<PAGE>
                                                                     (conformed)

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                               FORM 10-Q/A No. 1


[X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 2001 OR


[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
               EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
                          ____________ TO ____________


                         COMMISSION FILE NUMBER 0-13667





                             PDG ENVIRONMENTAL, INC.
             (Exact name of registrant as specified in its charter)





               DELAWARE                                         22-2677298
(State or other jurisdiction of incorporation                (I.R.S. Employer
            or organization)                                 Identification No.)


1386 BEULAH DRIVE, BUILDING 801
PITTSBURGH, PENNSYLVANIA                                          15235
   (Address of principal executive offices)                     (Zip Code)


                                  412-243-3200
              (Registrant's telephone number, including area code)


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 No X
                                         ---

As of December 10, 2001, there were 9,342,330 shares of the registrant's common
stock outstanding.


<PAGE>
                    PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES




                                      INDEX



<TABLE>
<CAPTION>

<S>                                                                                                          <C>
PART I.  FINANCIAL INFORMATION                                                                               PAGE


    Item 1.   Consolidated Financial Statements and Notes to Consolidated Financial Statements


         (a)  Condensed Consolidated Balance Sheets as of October 31, 2001 (unaudited) and                     3
              January 31, 2001

         (b)  Consolidated  Statements of Operations  for the Three Months Ended October 31, 2001 and
              2000 (unaudited)                                                                                 4

         (c)  Consolidated Statements of Operations for the Nine Months Ended October 31, 2001
              and 2000 (unaudited)                                                                             5

         (d)  Consolidated Statements of Cash Flows for the Nine Months Ended October 31, 2001
              and 2000 (unaudited)                                                                             6

         (e)  Notes to Consolidated Financial Statements (unaudited)                                           7


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


PART II.  OTHER INFORMATION

    Item 1.   Legal Proceedings                                                                                13

    Item 3.   Defaults Upon Senior Securities                                                                  13

    Item 6.   Exhibits and Reports on Form 8-K                                                                 13

    Signatures                                                                                                 14
</TABLE>




                                       2
<PAGE>


                          PART I. FINANCIAL INFORMATION
                    PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                           OCTOBER 31,       JANUARY 31,
                                                              2001               2001*
                                                          ------------      ------------
                                                          (UNAUDITED)
<S>                                                       <C>               <C>
ASSETS


CURRENT ASSETS
Cash and short-term investments                           $      9,000      $    214,000
Accounts receivable - net                                   10,809,000         7,278,000
Costs and estimated earnings in excess of billings on
  uncompleted contracts                                      2,715,000         2,546,000
Inventory                                                      540,000           468,000
Other current assets                                           454,000           301,000
                                                          ------------      ------------

TOTAL CURRENT ASSETS                                        14,527,000        10,807,000

PROPERTY, PLANT AND EQUIPMENT                                7,876,000         6,670,000
Less:  accumulated depreciation                             (5,737,000)       (5,140,000)
                                                          ------------      ------------
                                                             2,139,000         1,530,000

OTHER ASSETS                                                 1,119,000         1,072,000
                                                          ------------      ------------

TOTAL ASSETS                                              $ 17,785,000      $ 13,409,000
                                                          ============      ============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable                                          $  4,152,000      $  1,923,000
Billings in excess of costs and estimated earnings
  on uncompleted contracts                                   1,690,000           910,000
Current portion of long-term debt                              596,000           177,000
Accrued liabilities                                          1,660,000         1,913,000
                                                          ------------      ------------

TOTAL CURRENT LIABILITIES                                    8,098,000         4,923,000

OTHER LONG-TERM LIABILITIES                                        --            210,000

LONG-TERM DEBT                                               5,388,000         2,942,000

STOCKHOLDERS' EQUITY
Cumulative convertible 2% preferred stock                       14,000            14,000
Common stock                                                   188,000           177,000
Additional paid-in capital                                   8,100,000         7,767,000
Deferred compensation                                          (59,000)              --
(Deficit) retained earnings                                 (3,906,000)       (2,586,000)
Less treasury stock                                            (38,000)          (38,000)
                                                          ------------      ------------

TOTAL STOCKHOLDERS' EQUITY                                   4,299,000         5,334,000
                                                          ------------      ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $ 17,785,000      $ 13,409,000
                                                          ============      ============
</TABLE>

*Derived from audited financial statements. See accompanying notes to
consolidated financial statements.



                                       3
<PAGE>


                    PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
                      STATEMENTS OF CONSOLIDATED OPERATIONS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                FOR THE THREE MONTHS
                                                                  ENDED OCTOBER 31,
                                                           ------------------------------
                                                               2001               2000
                                                           ------------      ------------

<S>                                                        <C>               <C>
CONTRACT REVENUE                                           $ 12,184,000      $  9,230,000
CONTRACT COSTS                                               10,546,000         8,162,000
                                                           ------------      ------------

Gross margin                                                  1,638,000         1,068,000

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                  1,442,000         1,202,000
                                                           ------------      ------------

Income (loss) from operations                                   196,000          (134,000)

OTHER INCOME (EXPENSE):
 Interest expense                                              (119,000)          (75,000)
 Interest income                                                  1,000             4,000
 Write off of deferred acquisition and financing costs                -          (205,000)
Other income                                                     12,000                 -
                                                           ------------      ------------

                                                               (106,000)         (276,000)
                                                           ------------      ------------

Income (loss) before income taxes                                90,000          (410,000)

INCOME TAX PROVISION                                                  -                 -
                                                           ------------      ------------

NET INCOME (LOSS)                                          $     90,000      $   (410,000)
                                                           ============      ============

PER SHARE OF COMMON STOCK:

BASIC                                                      $       0.01      $      (0.05)
                                                           ============      ============

DILUTIVE                                                   $       0.01      $      (0.05)
                                                           ============      ============

AVERAGE COMMON SHARES OUTSTANDING                             9,342,000         8,783,000

AVERAGE DILUTIVE COMMON SHARE EQUILIVANTS
OUTSTANDING                                                     330,000                 -
                                                           ------------      ------------

AVERAGE COMMON SHARES AND DILUTIVE COMMON
EQUILIVANTS OUTSTANDING FOR EARNINGS PER
SHARE CALCULATION                                             9,672,000         8,783,000
                                                           ============      ============
</TABLE>





See accompanying notes to consolidated financial statements.



                                       4
<PAGE>


                    PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
                      STATEMENTS OF CONSOLIDATED OPERATIONS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                FOR THE NINE MONTHS
                                                                 ENDED OCTOBER 31,
                                                           ------------------------------
                                                               2001              2000
                                                           ------------      ------------

<S>                                                        <C>               <C>
CONTRACT REVENUE                                           $ 28,725,000      $ 26,067,000
CONTRACT COSTS                                               25,755,000        22,657,000
                                                           ------------      ------------

Gross margin                                                  2,970,000         3,410,000

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                  3,911,000         3,165,000
                                                           ------------      ------------

Income (loss) from operations                                  (941,000)          245,000

OTHER INCOME (EXPENSE):
 Interest expense                                              (305,000)         (175,000)
 Interest income                                                  2,000            14,000
 Write off of deferred acquisition and financing costs                -          (205,000)
 Other income                                                    20,000            27,000
                                                           ------------      ------------

                                                               (283,000)         (339,000)
                                                           ------------      ------------

Income (loss) before income taxes                            (1,224,000)          (94,000)

INCOME TAX PROVISION                                                  -           (24,000)
                                                           ------------      ------------

NET INCOME (LOSS)                                          $ (1,224,000)     $   (118,000)
                                                           ============      ============

PER SHARE OF COMMON STOCK:

BASIC                                                      $      (0.13)     $      (0.01)
                                                           ============      ============

DILUTIVE                                                   $      (0.13)     $      (0.01)
                                                           ============      ============

AVERAGE COMMON SHARES OUTSTANDING                             9,181,000         8,713,000

AVERAGE DILUTIVE COMMON SHARE EQUILIVANTS
OUTSTANDING                                                           -                 -
                                                           ------------      ------------

AVERAGE COMMON SHARES AND DILUTIVE COMMON
EQUILIVANTS OUTSTANDING FOR EARNINGS PER
SHARE CALCULATION                                             9,181,000         8,713,000
                                                           ============      ============
</TABLE>





See accompanying notes to consolidated financial statements.



                                       5
<PAGE>


                    PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
                      STATEMENTS OF CONSOLIDATED CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                    FOR THE NINE MONTHS
                                                                      ENDED OCTOBER 31,
                                                              ----------------------------

                                                                 2001             2000
                                                              -----------      -----------

<S>                                                           <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                             $(1,224,000)     $  (118,000)
ADJUSTMENTS TO RECONCILE NET INCOME
  (LOSS) TO CASH:
    Depreciation and amortization                                 921,000          914,000
    Contingent acquisition consideration                          225,000              --
    Write off of deferred acquisition and financing costs               -          205,000
    Write off of bad debt                                               -           35,000

CHANGES IN ASSETS AND LIABILITIES
  OTHER THAN CASH:
    Accounts receivable                                        (3,531,000)        (509,000)
    Costs and estimated earnings in excess of billings
      on uncompleted contracts                                   (169,000)      (2,066,000)
    Inventory                                                     (72,000)        (125,000)
    Other current assets                                          119,000          288,000
    Accounts payable                                            1,957,000         (280,000)
    Billings in excess of costs and estimated earnings
      on uncompleted contracts                                    780,000           (8,000)
    Accrued liabilities                                          (153,000)         353,000
    Other                                                               -         (107,000)
                                                              -----------      -----------

                                                               (1,069,000)      (2,454,000)
                                                              -----------      -----------

NET CASH USED BY OPERATING ACTIVITIES                          (1,147,000)      (1,418,000)

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of property, plant and equipment                    (695,000)        (411,000)
    Acquisition of businesses                                    (891,000)        (573,000)
    Increase in other assets                                      (31,000)               -
                                                              -----------      -----------
NET CASH USED BY INVESTING ACTIVITIES                          (1,617,000)        (984,000)

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from debt                                          2,834,000        4,263,000
    Principal payments on debt                                   (275,000)      (2,015,000)
                                                              -----------      -----------

NET CASH PROVIDED BY FINANCING ACTIVITIES                       2,559,000        2,248,000
                                                              -----------      -----------

Net Decrease in Cash and Short-Term Investments                  (205,000)        (154,000)
Cash and Short-Term Investments, Beginning of Period              214,000          282,000
                                                              -----------      -----------

CASH AND SHORT-TERM INVESTMENTS, END OF PERIOD                $     9,000      $   128,000
                                                              ===========      ===========
</TABLE>


See accompanying notes to consolidated financial statements.



                                       6
<PAGE>


                    PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE NINE MONTHS ENDED OCTOBER 31, 2001
                                   (UNAUDITED)

NOTE 1 -- BASIS OF PRESENTATION

The consolidated financial statements include PDG Environmental, Inc.'s (the
"Corporation") and its wholly-owned subsidiaries.

The accompanying consolidated financial statements of the Corporation are
unaudited. However, in the opinion of management, they include all adjustments
necessary for a fair presentation of financial position, results of operations
and cash flows. All adjustments made during the three and nine months ended
October 31, 2001 were of a normal, recurring nature. The amounts presented for
the three and nine months ended October 31, 2001 are not necessarily indicative
of results of operations for a full year. Additional information is contained in
the Annual Report on Form 10-K of the Corporation for the year ended January 31,
2001 dated March 30, 2001 and the Quarterly Reports on Form 10-Q for the
Corporation for the quarter ended April 30, 2001 dated June 14, 2001 and for the
quarter ended July 31, 2001 dated September 14, 2001, and should be read in
conjunction with this quarterly report.

NOTE 2 - FEDERAL INCOME TAXES

No federal income tax has been provided for the nine months ended October 31,
2001 due to the loss in the current period and the existence of unused net
operating loss carryforwards. No state income taxes were provided due to the
loss in the current period.

Income taxes paid by the Corporation for the nine months ended October 31, 2001
and 2000 totaled approximately $78,000 and $69,000, respectively.

NOTE 3 - DEBT

On August 3, 2000, the Corporation closed on a new $4.7 million credit facility
with Sky Bank, an Ohio banking association, consisting of a 3-year $3 million
revolving line of credit, a 5-year $1 million equipment note, a 15-year $0.4
million mortgage and a 5-year $0.3 million commitment for future equipment
financing. The new financing repaid all of the Company's existing debt.

The line of credit, equipment note and commitment for future equipment financing
are at an interest rate of prime plus 1% with financial covenant incentives
which may reduce the interest rate to either prime plus 1/2% or prime. The
mortgage is at an interest rate of 9.15% fixed for three years and is then
adjusted to 2.75% above the 3-year Treasury Index every three years. The Chief
Executive Officer of the Corporation provided a limited personal guarantee for
the credit facility.

In November 2000, Sky Bank approved a $1.5 million increase in the line of
credit to $4.5 million to fund the proposed acquisition of Tri-State
Restorations, an asbestos abatement and demolition company in California. (See
Note 6 for further discussion of the acquisition). Additionally, Sky Bank
increased the commitment for future equipment financing by $0.3 million to $0.6
million. In April 2001 and June 2001, the Company borrowed $273,000 and
$283,000, respectively, against the commitment for future equipment financing to
fund the fixed asset portion of the Tri-State Restoration acquisition and to
fund other equipment purchases. In August 2001 the remaining $44,000 was
borrowed against the commitment for future equipment financing to fund equipment
purchases.

On October 31, 2001, the balance on the line of credit was $3,800,000 with an
unused availability of $700,000.

The Corporation paid interest costs totaling approximately $293,000 and $181,000
during the nine months ended October 31, 2001 and 2000, respectively.


                                       7
<PAGE>

NOTE 4 - PREFERRED STOCK

Cumulative dividends in arrears on the Corporation's 2% Series A Preferred Stock
were approximately $10,000 at October 31, 2001. At October 31, 2001, there were
6,000 shares of Series A Preferred Stock outstanding. Each share of Series A
Preferred Stock is convertible into four shares of the Corporation's common
stock at the option of the preferred stockholder.

The conversion rate on the Series A Preferred Stock is also subject to
adjustment as a result of certain changes in the Corporation's capital structure
or distributions to common stockholders (except for cash dividends permissible
under law).

At the Corporation's Annual Meeting of Stockholders held on July 23, 1993, the
following matters were approved by a majority of the Corporation's preferred and
common stockholders which affected the Corporation's Series A Preferred stock
and common stock: a reduction in the Series A Preferred Stock dividend rate from
9% to 2% and the cancellation of the accrued but unpaid dividends and the
special voting rights associated with such preferred stock in the event of a
certain accumulation of accrued but unpaid dividends thereon; and a
recapitalization of the Corporation in order to effect a one for two reverse
stock split (the "Recapitalization"). In exchange for the forfeiture of the
accrued but undeclared and unpaid dividends, the holders of the Series A
Preferred Stock were granted a common stock right which, if and when declared by
the Board of Directors, grant to the holders of such common stock rights shares
of the common stock of the Corporation. At the May 23, 1995, March 6, 2000 and
March 21, 2001 Board of Directors meeting, the issuance of one third of the
shares (280,071, 259,696 and 259,696 common shares, respectively) covered by the
aforementioned right was approved. The Recapitalization was contingent upon the
Corporation's listing on the American Stock Exchange. The Corporation made a
decision not to pursue such a listing; therefore, the Recapitalization was
indefinitely postponed.

NOTE 5 - NET EARNINGS PER SHARE

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


<TABLE>
<CAPTION>
                                                                              FOR THE NINE MONTHS
                                                                                ENDED OCTOBER 31,
                                                                         ----------------------------
                                                                            2001             2000
                                                                         -----------      -----------

<S>                                                                      <C>              <C>
NUMERATOR:

Net Income (loss)                                                        $(1,224,000)     $  (118,000)
Preferred stock dividends                                                     (1,000)          (1,000)
                                                                         -----------      -----------
Numerator for basic earnings per share--income available
      to common stockholders                                              (1,225,000)        (119,000)

Effect of dilutive securities:
      Preferred stock dividends                                                1,000            1,000
                                                                         -----------      -----------

Numerator for diluted earnings per share--income (loss) available to
      common stock after assumed conversions                             $(1,224,000)     $  (118,000)
                                                                         ===========      ===========

DENOMINATOR:

Denominator for basic earnings per share--weighted average
    shares                                                                 9,181,000        8,713,000

Effect of dilutive securities                                                      -                -
                                                                         -----------      -----------

Denominator for diluted earnings per share--adjusted
     weighted-average shares and assumed conversions                       9,181,000        8,713,000
                                                                         ===========      ===========

BASIC EARNINGS (LOSS) PER SHARE                                          $     (0.13)     $     (0.01)
                                                                         ===========      ===========

DILUTED EARNINGS (LOSS) PER SHARE                                        $     (0.13)     $     (0.01)
                                                                         ===========      ===========
</TABLE>



                                       8
<PAGE>
The following table sets forth the computation of basic and diluted earnings
(loss) per share:

<TABLE>
<CAPTION>
                                                                             FOR THE THREE MONTHS
                                                                               ENDED OCTOBER 31,
                                                                         ----------------------------
                                                                             2001            2000
                                                                         -----------     -----------

<S>                                                                      <C>             <C>
NUMERATOR:

Net Income (loss)                                                        $    90,000     $  (410,000)
Preferred stock dividends                                                          -               -
                                                                         -----------     -----------
Numerator for basic earnings per share--income available
      to common stockholders                                                  90,000        (410,000)

Effect of dilutive securities:
      Preferred stock dividends                                                    -               -
                                                                         -----------     -----------

Numerator for diluted earnings per share--income (loss) available to
      common stock after assumed conversions                             $    90,000     $  (410,000)
                                                                         ===========     ===========

DENOMINATOR:

Denominator for basic earnings per share--weighted average
    shares                                                                 9,342,000       8,783,000

Effect of dilutive securities:
     Warrants                                                                 28,000               -
     Employee stock options                                                  302,000               -
                                                                         -----------     -----------

                                                                             330,000               -
                                                                         -----------     -----------

Denominator for diluted earnings per share--adjusted
     weighted-average shares and assumed conversions                       9,672,000       8,783,000
                                                                         ===========     ===========

BASIC EARNINGS PER SHARE                                                 $      0.01     $     (0.05)
                                                                         ===========     ===========

DILUTED EARNINGS PER SHARE                                               $      0.01     $     (0.05)
                                                                         ===========     ===========
</TABLE>


NOTE 6 - ACQUISITION


Effective May 31, 2001, PDG Environmental, Inc. and subsidiaries (the
"Corporation") entered into an agreement (the "Agreement") with Tri-State
Restorations, Inc. ("Tri-State") and Timothy Vitta and Thomas Stevens
(collectively "the Principals") for the purchase of selected assets and
assumption of contracts of Tri-State. Tri-State owned and operated a business
which conducted environmental remediation, demolition and asbestos abatement.

As consideration for the purchase, the Corporation paid Tri-State $541,000 in
cash, $150,000 in the form of a subordinated note at 6 1/2% interest due May 31,
2002 and 300,000 shares of the Corporation's common stock and entered into an
employment agreement with the Principals that provides for additional
compensation in addition to an annual salary.

Tri-State's revenues for the years ended December 31, 2000 and 1999 were
$11,665,000 and $9,588,000, respectively.




                                       9
<PAGE>



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

THREE MONTHS ENDED OCTOBER 31, 2001 AND 2000

During the three months ended October 31, 2001 ("Fiscal 2002"), the
Corporation's contract revenues increased to $12.2 million compared to $9.2
million in the three months ended October 31, 2000 ("Fiscal 2001") due to $3.3
million of revenues from the Tri-State operation acquired effective June 1,
2001.

The Corporation's gross margin increased to $1.6 million in the third quarter of
fiscal 2002 compared to $1.1 million in the third quarter of fiscal 2001. The
increase in gross margin is due to a number of larger projects in the current
year compared to a large volume of work at one office being performed at a
relatively low margin level and negative contract adjustments in the prior year
fiscal quarter.

Selling, general and administrative expenses increased to $1.4 million in the
current fiscal quarter as compared to $1.2 million in the three months ended
October 31, 2000. This increase was due to the addition of three branch offices
since the prior year fiscal quarters including the previously discussed
Tri-State operation acquired effective June 1, 2001.

The Corporation reported income from operations of $0.2 million for the three
months ended October 31, 2001 compared to loss from operations of $0.13 million
for the three months ended October 31, 2000 as a direct result of the factors
discussed above.

Interest expense increased to $0.12 million in the current quarter as compared
to $0.075 million in the same quarter of a year ago due to a higher level of
borrowings to support increased revenues and borrowings required to finance the
acquisition of Tri-State.

During the prior year quarter, the Company terminated negotiations with
Medalclad Corporation for the acquisition of its Metalclad Insulation subsidiary
business which resulted in the write off of $163,000 of deferred acquisition
costs. Additionally, the Company wrote off $42,000 of deferred financing costs
relating to debt that was refinanced in August 2000.

During the quarters ended October 31, 2001 and 2000, the Corporation made no
provision for federal income taxes due to the loss in the current fiscal year
and due to the utilization of net operating loss carryforwards for financial
reporting purposes, respectively. No state income tax provision was made in the
current quarter due to the year to date loss while no state income tax provision
was made in the prior fiscal quarter due to the loss.

NINE MONTHS ENDED OCTOBER 31, 2001 AND 2000

During the nine months ended October 31, 2001, the Corporation's contract
revenues increased to $28.7 million compared to $26.1 million in the nine months
ended October 31, 2000. The current nine month period included $5.0 million of
revenues from the Tri-State operation acquired effective June 1, 2001.

The Corporation's gross margin decreased to $3.0 million in the nine months of
fiscal 2002 compared to $3.4 million in the nine months of fiscal 2001. The
decrease in gross margin is due to labor shortages and operational problems at
three of the Corporation's locations during the second and third quarters of
Fiscal 2002.

Selling, general and administrative expenses increased to $3.9 million in the
current fiscal year as compared to $3.2 million in nine months ended October 31,
2000. This increase was due to the addition of five branch offices since the
beginning of Fiscal 2001.

The Corporation reported a loss from operations of $0.94 million for the nine
months ended October 31, 2001 compared to income from operations of $0.25
million for the nine months ended October 31, 2000 as a direct result of the
factors discussed above.


                                       10
<PAGE>

Interest expense increased to $0.31 million in the current year as compared to
$0.18 million in the same period of a year ago due to a higher level of
borrowings to support increased revenues and borrowings required to finance the
acquisition of Tri-State.

During the prior year, the Company terminated negotiations with Medalclad
Corporation for the acquisition of its Metalclad Insulation subsidiary business
which resulted in the write off of $163,000 of deferred acquisition costs.
Additionally, the Company wrote off $42,000 of deferred financing costs relating
to debt that was refinanced in August 2000.

During the nine months ended October 31, 2001 and 2000, the Corporation made no
provision for federal income taxes due to the loss in the period and due to the
utilization of net operating loss carryforwards for financial reporting
purposes, respectively. No state income tax provision was made in the current
period due to the loss while a state income tax provision of $24,000 was made in
the prior fiscal period.

LIQUIDITY AND CAPITAL RESOURCES

During the nine months ended October 31, 2001, the Corporation's cash decreased
by $0.21 million to $0.01 million.

The decrease in cash and short term investments during the half of fiscal 2002
is attributable to cash outflows from operations of $1.15 million, cash outflows
for investing activities of $1.6 million which included $0.6 million relative to
the purchase of selected assets of the former Tri-State operation, $0.29 million
of payments to the former owners of businesses acquired in prior years and $0.7
million for the purchase of property, plant and equipment. These cash outflows
were partially offset by net cash inflows of $2.56 million from funding
activities which included proceeds from debt of $2.84 million, consisting of
$2.05 million from the utilization of the Corporation's line of credit and $0.84
million from borrowings to finance new equipment purchases. These cash flows
were partially offset by $0.28 million of principal payments on debt.

Cash used by operating activities totaled $1.15 million in the nine months ended
October 31, 2001. Cash outflows included $1.2 million from the current period
loss, a $3.53 million increase in accounts receivables, including a $2.0 million
increase to fund the accounts receivable of the former Tri-State operation, a
$0.17 million increase in costs and estimated earnings in excess of billings on
uncompleted contracts, a $0.07 increase in inventory and a $0.15 million
decrease in accrued liabilities. These cash outflows were partially offset by
cash inflows including a $0.12 million decrease in other assets, a $1.96 million
increase in accounts payable, a $0.78 million increase in billings in excess of
costs and estimated earnings on uncompleted contracts, $0.92 million of
depreciation and amortization and $0.23 million of contingent acquisition
consideration.

At October 31, 2001, the Corporation's backlog totaled $35.5 million ($27.6
million on fixed fee contracts and $7.9 million on time and materials or unit
price contracts).

During the nine months ended October 31, 2000, the Corporation's cash decreased
by $0.15 million to $0.13 million.

The decrease in fiscal 2000 was due to a $2.5 million cash outflow from
operating activities and a $1.0 million outflow relating to investing
activities, which was partially offset by a $2.2 million inflow associated with
financing activities.

Cash outflows from operating activities of $2.5 million in the nine months ended
October 31, 2000 included a $0.5 million increase in accounts receivable, a $2.1
million increase in costs and estimated earnings in excess of billings on
uncompleted contracts due to a series of unbilled contracts at one office, a
$0.13 million increase in inventory, a $0.3 million decrease in accounts payable
and the $0.12 million net loss. The aforementioned cash outflows from operating
activities were partially offset, by $0.9 million of depreciation and
amortization, the $0.2 million write off of deferred acquisition and financing
costs, a $0.3 million decrease in other current assets and a $0.35 million
increase in accrued liabilities.


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<PAGE>

The Corporation's cash outflows from investing activities of $1.0 million in the
nine months ended October 31, 2000 was attributed to $0.41 million for the
purchase of property, plant and equipment and $0.57 million to purchase the
businesses acquired.

Cash inflows associated with financing activities of $2.2 million during the
nine months included proceeds of debt of $4.3 million consisting of $1.4 million
from the new term loans received in the third, $1.4 million of borrowings on the
new line of credit and $1.5 million of borrowings on the line of credit that was
refinanced in August 2000. These inflows were partially offset by principal
payments of $2.0 million consisting of a $0.24 million payoff of the mortgage
that was refinanced, a $0.21 million payoff of the term loan that was
refinanced, a $1.5 million payoff of the line of credit that was refinanced and
$0.08 million of scheduled principal payments on term debt.





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<PAGE>


                           PART II-- OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

The Registrant is subject to dispute and litigation in the ordinary course of
business. None of these matters, in the opinion of management, is likely to
result in a material effect on the Registrant based upon information available
at this time.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

The Registrant is currently in arrears with respect to the payment of dividends
on its Series A Preferred Stock. At October 31, 2001, the cumulative dividends
in arrears on the Series A Preferred Stock were approximately $10,000.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)     Exhibits:

                                  EXHIBIT INDEX
                           EXHIBIT NO. AND DESCRIPTION
                                                           PAGES OF SEQUENTIAL
                                                            NUMBERING SYSTEM


(b)     Reports on Form 8-K


The registrant filed the following Current Reports on Form 8-K during the three
months ended October 31, 2001.

Filing on Form 8-K/A on October 2, 2001 with the audited December 31, 2000 and
1999 financial statements of Tri-State Restorations, Inc. and related pro
formas.



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<PAGE>





                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.




                                     PDG ENVIRONMENTAL, INC.




                                     By   /s/ John C. Regan
                                       -----------------------------------------
                                           John C. Regan
                                           Chairman and Chief Executive Officer





March 14, 2002


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