FORM 10-K

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

                For the  fiscal  year  ended  December  31, 1999.
                                       OR
         [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

                           Commission File No. 1-8129.

                              US 1 INDUSTRIES, INC.
             (Exact name of registrant as specified in its charter)


Indiana
(State of Incorporation)
(I.R.S. Employer Identification No.)                 95-3585609

1000 Colfax, Gary, Indiana 46406
(Address of principal executive
offices)           (Zip Code)
Registrant's telephone number, including area code: (219) 944-6116
                                                    --------------

Securities registered pursuant to Section 12(b) of the Act:

                                           Name of each exchange
Title of each class on which registered
Common Stock, no par value                    None


Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes _X_ No __

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained wherein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]

On March 15, 2000,  there were 10,618,224  shares of  registrant's  common stock
were outstanding, and the aggregate market value of the voting stock held by non
affiliates of the registrant was approximately  $1,000,000.  For purposes of the
forgoing  statement,  directors and officers of the registrant have been assumed
to be affiliates.



<PAGE>
                                     PART 1

Item 1.  Business.

     The registrant,  US 1 Industries,  Inc.  (hereinafter referred to, together
with its subsidiaries, as "US 1" or the "Company"),  through its subsidiaries is
an interstate  trucking company operating in 48 states.  The Company's  business
consists of a truckload  operation for which the Company  obtains  substantially
all of its  business  through  independent  sales  agents who then  arrange with
independent truckers to haul the freight to the desired destination.

     US 1 was incorporated in California under the name Transcon Incorporated on
March 3, 1981. In March 1994,  the Company  changed its name to US 1 Industries,
Inc. In February  1995, the Company was merged with an Indiana  corporation  for
purposes of re-incorporation  under the laws of Indiana. The Company's principal
subsidiaries  consist of Blue and Grey Transport,  Inc., an Indiana  corporation
("BGT"), Blue and Grey Brokers,  Inc., an Indiana corporation ("BGB"),  Carolina
National  Logistics,  Inc., an Indiana  corporation  ("CNL"),  Carolina National
Transportation, Inc., an Indiana corporation ("CNT"), Gulf Line Brokerage, Inc.,
an Indiana  Corporation  ("GLB"),  Gulf Line  Transportation,  Inc.,  an Indiana
Corporation ("GLT"), Keystone Lines, a California corporation ("Keystone"),  and
TC Services,  Inc., a California  corporation ("TCS").  BGT, BGB, CNL, CNT, GLB,
GLT,  and  Keystone  operate  under  authority  granted  by  the  United  States
Department of Transportation (the "DOT") and various state agencies.

Operations

     The Company  carries  virtually all forms of freight  transported by truck,
except  bulk  goods and  hazardous  materials,  including  specialized  trucking
services such as containerized, refrigerated, and flatbed transportation.

     The Company  contracts with independent  truckers and sales agents and pays
them a percentage of the revenue received from customers for the  transportation
of  goods.  The  expenses  related  to the  operation  of  the  trucks  are  the
responsibility  of  the  independent   contractors.   Consequently,   short-term
fluctuations  in operating  activity have less of an impact on this component of
the   Company's   net  income  than  they  have  on  the  net  income  of  truck
transportation  companies that bear  substantially  all of the cost of employing
drivers and maintaining  equipment.  Like other truck transportation  companies,
however,  US 1's  revenues  are  affected  by  competition  and the state of the
economy.

     The Company's  principal  focus during 1999 was growing the Company through
expansion  of Carolina  National  Transportation,  and  controlling  the cost of
operations.

Marketing and Customers

     The Company conducts its business  through  independent  sales agents.  The
sales agents have  facilities and personnel to monitor and coordinate  shipments
and to dispatch independent contractors who own and operate their own trucks for
freight transportation.

     Approximately  86% of the Company's  revenues from its trucking  operations
are allocated to the payment of independent contractors and sales agents.

     During 1999, the Company  utilized the services of  approximately  30 sales
agents.  One agent  accounted for 18% and 15% of the  Company's  revenue for the
years ended December 31, 1999 and December 31, 1998,  respectively.  The Company
shipped  freight for  approximately  1,000  customers  in 1999,  no one of which
accounted for more than of 10% of the Company's total revenues.



<PAGE>
     In 1998 and 1997, one other agent accounted for 12% and 14%,  respectively,
of the Company's total revenues. No customers in 1998 or 1997 accounted for more
than 10% of the Company's revenues.

     The  independent  contractors  used by the Company must enter into standard
equipment  operating   agreements.   The  agreements  provide  that  independent
contractors  must  bear  many of the  costs of  operations,  including  drivers'
compensation,  maintenance costs, fuel costs, collision insurance, taxes related
to the  ownership  and  operation of the  vehicle,  licenses,  and permits.  The
Company  requires  independent   contractors  to  maintain  their  equipment  to
standards  established by the DOT, and the drivers are subject to  qualification
and training procedures  established by the DOT. The Company is also required to
have random drug  testing,  enforce hours of service  requirements,  and monitor
maintenance of vehicles.

Employees

     At December 31, 1999, the Company had approximately  thirty-five  full-time
employees.  The Company's  employees are not covered by a collective  bargaining
agreement.

Competition

     The  trucking  industry is highly  competitive.  The Company  competes  for
customers  primarily  with  other  nationwide  carriers,   some  of  which  have
company-owned  equipment  and company  drivers,  and many, if not most, of which
have greater  volume and  financial  resources.  The Company also  competes with
private carriage conducted by existing and potential customers. In addition, the
Company competes with other modes of transportation including rail.

     The Company also faces competition for the services of independent trucking
contractors and sales agents.  Sales agents  routinely do business with a number
of carriers on an ongoing  basis.  The Company has attempted to develop a strong
sales agent  network by  maintaining  a policy of prompt  payment  for  services
rendered.

     Competition  is  based  on  several  factors;   principally   cost,  timely
availability of equipment and quality of service.

Insurance

     The Company insures the trucks with automobile liability insurance coverage
of up to $2 million per  occurrence  with a $5,000  deductible.  The Company has
cargo insurance coverage of $200,000 per occurrence  ($400,000 for catastrophes)
with a $10,000  deductible.  The Company  also  maintains a  commercial  general
liability policy with a limit of $1,000,000 per occurrence and no deductible.

Potential Changes in Fuel Taxes

     From time to time, various legislative proposals are introduced to increase
federal,  state,  or local taxes,  including  taxes on motor fuels.  The Company
cannot predict  whether,  or in what form, any increase in such taxes applicable
to the Company will be enacted and, if enacted,  whether or not the Company will
be able to  reflect  the  increases  in prices  to  customer.  Competition  from
non-trucking modes of transportation and from intermodal transportation would be
likely to increase if state or federal taxes on fuel were to increase  without a
corresponding increase in taxes imposed upon other modes of transportation.

<PAGE>
Independent Contractor Status

     From  time  to  time,  various  legislative  or  regulatory  proposals  are
introduced  at the federal or state  levels to change the status of  independent
contractors'  classification  to employees  for either  employment  tax purposes
(withholding,  social  security,  Medicare  and  unemployment  taxes)  or  other
benefits available to employees.  Currently,  most individuals are classified as
employees or  independent  contractors  for  employment tax purposes based on 20
"common-law"  factors rather than any definition  found in the Internal  Revenue
Code or Internal Revenue Service regulations.  In addition, under Section 530 of
the  Revenue  Act of 1978,  taxpayers  that  meet  certain  criteria  may  treat
similarly situated workers as employees, if they have received a ruling from the
Internal Revenue Service or a court decision  affirming their  treatment,  or if
they are following a long-standing recognized practice.

     Although management is unaware of any proposals currently pending to change
the employee/independent  contractor  classification,  the costs associated with
potential changes, if any, in the employee/independent contractor classification
could adversely  affect the Company's  results of operations if the Company were
unable to reflect them in its fee arrangements with the independent  contractors
and agent or in the prices charged to its customer.

Regulation

     The Company is a common and contract motor carrier regulated by the DOT and
various state  agencies.  Prior to 1980, the government  strictly  regulated the
trucking industry as to entry of new operators, rates charged, routes driven and
types of freight  hauled.  The Motor  Carrier Act of 1980  commenced a period of
deregulation that has continued to the present. The Act increased competition by
easing  barriers to entry into the  trucking  industry,  such as proof of public
convenience and necessity.  The Act also made rates more competitive and reduced
regulation of the industry.

     Like all interstate  motor  carriers,  the Company is subject to the safety
requirements prescribed by the DOT, including regulations effective in 1992 that
instituted  drug-testing procedures and a uniform commercial driver license. The
Company is in substantial compliance with these regulations.

Environmental Regulation

     The Company owns property in Phoenix,  Arizona that was formerly  leased to
Transcon  Lines  ("Lines")  as a terminal  facility,  where  soil  contamination
problems  existed  or  are  known  to  exist  currently.   State   environmental
authorities   notified  the  Company  of  potential  soil   contamination   from
underground  storage tanks,  and management has been working with the regulatory
authorities to implement  required  remediation.  The underground  storage tanks
were removed from the Phoenix  facility in February  1994.  Currently  the State
environmental  authorities are requiring  further  testing of the property.  The
Company  believes  it  is in  substantial  compliance  with  state  and  federal
environmental  regulations  relative  to the  trucking  business.  However,  the
Company is  working  with  regulatory  officials  to  eliminate  any  sources of
contamination and determine extent of existing problems.  Estimates of the costs
to complete the future  remediation of approximately  $141,000 are considered in
the land valuation allowance at December 31, 1999 and 1998.

<PAGE>
Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995

     The  statements  contained in Item 1  (Description  of Business) and Item 6
(Management  Discussion  and  Analysis  of  Financial  Condition  and Results of
Operation);   particularly  the  statements  under  "Future  Prospects"  contain
forward-looking   statements  that  are  subject  to  a  variety  of  risks  and
uncertainties.  The Company cautions readers that these risks and  uncertainties
could cause the Company's actual results in 2000 and beyond to differ materially
from  those  suggested  by  any  forward-looking  statements.  These  risks  and
uncertainties  include,  without limitation,  a lack of historic information for
new operations on which  expectations  regarding their future performance can be
based, general economic and business conditions affecting the trucking industry,
competition from, among others,  national and regional  trucking  companies that
have  greater   financial  and  marketing   resources  than  the  Company,   the
availability of sufficient  capital,  and the Company's  ability to successfully
attract and retain qualified owner operators and agents.

Item 2.  Properties

     The Company's administrative offices are at 1000 Colfax, Gary, Indiana. The
Company leases its  administrative  offices on a month to month basis for $2,200
per month from Mr. Michael E. Kibler,  President,  Chief Executive Officer and a
director of the Company,  and Mr. Harold  Antonson,  Treasurer,  Chief Financial
Officer and a director of the Company.
     Carolina  National leases 2,400 sq. ft of office space in Mt. Pleasant,  SC
for $2,700 per month.  The  current  lease  expires  June 30,  2000.  Management
believes that the Company's leased properties are adequate for its current needs
and can be retained or replaced at acceptable cost.

Item 3.  Legal Proceedings

     Cam  Regional  Transport  has filed a complaint  against the Company  which
alleges breach of contract,  claiming that Trailblazer  Transportation,  Inc., a
subsidiary of the Company which filed bankruptcy,  failed to abide by a purchase
agreement  entered into with Cam  Regional  Transport,  Inc and Laurel  Mountain
Leasing,  Inc.  The  complaint  seeks  damages of $284,000  plus  interest  from
November  1992.  At this time,  the Company and its legal  counsel are unable to
assess the outcome of this complaint.  The Company intends to vigorously  defend
itself in this matter.

    The  Company is  involved in other  litigation  in the normal  course of its
business. Management intends to vigorously defend these cases. In the opinion of
management,  the litigation now pending will not have a material  adverse effect
on the consolidated financial position of the company.

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

     No matters were  submitted to a vote of the Company's  shareholders  during
the fourth quarter of 1999.

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.

     Shares of Common  Stock of the  Company  are  listed and traded on the NASD
Electronic "bulletin board market" under the symbol USOO.

     The  following  table sets forth for the period  indicated the high and low
sales  prices per share of the Common  Stock as  reported  on the New York Stock
Exchange  Composite  Tape through  June 1998.  The prices since June 1998 are as
reported  from NASDAQ  quotations  provided  by North  American  Quotations  and
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not represent actual transactions.

<PAGE>
<TABLE>
<CAPTION>

     Calendar Year                            High                        Low
-----------------------------------------------------------------------------
      1999
      ----
<S>                                           <C>                        <C>
      First Quarter                            3/32                       1/32
      Second Quarter                           1/8                        1/64
      Third Quarter                            1/8                        1/64
      Fourth Quarter                           9/64                       3/64
      1998
      First Quarter                           13/32                       7/32
      Second Quarter                           3/8                        1/4
      Third Quarter                            3/8                        3/32
      Fourth Quarter                           3/32                       1/16

<FN>
     As of March 15, 2000, there were 3,281 holders of record of Common Stock.

     The Company has not paid any cash dividends on its Common Stock. Management
does not anticipate  paying any dividends on the Common Stock in the foreseeable
future,  and the Company's  current  credit  agreement  prohibits the payment of
dividends.
</FN>
</TABLE>

Item 6. SELECTED FINANCIAL DATA

     The selected consolidated  financial data presented below have been derived
from the Company's consolidated financial statements. The consolidated financial
statements  for the years ended  December 31, 1999 and 1998 have been audited by
the Company's  independent  certified public  accountants,  whose report on such
consolidated   financial  statements  is  included  herein  under  Item  8.  The
consolidated  financial  statements  for the year ended  December  31, 1997 were
audited  by  PricewaterhouseCoopers,  LLP  whose  report  on  such  consolidated
financial  statements is included herein under Item 8. The information set forth
below should be read in conjunction with the consolidated  financial  statements
and notes  thereto  under Item 8 and  "Management's  Discussion  and Analysis of
Financial Condition and Results of Operations."
<TABLE>
<CAPTION>

                                   (in thousands, except per share data)
                                      Fiscal Year Ended December 31,
<S>                                    <C>        <C>       <C>       <C>       <C>
                                      1999        1998       1997      1996      1995

STATEMENT OF OPERATIONS DATA:
Operating revenues                   $32,333     $30,177    $25,422   $15,412   $14,904
Other operating costs and expenses     3,481       3,408      3,806     2,394     2,147
Purchased transportation              24,846      23,417     19,676    11,694    11,318
Commissions                            3,052       3,178      2,361     1,498     1,250

Operating income (loss)                  954         174       (421)     (174)      189

Interest expense                         661         744        435       282       205

Income (loss) before extraordinary item  412         173       (803)     (339)      679

Net income (loss)                        412         173       (192)      341      (820)

Income (loss) per common share before Income (loss) from operations:
        Basic                          $0.03       $0.01     ($0.08)   ($0.01)   ($0.08)
        Diluted                        $0.03       $0.01     ($0.08)   ($0.01)   ($0.08)
  Extraordinary item
        Basic                          $0.00       $0.00      $0.06     $0.05     $0.00
        Diluted                        $0.00       $0.00      $0.06     $0.05     $0.00
  Earnings (loss) per share:
        Basic                          $0.03       $0.01     ($0.02)    $0.04    ($0.08)
        Diluted                        $0.03       $0.01     ($0.02)    $0.04    ($0.08)
  Weighted average shares outstanding:
        Basic                     10,618,224  10,618,224 10,616,397 9,879,077 9,829,336
        Diluted                   10,618,224  10,618,224 10,616,397 9,879,077 9,829,336
</TABLE>
<PAGE>
<TABLE>

<S>                                    <C>        <C>        <C>       <C>       <C>
BALANCE SHEET DATA:
  Total assets                         5,352       4,499      6,261     2,198     2,287
  Long-term debt, including
   current portion                     2,547       2,967      2,571       583       530
  Working capital deficiency            (712)       (861)    (1,451)   (3,016)   (3,389)
  Shareholders' deficiency            (3,968)     (4,298)    (4,399)   (4,020)   (4,697)

OTHER DATA:
  Cash (used in) provided by
   operating activities                 (370)        490     (3,630)     (445)   (1,401)
  Cash provided by (used in)
   investing activities                   74          58       (269)      149       592
  Cash (used in) provided by
   financing activities                  296        (848)     3,971       468       781
</TABLE>

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation.

Overview

     Purchased transportation represents the amount an independent contractor is
paid to haul  freight  and is  primarily  based on a  contractually  agreed-upon
percentage  of revenue  generated  by the haul for truck  capacity  provided  by
independent  contractors.  Purchased  transportation is the largest component of
operating  expenses  and, on a  consolidated  basis,  increases  or decreases in
proportion to the revenue generated through independent contractors.  Commission
to  agents  and  brokers  are  primarily  based  on  contractually   agreed-upon
percentages  of revenue.  Commissions  to agents and brokers as a percentage  of
consolidated   revenue  will  vary  directly  with  revenue   generated  through
independent commission sales agents.

     A majority of the insurance and claims  expense is based on a percentage of
revenue and, as a result,  will increase or decrease,  on a  consolidated  basis
with the Company's revenue. Potential liability associated with accidents in the
trucking  industry  is severe  and  occurrences  are  unpredictable.  A material
increase  in  the  frequency  or  severity  of  accidents  or  the   unfavorable
development of existing  claims could adversely  affect the Company's  operating
income.

     The following table set forth the percentage relationships of expense items
to revenue for the periods indicated:

<TABLE>
<CAPTION>
                                 Fiscal Years
                                                 --------------------------
                                                  1999     1998     1997
                                                  ------   ------   ------
<S>                                              <C>       <C>      <C>
Revenue                                           100.0%   100.0%   100.0%

Operating expenses:
    Purchased transportation                       76.8     77.6     77.4
    Commissions                                     9.4     10.5      9.3
    Insurance and claims                            3.3      3.1      3.7
    Salaries, wages and other                       3.9      4.1      5.1
    Other operating expenses                        3.6      4.1      6.2
                                                  ------   ------   ------
     Total operating expenses                      97.0     99.4    101.7
                                                  ------   ------   ------
Operating income (loss)                             3.0      0.6     (1.7)
</TABLE>

<PAGE>
1999 Compared to 1998

     Revenue  for the fiscal  year 1999 was $32.3  million,  an increase of $2.2
million,  or 7.1%,  over  revenue for the 1998 fiscal  year.  The  increase  was
attributable to continued growth at Carolina  National  Transportation,  and the
operations of a new agent at Keystone Lines.

     Purchased  transportation  was 76.8% of revenue in 1999 compared with 77.6%
in 1998. The decrease in the percentage of purchased  transportation  to revenue
was  primarily  attributable  to  management  having  better  control  over  the
ancillary costs.

     Commissions  to agents were 9.4% of revenue in 1999  compared with 10.5% in
1998  primarily  due to  contracts  with  newer  divisions  negotiated  a  lower
percentage rate.

     Insurance  and claims  were 3.3% of revenue in 1999  compared  with 3.1% in
1998  primarily  due to higher  premium  costs  associated  with a new insurance
carrier for Carolina National.

     Salaries, wages and other expenses were 3.9% of revenue in 1999 and 4.1% in
1998. The slight decrease in salaries,  wages and other expenses as a percentage
of revenue was due to the Company's continued efforts to control overhead costs.
Other  operating  expenses  were 3.6% of revenue  in 1999 and 4.1% in 1998.  The
decrease  in other  operating  expenses  as a  percentage  of  revenue  was also
primarily  attributable  to the cost  containment  measures  established  by the
Company.

     Based on the changes in revenue and  expenses  discussed  above,  operating
income increased by $780,000 from $174,000 in 1998 to $964,000 in 1999.

     Interest expense remained constant at $0.7 million for fiscal year 1999 and
1998. An increase in the Company's interest rate on its revolving line of credit
to a default  rate of prime plus 4.75% was  equally  offset by a decrease in the
average outstanding balance in 1999.

     Non-operating  income (expense),  exclusive of interest expense,  decreased
from  $743,000  in  1998  to  $119,000  in  1999.  The  decrease  was  primarily
attributable to the write off of old payables in 1998 as discussed in Note 13 to
the consolidated financial statements.

     Net income in 1999 was  $412,000  compared  with  $173,000 in 1998.  Income
available to common  shareholders  was $330,000,  or $0.03 per common share,  in
1999 compared with $101,000, or $0.01 per common share, in the prior year.




<PAGE>
1998 Compared to 1997

     Revenue  for the fiscal  year 1998 was $30.2  million,  an increase of $4.8
million,  or 18.7%,  over  revenue for the 1997 fiscal  year.  The  increase was
primarily  attributable  to the  start-up of Carolina  National  Transportation,
offset by a decrease  in revenue of Keystone  Lines  caused by a loss of certain
agent relationships.

     Purchased  transportation  was 77.6% of revenue in 1998 compared with 77.4%
in 1997.  Commissions to agents were 10.5% of revenue in 1998 compared with 9.3%
in 1997 primarily due to change in agent relationships and the Company's need to
attract new agents with higher commission rates.  Insurance and claims were 3.1%
of revenue in 1998  compared with 3.7% in 1997  primarily due to favorable  loss
experience in 1998.

     Salaries, wages and other expenses were 4.1% of revenue in 1998 and 5.1% in
1997.  The decrease in  salaries,  wages and other  expenses as a percentage  of
revenue  was due to the  Company's  efforts to  control  overhead  costs.  Other
operating  expenses were 4.1% of revenue in 1998 and 6.2% in 1997.  The decrease
in other  operating  expenses  as a  percentage  of revenue  was also  primarily
attributable to the implementation of cost containment measures by the Company.

     Based on the changes in revenues and expenses  discussed  above,  operating
income (loss)  increased by $595,000 from an operating  loss of $421,000 in 1997
to an operating income of $174,000 in 1998.

     Interest  expense  increased  from $0.4  million in 1997 to $0.7 million in
1998. The Company's need for additional  working capital to finance the Carolina
National  Transportation start-up resulted in an increase in the average balance
of the revolving line of credit.

     Non-operating  income (expense),  exclusive of interest expense,  increased
from  $54,000  in  1997  to  $743,000  in  1998.   The  increase  was  primarily
attributable to the write off of old payables in 1998 as discussed in Note 13 to
the consolidated financial statements.

     In 1997, the Company  recorded an  extraordinary  gain of $610,000 (or $.06
per common share) resulting from the bankruptcy of Trailblazer Transportation (a
subsidiary of Keystone Lines, Inc.)

     Net income in 1998 was  $173,000  compared  with a net loss of  $192,000 in
1997. Income available to common shareholders was $101,000,  or $0.01 per common
shared,  in 1998  compared  with a loss  available  to  common  shareholders  of
$254,000, or $0.02 per common share, in the prior year.


Future Prospects

     The Company has  experienced  operating  losses and negative  cash flows in
recent  years  and  currently  has  a  net  working   capital   deficiency   and
shareholders'  deficiency.  In  addition,  the  company  is in  default  of  its
revolving  line of credit  agreement and the lender has demanded  payment of all
outstanding  balances no later than April 28, 2000.  If the Company is unable to
refinance its line of credit by that date, the Company would not have sufficient
funds to pay its obligations  including advances on its existing line of credit,
as they are due.  The  report  of the  Company's  Independent  Certified  Public
Accountants  contains an  explanatory  paragraph  indicating  that these factors
express  substantial  doubt about the  Company's  ability to continue as a going
concern.

<PAGE>
     The  Company's  ability  to  continue  as a  going  concern  is  ultimately
dependent on its ability to refinance  its  outstanding  debt with a new lender,
increase  sales to a level that will allow it to operate  profitably and sustain
positive  operating  cash flows.  In addition,  the Company  needs to reduce the
level of  outstanding  indebtedness  which will,  in turn,  reduce the amount of
interest expense.  Although the reduction of expenses,  including interest,  can
contribute to future profitability,  achieving profitability without an increase
in sales  would  require  a greater  level of  expense  reductions  which in all
likelihood  could  only be  accomplished  through a  significant  reduction  and
restructuring of the nature and scope of operations.

     Shareholders and potential  investors in the Company are cautioned that the
Company's  financial  condition  remains  precarious  and  that an  increase  in
operating performance is essential to its long term survival.

Liquidity and Capital Resources

     As of December 31, 1999, the Company's  financial  position  remained poor.
The  Company  had a net  deficiency  in  shareholders'  equity of $4.0  million.
Working capital deficiency at December 31, 1999 was ($0.7) million,  compared to
($0.8) million at the end of 1998.

     Accounts receivable at the end of 1999 were $5.0 million as opposed to
$4.0 million in 1998.  This is due to the increase in revenue generated in 1999.

     Accounts  payable and other  accrued  expenses at the end of 1999 were $2.7
million,  compared  to $2.6  million  at the end of 1998.  The  increase  is due
primarily to an increase in accrued interest.

     The  bank  overdraft  and  balance  of the  revolving  line of  credit  has
increased by $0.7 million from 1998 due to increased business.

     The  Company's  principal  source of  liquidity is its $3.3 million line of
credit with FINOVA.  The  availability  of the line of credit is based on 72% of
Keystone's, Gulf Line's and Carolina National's eligible accounts receivable. At
December 31, 1999, the outstanding borrowings were $3.1 million.

     During 1999, the Company's  lender issued  several  letters of default with
respect to  covenant  violations  including  violation  of the minimum net worth
requirements and total debt service coverage ratio requirements.  As a result of
the default status, the lender has increased the interest rate to the prime rate
plus 4.75% and reduced the percent of eligible  accounts  receivable from 80% to
72%.

     In December  1999,  the lender  issued a notice of  acceleration  requiring
payment of the outstanding balance of the line of credit no later that April 28,
2000.  The  Company is  currently  in  discussion  with  another  lender and has
obtained a letter of commitment for $2 million of financing.  Advances under the
new  line of  credit  agreement  will be  limited  to 70% of  eligible  accounts
receivable.  Advances will bear  interest at the lender's  prime rate plus 0.5%.
The line of credit will be secured by substantially  all of the Company's assets
and require personal  guarantees from the Company's Chief Executive  Officer and
Chief Financial Officer.

     The Company  intends to complete the  refinancing  of the revolving line of
credit no later that April 15, 2000.  However,  as the Company has not finalized
this new financing, there is no assurance that the Company will be successful in
refinancing  its line of  credit.  If the  Company  is  unsuccessful  and Finova
demands  repayment,  there is substantial doubt that the Company will be able to
continue  as a going  concern.  The  difference  between  the  amount  currently
outstanding  on the  current  line of  credit  agreement  and the  amount of the
commitment will be financed through  subordinated  debt from the Company's Chief
Executive Officer and Chief Financial Officer or entities controlled by them.

     Related party loans from AIP and Messrs. Kibler and Antonson have decreased
from $2.7 million at December 31, 1998 to $2.4 million at December 31, 1999.


<PAGE>
Environmental Liabilities

     The Company is not a party to any Super-fund  litigation and otherwise does
not have any known  environmental  claims against it. However,  the Company does
have one  property  where soil  contamination  problems  existed or are known to
exist currently. The Company has preliminarily evaluated its potential liability
as this site and believes that it has reserved appropriately for its remediation
or that the fair market value of the  property  exceeds its net book value by an
amount in excess of any remediation  cost.  There can be no assurance,  however,
that the cost of remediation would not exceed the expected amounts.  The Company
continues to monitor  soil  contamination  and may be required to remediate  the
property in the near future.

Inflation

     Changes  in freight  rates  charged by the  Company  to its  customers  are
generally reflected in the cost of purchased transportation and commissions paid
by the Company to independent contractors and agents,  respectively.  Therefore,
management  believes  that  future  operating  results  of the  Company  will be
affected primarily by changes in volume of business.  However, due to the highly
competitive nature of the truckload motor carrier industry,  it is possible that
future  freight  rates  and  cost of  purchased  transportation  may  fluctuate,
affecting the Company's profitability.

Recently Issued Accounting Standards

     In June 1998, the FASB issued Statement of Financial  Accounting  Standards
(SFAS) No. 133, "Accounting for Derivative  Instruments and Hedging Activities,"
which establishes  accounting and reporting standards for derivative instruments
and hedging activities.  It requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial  position and measure
those  instruments at fair value. SFAS No. 133 has been amended by SFAS No. 137,
which delayed the effective date to periods  beginning  after June 15, 2000. The
Company, to date, has not engaged in derivative or hedging activities.

     In March 1998,  the  American  Institute of  Certified  Public  Accountants
(AICPA) issued  Statement of Position (SOP) 98-1,  "Accounting  for the Costs of
Computer Software Developed or Obtained for Internal Use." SOP 98-1 is effective
for years  beginning  after December 15, 1998.  SOP 98-1 provides  guidance over
accounting  for  computer  software  developed  or obtained  for  internal  use,
including  the  requirements  to capitalize  and amortize  specific  costs.  The
adoption  of the  standard  did not  have a  material  effect  on the  Company's
capitalization policy.

     In April  1998,  the  AICPA  issued  SOP 98-5,  "Reporting  on the Costs of
Start-Up  Activities."  SOP 98-5 is effective years beginning after December 15,
1998. SOP 98-5 requires costs of start-up  activities and organization  costs to
be expensed as incurred.  The adoption of this  standard did not have a material
effect on the Company's consolidated financial statements.



<PAGE>
Item 7a. Quantitative and Qualitative Disclosures about Market Risk

     The Company has a credit  agreement  with FINOVA Capital  Corporation  that
provides  $3,300,000  of borrowing  capacity to finance  operations.  Borrowings
under the agreement bear interest at the prime rate plus 2.75%. During 1999, the
average  outstanding  balance under the credit agreement was $2,162,000.  During
1999,  FINOVA  issued a letter of default and  increased  the  interest  rate on
outstanding  advances  under the credit  agreement to the prime rate plus 4.75%.
Based on the default  status of the Company with  FINOVA,  the fair value of the
outstanding  borrowings  as of December 31, 1999 was  estimated  to  approximate
carrying value.

     In December  1999,  the lender  issued a notice of  acceleration  requiring
payment of the outstanding balance of the line of credit no later that April 28,
2000.

Item 8.  Financial Statements and Supplementary Data.

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors of
US 1 Industries, Inc.
Gary, Indiana

     We have  audited  the  accompanying  consolidated  balance  sheets  of US 1
Industries,  Inc.  and  Subsidiaries  as of  December  31, 1999 and 1998 and the
related consolidated  statements of operations,  shareholders'  deficiency,  and
cash  flows  for the  years  then  ended.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion of these financial statements based on our audits.

     We conducted  our audits in accordance  with  generally  accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimated  made by
management,  as well as  evaluating  the overall  presentation  of the financial
statements.  We  believe  that our  audits  provide a  reasonable  basis for our
opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present  fairly,  in all  material  respects,  the  financial  position  of US 1
Industries, Inc. and Subsidiaries at December 31, 1999 and 1998, and the results
of their  operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles.

     The accompanying  financial statements have been prepared assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 to the
consolidated financial statements,  the Company has experienced operating losses
and negative cash flows in recent years and has a net working capital deficiency
and  shareholders'  deficiency.  In  addition,  the Company is in default of its
revolving  line of credit  agreement and its lender has demanded  payment of the
outstanding   balance  no  later  than  April  28,  2000.  These  factors  raise
substantial  doubt about the Company's  ability to continue as a going  concern.
Management's  plans in regard to these matters are also described in Note 1. The
consolidated  financial  statements  do not include any  adjustments  that might
result from the outcome of this uncertainty.


BDO Seidman, LLP

Chicago, Illinois
March 10, 2000



<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS (Continued)



To the Shareholders and Board of Directors of US 1 Industries, Inc.

     We have audited the  accompanying  consolidated  statements of  operations,
shareholders'  equity and cash flows of US 1 Industries,  Inc. and  subsidiaries
(the "Company") for the year ended December 31, 1997. These financial statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an  opinion  on these  consolidated  financial  statements  based on our
audit.

     We conducted  our audit in  accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management, as well as the overall financial statement presentation.  We believe
our audit provides a reasonable basis for our opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material respects, the results of the operations and cash
flows of US 1 Industries,  Inc. and subsidiaries for the year ended December 31,
1997 in conformity with generally accepted accounting principles.

     The accompanying  financial statements have been prepared assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 to the
financial statements,  the Company has experienced operating losses and negative
cash flows in recent years and has a net capital deficiency. These factors raise
substantial  doubt about the Company's  ability to continue as a going  concern.
Management's  plans in regard to these matters are also described in Note 1. The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.




PricewaterhouseCoopers LLP


March 27, 1998




<PAGE>
                     US 1 INDUSTRIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>

ASSETS
<S>                                                   <C>            <C>

                                                       1999           1998
                                                       ----           ----
CURRENT ASSETS:
 Accounts receivable-trade, less allowance for
    doubtful accounts of $66,648 and $95,083
    respectively                                   $4,972,846    $4,041,966
 Other receivables                                    105,770        59,654
 Deposits                                             162,173       132,429
 Prepaid expenses                                       9,245        27,798
                                                   ----------    ----------
      Total current assets                          5,250,034     4,261,847

FIXED ASSETS:
   Equipment                                         100,738        258,445
   Less accumulated depreciation and amortization     52,756        (75,316)
                                                   ----------    ----------
      Net fixed assets                                47,982        183,129
                                                   ----------   -----------
ASSETS HELD FOR SALE:
   Land                                              195,347        195,347
   Valuation allowance                              (141,347)      (141,347)
                                                   ----------   -----------
      Net assets held for sale                        54,000         54,000
                                                   ----------   -----------
TOTAL ASSETS                                    $  5,352,016    $ 4,498,976
                                                   ==========   ===========
<FN>
The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.
</FN>
</TABLE>

<PAGE>


                     US 1 INDUSTRIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>

LIABILITIES AND SHAREHOLDERS' DEFICIENCY
<S>                                                  <C>            <C>
                                                      1999           1998
                                                      ----           ----
CURRENT LIABILITIES:
   Accounts payable                              $ 1,341,134    $ 1,445,889
   Bank overdraft                                    345,719        260,404
   Accrued expenses                                  215,505        183,400
   Short-term debt                                 3,173,990      2,565,006
   Insurance and claims                              204,592        181,524
   Accrued compensation                               17,314         17,591
   Accrued interest                                  613,567        392,883
   Fuel and other taxes payable                       49,948         75,695
                                                 -----------   ------------
      Total current liabilities                    5,961,769      5,122,392
                                                 -----------   ------------
LONG-TERM DEBT TO RELATED PARTIES                  2,451,028      2,849,262

COMMITMENTS AND CONTINGENCIES

REDEEMABLE PREFERRED STOCK:
    Authorized 5,000,000 shares; no par value,
    Series A shares outstanding:
    1999 and 1998 - 1,094,224
    Liquidation preference $0.3125 per share         907,540        825,254
SHAREHOLDERS' DEFICIENCY:
   Common stock, authorized 20,000,000 shares; no par value; shares outstanding:
    1999 and 1998 - 10,618,224                    40,844,296     40,844,296
   Accumulated deficit                           (44,812,617)   (45,142,228)
                                                 -----------     -----------
   Total shareholders' deficiency                 (3,968,321)    (4,297,932)
                                                 -----------     -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
    DEFICIENCY                                  $  5,352,016    $4,498,976
                                                 ===========    ============
<FN>
The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.
</FN>
</TABLE>

<PAGE>

                     US 1 INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
                     YEARS ENDED DECEMBER 31, 1999, AND 1998

<TABLE>
<CAPTION>

<S>                                             <C>            <C>            <C>
                                                1999           1998           1997
OPERATING REVENUES                          $32,333,528    $30,176,818    $25,421,806
OPERATING EXPENSES:
   Purchased transportation                  24,846,421     23,416,624     19,676,213
   Commissions                                3,052,406      3,177,908      2,360,989
   Insurance and claims                       1,070,564        938,044        941,700
   Salaries, wages, and other                 1,248,089      1,223,113      1,285,778
   Other Operating expenses                   1,162,189      1,247,334      1,578,486
                                              ---------     ----------     ------------

            Total operating expenses         31,379,669     30,003,023     25,843,166
                                             ----------     ----------     ----------
OPERATING INCOME (LOSS)                         953,859        173,795       (421,360)
NON OPERATING INCOME (EXPENSE):
    Interest income                               9,840          7,702          2,430
    Interest expense                           (660,509)      (743,953)      (435,042)
    Write off of old payables                                  530,674
    Other income (expense), net                 108,707        204,419         51,462
                                               --------     ----------      ---------
      Total non operating expense              (541,962)      (  1,158)      (381,150)
                                                                                      -
INCOME (LOSS)
     BEFORE EXTRAORDINARY GAIN                  411,897        172,637       (802,510)
EXTRAORDINARY GAIN:
     Forgiveness of debt                              0              0        610,318
                                              ---------     ----------       ----------
NET INCOME (LOSS)                               411,897        172,637       (192,192)
DIVIDENDS ON PREFERRED SHARES                    82,286         72,000         61,712
                                             ----------     ----------      ----------
NET INCOME(LOSS)AVAILABLE TO COMMON SHARES      329,611       $100,637      ($253,904)
                                              ---------     ----------      ----------

INCOME (LOSS) PER COMMON SHARE:
    Income (loss) from operations:
        Basic                                     $0.03          $0.01         ($0.08)
        Diluted                                   $0.03          $0.01         ($0.08)
    Extraordinary gain:
        Basic                                     $0.00          $0.00          $0.06
        Diluted                                   $0.00          $0.00          $0.06
    Net Income (loss):
        Basic                                     $0.03          $0.01         ($0.02)
        Diluted                                   $0.03          $0.01         ($0.02)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING -
   BASIC AND DILUTED                         10,618,224     10,618,224     10,616,397

<FN>
The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.
</FN>
</TABLE>


<PAGE>

       US 1 INDUSTRIES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF
                        SHAREHOLDERS' DEFICIENCY
              YEARS ENDED DECEMBER 31, 1999,1998, and 1997
<TABLE>
<CAPTION>

                                     Common Stock     Accumulated
                          Shares         Amount       Deficit        Total
<S>                       <C>          <C>          <C>           <C>
Balance at
  December 31, 1996       10,573,780   $40,824,296  ($44,988,961) ($4,164,665)
Issuance of Common Stock      44,444        20,000                     20,000
Dividends on Preferred Stock                             (61,712)     (61,712)
Net(loss)                                               (192,192)    (192,192)
Balance at
________________________________________________
  December 31, 1997       10,618,224   $40,844,296  ($45,242,865) ($4,398,569)
Dividends on Preferred Stock                             (72,000)     (72,000)
Net income                                               172,637      172,637
Balance at                __________   ___________   ___________   __________
  December 31, 1998       10,618,224   $40,844,296  ($45,142,228) ($4,297,932)
Dividends on Preferred Stock                             (82,286)     (82,286)
Net Income                                               411,897      411,897
Balance at
__________   ___________   ___________   __________
             -----------   -----------   ------------   --
  December 31, 1999       10,618,224   $40,844.296  ($44,812,617) ($3,968,321)

<FN>
The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.
</FN>
</TABLE>

<PAGE>

<TABLE>

                     US 1 INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   YEARS ENDED DECEMBER 31, 1999,1998 AND 1997
<CAPTION>

<S>                                                     <C>            <C>           <C>
                                                        1999           1998          1997
CASH FLOWS FROM OPERATING ACTIVITIES:

  Net income (loss)                                  $  411,897    $ 172,637     ($192,192)
Adjustments to
reconcile net income (loss) to net
  cash provided by (used in)operating activities:
    Depreciation and amortization                        30,795       74,963         9,533
    Provision on accounts receivable                                               145,298
    Write off of old payables                                       (530,674)
    Loss on disposal of equipment                        30,177       17,488         1,160
    Extraordinary gain - forgiveness of debt                                      (610,318)
    Gain on sale of property                                         (44,800)
    Changes in operating assets and liabilities:
      Accounts receivable-trade                        (930,880)   1,024,290    (3,709,607)
      Other receivables                                 (46,116)     277,265      (200,271)
      Prepaid expenses                                   18,553       55,933        32,745
      Deposits                                          (29,744)      21,639          (176)
      Accounts payable                                 (104,755)    (758,417)      720,143
      Accrued expenses                                   32,105      207,570       (14,644)
      Insurance and claims                               23,068      (60,083)      (10,546)
      Accrued interest                                  220,684      252,059       108,396
      Accrued compensation                                 (277)     (20,711)       (8,578)
      Fuel and other taxes payable                      (25,747)    (198,206)       99,524
                                                         -------    ---------      --------
         Net cash (used in) provided by operating
          activities                                   (370,240)     490,953    (3,629,533)
                                                       ---------    --------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property and equipment                    (5,183)      (2,566)      (41,496)
  Purchase of land                                                                (227,879)
  Proceeds from sale of property and equipment          _79,358       61,055      _________
                                                        -------     --------      ---------
        Net cash provided by (used by) investing
         activities                                      74,175       58,489      (269,375)
                                                        -------     --------      ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net borrowings (repayments) under line of credit      630,745     (741,720)    2,135,847
  Proceeds from issuance of common stock                                            20,000
  Proceeds from short term loan on property                                         50,000
  Repayment of long-term loans                          (64,277)    (123,308)      (10,000)
  Net repayments of proceeds from related party loans  (355,718)     287,236       926,608
  Increase (decrease)in bank overdraft                   85,315     (269,729)      348,991
  Proceeds from issuance of mortgages to
       related parties                                 ________             _       500,000
Net cash                                                             --------       -------
provided by (used in)financing
         activities                                     296,065     (847,521)    3,971,446
                                                       --------     ---------    ---------

NET INCREASE (DECREASE)IN CASH                                      (298,079)       72,538

CASH, BEGINNING OF YEAR                                       _      298,079       225,541
                                                        -------     --------       -------
CASH, END OF YEAR                                      $______0     $      0      $298,079
                                                              -     ----------------------
-------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
  INFORMATION--
  Cash paid during year for interest                   $439,825     $491,894      $326,646

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
  FINANCING ACTIVITIES
  Note payable incurred for purchase of equipment      $      0     $232,700      $      0

<FN>
The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.
</FN>
</TABLE>


<PAGE>
                     US 1 INDUSTRIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 1999, AND 1998


1.       OPERATIONS

          The Company is primarily an  interstate  truckload  carrier of general
commodities,  which uses independent agents and drivers to contract for and haul
freight for its customers in 48 states with a concentration  in the Southeastern
United States.  One agent accounted for 18% and 15% of the Company's revenue for
the years ended December 31, 1999 and December 31, 1998,  respectively.  Another
agent  represented 12% and 14% of sales for the year ended December 31, 1998 and
1997, respectively.

     Going Concern--The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. The Company
has  experienced  operating  losses and negative  cash flows in recent years and
currently has a net working capital deficiency and shareholders'  deficiency. In
addition,  the Company is in default of its revolving  line of credit  agreement
and the lender has demanded  payment of all  outstanding  balances no later that
April 28, 2000. If the Company is unable to refinance its line of credit by that
date,  the  Company  would  not have  sufficient  funds  to pay its  obligations
including  advances  on its  existing  line of  credit,  as they are due.  These
factors raise  substantial  doubt about the  Company's  ability to continue as a
going concern.

     The  Company's  ability  to  continue  as a  going  concern  is  ultimately
dependent on its ability to refinance  its  outstanding  debt with a new lender,
increase  sales to a level that will allow it to operate  profitably and sustain
positive  operating  cash flows.  In addition,  the Company  needs to reduce the
level of  outstanding  indebtedness  which will,  in turn,  reduce the amount of
interest expense.  Although the reduction of expenses,  including interest,  can
contribute to future profitability,  achieving profitability without an increase
in sales  would  require  a greater  level of  expense  reductions  which in all
likelihood  could  only be  accomplished  through a  significant  reduction  and
restructuring  of the  nature  and  scope of  operations.  Management  is in the
process of negotiating a line of credit agreement with a new lender (see Note 7)
and  continues  its efforts to improve  profitability  through  expansion of the
Company's  business in new  markets.  However,  there is no  assurance  that the
Company will be  successful in  refinancing  its line of credit or improving the
Company's  operating  results.  The  financial  statements  do not  include  any
adjustments that might result from the outcome of this uncertainty.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Principles of Consolidation--The  consolidated financial statements include
the accounts of US 1  Industries,  Inc. and its  subsidiaries.  All  significant
intercompany accounts and transactions have been eliminated.

     Revenue  Recognition--Revenue  for  freight in transit is  recognized  upon
delivery.   Amounts  payable  for  purchased  transportation,   commissions  and
insurance expense are accrued when the related revenue is recognized.

      Fixed  Assets--Fixed  assets are stated at cost and depreciated  using the
straight-line  method over the  estimated  useful  lives of the related  assets,
which range from three to eight years.

     Assets Held for Sale--Such  assets  comprise real estate,  not required for
the Company's  operations,  which is carried at the lower of historical  cost or
estimated net realizable value. See Note 12.


<PAGE>
                     US 1 INDUSTRIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     Long-Lived   Assets  -  The  Company  assesses  the  realizability  of  its
long-lived assets 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."

     Accounting Estimates--The preparation of financial statements in conformity
with  generally  accepted  accounting  principles  requires  management  to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities and disclosure of contingent  assets and liabilities at the dates of
financial  statements and the reported  amounts of revenues and expenses  during
the reporting periods. Actual results could differ from those estimates.

     Recently  Issued  Accounting  Standards--In  June  1998,  the  FASB  issued
Statement of Financial  Accounting  Standards  (SFAS) No. 133,  "Accounting  for
Derivative Instruments and Hedging Activities," which establishes accounting and
reporting  standards  for  derivative  instruments  and hedging  activities.  It
requires  that  an  entity   recognize  all  derivatives  as  either  assets  or
liabilities in the statement of financial position and measure those instruments
at fair  value.  SFAS  133 has been  amended  by SFAS  137,  which  delayed  the
effective date to periods  beginning after June 15, 2000. The Company,  to date,
has not engaged in derivative and hedging activities.

     In March 1998,  the  American  Institute of  Certified  Public  Accountants
(AICPA) issued  Statement of Position (SOP) 98-1,  "Accounting  for the Costs of
Computer Software Developed or Obtained for Internal Use." SOP 98-1 is effective
for years  beginning  after December 15, 1998.  SOP 98-1 provides  guidance over
accounting  for  computer  software  developed  or obtained  for  internal  use,
including  the  requirements  to capitalize  and amortize  specific  costs.  The
adoption  of the  standard  did not  have a  material  effect  on the  Company's
capitalization policy.

     In April  1998,  the  AICPA  issued  SOP 98-5,  "Reporting  on the Costs of
Start-Up  Activities."  SOP 98-5 is effective years beginning after December 15,
1998. SOP 98-5 requires costs of start-up  activities and organization  costs to
be expensed as incurred.  The adoption of this  standard did not have a material
effect on the Company's consolidated financial statements.


     Income Taxes--Deferred income taxes are recognized for the tax consequences
of "temporary differences" by applying enacted statutory tax rates applicable to
future years to differences between the financial statement carrying amounts and
the tax bases of existing assets and liabilities. In addition, the amount of any
future tax  benefits  are  reduced by a valuation  allowance  to the extent such
benefits are not expected to be fully utilized.

<PAGE>
                  US 1 INDUSTRIES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

   Earnings  Per  Common  Share--In  February  1997,  the  Financial  Accounting
Standards  Board issued  Statement  No. 128,  "Earnings per Share," which became
effective for both interim and annual financial  statement  periods ending after
December 15, 1997. As required by this  statement,  the Company  adopted the new
standards  for  computing  and  presenting  earnings per share ("EPS") for 1997.
Following are the  reconciliations  of the  numerators and  denominators  of the
basic and diluted EPS.

<TABLE>

<S>                                                  <C>             <C>              <C>
Numerator                                            1999            1998             1997
      Income (loss)before extraordinary gain      $ 411,897        $172,637        ($802,510)
      Extraordinary gain                                  0               0          610,318
                                                   --------      ----------       ----------
               Net income (loss)                  $ 411,897        $172,637        ($192,192)

      Dividends on preferred shares               ($ 82,286)      ($ 72,000)       ($ 61,712)
                                                  ---------      ----------       ----------
          Income (loss) available to common
         shareholders for basic and diluted EPS   $ 329,611         100,637        ($253,904)

Denominator
      Weighted average common shares
         outstanding for basic and diluted EPS   10,618,224      10,618,224       10,616,397
</TABLE>


     As of December 31, 1998 and 1997, the Company had options  outstanding that
are not  included in the  computation  of diluted  EPS because the options  were
considered antidulitive for the periods presented.


     Business  Segments - Statement of Financial  Accounting  Standards No. 131,
"Disclosures about Segments of an Enterprise and Related  Information"  requires
public  enterprises to report certain  information  about reporting  segments in
financial  statements.  The Company  presents  its  operations  in one  business
segment.

     Reclassifications  - Certain items in the prior year  financial  statements
have been reclassified to conform with the current year presentation.

3.  EXTRAORDINARY GAIN

     During  the  fourth   quarter  of  1997,   the  bankruptcy  of  Trailblazer
Transportation  (a  subsidiary  of  Keystone  Lines,  Inc.) was  finalized  and,
accordingly,  the  Company  recorded  an  extraordinary  gain of $610,318 on the
forgiveness of debt.

4.  REDEEMABLE PREFERRED STOCK

     The Series A preferred  shares are not convertible  into common stock,  are
non-voting,  and earn  dividends  at the rate of  $0.0375  per  share  per annum
(increasing by $0.0063 on each of January 1, 1995, 1996 and 1997, and by $0.0094
on January 1, 1998 and on each  January 1  thereafter  until  redeemed)  payable
quarterly on the first day of February,  May, August, and November. The Series A
preferred stock is redeemable at the option of the Company or the holders at any
time.

     As of December 31, 1999, series A cumulative  preferred stock dividends are
in arrears by  $360,427.  The  Company's  current line of credit  prohibits  the
payment of dividends.


                                     1
<PAGE>
                  US 1 INDUSTRIES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

5.  RELATED PARTY TRANSACTIONS

     One  of  the  Company's  subsidiaries  provides  safety,   management,  and
accounting  services to companies  controlled by the Chief Executive Officer and
Chief Financial  Officer of the Company.  These services are priced to cover the
cost of the employees providing the services. Revenues related to those services
totaled $77,640, $70,607, and $149,442 in 1999, 1998, and 1997, respectively.

     One of the Company's insurance providers,  American Inter-Fidelity Exchange
(AIFE) is managed by a Director of the Company and the Company has an investment
in the provider. In addition,  the Director also manages an affiliated insurance
carrier, Indiana Truckers Exchange (ITE). For the years ended December 31, 1999,
1998, and 1997, cash paid for related party  insurance  premiums and deductibles
amounted to $532,586, $751,123, and $770,704, respectively. The Company also has
long term notes payable to AIFE and ITE as described in Note 8.

   The  Company  has notes  payable due to its Chief  Executive  Officer,  Chief
Financial  Officer,  and August  Investment  Partnership,  an affiliated  entity
through common ownership, as described in Note 8.

6.  LEASES

     The  Company  leases  office  space  on  a  month-to-month  basis  for  its
headquarters  in Gary,  Indiana  for $2,200 per month from the  Company's  Chief
Executive  Officer and Chief Financial  Officer.  No formal lease agreement with
the Company existed at December 31, 1999. The Company leases office space in Mt.
Pleasant,  South Carolina for $ 2,700 per month. The lease agreement  expires in
June,  2000. Rent expense for the years ended December 31, 1999,  1998, and 1997
was approximately $59,000, $59,000, and $80,000, respectively.

7. SHORT-TERM DEBT

     Short-term debt at December 31, 1999 and 1998 comprises:
<TABLE>

<S>                                                <C>                <C>
                                                December 31,       December 31,
                                                 1999               1998
                                              -----------          ----------
Line of credit                              $3,077,606          $2,446,861
Current portion of long-term debt               96,384             118,145
                                           -----------          ----------
         Total                                 $3,173,990          $2,565,006
                                           ===========          ==========
</TABLE>

     Under its revolving line of credit agreement the Company may borrow up to a
maximum of  $3,300,000.  Under the  agreement  borrowings  are limited to 80% of
eligible  accounts  receivable  and bear  interest  at the prime rate (8.50% and
7.75% at December 31, 1999 and 1998,  respectively)  plus 2.75%.  Advances under
the line of  credit  agreement  are  collateralized  by the  Company's  accounts
receivable, property and other assets.

      The line of  credit is  subject  to  termination  upon  various  events of
default,  including  failure to remit  timely  payments  of  interest,  fees and
principal,  any adverse  change in the business of the Company or the insecurity
of the lender  concerning the ability of the Company to repay its obligations as
and when due or failure to meet certain financial covenants. Financial covenants
include:  minimum net worth  requirements,  total debt service  coverage  ratio,
capital  expenditure  limitations,  restrictions on  compensation  levels of key
officers,   and   prohibition   of   additional   indebtedness   without   prior
authorization.



<PAGE>
                  US 1 INDUSTRIES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


     During 1999, the Company's  lender issued  several  letters of default with
respect to  covenant  violations  including  violation  of the minimum net worth
requirements and total debt service coverage ratio requirements.  As a result of
the default status, the lender has increased the interest rate to the prime rate
plus 4.75% and reduced the percent of eligible  accounts  receivable from 80% to
72%.

     In December  1999,  the lender  issued a notice of  acceleration  requiring
payment of the outstanding balance of the line of credit no later that April 29,
2000.  The  Company is  currently  in  discussion  with  another  lender and has
obtained a letter of commitment for $2 million of financing.  Advances under the
new  line of  credit  agreement  will be  limited  to 70% of  eligible  accounts
receivable.  Advances will bear  interest at the lender's  prime rate plus 0.5%.
The line of credit will be secured by substantially  all of the Company's assets
and require personal  guarantees from the Company's Chief Executive  Officer and
Chief Financial Officer.

     The Company  intends to complete the  refinancing  of the revolving line of
credit no later that April 15, 2000.  However,  as the Company has not finalized
this new financing, there is no assurance that the Company will be successful in
refinancing its line of credit.  If the Company is unsuccessful  and the current
lender demands  repayment,  there is substantial  doubt that the Company will be
able to continue as a going concern. The difference between the amount currently
outstanding  on the line of credit  agreement  and the amount of the  commitment
will be financed  through  subordinated  debt from the Company's Chief Executive
Officer and Chief Financial Officer or entities controlled by them.

8. LONG-TERM DEBT TO RELATED PARTIES

Long-term debt at December 31, 1999 and 1998 comprises:
<TABLE>
<CAPTION>
<S>                                                   <C>           <C>
                                                      1999          1998

Note  payable  to  August  Investment  Partnership,
 interest  at  prime + .75%,
 interest only payments required, principal
 balance due January  2001                       $ 250,000      $  250,000

Mortgage note payable to the Chief Executive Officer and Chief Financial Officer
 collateralized  by land,  interest  at  prime + .75%,  interest  only  payments
 required, principal balance due
 July  2003                                        500,000         500,000

Mortgage note payable to ITE paid in 1999                           56,428

Note payable, collateralized by equipment,
 monthly payments of $3,985 including
 interest at 7.8% through February, 2001            45,115         109,392

Mortgage note payable to ITE,
 Monthly payments of $2,850 including
 Interest at 9% through March 2002                  68,443          57,289

Mortgage note payable to AIFE,
 monthly payments of $2,150 including
 interest at 9% through March 2002                  51,689          43,256
</TABLE>

<PAGE>
                  US 1 INDUSTRIES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Mortgage  note  payable to August  Investment  Partnership,  interest at prime +
 .75%, interest only payments required, principal balance due
<TABLE>
<S>                                            <C>             <C>
 January, 2001                                     100,000         100,000

Note  payable  to the  Chief  Executive  Officer  And Chief  Financial  Officer,
 interest at prime + .75%, interest only payments required,
 principal balance due January, 2001             1,532,165       1,851,042
                                                 ---------      ----------
     Total debt                                  2,547,412       2,967,407
Less current portion                                96,384         118,145
                                                 ---------      ----------
Total long-term debt                           $ 2,451,028     $ 2,849,262
                                                ==========      ==========
</TABLE>

Interest expense on related party notes was approximately $261,000, $325,000 and
$273,000 for the years ended December 31, 1999 ,1998, and 1997 respectively.

Scheduled  maturities  of the  long-term  debt at  December  31, 1999 are due as
follows:
<TABLE>

<S>               <C>                      <C>
                  2000                     $   96,384
                  2001                      1,938,243
                  2002                         12,785
                  2003                        500,000
                                           ----------
                                           $2,547,412
                                           ==========
</TABLE>

9.  STOCK OPTIONS

     The Company has a stock  option plan which allows the Board of Directors to
grant options to officers and certain key employees to purchase  common stock at
the fair market  value on the date of the grant.  At December 31, 1999 and 1998,
96,500  share were  available  for future  option  grants under the stock option
plan.  There  were no  options  outstanding  under the stock  option  plan as of
December 31, 1999 and 1998.

     During 1997,  the Board of  Directors  granted  options to purchase  80,000
shares of the Company's common stock to an unaffiliated  investor at an exercise
price of $.25 per share. These options were immediately  exercisable and expired
on December 31, 1999.

10.  INCOME TAXES

     The effective tax rate differs from the U.S. statutory federal income tax
rate of 34% as described below:
<TABLE>

<S>                                            <C>        <C>       <C>
                                               1999       1998      1997
                                          ---------     ------    ------
Income tax expense (benefit)
  At statutory rate                         140,000     59,000   (65,000)

(Decrease)Increase In Valuation            (169,000)   (71,000)   78,000
                      Allowance

State income taxes
  Net of federal income tax                  29,000     12,000   (13,000)
-----------------------------------------------------------------------------
Income tax expense (benefit)                    -          -         -
</TABLE>


<PAGE>
                  US 1 INDUSTRIES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

    Deferred  income taxes reflect the net tax effects of temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and income tax purposes. A valuation allowance for the net deferred tax
asset has been recognized due to the uncertainty of realizing the benefit of the
loss carry forwards and future deductible temporary differences.  The components
of deferred tax assets as of December 31, 1999 and 1998 are as follows:
<TABLE>

<S>                                              <C>            <C>
                                                 1999           1998
                                          ------------  -------------
     Deferred tax assets:
       Accounts receivable and other     $     45,000   $     32,000
       Estimated fuel and other taxes          19,000         47,000
       Insurance and claims                    82,000         68,000
       Litigation reserves                     17,000         17,000
       Land valuation allowance                48,000         48,000
       Net operating loss carry forwards   19,787,000     19,938,000
                                           ----------    -----------
       Total deferred tax assets           19,998,000     20,150,000
       Less valuation allowance           (19,998,000)   (20,150,000)
                                          -----------   ------------
     Total net deferred tax asset       $      ---     $      ---
                                          ===========  =============
</TABLE>


     The Company has provided a valuation  allowance to write-down  deferred tax
assets due to  uncertainty  of its  ability to utilize  them in future  periods.
During 1999 and 1998,  the valuation  allowance  was decreased by  approximately
$152,000 and $59,000  respectively,  to reflect the utilization of net operating
loss carryforwards.

     The Company has net  operating  loss  carryforwards  of  approximately  $59
million at December  31,  1999.  These  carryforwards  are  available  to offset
taxable income in future years and substantially all of these carryforwards will
expire in the years 2003 through 2008.

11.  COMMITMENTS AND CONTINGENCIES

     Cam  Regional  Transport  has filed a complaint  against the Company  which
alleges breach of contract,  claiming that Trailblazer  Transportation,  Inc., a
subsidiary of the Company which filed bankruptcy,  failed to abide by a purchase
agreement  entered into with Cam Regional  Transport,  Inc. and Laurel  Mountain
Leasing,  Inc.  The  complaint  seeks  damages of $284,000  plus  interest  from
November  1992.  At this time,  the Company and its legal  counsel are unable to
assess the outcome of this complaint.  The Company intends to vigorously  defend
itself in this matter.

     The  Company is involved in other  litigation  in the normal  course of its
business. Management intends to vigorously defend these cases. In the opinion of
management,  the litigation now pending will not have a material  adverse effect
on the consolidated financial position of the Company.

     The Company has entered  into an agreement  with  certain key  employees of
Carolina National Transportation, Inc.("Carolina"), a wholly owned subsidiary of
the  Company,  in which these  employees  will  receive up to 40%  ownership  in
Carolina.  These key employees will earn the 40% ownership  interest in Carolina
over a three  year  period  beginning  in the  year in which  Carolina  achieves
positive  net worth.  Carolina has a negative net worth of $482,000 and $744,000
at December 31, 1999 and 1998, respectively.

     The Company carries insurance for public liability and property damage, and
cargo  loss  and  damage  through  various  programs.  The  Company's  insurance
liabilities  are based upon the best  information  currently  available  and are
subject  to  revision  in  future  periods  as  additional  information  becomes
available. Management believes it has adequately provided for insurance claims.


<PAGE>

                     US 1 INDUSTRIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12.  ENVIRONMENTAL MATTERS

     The Company  owns a piece of property in Phoenix  where soil  contamination
problems  exist.  The Company has been  working  with  regulatory  officials  to
eliminate  new  contamination  sources  and  determine  the  extent of  existing
problems.   Estimates  of  the  cost  to  complete  the  future  remediation  of
approximately  $141,000  are  considered  in the  land  valuation  allowance  at
December 31, 1999 and 1998.

13.      OTHER MATTERS


a)          In 1999 and 1998,  other  income(expense),net,  in the  consolidated
            statement of  operations  is comprised  primarily of a write off net
            payables  from fiscal  years 1996 and 1997  relating to revisions of
            estimates of amounts due from or payable to drivers and agents.
b)          During 1998, the Company has written off  approximately  $531,000 in
            vendor accounts payable which are no longer considered by management
            and the  Company's  legal  Counsel  to be valid  obligations  of the
            Company.  These payables relate to fiscal years prior to 1994 and no
            claims have been made against these amounts since September 1993.


Item 9.  Changes  in and  Disagreements  with  Accountants'  on  Accounting  and
Financial Disclosure.

     None.



<PAGE>
                                       PART III

Item 10.  Directors and Executive Officers of the Registrant.

DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The executive officers of the company as of March 15, 2000 were as follows
<TABLE>
<CAPTION>

<S>                       <C>           <C>
NAME                       AGE          POSITION
----                       ---          --------
Michael E. Kibler           59          President, Chief Executive
Officer,
                                        and Director
Harold E. Antonson          60          Chief Financial Officer, treasurer,
                                        and Director
Richard Courtney            58          Vice President, Secretary and Director
Lex Vendetti                47          Director
Robert I. Scissors          66          Director
Gage Blue                   29          Director
Brad James                  44          Director
</TABLE>

<TABLE>

<S>                          <C>
Name                          Office and Experience
Michael E. Kibler             Mr. Kibler is President and Chief Executive
                              Officer of the Company  and has  held these
                              positions since September 13, 1993.  He also has
                              been President of Enterprise Truck Lines, Inc.,
                              an interstate trucking company engaging in
                              operations similar to the Company's, since 1972.
                              Mr. Kibler is also a director of American
                              Inter-Fidelity Exchange, an insurance reciprocal
                              located in Indiana that is the subject of an
                              Order of Rehabilitation by the Indiana
                              Department of Insurance.  Mr. Kibler has served
                              as a Director of the Company since 1993.

Harold E. Antonson            Mr. Antonson is Chief Financial Officer of the
                              Company, a position he has held since March
                              1998. Mr. Antonson is a certified public
                              accountant.  Prior to joining the Company,
                              he was Secretary/Treasurer of American
                              Inter-fidelity Exchange.  Mr Antonson is also a
                              partner in August Investment Partnership.  Mr.
                              Antonson was elected a director and Treasurer of
                              the Company in November 1999.

Lex Vendetti                  Mr. Vendetti has served as a Director of the
                              Company since 1993.  Mr. Vendetti has been the
                              General Manager of American Interfidelity, an
                              insurance reciprocal located in Indiana that is
                              the subject of an order of rehabilitation by the
                              Indiana Department of Insurance, since 1995.

Robert Scissors               Mr. Scissors has been a Director of the Company
                              since 1993.  Mr. Scissors  began his career in
                              the Insurance Industry  in 1957.  Later, in
                              1982, Mr. Scissors joined a brokerage firm
                              called Alexander/Alexander where he worked until
                              retiring in 1992.  Mr. Scissors currently serves
                              as an insurance consultant and broker.

<PAGE>
Gage Blue                     Mr. Blue was elected Director in 1999.  Mr. Blue
                              is Vice President of Operations for Carolina
                              National, a subsidiary of US1 Industries, which
                              began operations in 1996.  Mr. Blue has held the
                              position of Vice President of Operations since
                              December 1996.

Brad James                    Mr. James is the President of Seagate
                              Transportation Services, Inc.  Mr. James
                              graduated from Bowling Green University with a
                              Bachelors Degree in Science in Business
                              Administration.  He has been in the trucking
                              industry since 1977.
                              Mr. James was elected Director of the Company in
                              1999.

Richard Courtney              Mr. Courtney has served as Vice-President and
                              Secretary of the Company since September, 1993.
                              Since 1982, Mr. Courtney has been the Controller
                              of Eastern Refrigerated Express, Inc., an
                              affiliate of the Company.  Mr. Courtney has
                              served as a director of the Company since 1994.

</TABLE>

Item 11.  Executive Compensation

     The following Summary  Compensation  Table sets forth  compensation paid by
the Company during the years ended December  31,1999,1998  and 1997 to its Chief
Executive Officer. No other officer earned in excess of $ 100,000.
<TABLE>
<CAPTION>

                       Summary Compensation Table

                              Annual Compensation

Name and Position        Year          Salary       Bonus         Other
-----------------        ----          ------       -----         -----
<S>                      <C>           <C>             <C>           <C>
Michael Kibler           1999          33,048          0             0
President                1998          33,048          0             0
                         1997          33,048          0             0
</TABLE>


EMPLOYEE STOCK OPTIONS

     The company's  1987 Stock Option Plan  (Nonqualified)  (the "Option  Plan")
authorizes  the Board of Directors or a committee  thereof to grant to officers,
including officers who are also directors,  and employees of the Company options
to purchase from the Company shares of Common Stock.  The Option Plan originally
covered an aggregate  of 570,000  shares of Common  Stock.  At December 31, 1999
there  were no options  outstanding  under the  Option  Plan and  96,500  shares
remained available for future grants of options thereunder.


Item 12.  Security Ownership of Certain Beneficial Owners and Management.

Security Ownership of Management

     The  following  table sets forth the  number  and  percentage  of shares of
Common  Stock that as of March 15, 2000 are deemed to be  beneficially  owned by
each director of the company and director nominee,  by each executive officer of
the  Company and by all  directors  and  executive  officers of the company as a
group

<TABLE>
<CAPTION>
                              Number of Shares of
                              Common Stock
Name and position             Beneficially Owned        Percentage of Class
-----------------             ------------------        -------------------
<S>                                  <C>       <C>        <C>
Michael E Kibler                     3,489,507 (1,2)      32.9%
Director, President and
Chief Executive Officer

Richard Courtney                     3,434,507  (1)       32.3%
Director, Vice President and
Secretary

Robert I. Scissors,                     36,770               0
Director

Lex L. Vendetti                         20,000               0
Director

Harold E. Antonson                   3,489,507  (1,3)     32.9%
Chief Financial Officer,
Treasurer and Director

All Directors and Executive Officers 3,735,919            35.2%
</TABLE>

(1)      As partners of August Investment Partnership (AIP), Messrs. Kibler,
         Antonson, Courtney, and Lavery may be deemed to be beneficial owners of
         3,067,840 shares of common stock owned by AIP
(2)     As Director of Eastern Refrigerated Express Inc, )an entity under common
        control)  Messrs.  Kibler,  Antonson,  and  Courtney may be deemed to be
        beneficial owner of 366,667 Shares of Common Stock owned by Eastern.

(3)  Mr.  Antonson  disclaims  beneficial  ownership of 197,500 shares of Common
     Stock owned by American  Inter-Fidelity  Exchange,  of which Mr Antonson is
     Secretary and Treasurer

Security Ownership of Certain Beneficial Owners

     The  following  table sets forth the  number  and  percentage  of shares of
Common Stock  beneficially owned as of March 15, 2000 by any person who is known
to the  Company  to be the  beneficial  owner of more than five  percent  of the
outstanding shares of Common Stock:
<TABLE>
<CAPTION>

                              Number of Shares of
Name and Address of           Common Stock                Percentage
Beneficial Owner              Beneficially Owned          of Class
----------------              ------------------          --------
<S>                           <C>        <C>               <C>
Harold E. Antonson            3,489,507  (1,2,3)           32.9%
8400 Louisiana Street
Merrillville, IN 46410

August Investment Partnership 3,067,840                    28.9%
8400 Louisiana Street
Merrillville, IN 46410


Richard Courtney              3,434,507  (1,3)             32.3%
8400 Louisiana Street
Merrillville, IN 46410


<PAGE>
Brad A. James                 3,067,840  (1)               28.9%
8400 Louisiana Street
Merrillville, IN 46410

Michael Kibler                3,489,507  (1,3)             33.0%
8400 Louisiana Street
Merrillville, IN 46410

John K. Lavery                3,438,507  (1,3)             32.4%
8400 Louisiana Street
Merrillville, IN 46410
</TABLE>


(1) As partners of AIP, Messrs.  Kibler,  Courtney,  Antonson, and Lavery may be
deemed to be beneficial owners of the shares of Common Stock owned by AIP.

(2) Mr.  Antonson  disclaims  beneficial  ownership of 197,500  shares of Common
Stock  owned by  American  Inter-Fidelity  Exchange,  of which Mr.  Antonson  is
Secretary and Treasurer.

(3) As  directors  of  Eastern  Refrigerated  Express,  Inc.  Messrs.  Antonson,
Courtney,  Kibler and Lavery  may be deemed to be  beneficial  owners of 366,667
shares of Common Stock owned by Eastern.

Item 13.  Certain Relationships and Related Transactions.

     The company leases office space for its headquarters in Gary, Indiana,  for
$2,200 per month from  Michael E.  Kibler,  the  president  and Chief  Executive
Officer  and a  director  of the  Company,  and  Harold E.  Antonson,  the Chief
Financial Officer,  treasurer and a director of the Company.  Messrs. Kibler and
Antonson own the property as joint tenants.

     One  of  the  Company's  subsidiaries  provides  safety,   management,  and
accounting services to companies controlled by the President and Chief Financial
Officer  of the  Company.  These  services  are  priced to cover the cost of the
employees  providing the services.  Revenues  related to those services  totaled
$77,640 and $149,442 in 1999, 1998, and 1997 respectively.

     One of the Company's insurance providers,  American Inter-Fidelity Exchange
(AIFE) is managed by a Director of the Company and the Company has an investment
in the Provider. In addition,  the Director also manages an affiliated insurance
carrier, Indiana Truckers Exchange (ITE). For the years ended December 31, 1999,
1998 and 1997 cash paid for related  party  insurance  premiums and  deductibles
amounted to $532,586,  $751,123 and $770,704 respectively.  The Company also has
long  term  notes  payable  to  AIFE  and  ITE  as  described  in  Note 8 to the
consolidated financial statements.

   The  Company  has notes  payable due to its Chief  Executive  Officer,  Chief
Financial  Officer,  and August  Investment  Partnership,  an affiliated  entity
through common ownership,  as described in Note 8 to the consolidated  financial
statements.








<PAGE>
                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)(1)  List of Financial Statements

The following is a list of financial statements filed herewith:

<TABLE>
<CAPTION>
                                                                    Page Number

<S>                                                                  <C>    <C>
Reports of Independent Certified Public Accountants                  11 and 12

Consolidated Balance Sheets as of December 31, 1999 and 1998         13

Consolidated Statements of Operations for the years ended            15
December 31, 1999, 1998 and 1997

Consolidated Statements of Shareholders' Deficiency                  16
for the years ended December 31, 1999,1998, and 1997

Consolidated Statements of Cash Flows                                17
for the years ended December 31, 1999,1998, and 1997

Notes to Consolidated Financial Statements                           18

</TABLE>

(a)(2)     List of Financial Statement Schedules

     Schedules are not included  because of the absence of the conditions  under
which they are required or because the required  information  is included in the
consolidated financial statements or notes thereto.

<PAGE>
(a)(3)   List of Exhibits

     The following exhibits,  numbered in accordance with Item 601 of Regulation
S-K, are filed as part of this report:


Exhibit 3.1       Articles of Incorporation of the Company.
            (incorporated herein by reference to the Company's Proxy Statement
             of November 9, 1993).

Exhibit 3.2       By-Laws of the Company.
            (incorporated  herein by reference to the Company's Annual Report on
             Form 10-K for the year ended December 31, 1994).

Exhibit 10.1  Loan and Security Agreement with FINOVA and Keystone Lines and
              L.R.S. Transportation, Inc.

Exhibit 10.2  Loan agreements with August Investment Partnership and US 1
              Industries.

Exhibit 10.3  Loan agreements with Michael Kibler/Harold Antonson and US 1
              Industries.

Exhibit 10.4 Loan agreements with AIFE/ITE and US 1 Industries.

Exhibit 10.5  First Amendment of Loan and Security Agreement with FINOVA and
              Keystone Lines and L.R.S. Transportation, Inc.

Exhibit 10.6  Second Amendment of Loan and Security Agreement with FINOVA and
              Keystone Lines and L.R.S. Transportation, Inc.

Exhibit       10.7  Mortgage  and Loan  agreements  with  Michael  Kibler/Harold
              Antonson and US 1 Industries, Inc.

Exhibit 21.1  Subsidiaries of Registrant

Exhibit 27.1  Financial Data Schedule


(b)      Reports on Form 8-K

NONE



<PAGE>


                                                SIGNATURES

     Pursuant to the  requirements  of  Sections 13 and 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned there unto duly authorized.
<TABLE>
<CAPTION>

                                    US 1 INDUSTRIES, INC.

<S>                                <C>
Date:_________________              By:  _________________________
                                         Michael E. Kibler
                                         President & Chief Executive Officer
                                         (Principal Executive Officer)


Date:_________________              By:  _________________________
                                         Harold Antonson
                                         Chief Financial Officer & Treasurer
                                      (Principal Financial & Accounting Officer)
</TABLE>

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.
<TABLE>

<S>                                      <C>

Date:_________________                    _________________________
                                          Richard Courtney, Director

Date:_________________                    __________________________
                                          Michael E. Kibler, Director

Date:_________________                    _________________________
                                          Robert I. Scissors, Director

Date:_________________                    _________________________
                                          Lex L. Vendetti, Director

Date:_________________                    _________________________
                                          Gage Blue, Director

Date:_________________                    _________________________
                                          Brad James, Director

Date:_________________                    _________________________
                                          Harold Antonson, Director
</TABLE>