<PAGE>

                       U.S. SECURITIES AND EXCHANGE COMMISSION
                                           
                                WASHINGTON, D.C. 20549
                                           
                                           
                                      FORM 10-Q
                                           
                                           
      [X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
                                 EXCHANGE ACT OF 1934
                                           
                  For the quarterly period ended September 30, 1997
                                           
                                           
      [ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                                 EXCHANGE ACT OF 1934
                                           
                                           
                           Commission File Number  00-22690
                                           
                                           
                             CONSOLIDATED STAINLESS, INC.
                                           
                          State of Incorporation:  Delaware
                                           
                   IRS Employer Identification Number:  59-1669166
                                           
                               1601 East Amelia Street
                                Orlando, Florida 32803
                                           
                                   (407)  896-4000
                                           
        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  
                                ----                   ----
                                           
             As of November 1, 1997,  Consolidated Stainless, Inc. had 
outstanding 4,610,329 shares of Common Stock,  par value $.01 per share.

<PAGE>

                                  TABLE OF CONTENTS
                                           
                                           
ITEM                                                                     PAGE(S)

                                        Part I
                                           
                                Financial Information
                                           
                                           
1.  FINANCIAL STATEMENTS

         Balance Sheets ..............................               1  -  2

         Statements of Operations.....................                     3

         Statements of Cash Flows.....................                     4

         Notes to Financial Statements................               5  -  6 


2.  MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS .........               7  -  14




                                       Part II
                                           
                                  Other Information
                                           
                                           
6.  EXHIBITS AND REPORTS ON FORM 8-K ..................             15  -  16

<PAGE>

                                       PART I
                               Financial Information

                          ITEM 1.    FINANCIAL STATEMENTS

                            CONSOLIDATED STAINLESS, INC.
                                   BALANCE SHEETS

<TABLE>
<CAPTION>

                                                           9/30/97
                                                          (Unaudited)      12/31/96
                                                       ------------------------------

ASSETS
<S>                                               <C>                   <C>
CURRENT:
    Cash and cash equivalents                          $    489,278       $    273,914
    Accounts Receivable:                                                
       Trade, less allowance for possible losses                        
          of $349,978 and $129,000                        7,627,580          6,165,794
    Other                                                   115,299            145,723
    Due from stockholders                                   151,937            279,895
    Inventories                                          22,654,306         21,321,810
    Refundable income taxes                                      -             957,475
    Prepaid expenses                                        105,704            206,840
    Deferred income taxes                                   398,042            292,800
                                                         ----------         ----------
         TOTAL CURRENT ASSETS                            31,542,146         29,644,251
                                                                        
 PROPERTY AND EQUIPMENT,  less                                          
    accumulated depreciation and amortization            16,668,454         17,513,878
                                                                        
 OTHER ASSETS:                                                          
    Deferred financing costs, less accumulated                         
         amortization $88,418 and $166,394                  509,671            357,245
    Goodwill, less accumulated amortization of                          
         $317,640 and $176,916                            2,420,950          3,575,587
    Other                                                   235,974            161,290
                                                          ---------          ---------
         TOTAL OTHER ASSETS                               3,166,595          4,094,122

                                                       ------------       ------------
         TOTAL ASSETS                                  $ 51,377,195       $ 51,252,251
                                                       ------------       ------------
                                                       ------------       ------------

</TABLE>


              See the accompanying notes to the financial statements.

                                        - 1 -

<PAGE>

                            CONSOLIDATED STAINLESS, INC.
                                   BALANCE SHEETS

<TABLE>
<CAPTION>
                                                             9/30/97
                                                           (Unaudited)      12/31/96
                                                           -------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
<S>                                                      <C>             <C>
    Accounts payable                                     $  8,626,222     $ 4,379,114
    Book overdrafts                                           475,550         702,116
    Due to stockholders                                       200,000         563,158
    Accrued expenses:
         Payroll and related taxes                            484,059         528,312
         Interest                                             221,316         228,704
         Other                                                845,054         657,695
    Current maturities of long-term debt                    1,399,610       4,989,411
    Current portion of capital lease obligation               959,358         862,004
                                                         ------------     -----------
         TOTAL CURRENT LIABILITIES                         13,211,169      12,910,514


LONG-TERM DEBT, less current maturities                    31,658,097      26,772,909
LONG-TERM CAPITAL LEASE OBLIGATIONS,
    less current portion                                    1,266,869       1,957,497
DEFERRED INCOME TAXES                                         398,042         393,000
                                                         ------------     -----------
         TOTAL LIABILITIES                                 46,534,177      42,033,920

 COMMITMENTS AND CONTIGENCIES                                       -               -

STOCKHOLDERS'  EQUITY:
    Preferred stock $.01 par - shares authorized
         2,000,000; none issued                                     -               -
    Common stock $.01 par - shares authorized
         15,000,000; issued and outstanding 4,610,329
         and 4,465,866                                         46,103          44,659
    Additional paid-in capital                              8,064,638       7,741,039
    Retained earnings (accumulated deficit)                (3,267,723)      1,432,633
                                                         ------------    ------------
         TOTAL STOCKHOLDERS' EQUITY                         4,843,018       9,218,331
                                                         ------------    ------------

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                 $ 51,377,195    $ 51,252,251
                                                         ------------    ------------
                                                         ------------    ------------
</TABLE>


              See the accompanying notes to the financial statements.


                                        - 2 -

<PAGE>


CONSOLIDATED STAINLESS, INC.
STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED                    NINE MONTHS ENDED
                                                                9/30/97       9/30/96                 9/30/97      9/30/96
                                                                      (UNAUDITED)                          (UNAUDITED)
                                                             ----------------------------           -------------------------
<S>                                                          <C>              <C>                     <C>          <C>

SALES                                                        $14,286,222      $12,090,743             $41,663,644  $39,258,332

COST OF SALES                                                 12,940,222       10,489,017              37,192,488   32,277,083
                                                             -----------      -----------           -------------  -----------
     Gross profit                                              1,346,000        1,601,726               4,471,156    6,981,249

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                   1,980,439        1,415,534               5,559,716    5,077,607

PROVISION FOR LOSS ON SALE OF CERTAIN ASSETS OF FLOW 
   COMPONENTS' DIVISION                                        1,013,913               --               1,013,913           --
                                                             -----------      -----------           -------------  -----------
     Income (loss) from operations                            (1,648,352)         186,192              (2,102,473)   1,903,642

OTHER INCOME (EXPENSES):
     Interest                                                   (967,689)        (793,876)             (2,683,844)  (2,181,575)
     Other                                                        49,052           36,732                 108,100      317,448
                                                             -----------      -----------          --------------  -----------
          Income (loss) before taxes on income (benefit)      (2,566,989)        (570,952)             (4,678,217)      39,515

TAXES ON INCOME (BENEFIT)                                        697,439         (246,198)                 22,139       (2,011)
                                                             -----------      -----------           -------------  -----------
NET INCOME (LOSS)                                            $(3,264,428)     $  (324,754)            $(4,700,356) $    41,526
                                                             ===========      ===========           =============  ===========

EARNINGS (LOSS) PER COMMON SHARE:

     Primary                                                  $    (0.71)     $     (0.07)            $     (1.04) $      0.01
     Fully diluted                                                   N/A            (0.07)                    N/A         0.01

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
  AND SHARE EQUIVALENTS OUTSTANDING:
     Primary                                                   4,610,329      $ 4,438,366               4,517,195    4,703,465
     Fully diluted                                                   N/A        4,438,366                     N/A    4,703,465


</TABLE>

           See the accompanying notes to the financial statements.

                                     - 3 -

<PAGE>


      CONSOLIDATED STAINLESS, INC.
       STATEMENTS OF CASH FLOWS
              (UNAUDITED)

<TABLE>
<CAPTION>
                                                                     NINE MONTHS ENDED
                                                                  9/30/97           9/30/96
                                                                  -------------------------
<S>                                                               <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

   Net income (loss)                                           $ (4,700,356)     $   41,526
   Adjustments to reconcile net income (loss)
     to net cash provided by operating activities: 
     Depreciation                                                 1,221,904         931,349
     Amortization                                                   265,207         246,135
     Write-down in value of Goodwill                              1,013,913              --
     Loss (gain) on disposal of property and equipment               14,125         (23,000)
     Deferred income taxes                                         (100,200)        (55,792)
     Cash provided by (used for):
        Accounts receivable                                      (1,431,362)        238,018
        Insurance proceeds receivable                                    --         804,366
        Due from stockholders                                       (10,159)        (28,728)
        Inventories                                              (1,332,496)      1,016,620
        Refundable income taxes                                     957,475         (44,407)
        Prepaid expenses                                            101,136         114,041
        Accounts payable                                          4,247,108      (2,652,012)
        Due to stockholders                                         100,000         568,712
        Accruals                                                    135,719         (49,381)
                                                                 ----------     -----------
Net cash provided by operating activities                           482,014       1,107,447
                                                                 ----------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of property and equipment                            (654,515)     (3,955,997)
     Proceeds from the sale of property and equipment               345,698          23,000
     Purchase of Flow Components, Inc.                                   --      (4,093,101)
     Purchase of 21st Century, net of cash acquired                      --        (135,978)
     Increase in other assets                                      (132,330)       (187,471)
                                                                -----------     -----------
                                                                   (441,147)     (8,349,547) 
                                                                -----------     -----------
CASH FLOWS FROM FINANCING ACTIVITIES:  
     Decrease in book overdrafts                                   (226,566)     (2,578,724)
     Net proceeds under revolving lines of credit                 5,662,384       4,803,282
     Repayments of long-term debt                                (4,395,008)     (4,128,227)
     Proceeds from long-term debt                                        --      10,394,556
     Repayments of capital lease obligations                       (647,051)     (1,190,408)
     Deferred financing costs                                      (219,262)       (176,983)
     Proceeds from exercise of stock options                              --        142,145
     Proceeds from exercise of stock warrants                             --        371,898
                                                                ------------      ---------
 Net cash provided by financing activities                           174,497      7,637,539
                                                                ------------      ---------
Net increase in cash and cash equivalents                            215,364        395,439

CASH AND CASH EQUIVALENTS, beginning of period                       273,914         94,319
                                                                ------------      ---------
 CASH AND CASH EQUIVALENTS, end of period                       $    489,278      $ 489,758
                                                                ============      =========
</TABLE>
            See the accompanying notes to the financial statements.

                                     - 4 -

<PAGE>

                            NOTES TO FINANCIAL STATEMENTS
                                           
                                           
NOTE 1  -  BASIS OF PRESENTATION

The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-Q, and do not include all of the
information and disclosures required by generally accepted accounting
principles.  These statements should be read in conjunction with the financial
statements and notes thereto included in the Company's Form 10-K for the year
ended December 31, 1996.  The accompanying financial statements have not been
examined by an independent accountant in accordance with generally accepted
auditing standards, but in the opinion of management, such financial statements
include all adjustments, consisting only of normal recurring adjustments and
accruals, to fairly report the Company's financial position and results of
operations.  The results of operations for the interim periods shown in this
report are not necessarily indicative of results to be expected for the fiscal
year.

NOTE 2  -  EARNINGS (LOSS) PER COMMON SHARE

Earnings (loss) per common share are based on the weighted average number of
common shares and dilutive common stock equivalents outstanding during the nine
months ended September 30, 1996.  Common stock equivalents include warrants and
options and have not been included for the three months and nine months ended
September 30, 1997and the three months ended September 30, 1996 since their
effect would be antidilutive.

In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 "Earnings Per Share" ("SFAS 128").  SFAS
128 establishes new standards for computing and presenting earnings per share
("EPS").  Specifically, SFAS 128 replaces the presentation of primary EPS with a
presentation of basic EPS, requires dual presentation of basic and diluted EPS
on the face of the income statement for all entities with complex capital
structures and requires a reconciliation of the numerator and denominator of the
basic EPS computation to the numerator and denominator of the diluted EPS
computation.  SFAS 128 is effective for financial statements issued for periods
ending after December 15, 1997, earlier application is not permitted.  EPS for
the three and nine months ended September 30, 1997 and September 30, 1996
computed under SFAS 128 would not be materially different than previously
computed.

NOTE 3  -  SUPPLEMENTAL CASH FLOW INFORMATION

The Company incurred long-term debt and capital lease obligations of $81,787 and
$1,019,869 in connection with the purchase of property and equipment and during
the nine months ended September 30, 1997 and 1996, respectively.

On June 26, 1997, the Chief Executive Officer and President elected to convert
$325,043 of subordinated debt which the Company borrowed from them in 1996 into
144,463 shares of common stock based on the closing value at that date ($2.25
per share).

                                       - 5 -

<PAGE>


NOTE 4  -  WRITE-DOWN IN VALUE OF GOODWILL

Based on the November 5, 1997 contract, effective November 1, 1997, for the sale
of certain assets of the Flow Components' division, and in accordance with
Statement of Financial Accounting Standards No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of",
the Company has written-down goodwill on its September 30, 1997 financial
statements by an additional $1,013,913 to provide for the loss on the sale.




                                        - 6 -

<PAGE>

                             Consolidated Stainless, Inc.

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

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

The statements contained herein that are not historical facts may be forward
looking statements.  The forward looking statements are subject to certain risks
and uncertainties, including without limitation those identified below, which
could cause actual results to differ materially from historical results or those
anticipated.  Readers are cautioned not to place undue reliance on these forward
looking statements, which speak only as of their dates.

The following factors could cause actual results to differ materially from
historical results or those anticipated; adverse economic conditions, the impact
of competitive products and pricing, product demand and acceptance risks, raw
material and other increased costs, customer delays or difficulties in the
production of products, and other risks detailed from time to time in
Consolidated Stainless, Inc.'s  Securities and Exchange Commission filings.


RESULTS OF OPERATIONS

Sales for the three months ended September 30, 1997 were $14.3 million,
reflecting an 18.2% increase from the comparable period in 1996.  Sales for the
nine months ended September 30, 1997 were $41.7 million, resulting in a 6.1%
increase from the nine months of 1996. These increases can be attributed to the
Company's strategic decision to increase market share.  These increases would
have been significantly higher if not for a 22% reduction in selling prices for
stainless steel pipe compared with the prior periods.

Gross profit as a percentage of sales for the third quarter of 1997 decreased to
9.4%, as compared to 13.2% for the third quarter of 1996.  Similarly, for the
nine months ended September 30, 1997, gross profit as a percentage of sales
decreased to 10.7% from 17.8% in the comparable period in 1996.   These 

                                       - 7 -

<PAGE>

decreases are primarily due to downward pressure on selling prices from
oversupply in the U.S. market. 

Selling, general and administrative expenses increased 39.9% for the three
months ended September 30, 1997 as compared with the same period in 1996 and
increased 9.5% for the nine months ended September 30, 1997 relative to the
comparable period in 1996.  These increases can be primarily attributed to
reduced expenses in the third quarter of 1996, due to the reversal of a $0.4
million accrual for executive officer bonuses in that quarter, and increased
costs in the third quarter of 1997, as a result of an additional provision for
the allowance for doubtful accounts of $0.1 million. 

A provision for loss on the sale of certain assets of the Flow Components
division for $1.0 million was recorded for the third quarter of 1997.  Based on
the November 5, 1997 contract, effective November 1, 1997, for the sale of
certain assets of this division the Company has written-down goodwill in
accordance with Statement of Financial Accounting Standards No. 121 "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of".  See Item 5 in Part II - Other Information.

Interest expense increased 21.9% for the third quarter of 1997 as compared with
the third quarter in 1996.  For the nine months ended 

                                        - 8 -

<PAGE>

September 30, 1997 interest expense increased 23.0% compared with the nine
months ended September 30, 1996.  These increases were primarily due to a rise
in the Company's indebtedness incurred throughout 1996 to finance capital
improvement projects such as the buttweld fittings, coil slitting, and
ornamental and structural tubing operations, and the expansion of the Auburndale
manufacturing facility.  Additionally, in the third quarter of 1997, the Company
accrued $0.1 million of interest costs relating to the Internal Revenue Service
examination for the tax years ended December 31, 1992, November 30, 1993,
December 31, 1994 and December 31, 1995.

The Company recorded taxes on income of $0.7 million for the three months ended
September 30, 1997 compared with an income tax benefit of $0.2 million for the
comparable period in 1996.  Taxes on income for the nine months ended September
30, 1997 was approximately $22,000 as opposed to an income tax benefit of
approximately $2,000 for the nine months ended September 30, 1996.   The taxes
on income resulted from a $0.1 million increase in the provision for the
Internal Revenue Service examination and $0.6 million due to the re-evaluation
of the deferred income tax asset account and adjusting the valuation reserve in
accordance with Financial Accounting Standards No.109 "Accounting for Income
Taxes".

As a result of the foregoing factors, the net loss for the three months ended
September 30, 1997 was $3.3 million, as compared with $0.3 million net loss
generated during the third quarter of 1996.  The net loss for the nine months

                                        - 9 -

<PAGE>

ended September 30, 1997 was $4.7 million as compared to net income of
approximately $42,000 for the comparable period in 1996.  These decreases are
primarily attributable to narrower gross profit margins resulting from a decline
in stainless steel selling prices, the write-down of goodwill, the re-evaluation
of the deferred tax asset account and higher interest costs.

LIQUIDITY AND CAPITAL RESOURCES

On November 14, 1997, the Company entered into a Letter Agreement (the "Letter
Agreement") amending its Loan and Security Agreement dated March 10, 1997 by and
between Mellon Bank, N.A. ("Mellon") and the Company (the "Loan Agreement"). 
The Company failed to meet its effective net worth covenant for the periods
ended July 31, 1997, August 31, 1997 and September 30, 1997.  Additionally,
certain other financial ratio covenants (i.e., net loss, capital expenditures,
current ratio and senior debt to effective net worth) were not met for the
period ended September 30, 1997.  In the Letter Agreement, Mellon waived the
covenant violations along with a payment default on the overadvance and a
cross-default under the Convertible Subordinated Note Purchase Agreement, as
amended.  The borrowing base of 85% of the qualified accounts receivable and 65%
of eligible inventory, subject to the amended maximum advance amount, remains
unchanged on this revolving line of credit facility.  The interest rate
continues to be a variable margin over either the fluctuating prime rate of
interest or the fluctuating LIBOR Rate.  The Loan Agreement, as amended,
continues to contain certain negative covenants to be observed by the 

                                        - 10 -

<PAGE>


Company, as well as certain financial ratios which the Company must maintain
until the maturity date of the Loan Agreement on March 10, 2001. 

On November 5, 1997, the Company amended ("Third Amendment") its Loan Agreement.
The Third Amendment recognizes Mellon's consent to the sale of Flow Assets (see
Item 5 in Part II - Other Information).  As a result of the sale, the maximum
advance amount was reduced to $22.0 million from $25.0 million and the maximum
advance on eligible inventory was reduced to $14.0 million from $15.0 million. 
Additionally, the Company agreed to assign the $250,000 promissory note from the
sale to Mellon and to reduce the overadvance to $1.4 million from $2.6 million. 
However, the Company will continue to reduce the overadvance monthly by $175,000
until it is reduced to zero.

 On August 11, 1997, the Company amended ("Second Amendment") its Loan
Agreement.  In addition to the First Amendment to the Loan and Security
Agreement dated as of March 31, 1997, which amended certain financial covenants
contained in the Loan Agreement for the period ended March 31, 1997, the main
purpose of the Second Amendment was to amend certain covenants for the period
June 30, 1997 through December 31, 2000.  The Second Amendment also reduced the
maximum advance on eligible inventory from $17.0 million to $16.0 million, with
a further reduction as of October 15, 1997 to $15.0 million. 


                                        - 11 -

<PAGE>

Borrowings under the Loan Agreement are secured by all of the assets of the
Company, other than real property and specified equipment already subject to
liens in favor of other lenders, and such borrowings are personally guaranteed
up to $3.0 million in the aggregate by Harvey Adams, Chief Executive Officer,
and Ronald Adams, President.

On November 11, 1997, approximately $19.8 million was outstanding under the line
of credit created pursuant to the Loan Agreement.

On November 14, 1997, the Company amended ("Amendment No. 4") its Convertible
Subordinated Note Purchase Agreement (the "Note Purchase Agreement"), dated
October 18, 1996, by and between the Company, SunTrust Banks, Inc., and Messrs.
Harvey and Ronald Adams.  The main purpose of Amendment No. 4 is to amend
certain financial ratios for the period ended September 30, 1997.  In addition,
Waiver and Modification Agreement No. 3, dated August 12, 1997, amended certain
financial ratios contained in the Note Purchase Agreement for the period ended
June 30, 1997 and Waiver and Modification Agreement No. 2 amended certain
financial ratios contained in the Note Purchase Agreement for the period ended
March 31, 1997.
 
As of September 30, 1997, the Company amended ("Equipment Amendment No. 2") its
term loan agreement ("Equipment Loan Agreement"), dated January 22, 1996, by and
between the Company, Flow Components, Inc. ("FCI") and

                                         - 12 -

<PAGE>

SunTrust Bank, Central Florida, N.A.  The primary purpose of Equipment Amendment
No. 2 was to amend certain financial ratios for the period ended September 30,
1997.

On August 22, 1997, the Company amended ("Equipment Amendment No. 1")  its
Equipment Loan Agreement.  The primary purpose of Equipment Amendment No. 1 was
to recognize that FCI had merged into the Company on April 22, 1996, such that
FCI was no longer a separate legal entity, and to reinstate and revise covenants
that became unenforceable due to the change in the Company's major lender on
March 10, 1997.
 
The Company's ability to service its current debt levels are contingent on an
improvement in its results of operations along with the continued support of its
vendors and major lenders.


The Company has been notified by the Department of Treasury - Internal Revenue
Service ("IRS") that it has concluded an examination of the Company's tax
returns for the tax periods ended December 31, 1992, November 30, 1993, December
31, 1994 and December 31, 1995.  The IRS is proposing changes to the tax returns
resulting in additional taxes amounting to $1,210,706 and penalties totaling an
additional $242,140.  The issues raised by the IRS relate to a Built-in Gains
Tax for the disposition of inventory and the valuation of inventory

                                         - 13 -

<PAGE>

based upon the tax requirement that certain indirect costs be included in the
value of its inventory which are not required for financial statement purposes.
The Company appealed the proposed findings to the Office of the Regional
Director of Appeals and has requested a hearing to present its position on the
issues raised by the IRS.  The Company has substantial arguments, both in the
facts and circumstances and in the law, to refute the arguments of the IRS.  The
Company believes that the Built-in Gains Tax does not apply to the years
examined and that it has capitalized sufficient costs to comply with IRS
regulations.  However, should the IRS prevail on the capitalization of costs
issue, it would immediately create an additional net operating loss increasing
the amount of available losses to carry forward and offset against future
taxable earnings of the Company.

Should the Appeals Officer find in favor of the IRS, the Company has additional
administrative channels of appeal available to challenge the proposed changes
and intends to vigorously defend its position.


                                        - 14 -

<PAGE>

                             Consolidated Stainless, Inc.
                                           
                             Part II:  Other Information
                                           
                                           
ITEM 5.  OTHER INFORMATION

SALE OF CERTAIN ASSETS OF THE FLOW COMPONENTS DIVISION

The Company entered into an agreement (the "Flow Asset Purchase Agreement") with
Texas Metal Works, Inc., of Beaumont, Texas, a wholly owned subsidiary of
Specialty Piping Components, Inc. ("TMW"), dated November 5, 1997 and effective
November 1, 1997, pursuant to which certain assets (the "Flow Assets") of the
Company's Flow Components Division (the "Division") were sold to TMW.  The Flow
Assets include all machinery and equipment, certain intangible assets including
goodwill, rights under contracts for the purchase of inventory, and inventory
used in connection with operation of the business of the Division.  The Company
retained all accounts receivable generated by the operation of the business of
the Division, all accounts payable related to the Division's operations, and the
obligation to satisfy all liabilities secured by Flow Assets.  As consideration
for its sale of the Flow Assets to TMW, the Company received $5,050,549 (the
"Purchase Price"), $250,000 of which was paid in the form of a promissory note
due on November 5, 1999 and the balance ($4,800,549) was paid in cash at
closing.  The Purchase Price for the Flow Assets was based upon the current fair
market value of the tangible assets sold and the current value of the goodwill
for the operations of the Division as recorded on the books and records of the
Company as of October 31, 1997.  The Company has used a portion of the proceeds
from the sale of the Flow Assets to pay accounts payable related to Division
operations and indebtedness secured by the Flow Assets.

Pro forma financial information is not required to be presented as a result of
this transaction.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

         10.1 - Amendment No. 1 to Loan Agreement dated as of August 22,
              1997 with Suntrust Bank, Central Florida, National Association.

         10.2 - Second Amendment to Loan Agreement dated as of September 30, 
              1997 with Suntrust Bank, Central Florida, National Association.


                                         - 15 -

<PAGE>


         10.3 - Third Amendment to Loan and Security Agreement dated November 
              5, 1997 between Consolidated Stainless, Inc. and Mellon
              Bank, N.A.

         10.4 - Asset Purchase Agreement, dated November 5, 1997, by and
              among Consolidated Stainless, Inc. and Texas Metal Works, Inc

         10.5 - Waiver and Modification Agreement No.4 to Convertible 
              Subordinated Note Purchase Agreement Amendment dated 
              November 14, 1997 with Suntrust Banks, Inc.

         10.6 - Letter Agreement to Loan and Security Agreement dated
              November 14, 1997 between Consolidated Stainless, Inc. and
              Mellon Bank, N.A.


(b)  Form 8 - K

    The Company filed a Form 8-K dated July 22, 1997 with respect to a 30-day
letter received on April 30, 1997 from the Internal Revenue Service regarding
the tax periods ended December 31, 1992, November 30, 1993, December 31, 1994
and December 31, 1995.



                                         - 16 -

<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,  thereunto duly
authorized.


                                                   CONSOLIDATED STAINLESS, INC.
                                                          (Registrant)



Date:  NOVEMBER 17, 1997                               By: /S/BURTON R. CHASNOV
                                                           ---------------------
                                                           Burton R. Chasnov

                                                       Executive Vice President
                                                       Chief Financial Officer







                                         - 17 -
<PAGE>


                                    EXHIBIT INDEX

Exhibits                            Description of Items

         10.1 - Amendment No. 1 to Loan Agreement dated as of August 22,
              1997 with Suntrust Bank, Central Florida, National Association.

         10.2 - Second Amendment to Loan Agreement dated as of September 30, 
              1997 with Suntrust Bank, Central Florida, National Association.

         10.3 - Third Amendment to Loan and Security Agreement dated November 
              5, 1997 between Consolidated Stainless, Inc. and Mellon
              Bank, N.A.

         10.4 - Asset Purchase Agreement, dated November 5, 1997, by and
              among Consolidated Stainless, Inc. and Texas Metal Works, Inc

         10.5 - Waiver and Modification Agreement No.4 to Convertible 
              Subordinated Note Purchase Agreement Amendment dated 
              November 14, 1997 with Suntrust Banks, Inc.

         10.6 - Letter Agreement to Loan and Security Agreement dated
              November 14, 1997 between Consolidated Stainless, Inc. and
              Mellon Bank, N.A.