UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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


For the Quarter Ended  September 30, 1998          Commission File No. 00019678
--------------------------------------------------------------------------------

                                 INFRACORPS INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


         Virginia                                               54-1414643
--------------------------------------------------------------------------------
State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                              Identification No.)


           7400 Beaufont Springs Drive, Suite 415, Richmond, VA 23225
--------------------------------------------------------------------------------
                             (Address)                        (Zip Code)


                                 (804) 272-6600
--------------------------------------------------------------------------------
               Registrant's telephone number, including area code

                             ETS INTERNATIONAL, INC.
--------------------------------------------------------------------------------
             (Former name, former address and former fiscal year if
                           changed since last report)


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 fill such  reports),  and (2) has been  subject  to the filing
requirements for the past 90 days.

                                     Yes     x          No              
                                         ---------          ----------

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
stock, as of November 13, 1998.

             Class                        Number of Shares Outstanding
             -----                        ----------------------------
         Common Stock                               16,492,043


<PAGE>
<TABLE>

                                               PART I - FINANCIAL INFORMATION

                                                ITEM 1. FINANCIAL STATEMENTS

                                              INFRACORPS INC. AND SUBSIDIARIES
                                                 CONSOLIDATED BALANCE SHEET
<CAPTION>

                                                                                  September 30, 1998         March 31, 1998
                                                                                  ------------------         --------------
ASSETS                                                                                (unaudited)               (audited)
<S>                                                                                  <C>                      <C>          
Current assets:
    Cash and cash equivalents                                                        $    100,023             $     206,750
    Accounts receivable:
       Trade (net of allowance of $50,000 in 1998 and 1997)                             3,687,891                 2,540,810
       Other                                                                              221,021                    78,936
    Costs and estimated earnings in excess of billings
       on uncompleted contracts                                                           509,005                   563,924
    Notes receivable                                                                                                200,000
    Inventory                                                                             683,619                   931,590
    Prepaid expenses                                                                      120,879                   143,174
                                                                                      -----------               -----------
         Total current assets                                                           5,322,456                 4,665,184

Property, plant and equipment:
    Furniture and fixtures                                                                376,329                   345,857
    Machinery, tools and equipment                                                      4,123,898                 4,027,556
    Vehicles                                                                            1,331,372                 1,373,657
    Leasehold improvements                                                                303,795                   340,282
                                                                                      -----------               -----------
                                                                                        6,135,394                 6,087,352
    Less accumulated depreciation                                                       3,604,928                 3,475,318
                                                                                      -----------               -----------
         Total property, plant and equipment, net                                       2,530,466                 2,612,034

Other assets:
   Restricted cash                                                                        600,000                   600,000
   Franchise agreements                                                                    47,666                    50,916
    Notes receivable from officers                                                        151,040                   151,040
    Note receivable from ETS, Inc.                                                         99,693                   100,000
    Cash value of life insurance                                                            6,693                     6,693
    Other assets                                                                           15,146                    97,338
                                                                                      -----------               -----------
         Total other assets                                                               920,238                 1,005,987

   Assets of business transferred under
        contractual agreements                                                            221,532                   267,666
                                                                                      -----------               -----------

         Total assets                                                                 $ 8,994,692               $ 8,550,871
                                                                                      ===========               ===========



<PAGE>
                                              INFRACORPS INC. AND SUBSIDIARIES
                                            LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
                                                                                  September 30, 1998         March 31, 1998
                                                                                  ------------------         --------------
                                                                                    (unaudited)                  (audited)

Current liabilities:

    Bank overdraft                                                                   $   772,061              $    173,493
    Notes payable to bank                                                                 89,062                    89,062
    Notes payable to stockholders                                                        850,000                 3,410,000
    Notes payable to affiliates                                                          374,573                   966,159
    Notes payable                                                                         24,375                         0
    Current portion of long-term debt                                                    487,477                   480,543
    Accounts payable                                                                   2,312,364                 1,846,539
    Accrued expenses and other current liabilities                                       283,498                   768,638
    Reserve for loss on closing subsidiary                                               500,000                         0
                                                                                     -----------               -----------

         Total current liabilities                                                     5,693,410                 7,734,434

Long-term liabilities:
    Long-term debt                                                                       641,198                   907,896
    Deferred gain on sale/leaseback                                                      329,667                   481,821
    Liabilities of business transferred under contractual
       arrangements                                                                      140,339                   140,339
                                                                                     -----------               -----------

         Total liabilities                                                             6,804,614                 9,264,490

Stockholders' equity:
    Preferred stock, no par value; authorized 5,000,000
       shares; issued and outstanding 3,250,000 and 0 shares at
       September 30, 1998 and March 31, 1998, respectively                             3,271,667                         0
    Common stock, no par value; authorized 30,000,000
       shares; issued and outstanding 16,492,043 shares                                6,126,338                 6,126,338
    Retained earnings (accumulated deficit)                                           (7,014,815)               (6,646,845)
    Less notes receivable from officers                                                 (193,112)                 (193,112)
                                                                                     -----------               -----------

         Total stockholders' equity                                                    2,190,078                 (713,619)
                                                                                     -----------               -----------

         Total liabilities and  stockholders' equity                                 $ 8,994,692               $ 8,550,871 
                                                                                     ===========               ===========


<PAGE>



                                              INFRACORPS INC. AND SUBSIDIARIES
                                              CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>

                                                          Three months ended                        Six months ended
                                                   September 30        September 30         September 30          September 30
                                                       1998                 1997                 1998                  1997
                                                       ----                 ----                 ----                  ----
                                                   (unaudited)          (unaudited)          (unaudited)          (unaudited)

Contract Revenues - Commercial                     $ 5,811,587          $ 5,425,099         $ 10,102,509         $ 11,079,506
Cost of goods and services                           4,992,723            3,906,489            8,620,260            8,430,963
                                                   -----------          -----------         ------------         ------------
Gross Profits (losses)                                 818,864            1,518,610            1,482,249            2,648,543

Selling, general and administrative expenses           597,074              545,232            1,430,278            1,104,956
                                                   -----------          -----------         ------------         ------------
Net Operating Income                                   221,790              973,378               51,971            1,543,587
Interest income                                          9,324                8,316               20,366               13,104
Interest expense                                      (103,771)            (276,967)            (248,118)            (442,395)
Gain on sale of equipment                                    0                    0              329,478                    0
                                                   -----------          -----------         ------------         ------------
Income (Loss) from continuing operations            $  127,343          $   704,727         $    153,697         $  1,114,296
  
Loss from discontinued operations                            0             (492,559)                   0             (339,438)
Loss on disposal of discontinued operations           (500,000)                   0             (500,000)                   0
                                                   -----------          -----------         ------------         ------------
Net income (loss)                                   $ (372,657)         $   212,168         $   (346,303)        $    774,858 
                                                    ==========          ===========         ============         ============ 


Earnings (Loss) from continuing operations 
  per common share:
          Basic                                     $      .01          $       .05         $        .01         $        .08
          Diluted                                   $      .01          $       .05         $        .01         $        .08

Earnings (Loss) per common share:
          Basic                                     $     (.02)         $       .01        $        (.02)        $        .05
          Diluted                                   $     (.02)         $       .01        $        (.02)        $        .05

Average shares of common stock used for 
  above computation:
          Basic                                     16,492,043           14,999,955           16,492,043           14,548,333
          Diluted                                   19,742,043           14,999,955           18,117,043           14,548,333


<PAGE>



                                              INFRACORPS INC. AND SUBSIDIARIES
                             CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                                             SIX MONTHS ENDED SEPTEMBER 30, 1998
<CAPTION>
                                                                                          Retained        Notes
                                                                                          Earnings      Receivable
                                    Common Stock                Preferred Stock         Accumulated       from
                                Shares       Amount           Shares       Amount         (Deficit)      Officer        Total
                                ------       ------           ------       ------         ---------      -------        -----
                             (unaudited)   (unaudited)    (unaudited)    (unaudited)     (unaudited)   (unaudited)    (unaudited)

Balances at March 31, 1998    16,492,043    $ 6,126,338              0   $         0    $ (6,646,845)   $ (193,112)  $  (713,619)

Net Income                                                                                    26,354                      26,354
                              ----------    -----------      ---------   -----------    ------------    ----------   ----------- 

Balances at June 30, 1998      16,492,043   $ 6,126,338              0   $         0    $ (6,516,349)   $ (193,112)  $  (687,267)

Conversion of debt to
       preferred shares                                      3,250,000   $ 3,250,000                                 $ 3,250,000

Accrued dividends
   preferred shares                                             21,667       (21,667)                                          0

Net Income                                                                                  (372,657)                   (372,657)
                              ----------    -----------      ---------   -----------    ------------    ----------   ----------- 
Balances at
   September 30, 1998          16,492,043     $6,126,338     3,250,000   $ 3,271,667     $(7,014,815)   $ (193,112)  $ 2,190,078



<PAGE>
                                              INFRACORPS INC. AND SUBSIDIARIES

                                            CONSOLIDATED STATEMENTS OF CASH FLOW
<CAPTION>

                                                                                                    Six months ended
                                                                                       September 30, 1998        September 30, 1997
                                                                                       ------------------        ------------------
                                                                                           (unaudited)                (unaudited)

Cash flows from operating activities:
       Net income (loss)                                                                   $  (346,303)                $  774,856

Adjustments  to  reconcile  net  income  (loss)  to net cash  used in  operating
activities:
       Depreciation and amortization                                                           276,628                    612,921
       Amortization of convertible debentures discount                                               0                    252,289
       Professional services received in exchange for common stock                                   0                    133,444
       Amortization of deferred gain on sale/leaseback                                        (152,154)                  (152,154)
       Gain on disposal of equipment                                                          (329,478)                         0
       Reserve for closing subsidiary                                                         (500,000)                         0

Increase/decrease in operating assets and liabilities:
       Accounts receivable                                                                  (1,289,166)                  (878,938)
       Costs and estimated earnings in excess of billings on uncompleted contracts              54,919                   (440,743)
       Inventories                                                                             247,971                   (287,577)
       Prepaid expenses                                                                         22,277                    (70,342)
       Cash surrender value of life insurance, net                                                   0                    (17,611)
       Accounts payable                                                                         82,192                   (361,841)
       Accrued expenses and other liabilities                                                  465,825                   (651,046)
       Other Assets                                                                           (485,140)                   333,094
                                                                                           -----------                 ----------
Net cash used in operating activities                                                         (952,429)                  (753,655)

Cash flow from investing activities:
       Purchase of property, plant and equipment                                              (372,332)                  (804,966)
       Proceeds from sale of Service Division                                                  350,000                          0
       Notes Receivable decrease                                                               200,307                          0
       Decrease in assets of business transferred under contractual agreement                   46,134                          0
                                                                                           -----------                 ----------
Net cash used in investing activities                                                          224,109                   (804,966)

Cash flows from financing activities:
       Bank overdraft                                                                          598,568                    884,318
       Notes payable increase (decrease)                                                    (3,817,211)                         0
       Issuance of preferred stock                                                           3,250,000                          0
       Principal payments on long-term debt                                                   (259,764)                (1,160,236)
       Proceeds from exercise of stock options                                                       0                    492,188
       Proceeds from notes payable to stockholder                                              850,000                  1,696,972
                                                                                           -----------                 ----------
Net cash provided by financing activities                                                      621,593                  1,913,242
                                                                                           -----------                 ----------

Increase (decrease) in cash and cash equivalents                                              (106,727)                   354,621
Cash and cash equivalents at beginning of year                                                 206,750                    377,313
                                                                                           -----------                 ----------

Cash and cash equivalents at end of period                                                 $   100,023                 $  731,934
                                                                                           ===========                 ==========


Supplemental  disclosures of cash flow information and noncash investing activities:  Interest paid on notes payable and long-term
debt was $248,118 and $442,395 for the six months ended  September  30, 1998 and September  30, 1997  respectively.  There were no
capital lease obligations for the periods represented.

</TABLE>

<PAGE>
                        INFRACORPS INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  A - BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting  principles for interim financial information
as set forth in Article 10 of Regulation S-X.  Accordingly,  they do not include
all of the information and footnotes required by generally  accepted  accounting
principles for complete financial statements. In the opinion of management,  all
necessary  adjustments  (consisting  of normal  recurring  accruals)  considered
necessary for a fair presentation have been included.  Operating results for the
six months  ended  September  30,  1998 are not  necessarily  indicative  of the
results that may be expected for the fiscal year ending March 31, 1999. On April
6,1998, the Company changed its year end from May 31 to March 31.

The  accompanying  financial  statements  have been prepared on a  going-concern
basis which  contemplates  the  realization  of assets and the  satisfaction  of
liabilities and commitments in the normal course of business.  For the six month
period  ended  September  30,  1998,  the  Company  had cash  used in  operating
activities  of  $952,429,  and  at  September  30,  1998,  the  Company  had  an
accumulated deficit of $7,014,815 from operations and a stockholders'  equity of
$2,190,078.

These factors, plus significant losses and cash flow deficits from operations in
prior  years,  indicate  that the Company may not be able to continue as a going
concern  for  a  reasonable  period  of  time.  The  Company's  working  capital
requirements  for the first  six  months  of  fiscal  1999 were met  principally
through the  proceeds of $350,000  from the sale of the ETSW  Service  Division,
$200,000 payment on notes receivable and a $850,000 loan from a shareholder.

Management's  plans to continue as a going concern include the following efforts
to generate necessary cash flow to meet the Company's working capital needs: (i)
raising additional  capital,  (ii) obtaining a line of credit,  (iii) increasing
sales of its infrastructure  products,  systems and services and (iv) continuing
to evaluate and manage costs and expenses and utilizing resources effectively to
increase gross profit and reduce selling and general administrative expenses.

Management  has  negotiated  with certain note holders to convert  their debt to
preferred stock (see Note H of Notes to Consolidated  Financial  Statements) and
is currently in  negotiation  with lenders to obtain a line of credit to provide
working  capital.  Management  believes it can return the Company to  profitable
operations  in  fiscal  1999.  There  can  be  no  assurance  that  management's
negotiations with lenders will be successful or the Company will have profitable
operations in fiscal 1999.

The consolidated  financial statements do not include any adjustments related to
the  recoverability  and classification of recorded asset amounts or the amounts
and classifications of liabilities that might be necessary should the Company be
unable to continue as a going concern.



<PAGE>

NOTE  B - PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of ETS International,
Inc. and its wholly-owned subsidiaries, IC Subsidiary,  Inc.(formerly ETS, Inc.)
("ETS"),  ETS  Analytical  Services,  Inc.  and  InfraCorps  of  Virginia,  Inc.
(formerly  ETS Water and Waste  Management,  Inc.)  ("ETSW") and its  subsidiary
InfraCorps of Florida, Inc. (formerly ETS Liner, Inc.). Significant intercompany
accounts and transactions have been eliminated in consolidation.

NOTE  C - EARNINGS PER SHARE

Basic  earnings  per share have been  computed on the basis of  weighted-average
number of shares outstanding.  Diluted earnings per share did not include shares
related to stock options and warrants for the quarter  ended  September 30, 1998
as their effect was antidilutive.

NOTE  D - RESTRICTED CASH

Restricted  cash of $600,000 is included in other assets as it is restricted for
a  performance  bond  relating  to  the  Company's  contract  with  China  Steel
Corporation (the "China Steel Contract").  Potential issues have been brought to
current  management's  attention  regarding  the  budget to meet  certain of the
performance specifications of the China Steel Contract and the overall viability
of   limestone    emission    control   ("LEC")    technology   for   wide-scale
commercialization.  If the LEC technology does not meet contract specifications,
China Steel  Corporation  may seek to impose  financial  penalties or attempt to
recover  damages or obtain other relief under the  contract,  including  drawing
down on the $600,000 performance bond posted by the Company. See note E of Notes
to Consolidated Financial Statements for additional information.

NOTE  E  -  DISPOSAL OF ENVIRONMENTAL OPERATIONS SEGMENT

On October 31, 1997, ETS Analytical  Services,  Inc.  ("ETSAS"),  a wholly owned
subsidiary of the Company,  sold substantially all of its assets in return for a
ten-year 8.5%  promissory  note in the amount of $1,000,000,  which exceeded the
net book value of the  assets and  liabilities  sold.  Also,  since the risks of
ownership  were not  transferred  to the  purchaser,  no sale was recognized for
accounting purposes.  Accordingly, the assets and liabilities transferred to the
purchaser  remain  in the  noncurrent  sections  of the  balance  sheet  and are
designated as "assets of business  transferred under  contractual  arrangements"
and "liabilities of business  transferred  under  contractual  arrangements." At
March  31  and  September  30,  1998,  "assets  of  business  transferred  under
contractual arrangements" was stated net of a valuation allowance of $858,000.

On March 12, 1998,  substantially  all of the assets and certain  liabilities of
ETS, a wholly owned  subsidiary  of the Company,  were sold to ETS  Acquisition,
Inc., a newly formed firm based in Roanoke,  Virginia.  In connection  with this
sale, the Company sold a portion of its assets and business  relating to the LEC
technology, including patents and licenses, to Christel Clear Technologies, Inc.
("CCTI"),  a newly formed firm based in Roanoke,  Virginia.  The total  purchase
price was $1,896,124 for all of the aforementioned.  The purchase price was paid
in  cash,  stock of the  Company,  assumption  of  certain  liabilities  of ETS,
delivery of a $200,000 thirty-day note bearing 8 1/2% interest and delivery of a

<PAGE>

ten-year  $100,000 note bearing 8 1/2% interest.  Also, the Company will receive
50% of all royalties  received by CCTI in connection with the license of the LEC
technology.  While there is no  indication  that the LEC will be resold by CCTI,
the  agreement  further  provides  that the Company  will receive 50% of the net
sales price from a resale of the LEC technology on or before March 12, 1999, and
25% of the net sales  price from a resale  after March 12, 1999 but on or before
March 12, 2000.

In  connection  with the  foregoing  transaction,  the  Company  entered  into a
Management  Agreement with Air Technologies,  Inc. ("ATI"),  a newly formed firm
based in Roanoke,  Virginia,  to provide management services with respect to the
Company's China Steel Contract. ATI and CCTI agreed to accept responsibility for
any  potential  liabilities  associated  with the China  Steel  Contract  and to
provide its best  effort to have the  contract  transferred  from the Company to
ATI. ETS  Acquisition,  Inc.,  CCTI and ATI are owned by three former  executive
officers of the Company and former members of the Company's Board of Directors.

If the LEC  technology  does  not  meet  contract  specifications,  China  Steel
Corporation may seek to impose financial penalties or attempt to recover damages
or  obtain  other  relief  under the  contract,  including  drawing  down on the
$600,000  performance  bond  posted  by the  Company.  See  note D of  Notes  to
Consolidated Financial Statements above for additional  information.  See note G
of Notes to Consolidated Financial Statements for additional information.

In connection  with the Company's  disposal of its  environmental  operations in
October 1997 and March 1998, income from these discontinued  operations has been
reclassified in the  consolidated  statements of income for the six-month period
ended  September 30, 1997.  Revenues of $1,865,431  for the  three-months  ended
September 30, 1997 and $3,650,077 for the  six-months  ended  September 30, 1997
related to the discontinued environmental operations.

NOTE  F-  SALE OF SERVICE DIVISION OF ETSW

On April 29, 1998, the Company sold the Service  Division of ETSW (e.g.,  septic
system  installation  and  repair,  plumbing,   jacuzzi  service  contracts  and
incidental concrete manufacturing/concrete products) to a new corporation formed
by Coleman S. Lyttle,  a director of the Company and  President  of ETSW,  for a
total purchase price of $550,000,  payable as follows: $350,000 cash at closing,
assumption  of certain  indebtedness  of the  Company  and notes  payable to the
Company in the aggregate  amount of $200,000.  Mr. Lyttle will continue to serve
as a director of the Company and as  President  of ETSW.  A gain of $329,478 was
recognized on this sale.

NOTE  G - CONTINGENT LIABILITIES AND OTHER MATTERS

Management  believes  that the existing  potential  liabilities  under the China
Steel  Contract  will make  obtaining  significant  outside  capital  difficult.
Management  is  negotiating  to obtain a line of credit from a bank.  Management
believes that it can return the Company to positive cash flow from operations in

<PAGE>

fiscal  1999.  There can be no  assurance  of the  extent to which  management's
negotiations  will be successful or that the Company will generate positive cash
flow from  operations in fiscal 1999. See notes D and E of Notes to Consolidated
Financial Statements for additional information.

NOTE H - PREFERRED STOCK

On July 30, 1998,  the Company issued  3,250,000  shares of Series A Convertible
Preferred stock, no par value (the "Series A Convertible  Preferred Stock"),  to
convert and retire an aggregate  principal  amount of $3,250,000 of Company debt
evidenced by promissory notes of the Company held by certain  shareholders.  The
Company sold shares of Series A Convertible Preferred Stock to each shareholder,
at a price of $1.00 per share, which was paid by the shareholder's  delivery and
surrender to the Company of his  promissory  note and any  security  agreements,
guarantees or liens executed by the Company or any of its affiliates in relation
to the promissory note.



<PAGE>



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

Results of Operations

Three Months and Six Months Ended  September  30, 1998  Compared to Three Months
And Six Months Ended September 30, 1997.

Substantially  all  of  the  assets  and  certain  liabilities  relating  to the
Company's   environmental   operations   have  been  sold  and   revenues   from
environmental  operations have been removed from  continuing  operations for the
three-month  and six-month  period ended  September  30, 1997.  Revenues for the
three-month  period  ended  September  30, 1998 (the  "second  quarter of fiscal
1999") were $5,811,587  compared to $5,425,099 for the three-month  period ended
September  30,  1997,  resulting  in a 7% increase in  revenues.  This  increase
largely was the result of increase in new orders in previous quarters.  Revenues
for the  six-month  period  ended  (the  "year  to date of  fiscal  1999")  were
$10,102,509  compared to $11,079,506  for the six-month  period ended  September
30, 1997, resulting in a 9%  decrease.  This decrease  largely was the result of
inclement  weather,  slowness in orders in the first quarter of the year and the
sale of the Service Division of ETSW.

Cost of goods and services for the second  quarter of fiscal 1999 was $4,992,723
or 86% of sales  compared  to  $3,906,489  or 72% of sales  for the  three-month
period ended September 30, 1997. Cost of goods and services for the year to date
of fiscal 1999 was  $8,620,260  or 85% of sales as compared to $8,430,963 or 76%
for the six-month  period ended September 30, 1997. Gross profits for the second
quarter of fiscal 1999 were  $818,864 or 14% of sales  compared to $1,518,610 or
28% of sales for the three-month  period ended September 30, 1997. Gross profits
for the year to date of fiscal 1999 were  $1,482,249  as compared to  $2,648,543
for the  six-month  period ended  September 30, 1997.  These  decreases in gross
profits were due to the  decreases in margins for the period.  Selling,  general
and administrative  expenses were $597,074 for the second quarter of fiscal 1999
or  10.3%  of net  sales  compared  to  $545,232  or 10% of net  sales  for  the
three-month period ended September 30, 1997. Selling, general and administrative
expenses were $1,430,278 for the year to date of fiscal 1999 or 14% of net sales
compared  to  $1,104,956  or 10% of net sales  for the  six-month  period  ended
September 30, 1997. The general and  administrative  expense increase was due to
costs  associated with the management  reorganization,  as well as the timing of
professional services for year-end reporting.

Gain on sale of $329,478 for the year to date of fiscal 1999  reflected the sale
of the Service  Division  of ETSW.  Interest  expense for the second  quarter of
fiscal 1999 was $103,771  compared to $276,967 for the three-month  period ended
September  30,  1997.  Interest  expense for the year to date of fiscal 1999 was
$248,118 as compared to $442,395 for the  six-month  period ended  September 30,
1997.  Interest  expense  reflects  interest paid on notes payable and long-term
debt,  including  credit lines,  amortization  of discount  associated  with the
convertible debentures and capital leases.


<PAGE>

 Income from  continuing  operations  for the second  quarter of fiscal 1999 was
$153,697  compared to income of  $1,543,587  for the  three-month  period  ended
September  30,1997.  Income from  continuing  operations for the year to date of
fiscal 1999 was $168,268 compared to income of $973,378 for the six-month period
ended  September  30,1997.   Discontinued   operations   include   environmental
operations   which  were  sold  in  October  1997  and  March  1998.  Loss  from
discontinued  operations was $492,559 for the three-month period ended September
30, 1997 and loss from  discontinued  operations  was $339,438 for the six-month
period ended  September 30, 1997.  Revenues of $1,865,431  for the  three-months
ended  September 30, 1997 and $3,650,077 for the six-months  ended September 30,
1997 related to the discontinued environmental operations.

Effective November 30, 1998, the Company will close InfraCorps of Florida,  Inc.
("Florida").  This  is due to the  losses  that  have  been  sustained  by  that
operation in the past year. A reserve of $500,000 was expensed for the estimated
costs of closing the Florida  operations.  The Company has  attempted  to find a
buyer for  Florida,  but if no buyer the assets  will be moved to  Virginia  and
utilized  in  Virginia's  operation  or  sold.  All  current  contracts  will be
completed within the next six months.

Net loss for the second  quarter of fiscal  1999 was  $372,657  compared  to net
income of $212,168 for the three-month period ended September 30, 1997. Net loss
for the year to date of  fiscal  1999 was  $346,303  compared  to net  income of
$774,858 for the six-month period ended September 30, 1997.

LIQUIDITY AND CAPITAL RESOURCES AS OF SEPTEMBER 30, 1998

The Company  continues  to be cash  deficient.  For the  six-month  period ended
September  30,  1998,  the  Company  had cash used in  operating  activities  of
$952,429,  and at September 30, 1998, the Company had an accumulated  deficit of
$7,014,815  from  operations  and a  stockholders'  equity  of  $2,190,078.  See
discussion under "Going Concern" below.

During  fiscal 1998,  InfraCorps  concluded  that it was in the  Company's  best
interest to de-emphasize its environmental products and services and to focus on
its construction  operations,  particularly with respect to the installation and
rehabilitation of subsurface  pipelines for the transmission of water, waste and
natural gas. Management currently is negotiating to obtain a line of credit.

Management's  success in this  regards  will,  to a large  extent,  depend  upon
whether  InfraCorps is able to accomplish the assignment without recourse of the
China Steel Contract to ATI. While negotiations with China Steel Corporation are
on-going, there can be no assurance that such negotiations will be successful or
that the Company will find sufficient  sources of outside capital to support its
future operations. See Note E of Notes to Consolidated Financial Statements.

Effective May 1, 1998, the Company  restructured its credit facility with Thomas
W. Marmon, a former director and a significant  shareholder of the Company.  The
new note for the credit  facility,  which in part is a renewal  of the  previous
note,  permitted total aggregate  borrowings by ETSI of up to $3.5 million.  The
new note  provided  for  monthly  interest  payments  at a rate of 10% until the
credit facility's  maturity at May 1, 1999 and 12% thereafter and was subject to

<PAGE>

call by the holder upon sixty days written  notice.  The new note was secured by
the assets of the Company and its  subsidiaries.  On July 30, 1998, Mr. Marmon's
debt  was  retired  through  the  issuance  of  2,500,000  shares  of  Series  A
Convertible  Preferred Stock of the Company and a cash payment of $696,655.  The
Company financed the cash payment through an existing shareholder by delivery of
a promissory  note secured by the assets of the  Company.  The note,  which pays
interest monthly at 10%, matures on October 31, 1998.

On April 28, 1998,  InfraCorps sold the Service  Division of ETSW (e.g.,  septic
system installation and repair, irrigation,  plumbing, jacuzzi service contracts
and incidental  concrete  manufacturing/concrete  products) to a new corporation
formed by  Coleman S.  Lyttle,  a  director  of the  Company  and  President  of
InfraCorps  of  Virginia,  Inc.  ("Virginia"),  for a total  purchase  price  of
$550,000,  payable as follows:  $350,000 cash at closing,  assumption of certain
indebtedness  of Virginia and notes payable to Virginia in the aggregate  amount
of $200,000. A gain of $329,478 was recognized on the sale.

Major components of cash flows used in operating  activities include an increase
in accounts  payable of $465,825,  an increase in  inventories  of  $247,971,  a
decrease in accounts receivable of $1,289,166 and a decrease in accrued expenses
and other current  liabilities  of $485,140.  Adjustments  to net cash flows are
gain  on  the  sale  of the  Service  Division  of  $329,478,  depreciation  and
amortization of $276,628 and amortization of deferred gain on  sale/leaseback of
$152,154.

Net cash  provided  by  investing  activities  of $224,109  consisted  mainly of
purchase of property,  plant and  equipment in the amount of $372,332,  proceeds
from sale of Service  Division of $350,000 and decrease in notes  receivable  of
$200,000. The net cash used in financing activities of $651,593 includes in part
proceeds  from  notes  payable  to  stockholder  of  $850,000,  payment  of debt
principal  of $259,764,  decrease in notes  payable of  $3,817,211,  increase in
preferred stock of $3,250,000 and an increase in bank overdraft of $598,568. The
cash and cash  equivalents  at  September  30,  1998 were  $100,023.  New orders
received  for the second  quarter of fiscal  1999 were  $6,020,032  compared  to
$4,075,032 for the three months ended  September 30, 1997. New orders  increased
in the second quarter of fiscal 1999 as a result of strong construction activity
during this period.  Backlog at September 30, 1998 was  $14,500,000  compared to
$4,200,000 at September 30, 1997.

Year 2000

         Many currently  installed  computer  systems and software  products are
programmed to assume that the century portion of a date was "19" to conserve the
use of storage and  memory.  This  assumption  resulted in the use of two digits
(rather than four) to define an applicable year.  Accordingly,  computer systems
that rely on two digits to define an applicable  year may recognize a date using
"00" as the year 1900,  rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations,  including,  among
other things, a temporary inability to process or transmit data or engage in

<PAGE>

normal  business  activities.  The  Company's  ability to operate is, to a large
extent,  dependent upon the proper operation of its computer system and those of
its  customers.  To the extent  that Year 2000  issues  result in the  long-term
inoperability  of  Company's  computer  system  or those of its  customers,  the
Company's  results of operation and financial  condition  will be materially and
adversely affected.



         The  Company  believes  that  it  has  fully  assessed  its  Year  2000
readiness.   This  assessment  included  a  review  of  the  Company's  internal
information  technology  system and  non-information  technology  systems.  Upon
review of this assessment,  the Company believes that its technology systems are
Year 2000 compliant.



         The  Company  is  currently  in  the  process  of   initiating   formal
communications  with all of its  customers to determine  the extent to which the
Company is vulnerable to those third  parties'  failures to remediate  their own
Year 2000 issues.  The Company  expects to complete this process by December 31,
1998.  Although the cost of the Company's Year 2000 remediation  program has not
yet been  finalized,  the  Company  estimates  that these  costs will not exceed
$30,000  and, in any event,  believes  that such costs will not have a material,
adverse effect upon the Company's results of operation or financial condition.


Forward Looking Statements

         Management  has included  herein  certain  forward  looking  statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the  Securities  Exchange  Act of 1934,  as  amended.  When used,
statements   which  are  not   historical   in  nature,   including   the  words
"anticipated",  "estimate", "should", "expect", "believe", "intend", and similar
expressions are intended to identify forward-looking statements. Such statements
are, by their  nature,  subject to certain  risks and  uncertainties.  Among the
factors  that could  cause the actual  results to differ  materially  from those
projected  are  the  following:  (i)  changes  in  legislative  enforcement  and
direction, (ii) unusually bad or extreme weather conditions, (iii) unanticipated
delays in contract  execution,  (iv) project delays or changes in project costs;
(v) unanticipated changes in operating expenses and capital  expenditures,  (vi)
sudden  loss of key  personnel,  (vii)  abrupt  changes  in  competition  or the
political   or  economic   climate,   and  (viii)   abrupt   changes  in  market
opportunities.  Other risks, uncertainties,  and factors that could cause actual
results to differ materially from those projected are detailed from time to time
in reports  filed by the Company with the  Securities  and Exchange  Commission,
including Forms 8-K, 10-Q, and 10-K.




<PAGE>

Going Concern

The  accompanying  financial  statements  have been prepared on a  going-concern
basis which  contemplates  the  realization  of assets and the  satisfaction  of
liabilities and commitments in the normal course of business.  For the six month
period  ended  September  30,  1998,  the  Company  had cash  used in  operating
activities  of  $952,429,  and  at  September  30,  1998,  the  Company  had  an
accumulated deficit of $7,014,815 from operations and a stockholders'  equity of
$2,190,078.

These factors, plus significant losses and cash flow deficits from operations in
prior  years,  indicate  that the Company may not be able to continue as a going
concern  for  a  reasonable  period  of  time.  The  Company's  working  capital
requirements  for the first quarter of fiscal 1999 were met principally  through
the proceeds of $350,000  from the sale of the ETSW Service  Division,  $200,000
payment on notes receivable and a $850,000 loan from a shareholder.

Management's  plans to continue as a going concern include the following efforts
to generate necessary cash flow to meet the Company's working capital needs: (i)
raising additional  capital,  (ii) obtaining a line of credit,  (iii) increasing
sales of its infrastructure  products,  systems and services and (iv) continuing
to evaluate and manage costs and expenses and utilizing resources effectively to
increase gross profit and reduce selling and general administrative expenses.

Management  has  negotiated  with certain note holders to convert  their debt to
preferred stock (see Note H of Notes to the Consolidated  Financial  Statements)
and is  currently  in  negotiation  with  lenders  to obtain a line of credit to
provide  working  capital.  Management  believes  it can return  the  Company to
profitable   operations  in  fiscal  1999.   There  can  be  no  assurance  that
management's  negotiations  with lenders will be  successful or the Company will
have profitable operations in fiscal 1999.

The consolidated  financial statements do not include any adjustments related to
the  recoverability  and classification of recorded asset amounts or the amounts
and classifications of liabilities that might be necessary should the Company be
unable to continue as a going concern.

Recent Events

On March  12,  1998,  substantially  all of the  assets of ETS,  a wholly  owned
subsidiary of the Company,  were sold to ETS  Acquisition,  Inc., a newly formed
firm based in Roanoke,  Virginia. In connection with this sale, the Company sold
a portion of its assets and business  relating to the LEC technology,  including
patents and licenses,  to CCTI, a newly formed firm based in Roanoke,  Virginia.
In  connection  with the  foregoing  transaction,  the  Company  entered  into a
Management  Agreement with ATI, a newly formed firm based in Roanoke,  Virginia,
to provide management services with respect to the Company's contract with China
Steel  Corporation.  ATI  and  CCTI  agreed  to  accept  responsibility  for any
potential  liabilities  associated  with the China Steel Contract and to provide
its best effort to have the  contract  transferred  from the Company to ATI. ETS
Acquisition,  Inc., CCTI and ATI are owned by three former executive officers of
the Company or ETS and former members of the Company's Board of Directors.

The Board of Directors of the Company is  continuing to review the financial and
other aspects of the LEC technology  that is being developed for the China Steel
Contract.  This review was  undertaken  after  potential  issues were brought to
current  management's  attention  regarding  the  budget to meet  certain of the

<PAGE>

performance specifications of the China Steel Contract and the overall viability
of the LEC technology for  wide-scale  commercialization.  If the LEC technology
does not meet  contract  specifications,  China  Steel  Corporation  may seek to
impose financial  penalties or attempt to recover damages or obtain other relief
under the  contract,  including  drawing down on the $600,000  performance  bond
posted by the Company.

The Company has continued to undertake  cost cutting  measures and is continuing
to seek  additional  capital.  On April 29,  1998,  the Company sold the Service
Division of ETSW (e.g., septic system installation and repair, plumbing, jacuzzi
service contracts and incidental concrete manufacturing/concrete  products) to a
new  corporation  formed by Coleman S.  Lyttle,  a director  of the  Company and
President of ETSW, for a total  purchase price of $550,000,  payable as follows:
$350,000 cash at closing,  assumption of certain indebtedness of the Company and
notes  payable to the Company in the  aggregate  amount of $200,000.  Mr. Lyttle
continues to serve as a director of the Company and as President of ETSW. A gain
of $329,478 was recognized on this sale.

On July 30, 1998,  the Company issued  3,250,000  shares of Series A Convertible
Preferred  Stock  to  convert  and  retire  an  aggregate  principal  amount  of
$3,250,000 of Company debt evidenced by promissory  notes of the Company held by
certain shareholders.  The Company sold shares of Series A Convertible Preferred
Stock to each shareholder,  at a price of $1.00 per share, which was paid by the
shareholder's  delivery and surrender to the Company of his promissory  note and
any security  agreements,  guarantees or liens executed by the Company or any of
its affiliates in relation to the promissory note.



<PAGE>



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

                  Not Applicable


                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         A lawsuit was served on ETS Analytical  Services,  Inc. ("ETSAS") on or
about  March 18,  1998 and filed in the Circuit  Court for  Chesterfield  County
under the caption,  Steven R. Pond v. ETS Analytical  Services,  Inc.,  Case No.
041CL98000254-00  (Circuit  Court for  Chesterfield  County).  In this  lawsuit,
Steven R. Pond  ("Pond"),  a former  employee of ETSAS and the owner of premises
leased to ETSAS,  asserted  that ETSAS has  breached its  obligations  under the
lease by failing  to make  certain  monthly  payments,  including  late fees and
interest,  as well as by causing or permitting  physical  damages and waste upon
the premises.  Pond is seeking  judgment against ETSAS in the sum of $129,189.85
for  accelerated  rent,  together  with  accrued  late  fees  in the  amount  of
$4,579.79;  compensatory  damages in the amount of $1,000.00,  plus the costs of
remediation and all damages, costs, liability or expense arising from or related
to environmental  contamination  or  environmental  degradation of the premises;
prejudgment  interest  at the rate of  1.00%;  together  with the  costs of this
action and award of attorney's fees and costs.  On April 8, 1996,  ETSAS filed a
Special Plea, Grounds of Defense, and Counterclaim, in which ETSAS asserted that
it is  entitled  to a set-off of any monies  allegedly  due and owing  under the
lease by virtue of Pond's  indebtedness to ETSAS, in the amount of approximately
$60,000,   under  a  promissory  note.  ETSAS  intends  to  defend  the  lawsuit
vigorously.  It is not  possible  at  this  stage,  however,  to  determine  the
likelihood of an unfavorable  outcome in the case or an estimate of the range of
potential loss.

ITEM 2.  CHANGES IN SECURITIES

                  None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

                  None

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

         On August 17, 1998, the Company held its annual  shareholders  meeting.
The following items were put forth to the security holders for a vote.

1.)            Five  individuals were nominated by management and elected by the
               shareholders by the following votes:

                                              For              Withheld
                                              ---              --------
         Terence Dellecker                  12,208,353          66,375
         Coleman S. Lyttle                  12,139,853         134,875
         John R. Potter                     12,209,353          65,375
         James B. Quarles                   12,219,203          55,525
         Navin D. Sheth                     12,226,253          48,475

2.)           Approval  of  the  Amendment  and  Restatement  of  the  Company's
              Articles of  Incorporation  to change the name of the Company from
              ETS International, Inc. to InfraCorps Inc.:

                   For                   Withheld                 Abstain
                   ---                   --------                 -------
                 12,168,686               85,345                   20,700


<PAGE>

3.)            Approval  of the  Board's  appointment  of KPMG Peat  Marwick  as
               auditors for fiscal 1999:

                   For                   Withheld                 Abstain
                   ---                   --------                 -------
                12,244,928                15,400                   14,400

4.)           Approval  of  the  proposed  amendments  of  Sections  2 and 10 of
              Article  III of the  Company's  Bylaws to  increase  the number of
              directors from 5 to 10 and set the number of directors to 7:

                   For                   Withheld                 Abstain
                   ---                   --------                 -------
                12,274,728                  0                         0


ITEM 5.   OTHER INFORMATION

                  None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

                  (A)      Exhibits

                           Exhibits to this Form 10-Q are as follows:

               Exhibit No.    Description
               -----------    -----------

               3.1            Articles  of  Incorporation,  as  amended,  of the
                              Registrant*

               3.1            Bylaws, as amended, of the Registrant*

               4.1            Specimen copy of certificate for the  Registrant's
                              common stock, no par value*

               4.2            Article II of the Registrant's Bylaws (included in
                              Exhibit 3.2)*

               10.1           Employment   Agreement  dated  January  20,  1998,
                              between James B. Quarles and the Registrant*

               10.2           Stock Option Agreements between the Registrant and
                              James B. Quarles*

               10.3           Management Agreement dated March 12, 1998, between
                              Air Technologies, Inc. and the Registrant*

               10.4           Contract dated  September 12, 1997,  between China
                              Steel Corporation and the Registrant**

               10.5           Lease dated June 1, 1996, between Estate of Stamie
                              E.  Lyttle  and ETS Water  and  Waste  Management,
                              Inc.***

               10.6           Agreement for the Purchase of Series A Convertible
                              Preferred  Stock and for the Conversion of Certain
                              Promissory Notes dated July 30, 1998.****

               10.7           Contract  License  Agreement  dated  September 14,
                              1995, between  Ultraliner,  Inc. and ETS Water and
                              Waste Management, Inc.*

               27.1           Financial Data Schedule*****




*         Incorporated  by reference to the  Registrant's  Annual Report on Form
          10-K for the transition period from June 1, 1997 to March 31, 1998.

**        Incorporated by reference to the Registrant's Quarterly Report on Form
          10-Q for the quarter ended August 31, 1997.

***       Incorporated  by reference to the  Registrants  Annual  Report of Form
          10-K for the fiscal year ended May 31, 1997.

****      Incorporated by reference to the Registrant's Quarterly Report on Form
          10-Q for the quarter ended June 30, 1998.

*****     Filed herewith.



                  (B)      Reports on Form 8-K

                           The Company did not file any Current Reports on 
                           Form 8-K during the quarter ended September 30, 1998.


<PAGE>

                                   SIGNATURES

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


                                          INFRACORPS INC.


DATE     November 13, 1998            BY: s/  James B. Quarles            
         -----------------                --------------------------------
                                                   James B. Quarles
                                                   Chairman and President



DATE     November 13, 1998            BY: s/Warren E. Beam, Jr.         
         -----------------                ------------------------------
                                                   Warren E. Beam, Jr.
                                                   Secretary and Controller



<PAGE>

                                  EXHIBIT INDEX

               Exhibit No.    Description
               -----------    -----------

               3.1            Articles  of  Incorporation,  as  amended,  of the
                              Registrant*

               3.2            Bylaws, as amended, of the Registrant*

               4.1            Specimen copy of certificate for the  Registrant's
                              common stock, no par value*

               4.2            Article II of the Registrant's Bylaws (included in
                              Exhibit 3.2)*

               10.1           Employment   Agreement  dated  January  20,  1998,
                              between James B. Quarles and the Registrant*

               10.2           Stock Option Agreements between the Registrant and
                              James B. Quarles*

               10.3           Management Agreement dated March 12, 1998, between
                              Air Technologies, Inc. and the Registrant*

               10.4           Contract dated  September 12, 1997,  between China
                              Steel Corporation and the Registrant**

               10.5           Lease dated June 1, 1996, between Estate of Stamie
                              E.  Lyttle  and ETS Water  and  Waste  Management,
                              Inc.***

               10.6           Agreement for the Purchase of Series A Convertible
                              Preferred  Stock and for the Conversion of Certain
                              Promissory Notes dated July 30, 1998.****

               10.7           Contract  License  Agreement  dated  September 14,
                              1995, between  Ultraliner,  Inc. and ETS Water and
                              Waste Management, Inc.*

               27.1           Financial Data Schedule*****




*       Incorporated by reference to the Registrant's Annual Report on Form 10-K
        for the transition period from June 1, 1997 to March 31, 1998.

**      Incorporated by reference to the  Registrant's  Quarterly Report on Form
        10-Q for the quarter ended August 31, 1997.

***     Incorporated by reference to the Registrants  Annual Report of Form 10-K
        for the fiscal year ended May 31, 1997.

****    Incorporated by reference to the  Registrant's  Quarterly Report on Form
        10-Q for the quarter ended June 30, 1998.

*****   Filed herewith.