FORM 10-KSB

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, 1997.
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                                              95-3585609
(State of Incorporation)                    
(I.R.S. Employer Identification No.)

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                New York Stock Exchange

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 herein, 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-KSB or any amendment to 
this Form 10-KSB. [X]

On March 21, 1998, 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 $2,235,041.  For purposes 
of the forgoing statement, directors and officers of the registrant have been 
assumed to be affiliates.

DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the registrant's proxy statement for the annual meeting of
shareholders to be held on May 29, 1998, are incorporated by reference into 
Part III.

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 and in Ontario and 
Quebec, Canada.  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 contract 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 Interstate Commerce Commission (the "ICC") and are 
subject to regulation of the ICC, the United States Department of 
Transportation (the "DOT"), and various state agencies.

     During 1994 Trailblazer Transportation, a Texas corporation and wholly 
owned subsidiary of Keystone, ceased operations.  Trailblazer filed for 
protection under the U.S. bankruptcy code on December 30, 1996.  The 
bankruptcy was finalized during the fourth quarter of 1997.  LRS 
Transportation, an Indiana corporation and wholly owned subsidiary of Keystone
Lines began operations in 1995, when it purchased the less-than-truckload 
("LTL") refrigerated division of Landair Services Inc.  LRS ceased operations 
during the third quarter of 1995 after sustaining substantial losses.


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 pays its independent contractors and sales agents a 
percentage of the revenue received from customers for the delivery of goods.  
The expenses related to transporting the freight from shipper to consignee 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 
maintaining drivers and equipment.  Like other truck transportation companies,
however, US 1's revenues are affected by seasonal weather conditions that may 
make driving difficult and by seasonal shutdowns of shippers.

     The Company's principal focus during 1997 was growing the Company through
expansion of Gulf Line Transportation, which started in December 1996, and 
Carolina National Transportation, which began in January of 1997.  Gulf Line 
Transportation began profitable operations beginning in July 1997.  Carolina 
National Transportation began profitable operations in October 1997.  These 
new operations accounted for sixty percent of the Company's 1997 revenue.  





Marketing and Customers

     The Company obtains substantially all of 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.  The Company pays sales 
agents and contractors commissions immediately upon delivery of shipments.

     Approximately 83% of the Company's revenues from its trucking operations 
are allocated to the payment of independent contractors and sales agents.  The
Company requires sales agents to pay a minimum of 75% of revenues to 
independent contractors.

     During 1997, the Company utilized the services of approximately 100 sales
agents, one of which each accounted for 14% of the Company's total revenues in
1997; no other agent accounted for more than 10% of revenue.  In 1996, two 
agents accounted for 15% of the total company's revenue.  The Company shipped 
freight for approximately 3,000 customers in 1997, none of which accounted for
more than of 10% of the Company's total revenues.

     The independent contractors used by the Company must enter into standard 
equipment operating agreements.  The agreements provide that independent 
contractors must bear all costs of operations, including drivers' 
compensation, maintenance costs, fuel costs, collision insurance, taxes 
related to the ownership or 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 and the ICC.  The Company also 
monitors independent contractors' "self-policing activities," which include, 
among other things, random drug testing, reporting hours of service of 
drivers, maintenance of vehicles, and reporting violations of state, federal 
and local laws.

Employees

     At December 31, 1997, the Company had thirty-six full-time employees.  Of
these employees, twenty-four were salaried and the rest were paid hourly.  The
Company's employees are not covered by a collective bargaining agreement.  The
Company provides services to other related party companies owned by the 
partners of August Investment Partnership.

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 providers of rail transport.

     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
upon delivery of goods.

     Competition is based on several factors; principally cost, timely 
availability of equipment and quality of service.  In that regard, the 
Company's business in 1997 and 1996 was impacted negatively by its financial 
condition and difficulties in retaining independent contractors and agents.






Insurance

     The Company insures the trucks with automobile liability insurance 
coverage of up to $1 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.


Regulation

     The Company is a common and contract motor carrier regulated by the ICC, 
the DOT and various state agencies.  Prior to 1980, the ICC 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 (the "Act")
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 greatly reduced ICC 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. 
However, because of a conditional safety rating in 1996, the Company was being
monitored by the DOT during 1997.  During 1997, the Company would have 
received a satisfactory rating had the DOT been allowed to change it's rating 
during the year.  Recent lawsuits brought by other motor carriers against the 
DOT have frozen the ratings of all motor carriers.

     In 1990, the Company was granted authority from Canadian authorities to 
haul truckload freight between all points in the provinces of Ontario and 
Quebec and the United States.  The Company is therefore also subject to 
Canadian regulation, which is not dissimilar to regulation in the states.


Environmental Regulation

     Federal regulations require tractor manufacturers to certify that new 
tractors meet certain federal emissions standards.  The Company verifies that 
the trucks that it leases and those that its independent contractors use have 
received such certificates.

     The Company owns a 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.  Otherwise, the 
Company believes it is in substantial compliance with state and federal 
environmental regulations relative to the trucking business.













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 1998 and beyond to 
differ materially from those expressed in any forward-looking statements made 
by, or on behalf of, the Company.  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 headquarters for $2,200 per month from Mr. Michael E. 
Kibler, President, Chief Executive Officer and a director of the Company, and 
Mr. Harold Antonson, a partner in August Investment Partnership ("AIP") and a 
shareholder and director of August Investment Corporation ("AIC") also a 
general partner of AIP. 




Item 3.  Legal Proceedings

     Reference is made to Note 11 of the notes to the consolidated financial 
statements for discussion regarding pending legal proceedings.


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 1997.

























Item 4A.  Executive Officers of the Registrant.

Name and Age                  Office and Experience
Michael E. Kibler, 57	      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 recipical
                              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.


James C. Day, 49	            Mr. Day is Vice President, Treasurer and
                              Assistant Secretary of the Company, positions he
                              has held since September 13,  Mr. Day also has
                              been Controller of K & A, Inc., a firm providing
                              support services to the Company and certain
                              other trucking companies since November 1992.
                              Mr. Day is a certified public accountant.  Prior
                              to Joining K & A, Inc., he was President of 
                              Custom Business Systems, Inc., a software
                              company, from June 1990 to October 1992, and 
                              from August 1988 to May 1990 he was Chief
                              Financial Officer of Floor Covering Associates,
                              Inc.  Mr. Day has served as a director of the
                              Company since 1993  


Richard Courtney, 56          Mr. Courtney has served as Vice-President,
                              Secretary, and Controller of the Company since
                              September, 1993.  Since 1982, Mr. Courtney has
                              been the Controller of Eastern Refrigerated
                              Express, Inc.  Mr. Courtney has served as a
                              director of the Company since 1994.

PART II

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 New 
York Stock Exchange under the symbol USO.  The Company does not currently meet
the requirements for continued listing on the NYSE and has been recently 
advised by the NYSE that it may be delisted and unless it promptly develops 
a business plan which fulfills the exchange's original listing requirements
it expects to be delisted. 














     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:


     Calendar Year                            High                        Low

1997
First Quarter                           9/16                       9/32
Second Quarter                          3/8                        7/32
Third Quarter                           1/2                        9/32
Fourth Quarter                          13/32                      3/16

1996
First Quarter                           13/16                      9/16
Second Quarter                          9/16                       5/16
Third Quarter                           7/8                        5/16
Fourth Quarter                          11/16                      5/16

     As of March 17, 1998, there were 3,390 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.

     The following equity sales during the fourth quarter of 1996 were not 
registered under the Securities Act.  The Company's president, Michael Kibler,
purchased 166,666 shares of common stock for $75,000.  Harold Antonson, a 
partner in August Investment Partnership, purchased 211,111 shares of common 
stock for $95,000.  Eastern Refrigerated Express, a company owned by the 
partners of AIP, purchased 366,667 shares of common stock for $165,000. 

Item 6. Management's Discussion and Analysis of Financial Condition and 
Results of Operation.

Results of Operations

     The financial statements and related notes contained elsewhere in this 
Form 10-KSB are essential to an understanding of the comparisons and are 
incorporated by reference into the discussion that follows.

1997 Compared to 1996

     The Company's operating revenues from continuing operations increased 
from $15.4 million in 1996 to $25.4 million in 1997.  The Company's operating 
revenues were generated principally by independent sales agents who originate 
truckload shipments.  These shipments are then transported by independent 
trucking contractors, using their own equipment.  The increase in operating 
revenues resulted primarily from the startup of Carolina National 
Transportation.

     Total operating expenses increased from $15.6 million in 1996 to $25.8 
million in 1997.  The largest component of operating expenses is purchased 
transportation.  Purchased transportation generally varies in proportion to 
operating revenues at approximately 77% of revenues.  Purchased transportation
increased from $11.7 million in 1996 to $19.7 million in 1997.  Commissions 
increased from $1.5 million in 1996 to $2.4 million in 1997, and similarly 
vary in proportion to operating revenues.  Insurance and claims, which 
increased from $0.6 million in 1996 to $0.9 million in 1997, vary in 
proportion to operating revenues, although they also depend on claims 
experience.  The remaining operating expenses increased from $1.8 million in 
1996 to $2.8 million in 1997 primarily as a result of the increase in wages 
and communication expenses resulting from the addition of Carolina National 
Transportation and Gulf Line.

     The Company had other expense of approximately $0.4 million in 1997 as 
compared to $0.2 million in 1996.  Interest, the largest ongoing component of 
non-operating income and expense, varies in proportion to the Company's 
outstanding interest-bearing indebtedness.  Interest expense increased from 
$0.3 million in 1996 to $0.4 million in 1997, primarily due to the increased 
debt used to finance the LRS losses and additional borrowing against the 
Carolina National accounts receivable.

     In 1996, the Company recorded income of $0.2 on the settlement of a suit 
with Landair Transportation.  An extraordinary gain on the discontinuation of 
the Paltrans Partnership of $0.5 million was also recognized in 1996.  During 
1997, the resolution of the bankruptcy petition filed by Trailblazer 
Transportation resulted in a gain of  $0.6 million due to forgiveness of 
Trailblazer's remaining liabilities.

     Overall, the Company's had a net loss of $0.2 million in 1997 as compared
to a net income of  $0.3 million in 1996.  The difference is principally a 
result of the increase in operating costs due to the startup of Carolina 
National and Gulf Line and interest expense between the two years.


Future Prospects

     The Company's management remains optimistic about its future prospects 
although several remaining hurdles must be successfully cleared.  These 
hurdles include adding revenue, controlling cash flow, controlling 
collections, and raising capital to reduce interest bearing debt.
 
     The Company believes the continued expansion of the inter-modal agent 
based business by Carolina National is the key to being profitable in 1998.

     The Company's future depends heavily on raising the capital to fund 
operations until revenue grows and generates sufficient cash flows to satisfy 
its indebtedness.  Revenue growth and the resulting improved cash flows will 
enable the Company to reduce its third party debt and improve its working 
relationships with potential agents and independent contractors.  In recent 
years, substantially all of the equity capital that the Company has needed was
provided by AIP and it's affiliates.  AIP and it's affiliates have advised the
Company that their interest in providing, and ability to provide, additional 
capital is limited.  As a consequence, the Company is exploring other options 
to raise capital, and various other potential transactions.  There can be no 
assurances, however, that the Company can raise the necessary capital to 
assure its long-term viability.

     Since May 1995 FINOVA has provided the Company an accounts receivable 
based credit facility.  This facility expires in May 1998.  This facility, 
however, contains a four-year extension based on the Company's ability to meet
certain performance criteria.  Through January 1998, the Company had not yet 
met these performance criteria. The inability to obtain the extension with 
FINOVA will directly impact the Company's ability to remain in operation.


Liquidity and Capital Resources

     As of December 31, 1997, the Company's financial position remained poor. 
The Company had a net deficit in shareholders' equity of $4.4 million and its 
current liabilities of $7.3 million exceeded its current assets by $1.4 
million.  The Company's negative cash flow has required the Company to rely on
stockholder capital contributions of $335,000 in the fourth quarter of 1996 
and debt issuance to stockholders of $1.5 million during 1997 to maintain cash
flows sufficient to pay its current obligations. 




     
     Cash flows during 1997 and 1996 came primarily from additional capital 
contributions. Negative cash flows from operations increased from a negative 
cash flow of $0.3 million in 1996 to a negative cash flow of $3.6 million in 
1997.  The negative cash flow in 1997 was primarily the result of the addition
of Carolina National.  Cash flows used in investing activities increased by 
$0.3 million in 1997 due to the purchase of property in 1997.  Cash flows from
financing increased from 1996 to 1997 by $3.5 million due to increased 
borrowing from FINOVA and AIP.

     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 80% of
Keystone's, Gulf Line's and Carolina National's eligible accounts receivable. 
At December 31, 1997, the outstanding borrowings were $3.2 million, 
essentially the entire amount the Company was eligible to borrow.  The line of
credit expires on May 31, 1998, however, it provides for a four year extension
and an increase to $5 million based on the Company's ability to meet certain 
performance criteria, which, as of January 1998, have not yet been met.

     Related party loans from AIP and Messrs. Kibler and Antonson have 
provided the Company additional long-term financing of $2,099,304 in 1997.

     Shareholders and potential investors in the Company are cautioned that 
the Company's financial condition remains precarious and that an increase in 
operating performance and an infusion of new capital are essential to its 
long-term survival.  There is no assurance that these goals will be achieved.

     The Company is not a party to any Superfund 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 at this site and believes that it has reserved appropriately for 
it's 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 has no current plans to remediate the property.


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.


Year 2000 Issue

     Many existing computer systems and related software applications, and 
other control devices, use only two digits to identify a year in a date field,
without considering the impact of the upcoming change in the century.  Such 
systems, applications and/or devices could fail or create erroneous results 
unless corrected so that they can process data related to the Year 2000.  The 
company relies on such computer systems, applications and devices in operating
and monitoring all major aspects of its business, including, but not limited 
to, its financial systems (such as general ledger, accounts payable, and 
payroll modules), customer services, internal networks and telecommunications 
equipment, and end products.  The Company also relies, directly, and 
indirectly, on the external systems of various independent business 
enterprises, such as its customers, suppliers, creditors, financial 
organizations, and of governments, both domestically and internationally, for 
the accurate exchange of data and related information.

     The Company is currently in the process of evaluating the potential 
impact of the Year 2000 issue on its business and the related expenses that 
would foreseeably be incurred in attempting to remedy such impact (including 
testing and implementation of remedial action).  Management's current estimate
is that the costs associated with the Year 2000 issue should not have a 
material adverse affect on the results of operations or financial position of 
the Company in any given year.  However, despite the Company's effort to 
address the Year 2000 impact on its internal systems, the Company is not sure 
that it has fully identified such impact or that it can resolve it without 
disruption of its business and without incurring significant expenses.  In 
addition, even if the internal systems of the Company are not materially 
affected by the Year 2000 issue, the Company could be affected as a result of 
any disruption in the operation of the various third-party enterprises with 
which the Company interacts.
 

Impact From Not Yet Effective Accounting Rules

     Reference is made to Note 2 of the consolidated financial statements.


Item 7.  Financial Statements and Supplementary Data.



















































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

We have audited the accompanying consolidated balance sheets of US 1 
Industries, Inc. and subsidiaries (the "Company") as of December 31, 1997 and 
1996, and the related consolidated statements of operations, shareholders' 
equity 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 on 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 
estimates made by management, as well as the overall financial statement 
presentation.  We believe our audits provide as 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, 1997 and 1996 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 
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.




Coopers & Lybrand L.L.P.


Chicago, Illinois
March 27, 1998


















US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996


ASSETS

                               			       1997         1996      
CURRENT ASSETS:                                                         
   Cash                                          $    298,079  $   225,541 
   Accounts receivable-trade, less allowance for                         
     doubtful accounts of $195,298 and $ 50,000     5,066,256    1,501,947 
   Other receivable                                   336,919      136,648 
   Deposits                                           154,068      153,892 
   Prepaid expenses                                    83,731      116,476 
                                                   -----------  ----------- 
      Total current assets                          5,939,053    2,134,504 
                                                   -----------  ----------- 
FIXED ASSETS:                                                              
   Equipment                                           52,996       17,193 
   Less accumulated depreciation and amortization     (12,682)      (7,682)
                                                   -----------  -----------
      Net fixed assets                                 40,314        9,511 
                                                   -----------  -----------
ASSETS HELD FOR SALE:                                                      
   Land                                               423,226      195,347 
   Valuation allowance                               (141,347)    (141,347)
                                                   -----------  -----------
      Net assets held for sale                        281,879       54,000 
                                                   -----------  -----------
TOTAL ASSETS                                      $ 6,261,246  $ 2,198,015 
                                                  ===========  =========== 



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


US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996


LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)

                                                       1997         1996   
CURRENT LIABILITIES:                                                       
   Accounts payable                               $ 2,651,580  $ 2,541.755
   Bank overdraft                                     530,133      181,142 
   Accrued expenses                                   137,454      152,098
   Short-term debt                                  3,292,945    1,769,146 
   Insurance and claims                               241,607      252,153 
   Accrued compensation                                38,302       46,880 
   Accrued interest                                   140,824       32,428
   Estimated fuel and other taxes                     273,901      174,377 
                                                  ------------ ------------
      Total current liabilities                     7,306,746    5,149,979 
                                                  ------------ ------------
LONG-TERM DEBT                                      2,599,815      521,160 
                                                                           
REDEEMABLE PREFERRED STOCK,                               
     authorized 5,000,000 shares; no par value,
     Series A shares outstanding:
     1997 - 1,094,224; 1996 - 1,094,224.                                   
     Liquidation preference $0.3125 per share         753,254      691,541 

COMMITMENTS AND CONTINGENCIES                                              

SHAREHOLDERS' EQUITY (DEFICIENCY):                                         
   Common stock, authorized 20,000,000 shares;                             
     no par value; shares outstanding:                                     
     1997 - 10,618,224  1996 -10,573,780           40,844,296   40,824,296
   Accumulated deficit                            (45,242,865) (44,988,961)
                                                  ------------ ------------
      Total shareholders' equity (deficiency)      (4,398,569)  (4,164,665)
                                                  ------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 
     (DEFICIT)                                    $ 6,261,246  $ 2,198,015 
                                                  ============ ============



The accompanying notes are an integral part of the consolidated financial 
statements

US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, AND 1996


1997 1996

OPERATING REVENUES                          $25,421,806   $15,412,322
                                             ----------    ----------
OPERATING EXPENSES:
   Purchased transportation                  19,676,213    11,694,203
   Insurance and claims                         941,700       623,445
   Salaries, wages, and other                 1,285,778       727,231
   Commissions                                2,360,989     1,498,404
   Operating supplies and expenses            1,220,978       822,251
   Operating taxes and licenses                 130,853        86,781
   Communications and utilities                 137,606        81,725
   Rents                                         79,516        50,677
   Depreciation and amortization                  9,533         1,951
                                              ---------      -------- 
            Total operating expenses         25,843,166    15,586,668
                                             ----------    ---------- 
OPERATING INCOME (LOSS)                        (421,360)     (174,346)
NON-OPERATING INCOME (EXPENSES):
    Interest income                               2,430        18,733
    Interest expense                           (435,042)     (282,121)
    Other income (expense), net                  51,462        98,449
                                               --------      -------- 
        Total other income (expense)           (381,150)     (164,939)
                                               --------      -------- 
INCOME (LOSS) FROM CONTINUING OPERATIONS
     BEFORE EXTRAORDINARY GAIN                 (802,510)     (339,285)
DISCONTINUED OPERATIONS:
     Gain on disposal of LRS                                  221,743
                                               ---------     ---------
LOSS BEFORE EXTRAORDINARY ITEM                 (802,510)     (117,542)
EXTRAORDINARY GAIN:
     Forgiveness of debt                        610,318       458,968
                                               ---------      --------
NET INCOME (LOSS)                              (192,192)      341,426
DIVIDENDS ON PREFERRED SHARES                    61,712       144,429
                                               ---------      --------
NET INCOME(LOSS)AVAILABLE TO COMMON SHARES    ($253,904)     $196,997

INCOME (LOSS) PER COMMON SHARE:
    Loss from continuing operations:
        Basic                                    ($0.08)       ($0.05)
        Diluted                                  ($0.08)       ($0.05)
    Net Income:
        Basic                                    ($0.02)        $0.02
        Diluted                                  ($0.02)        $0.02

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING -
   BASIC AND DILUTED                         10,616,397     9,879,077

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




















US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIENCY)
YEARS ENDED DECEMBER 31, 1997, and 1996

                                     Common Stock     Accumulated
                          Shares         Amount       Deficit        Total
Balance at
  January 1, 1996          9,829,336   $40,489,296  ($45,185,958) ($4,696,662)

Issuance of Common Stock     744,444       335,000                    335,000
Accrued Dividends on redeemable
   Preferred Stock                                      (144,429)    (144,429)
Net income                                               341,426      341,426
                          ----------    ----------   ------------  ----------- 
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
Accrued Dividends on redeemable
   Preferred Stock                                       (61,712)     (61,712)
Net income (loss)                                       (192,192)    (192,192)
                          ----------    ----------    -----------   ----------
Balance at
  December 31, 1997       10,618,224   $40,844,296  ($45,242,865) ($4,398,569)




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


US 1 INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, AND 1996


                                                         1997          1996
CASH FLOWS FROM OPERATING ACTIVITIES:


  Net income (loss)                                   ($192,192)     $341,426
  Adjustments to reconcile net income to net cash
    provided (used) for operating activities:
    Depreciation and amortization                         9,533         1,951
    Provision (recovery) on accounts receivable         145,298      (100,139)
    Transfer of Dallas Property                                       150,000
    Loss on disposal of equipment                         1,160
    Extraordinary gain - forgiveness of debt           (610,318)     (458,968)
    Changes in operating assets and liabilities:
      Accounts receivable-trade                      (3,709,607)      123,818
      Other receivables                                (200,271)        7,913
      Prepaid expenses                                   32,745        16,961
      Deposits                                             (176)       18,288
      Accounts payable                                  720,143      (387,565)
      Accrued expenses                                  (14,644)     (100,171)
      Insurance and claims                              (10,546)       42,475
      Accrued interest                                  108,396       (11,101)
      Accrued compensation                               (8,578)        5,589
      Estimated fuel and other taxes                     99,524        11,350
      Other                                                            43,315
                                                     -----------     --------
         Net cash used in operating activities       (3,629,533)     (294,858)

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property and equipment                   (41,496)       (1,365)
  Purchase of Land                                     (227,879)
                                                      ----------      --------
        Net cash used by investing activities          (269,375)       (1,365)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net borrowings (repayments) under line of credit    2,135,847       (40,482)
  Proceeds from issuance of common stock                 20,000       335,000
  Proceeds from short term loan on property              50,000
  Repayment of long-term loans                          (10,000)
  Proceeds from (repayment of) other related 
       party loans                                      926,608        (7,498)
  Increase in bank overdraft                            348,991       181,142
  Proceeds from issuance of mortgages to
       related parties                                  500,000
                                                      ---------       -------
        Net cash provided from  financing activities  3,971,446       468,162
                                                      ---------       -------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS     72,538       171,939

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR            225,541        53,602
CASH AND CASH EQUIVALENTS, END OF YEAR                 $298,079      $225,541

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
  INFORMATION--
  Cash paid during year for interest                   $326,646      $293,222

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



US 1 INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, AND 1996


1.  OPERATIONS

     The accompanying consolidated financial statements include the operations
of US 1 Industries, Inc. and its wholly owned subsidiaries, TC Services, Inc. 
("TCS"), Keystone Lines ("Keystone"), Blue and Grey Transport, Inc. ("BGT"), 
Blue and Grey Brokers, Inc. ("BGB"), Carolina National Logistics, Inc. 
("CNL"), Carolina National Transportation, Inc. ("CNT"), Gulf Line Brokerage, 
Inc. ("GLB"), and Gulf Line Transportation, Inc. ("GLT") together referred to 
herein as the "Company."  Trailblazer Transportation and LRS Transportation, 
Inc. were wholly owned subsidiaries of Keystone Lines. 

     The Company is primarily an interstate truckload carrier of general 
commodities, which uses independent agents and contractor equipment to 
contract for and haul freight for its customers.  One agent accounted for 14% 
of the Company's revenue for the year ended December 31, 1997. 

     Going Concern--The accompanying consolidated financial statements have 
been prepared assuming that the Company will continue as a going concern.  As 
shown in the accompanying consolidated financial statements, the Company 
experienced operating losses and negative cash flows in recent years.  At 
December 31, 1997 and 1996, the Company's current liabilities exceeded its 
current assets by $1.4 million and $3.0 million, respectively.  At December 
31, 1997 the shareholder deficit was $4.4 million.  The Company's future 
depends heavily on raising the capital to fund operations until revenue grows 
and generates sufficient cash flows to satisfy its indebtedness.  Revenue 
growth and the resulting improved cash flows will enable the Company to reduce
its third party debt and improve its working relationships with potential 
agents and independent contractors.  The Company is exploring options to raise
capital, including a rights offering and various other potential transactions.
The extension of the Company's line of credit beyond May 1998 is dependent 
upon attaining improved operating results in early 1998 and it's ability to 
achieve consistent compliance with financial covenants with its lenders.  The 
uncertainty related to financing, negative cash flows from operations, and the
shareholders' deficit continue to raise substantial doubt about its ability to
continue as a going concern.  The financial statements do not include any 
adjustments that might result from the outcome of this uncertainty.


2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Consolidation--The consolidated financial statements include the accounts
of US 1 Industries, Inc. and its subsidiaries.  All significant inter-company 
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.

     Cash and Cash Equivalents--The Company considers as cash equivalents all 
highly liquid investments with an original maturity of three months or less.

     Fixed Assets--Fixed assets are stated at cost.  Equipment is 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.




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


     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.

     Accounting Pronouncements--In June 1997, the Financial Accounting 
Standards Board issued Statement No. 130-"Reporting Comprehensive Income" 
("SFAS 130") and SFAS NO. 131, "Disclosures About Segments of an Enterprise 
and Related Information."  Both SFAS No. 130 and SFAS No. 131 are effective 
for financial statements for years beginning after December 15, 1997.   SFAS 
No. 130 requires the reporting of comprehensive income beginning 1998 and SFAS
No. 131 establishes standards for publicly-held business enterprises to report
information about operating segments in annual financial statements and 
requires that these enterprises report information about operating segments in
interim financial reports issued to shareholders.  The Company has not yet 
determined what, if any, impact SFAS No. 130 and 131 will have on the 
Company's disclosures.

     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.

     Reclassifications-Certain 1996 Balance Sheet amounts have been 
reclassified to conform to their 1997 presentation.

     Fair Value of Financial Instruments--The carrying value of cash and cash 
equivalents approximates fair value.  For debt instruments, it is not 
practicable to determine the fair value at December 31, 1997 due to several 
factors which include; related party considerations, the current financial 
status of US 1, and the lack of valuation information regarding certain 
collateral.

     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, 
and for all prior period earnings per share data presented.  Following are the
reconciliations of the numerators and denominators of the basic and diluted 
EPS.  The average market price of the common stock was greater than the 
exercise price of the outstanding options, however, as the Company had a net 
loss in 1997, the potentially dilutive securities (options) were antidilutive.













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

Numerator                                           1997               1996
      Loss from continuing operations            ($802,510)       ($339,285)
      Dividends on preferred shares                (61,712)       ( 144,429)
                                                 ----------       ----------
      Loss available to common shareholders
         for basic and diluted EPS               ($864,222)       ($483,714)
      Discontinued Operations                                       221,743
      Extraordinary gain                           610,318          458,968
                                                 ----------       ----------
      Net income (loss) available to common 
         shareholders for basic and diluted EPS  ($253,904)        $196,997

Denominator
      Weighted average common shares
         outstanding for basic and diluted EPS   10,616,397       9,879,077


3.  EXTRAORDINARY GAIN

     During the fourth quarter of 1997, the bankruptcy of Trailblazer 
Transportation was finalized and, accordingly, the Company recorded a gain of 
$610,318 ($0.06 per share - basic and diluted) on the forgiveness of debt.


     The Company's fifty percent investment in a joint venture, Paltrans 
Associates, in which the Company is a General Partner, was recorded on the 
equity method.  Paltrans owned and leased a terminal facility located on the 
west coast.  As of December 31, 1996, the Company had received $458,968, in 
cash in excess of the profits of the partnership.  The mortgage holder 
foreclosed on the property during the third quarter of 1996.  This action 
relieved the Company of any recourse with regards to the mortgage.  The amount
$458,968, ($0.05 per share - basic and diluted) which represented the 
Company's share of the negative equity of the partnership was recorded as 
income and classified as extraordinary since it represented, in effect, the 
forgiveness of non-recourse mortgage debt.


4.  REDEEMABLE PREFERRED STOCK AND COMMON STOCK

     August Investment Partnership ("AIP"), a related party to the Company, of
which the Company's President is a General Partner, has advanced $547,112 to 
the Company, which has been converted to Series C no par value, cumulative 
redeemable preferred stock.  The Series C 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 C preferred stock is redeemable at the option of the
Company at any time, and is redeemable at the option of the holders at the end
of two years.

     With the completion of the merger of the California corporation into the 
Indiana corporation in the first quarter of 1995, the authorized common shares
increased from ten million to twenty million and the previous series C 
preferred stock became series A preferred stock with the same redeemable 
options described above.   As of December 31, 1997, series A cumulative 
preferred stock dividends are in arrears by $206,141.  The Company's current 
line of credit prohibits the payment of dividends.





5.  RELATED PARTY TRANSACTIONS

     TC Services, Inc. provides transportation, management, and accounting 
services to companies owned by members of AIP.  These services are priced to 
cover the cost of the employees providing the services.  Revenues related to 
those services totalled $318,970 and $353,729 in 1997 and 1996, respectively.

     The Company's primary insurance provider ("AIFE") is managed by a General
Partner of AIP. For the years ended December 31, 1997 and 1996, cash paid for 
related party insurance premiums and deductibles amounted to $770,704 and 
$582,543, respectively. 

     AIFE converted outstanding accounts payable at December 31, 1994 and 
premium and deductibles from LRS into a note payable during 1995.  The balance
of these notes was $221,475 and $239,372 at December 31, 1997 and 1996, 
respectively, as disclosed 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 
President and another General Partner of AIP.  No formal lease agreement with 
the Company existed at December 31, 1997.


7. SHORT-TERM DEBT

     Short-term debt at December 31, 1997 and 1996 comprises:

	                                       
	                                    December 31,       December 31,
	                                        1997               1996    
	                                     ----------         ---------- 
Line of credit                             $3,188,581         $1,052,734 
Current portion of long-term debt              54,364             61,612 
Due to August Investment Partnership                             100,000
Due to Antonson/Kibler                                           554,800
Note on Kansas City Property                   50,000 
	                                     ----------         ---------- 
Total                                $3,292,945         $1,769,146 
	                                     ==========         ========== 

     Under its revolving line of credit agreement the Company may borrow up to
a maximum of $3,300,000.  Borrowings are limited to 80% of eligible accounts 
receivable and bear interest at the prime rate (8.50% and 8.25% at December 
31, 1997 and 1996, respectively) plus 2.75% and 3.25% at December 31, 1997 and
1996, respectively.  Advances under the line of credit agreement are 
collateralized by the Company's accounts receivable, property and other 
assets.  At December 31, 1997, the outstanding borrowings were $3.2 million, 
essentially the entire amount the Company was eligible to borrow.  The line of
credit expires on May 31, 1998, however, it provides for a four year extension
and an increase to $5 million based on the Company's ability to meet certain 
performance criteria, which, as of January 1998, have not yet been met.  

      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.  As of December 31, 1997, the Company was not in violation of 
any debt covenants.
 
Other-Outstanding short term loans from the President of the Company and 
another General Partner of August Investment Partnership ("AIP") (the 
Company's largest shareholders, Kibler and Antonson) and AIP were $654,800 at 
December 31, 1996.  The interest rate on these loans approximated the prime 
rate (8.25%) at December 31, 1996.  This amount was refinanced as long-term 
debt in 1997. (See Note 8)


8. LONG-TERM DEBT

     Long-term debt at December 31, 1997 and 1996 comprises:
                                                                              
                                                       1997          1996
                                                     ---------   ------------ 

Mortgage note payable to August Investment
 Partnership collateralized by land, 
 interest at prime + .75%, interest only
 payments required, principal balance due
 July 31, 1999                                     $  250,000       $250,000

Mortgage note payable to Antonson/Kilber  
 collateralized by land, interest at
 prime + .75%, interest only payments
 required, principal balance due
 July 3, 2003                                         500,000

Mortgage note payable to AIFE,
 collateralized by land, interest at 9%,
 monthly repayments of $5,000, including
 interest, remaining principal balance
 due March 31, 2002                                   221,475        239,372

TIP trailer settlement payments of principal
 only of $1,000 per month, principal due
 February, 2003                                        83,400         93,400

Mortgate note payable to August Investment
 Partnership, interest at prime + .75%, interest 
 only payments required, principal balance due
 January, 1999                                        100,000

Due to Antonson/Kibler interest at prime + .75%,
 interest only payments required, principal
 balance due January, 1999                          1,499,304
                                                   ----------       -------- 
     Total debt                                     2,654,179        582,772
Less current portion                                   54,364         61,612
                                                   ----------       -------- 
Total long-term debt                               $2,599,815       $521,160
                                                   ==========       ========

Scheduled maturities of the long-term debt at December 31, 1997 are due as 
follows:

		1998                     $   54,364
1999                      1,907,646
2000                         62,663
2001 67,452
2002 38,654
Beyond                      523,400
                         $2,654,179
                         ==========



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


9.  STOCK OPTIONS

     The Company's stock option plans provide for options to purchase common 
stock to officers and other key employees at the fair market value on the 
dates of grant.  At December 31, 1997 and 1996, 96,500 shares remained 
available for future option grants under the Company's stock option plans.  
There were no options outstanding related to the stock option plans at 
December 31, 1997 and 1996.

     During 1997, options which were immediately exercisable to purchase 
80,000 shares of common stock at $0.25 per share were granted to an 
unaffiliated investor.  These options expire at December 31, 1999.  These 
options were outstanding, and exercisable at December 31, 1997.

     In 1996, options were granted to an agent recruiter to apply his earned 
commissions for the first recruiting year to purchase up to 500,000 shares of 
stock at the 20 day average stock price immediately prior to the signing of an
agent or acquisition.  As of December 31, 1997, the recruiter had not elected 
to apply his commissions to purchase stock.

     The management team of Carolina National can, based on various 
performance criteria, earn options to purchase up to 40,000 shares of common 
stock at $.525 per share.  As December 31, 1997 and 1996, these performance 
criteria had not been met.


10.  INCOME TAXES

     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, 1997 and 1996 are as follows:
                     
                                            1997            1996    
                                            -------------   -------------
     Deferred tax assets:                                                
       Accounts receivable and other    $     66,401    $     17,000 
       Estimated fuel and other taxes         47,155          38,770 
       Insurance and claims                   68,390          61,429 
       Litigation reserves                    17,170          17,170 
	Land valuation allowance                48,058          48,058
       Other                                                                  
       Net operating loss carry forwards  19,962,684      19,963,283 
                                         ------------   -------------
       Total deferred tax assets          20,209,858      20,145,710 
                                                         
       Less valuation allowance          (20,209,858)    (20,145,710)
                                         ------------   -------------
     Total net deferred tax asset       $      ---      $      ---   
                                        =============   =============


     During 1997, the valuation allowance was decreased by approximately 
$64,000 to reflect the reversal of deductible temporary differences incurred 
by the Company.  The Company has net operating loss carry forwards of 
approximately $59 million and $59 million at December 31, 1997 and 1996, 
respectively.  These carry-forwards are available to offset taxable income in 
future years and will expire in the years 2000 through 2008.


11.  COMMITMENTS AND CONTINGENCIES

     Over the past few years, the Company has had a significant number of 
lawsuits instituted or threatened against it as a result of its poor financial
condition and its inability to meet certain financial obligations.  For the 
most part, these resulting suits have been settled through cash payments of a 
reduced amount or through the institution of payment plans.  The undisputed 
claims that have not been settled are reflected as liabilities in the 
Company's financial statements and are included in accrued expenses in the 
accompanying consolidated balance sheets.  The Company's significant 
litigation activity that is currently pending includes the following:

     McCormick v. Trailblazer.  Mr. McCormick, the owner of C.A. White 
Trucking Company ("White"), filed an action on October 1, 1993, alleging that 
Trailblazer failed to make required payments under an employment contract.  
Trailblazer did not make the payments as a result of a dispute related to 
undisclosed liens on assets purchased from White.  The Company has lost this 
suit, however, Trailblazer was closed in 1994 and has no funds to pay the 
judgment.  The judgment was for approximately $59,000.  The suit has since 
been brought against US 1.  The suit has been dismissed from Federal Court 
during the second quarter of 1997.  However, McCormick has refiled the case in
Texas State Court during the third quarter of 1997.

     Simpson V. Keystone Lines--Mr. Simpson, an independent owner-operator 
leased to Keystone Lines, is claiming an amount in excess of $25,000 for 
injuries he sustained to his back while working for the Company.  The Company 
is vigorously defending against this claim on the basis that Mr. Simpson was 
not an employee and is not entitled to a workers compensation claim.

     Cam Regional Transport, Inc., Miller, Pry v. Trailblazer, Transcon 
Incorporated.  The owners of Cam Regional Transport, Inc., filed an action in 
1994, alleging that Trailblazer failed to make required payments under an 
employment contract and purchase agreement alleging damages of $293,000.  
Trailblazer ceased to make the payments as a result of a dispute related to 
their employment and inability to obtain title to the assets purchased.  The 
Company is vigorously defending the action.

     The Company believes it has adequately provided for the above claims, 
however, additional liability is possible and the ultimate disposition of 
these claims may have a material adverse effect to the Company's results of 
operations, cash flows and financial position.

     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.
 

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

Settled litigation during 1997 include-

	Trailblazer Bankruptcy.  The bankruptcy of Trailblazer Transportation 
was finalized during the fourth quarter of 1997.  The company recognized a 
gain on the forgiveness of debt of $610,318.

Settled litigation during 1996 include-

	Farrell v. Transcon Incorporated.  This matter is a wrongful terminati
and misrepresentation claim brought by Mr. Farrell in Los Angeles Superior 
Court on July 8, 1993 alleging damages of $1.0 million.  In addition to the 
wrongful termination action, Mr. Farrell has filed a workers' compensation 
claim, which is pending before the California Workers' Compensation Appeals 
Board.  The Company's workers' compensation insurance carrier has settled with
Mr. Farrell on the workers' compensation portion of the suit.  The action in 
the Superior Court has been settled as of September 30, 1996.

	Landair Transport, Inc. v. US 1 Industries, Inc. and LRS Transportatio
On March 15, 1996, Landair Transportation filed suit in U.S. District Court 
for $623,414 against the Company for breach of contract arising out of an 
asset purchase agreement, related promissory note, and leases.  This suit was 
settled as of December 31, 1996.  The Company gave Landair the title to the 
Company's property in Dallas, Texas and a cash payment of $175,000 to settle 
this case.


12.  ENVIRONMENTAL MATTERS

     The Company owns a 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 required remediation of $141,347 are 
considered in the land valuation allowance at December 31, 1997 and 1996.


13.  DISCONTINUED OPERATIONS

     On January 11, 1995, the Company, through its subsidiary, L.R.S., Inc. 
("LRS") purchased certain assets of the less-than-truckload (LTL) refrigerated
operations of Landair Services, Inc.  After sustaining substantial losses 
through July 1995, the Board of Directors approved shutting down the 
operations of LRS effective August 15, 1995.  For the time LRS was operating, 
the Company considered it a separate segment.

     During 1996, the lawsuit with Landair Services, Inc. was settled.  As a 
result the Company, recorded $221,743 ($0.02 per share - basic and diluted) 
into income from discontinued operations and removed the note payable and 
other accounts payable from the books. 















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


15. SUBSEQUENT EVENTS

     As a result of a lawsuit concerning the ownership of property, US 1 
Industries, Inc. was awarded title to a property in Kansas City.  At December 
31, 1997, the carrying value of the property is $228,000 and is encumbered by 
a mortgage of $50,000 and unpaid real estate taxes of approximately $161,000. 
The Company entered into an agreement to sell the property for $290,000 which 
it expects to close in early 1998.

Item 8. Changes in and Disagreements with Independent Auditors' on Accounting 
and Financial Disclosure.

     NONE


					   PART III

Item 9.  Directors and Executive Officers of the Registrant.

     In response to the information called for by Item 401 of Regulation S-K 
with respect to directors of the Company, the material set forth under 
"ELECTION OF DIRECTORS -- Nominees for Board of Directors" in the Company's 
proxy statement for the annual meeting of shareholders, which will be filed 
with the Securities and Exchange Commission pursuant to Regulation 14A, is 
incorporated herein by reference.

     In response to the information called for by Item 401 of Regulation Item 
401 of Regulation S-K with respect to executive officers of the Company, the 
material set forth under "Executive Officers of the Registrant" in Part I of 
this Form 10-K Annual Report for the year ended December 31, 1997, is 
incorporated herein by reference.

Item 10.  Executive Compensation

     In response to the information called for by Item 402 of Regulation S-K 
with respect to directors of the Company, the information under "COMPENSATION 
OF DIRECTORS" in the Company's proxy statement for the annual meeting of 
shareholders, which will be filed with the Securities and Exchange Commission 
pursuant to Regulation 14A, is incorporated herein by reference.

     In response to the information called for by Item 402 of Regulation S-K 
with respect to executive officers of the Company, the information under 
"EXECUTIVE COMPENSATION" (exclusive of the "Report of Compensation Committee" 
and the "Performance Graph") in the Company's proxy statement for the annual 
meeting of shareholders, which will be filed with the Securities and Exchange 
Commission pursuant to Regulation 14A, is incorporated herein by reference.

Item 11.  Security Ownership of Certain Beneficial Owners and Management.

     In response to the information called for by Item 403 of Regulation S-K, 
the information under "SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL
OWNERS" in the Company's proxy statement for the annual meeting of 
shareholders, which will be filed with the Securities and Exchange Commission 
pursuant to Regulation 14A, is incorporated herein by reference.

Item 12.  Certain Relationships and Related Transactions.

     In response to the information called for by Item 404 of Regulation S-K, 
the information under "CERTAIN BUSINESS RELATIONSHIPS" in the Company's proxy 
statement for the annual meeting of shareholders, which will be filed with the
Securities and Exchange Commission pursuant to Regulation 14A, is incorporated
herein by reference.

						PART IV

Item 13.  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:

									      

Report of Independent Accountants                                       11

Consolidated Balance Sheets as of December 31, 1997 and 1996            12

Consolidated Statements of Operations for the years ended               14
December 31, 1997 and 1996 

Consolidated Statements of Shareholders' Equity (Deficiency)            15
for the years ended December 31, 1997  and 1996

Consolidated Statements of Cash Flows                                   16
for the years ended December 31, 1997 and 1996       

Notes to Consolidated Financial Statements                              17

(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.


(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 23.1  Consent of Coopers & Lybrand LLP 


(b)	Reports on Form 8-K

NONE


					    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.
						US 1 INDUSTRIES, INC.

Date:_________________		By:  _________________________
						Michael E. Kibler
						President & Chief Executive Of
						(Principal Executive Officer)


Date:_________________		By:  _________________________
						Richard Courtney
						Vice President & Secretary


Date:_________________		By:  _________________________
						James C. Day
					Vice President, Treasurer,& Assistant 
  				           (Principal Financial Officer & Prin
                                    Accounting Officer)
 
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.

Date:_________________		_________________________
						Mike Ashker, Director

Date:_________________		_________________________
						Richard Courtney, Director

Date:_________________		_________________________
						James C. Day, Director

Date:_________________		_________________________
						Michael E. Kibler, Director

Date:_________________		_________________________
						Robert I. Scissors, Director

Date:_________________		_________________________
						Lex L. Vendetti, Director

Date:_________________		_________________________
						Steve Green, Director
8

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