registrant


August 21, 1998                 By: /S/ Albert V. Furman III
                                    -----------------------------
                                    Albert V. Furman III
                                    Chairman and Chief Executive Officer
                                    

August 21, 1998                 By: /S/ C. Thomas Mulligan
                                    -----------------------------
                                    C. Thomas Mulligan
                                    Chief Financial Officer and
                                    General Counsel


                                 Page 16 of 18
<PAGE>


                           US INDUSTRIAL SERVICES, INC.

                                 EXHIBIT INDEX


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

          Exhibit 27      Financial Data Schedule...........................  18



           
                                  Page 17 of 18