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 NOVEMBER 30, 1997             Commission File No.00019678
--------------------------------------------------------------------------------

                             ETS INTERNATIONAL, 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.)


1401 Municipal Road, NW, Roanoke, Virginia                      24012
--------------------------------------------------------------------------------
(Address)                                                     (Zip Code)


Registrant's telephone number, including area code   (540) 265-0004
--------------------------------------------------------------------------------

                                 Not Applicable
--------------------------------------------------------------------------------
(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 subject to the filing  requirements  for at
least the past 90 days.

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

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
stock, as of the close of the period covered by this report.

      Class                           Number of Shares Outstanding

   Common Stock                                15,588,871

<PAGE>




                     PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

ETS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET

                                             NOVEMBER 30,1997    MAY 31, 1997
                                             ----------------    ------------
ASSETS                                          (unaudited)        (audited)

Current assets:
  Cash and cash equivalents                    $   885,402       $    94,734
  Accounts receivable:
    Trade (net of allowance of $62,099
      in 1998 and $119,424 in 1997               3,884,576         4,809,128
    U.S. Government agencies                         1,216            79,661
    Other                                          347,183           151,341
                                               -----------       -----------
                                                 4,232,975         5,040,130
  Costs and estimated earnings in excess of
    billings on uncompleted contracts            1,394,479         1,325,954
  Notes receivable from officers                         0            64,694
  Inventory                                      1,003,780           771,788
  Prepaid expenses                                 402,959           516,974
                                               -----------       -----------

           Total current assets                  7,919,595         7,814,274

Property, plant and equipment:
  Furniture and fixtures                           744,973           984,463
  Laboratory equipment                             833,406         2,829,277
  Machinery, tools and equipment                 3,720,108         3,138,372
  Vehicles                                       1,800,364         1,845,518
  Leasehold improvements                           508,841           788,051
                                               -----------       -----------
                                                 7,607,692         9,585,681
  Less accumulated depreciation                  4,954,706         6,505,254
                                               -----------       -----------
          Property, plant and
            equipment, net                       2,652,986         3,080,427

Other assets:
  Goodwill (net of accumulated amortization
    of $36,571 in 1998 and $28,091 in 1997)        218,647           227,155
  Notes receivable from officers                   354,554           344,152
  Prepublication costs (net of accumulated
    amortization of $335,965 in 1998 and
    $322,646 in 1997)                              196,296           208,890
  Patents granted (net of accumulated
    amortization of $36,582 in 1998 and
    $33,190 in 1997)                                74,155            77,546
  Patents pending                                   62,173            65,905
  Cash value of life insurance                      33,477           142,728
  Other assets                                     228,980           343,472
                                               -----------       -----------
                                                 1,168,282         1,409,848
  Assets of business transferred under
    contractual arrangements                     1,345,146                 0
                                               -----------       -----------
                                               $13,086,009   `   $12,304,549
                                               ===========       ===========




<PAGE>




LIABILITIES AND STOCKHOLDERS' EQUITY





                                             NOVEMBER 30,1997    MAY 31, 1997
                                             ----------------    ------------
                                               (unaudited)       (audited)

Current liabilities:
  Bank overdraft                              $         0        $    44,560
  Notes payable to bank                            89,837             89,837
  Notes payable to stockholders                 3,200,000          2,000,000
  Notes payable to affiliates                     584,159            289,159
  Current portion of long-term debt               373,967            493,012
  Accounts payable                              2,795,722          3,198,194
  Accrued expenses and other liabilities          660,844            431,467
  Common stock to be repurchased (including
   interest of $38,750), 269,565 shares;
   issued and outstanding                               0            409,642
                                               ----------         ----------

          Total current liabilities             7,704,529          6,955,871

Long-term debt                                    931,258            861,673
Notes payable to affiliates                             0            201,458
Deferred gain on sale/leaseback                   583,257            735,412
Liabilities of business transferred under
  contractual arrangements                        149,165                  0
                                               ----------         ----------

         Total liabilities                      9,368,209          8,754,414

Common stock subject to repurchase
  agreement, 269,565 shares                             0            387,500

Stockholders' equity:
  Common stock, no par value; authorized
    30,000,000 shares; issued and outstanding
    15,588,871 and 14,215,823 at November 30,
    1997 and May 31, 1997, respectively         5,836,846          5,002,129
  Preferred stock, no par value; authorized
    5,000,000 shares, none issued and
    outstanding                                         0                  0
  Retained earnings (accumulated deficit)      (2,119,046)        (1,839,494)
                                               ----------         ----------
          Total stockholders' equity            3,717,800          3,162,635


                                              $13,086,009        $12,304,549
                                              ===========        ===========


<PAGE>
<TABLE>


ETS INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>





                                  THREE MONTHS ENDED              SIX MONTHS ENDED
                              NOVEMBER 30   NOVEMBER 30       NOVEMBER 30   NOVEMBER 30
                                  1997          1996             1997           1996
                             -----------     ----------       ----------     ----------
                             (unaudited)    (unaudited)       (unaudited)   (unaudited)
<S> <C>

Contract revenues:
  U.S. Government agencies   $         0    $         0      $         0    $         0
  Commercial                   5,057,523      5,055,469       10,649,744     10,508,173
                             -----------     ----------       ----------     ----------

                               5,057,523      5,055,469       10,649,744     10,508,173

Cost of goods and services     4,084,885      4,195,892        8,368,634      8,692,304
                             -----------     ----------       ----------     ----------

Gross profits                    972,638        859,577        2,281,110      1,815,869

Selling, general and
  administrative expenses        798,942        554,266        1,508,980      1,331,377
                             -----------     ----------       ----------     ----------

     Net operating income        173,696        305,311          772,130        484,492


Miscellaneous income              15,218          5,779           25,360         13,353
Interest expense            (    221,339)  (     57,750)     (   467,350)   (   118,502)
                             -----------    -----------       -----------    -----------

Income (loss) from
  continuing operations     (     32,425)       253,340      $   330,140    $   379,343

Loss from discontinued
  operations                (    316,941)  (     83,882)     (   609,692)   (   108,764)
                             -----------    -----------       ----------     ----------

Net income (loss)           ($   349,366)   $   169,458      ($  279,552)    $  270,579
                             ===========    ===========       ==========     ==========





Net Income (loss) per common share:
  Primary                    $      (.02)   $       .01       $     (.02)    $      .02
  Fully debuted              $      (.02)   $       .01       $     (.02)    $      .02

Average shares of common stock used for the above calculation:
    Primary                   15,960,641     13,006,357       15,882,911     12,926,304
    Fully diluted             15,960,641     13,006,357       15,882,911     12,926,304

</TABLE>



<PAGE>



ETS INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
QUARTER ENDED NOVEMBER 30, 1997





                                                                     Retained
                                                                     Earnings
                                              Common Stock          Accumulated
                                         Shares        Amount        (Deficit)
                                       ----------   -----------    ------------ 
                                       (unaudited)  (unaudited)     (unaudited)

Balances at May 31, 1997               14,215,823   $ 5,002,129    ($ 1,839,494)

Conversion of convertible debentures      724,818       257,018

Proceeds from exercise of employee
   Stock options                           20,000        10,000

Cancellation of previous agreement to
   repurchase stock issued pursuant to
   an asset purchase                      269,565       387,500

Net Income                                                               69,814
                                       ----------   -----------    ------------ 
Balances at August 31, 1997            15,230,206    $5,656,647    ($ 1,769,680)



Conversion of convertible debentures      299,948       104,795

Exchange for goods and services            58,717        36,405

Discount on issuance of 225,000 warrants                 38,999

Net Income (loss)                                                  (    349,366)
                                       ----------   -----------    ------------ 
Balances at November 30, 1997          15,588,871    $5,836,846    ($ 2,119,046)












<PAGE>
<TABLE>


ETS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
<CAPTION>
<S> <C>
                                                        SIX MONTHS ENDED
                                                 NOVEMBER 30,1997  NOVEMBER 30,1996
                                                 ----------------  ----------------
                                                    (unaudited)      (unaudited)
Cash flows from operating activities:
  Net income (loss) from continuing
    operations                                         330,140      $   270,579
  Adjustments to reconcile net income (loss)
    to net cash provided by (used in)
    operating activities:
      Depreciation and amortization                    301,190          420,237
      Amortization of deferred gain on
        sale/leaseback                              (  152,155)      (  152,154)
      Amortization of convertible debentures
        discount                                       336,429                0

  Increase or decrease in operating assets
    and liabilities:
      Accounts receivable                              309,361       (  345,256)
      Costs and estimated earnings in excess of
        billings on uncompleted contracts           (  309,600)           6,723
      Inventories                                   (  231,662)      (  155,353)
      Prepaid expenses                                  49,135       (   51,145)
      Accounts payable                              (  366,067)         271,940
      Accrued expenses and other liabilities        (  229,380)      (   49,494)
      Cash surrender value of life insurance, net      109,251       (   10,297)
      Other Assets                                      98,876           24,024
                                                     ---------        ---------
        Net cash provided by (used in)
        operating activities                           245,518          229,804

Cash flows from investing activities:
  Purchase of property, plant and equipment         (  662,591)      (  353,397)
  Patent Cost Incurred                                   3,732       (   11,990)
                                                    -----------      -----------
    Net cash provided by (used in) investing
       activities                                   (  658,859)      (  365,387)
Cash flows from financing activities:
  Bank overdraft                                    (   44,560)      (    8,746)
  Notes receivable from officers
    (increase) decrease                             (   10,402)          12,195
  Notes payable increase (decrease)                          0          185,295
  Proceeds from long-term debt                         442,232           53,000
  Principal payments on long-term debt              (  262,011)      (  140,002)
  Proceeds from issuance of common stock                10,000                0
  Notes payable to affiliates increase(decrease)       295,000           76,365
  Proceeds from notes payable to stockholder         1,200,000                0
  Repurchase of common stock                        (  426,250)               0
                                                    ----------       ----------
    Net cash provided by (used in)
      financing activities                           1,204,009          178,107

Increase in cash and cash equivalents                  790,668           42,524
Cash and cash equivalents at beginning of year          94,734          121,713
                                                    ----------       ----------
Cash and cash equivalents at end of period          $  885,402       $  164,237
                                                    ==========       ==========
</TABLE>
   Supplemental  disclosures  of cash flow  information  and  noncash  investing
activities:  Interest paid on notes payable and long-term  debt was $223,592 and
$118,502 for the six months ended November 30, 1997 and 1996 respectively. There
were no capital lease obligations for the periods represented.



<PAGE>



ETS INTERNATIONAL, 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 November 30, 1997 are not necessarily indicative of the results
that may be expected for the year ending May 31, 1998.


NOTE B--PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of ETS International,
Inc. and its wholly-owned subsidiaries, ETS, Inc., ETS Analytical Services, Inc.
and ETS Water And Waste Management,  Inc. Significant  intercompany accounts and
transactions have been eliminated in consolidation.


NOTE C--EARNINGS PER SHARE

Earnings  per share  have been  computed  on the basis of the  weighted  average
number of shares  outstanding,  after giving appropriate effect for common stock
issued.   Stock  options  and  warrants  have  been  included  as  common  stock
equivalents when they result in dilution of earnings per share.


NOTE D--BUSINESS COMBINATION

(None)











<PAGE>



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


Forward Looking Statements

     From time to time,  the  Company  may  publish  forward-looking  statements
relating  to  such  matters  as  anticipated  financial  performance,   business
prospects,  technological  developments,  new products, research and development
activities and similar matters. The Private Securities  Litigation Reform Act of
1995 provides a safe harbor for forward-looking  statements.  In order to comply
with the terms of the safe harbor,  the Company  notes that a variety of factors
could cause the Company's  actual  results and  experience to differ  materially
from the anticipated  results or other  expectations  expressed in the Company's
forward-looking  statements.  The risks and  uncertainties  that may  affect the
operations,  performance,  development  and  results of the  Company's  business
include the following:  (I) changes in legislative  enforcement  and directions,
(ii) unusually bad weather conditions,  (iii)  unanticipated  delays in contract
execution, (iv) sudden loss of key personnel, (v) abrupt changes in competition,
and (vi) abrupt changes in market opportunities.

Results of Operations

Introduction

     A few relatively  large contracts in any one business segment in any fiscal
year can make any  segment  generate  relatively  large  revenues  in that year.
Because   disproportionate   generation  of  income  has  occurred  periodically
throughout  the existence of ETSI,  the  Company's  strategy has been to offer a
variety of services and maintain a flexible staff capable of executing different
tasks.  Services are tied to different  markets,  such as new pollution  control
equipment   expenditures   by  industry,   government   funding  or  legislative
enforcement.   In  addition,  ETSI  continually  markets  its  services  through
brochures,  seminars  and  attendance  at trade  shows  and  conferences  and by
telemarketing.  ETSI attempts to increase its business in the aggregate.  As the
United States experiences  economic and legislative  cycles, the demand for each
of the Company's services fluctuates accordingly.  Likewise,  economic cycles in
countries  such as Taiwan and Korea can influence the foreign  demand for ETSI's
products and services.

     ETSI has divided its revenues into four meaningful categories:  (a)services
-encompassing   field  and  analytical   testing,   regulatory   assistance  and
monitoring;   (b)  consulting   /engineering   -  encompassing   consulting  and
engineering services and educational areas; (c) products; and (d) construction.


Second Quarter Fiscal 1998 Compared to Second Quarter Fiscal 1997

     On  October  31,  1997,  substantially  all the  assets  of ETS  Analytical
Services, Inc., a wholly owned subsidiary of ETS International,  Inc., were sold
and the revenues have been removed from the continuing operations.


<PAGE>



     Revenues for continuing  operations  from the second quarter of fiscal 1998
were  $5,075,523  compared to $5,055,469  for the second quarter of fiscal 1997.
Revenues  for the six month  period  ended  November  30, 1997 were  $10,649,744
compared to  $10,508,173  for the same six months period in fiscal 1997.  Second
quarter  activities  resulted in revenues  that were lower than budgeted for the
pollution control company with a resulting  operating loss for the quarter while
the construction  companies had close to the same level of revenues as the prior
year second quarter.

      Total testing service  revenues for the second quarter of fiscal 1998 were
$482,777  compared to $547,319  for the second  quarter of fiscal 1997 for a 12%
decrease.  Field testing revenues were $356,008 for the current quarter compared
to $493,525 for the preceding  first quarter.  Field testing  services were down
from the prior  year  services  by 28%  mainly  due to lost of  previous  years'
clients  brought on by the companies being merged with other  companies,  closed
down or acquired  by other  companies.  Source  testing  revenues  were close to
budget and are expected to be stronger than normal for the winter quarter. Major
clients for the quarter  included a waste  incinerator  plant, an electric power
utility plant, a municipal waste incinerator  plant, a glass  manufacturer and a
specialty metals manufacturer.

     Regulatory  assistance  revenue for the quarter  were  $89,113  compared to
$33,994 for the second quarter of fiscal 1997 for a 162% increase.  Revenues for
regulatory  assistance were  approximately as forecasted for the quarter and are
operating strongly;  however,  there are indications that it may begin to soften
during the latter part of the third quarter.  Three major  customers  accounting
for 50% of the revenues were a a railroad  company,  a steel  manufacturer and a
tire manufacturer. Revenues for the second quarter of fiscal 1998 for monitoring
were $37,600 compared to $19,800 for the second quarter of fiscal 1997 for a 90%
increase with its clients being a chemical plant and a sanitation plant.

     Due to heavy losses incurred by the analytical laboratories and the lack of
success  in turning it  around,  ETSI sold  substantially  all the assets of ETS
Analytical Services, Inc. ("ETSAS") on October 31, 1997 to Q Enterprises,  Inc.,
a newly formed Virginia  corporation,  in  consideration of a promissory note in
the principal  amount of  $1,380,000.  The note is secured by a pledge of all of
the outstanding shares of Q Enterprises,  Inc. and provides for monthly payments
of principal and interest (at the rate of 8.5% per annum). The note payments are
amortized  over 30 years with a balloon  payment  after 10 years.  The  purchase
price was based upon the book  value of ETSAS's  assets  sold plus  goodwill.  Q
Enterprises,  Inc. has agreed to assume certain  equipment lease  obligations of
$180,000 and certain operating agreements of ETSAS. Q Enterprises, Inc. is owned
by  James B.  Quarles,  a former  employee  and  Senior  Vice  President  of ETS
International, Inc.

     The net  operations  of the  laboratories  are  presented  as  discontinued
operations on the income statement.  As a result of this sale, ETSI now operates
through three  affiliates,  ETS, Inc.  ("ETS"),  ETS Water and Waste Management,
Inc. ("ETSW") and ETS Liner, Inc., a subsidiary of ETSW.




<PAGE>



     Revenues for the second  quarter of fiscal 1998 for  consulting/engineering
and seminar services were $82,240 compared to $183,068 for the second quarter of
fiscal 1997 for 55% decrease.  Consulting  service revenues were $8,850 compared
to $3,907 for the second quarter of fiscal 1997.  Engineering services were down
significantly  at $58,379  for the quarter  compared to $155,577  for the second
quarter of fiscal 1997. This decrease was mainly due to unexpected  cancellation
of an engineering  program for a steel  manufacturing  client.  The  engineering
revenues are expected to improve in the third quarter due to increased  proposal
activity  during the second  quarter.  Major clients for the quarter  included a
iron foundry and an  environmental  engineering  firm.  Seminar revenues for the
quarter were $14,756  compared to $18,582 for the second  quarter of fiscal 1997
and  revenues  for sale of books were $255 for the current  quarter  compared to
$5,002 for the prior years' second quarter.

     Revenues for the sale of product for the quarter were $214,084  compared to
$52,347  for the  second  quarter  of fiscal  1997.  There were no sales for the
quarter for the  Baghouse  Performance  Monitoring  (BPM)  hardware and software
compared to $12,347 for the same quarter of fiscal. Revenues for the LEC project
in Taiwan were $214,084 for the quarter.  A kick-off  meeting to formally  begin
the project was held in Roanoke during  September.  ETS participated  with E & C
Engineering  Services to finalize the design details in preparation  for on-site
construction which started in December.

     Total  construction  service  revenues  which  includes ETS Liner,  Inc., a
subsidiary  of ETSW,  were  $4,278,422  for the second  quarter  of fiscal  1998
compared  to  $4,272,735  for  the  second  quarter  of  fiscal  1997.   Overall
construction   activities   for  the  quarter   were  normal  for  the  Company.
Construction sales and completion of work for the quarter were at the same level
as the second  quarter of fiscal  1997.  The third  quarter  activities  for the
Richmond,  Virginia  office are expected to be slower due to the winter weather.
Management  feels  very  optimistic  that the year  over  all  should  be a very
profitable  year.  ETS Liner had a strong second  quarter and should have strong
third and fourth quarters.

     Cost  of  goods  and  services  for  the  second  quarter  were  $4,084,885
representing  81% of the revenues  compared to $4,195,892 or 83% of revenues for
the second quarter of fiscal 1997. Gross profit for the second quarter of fiscal
1998 was  $1,000,433  or 20% of the  revenues  compared  to  $859,577  or 17% of
revenues for the second  quarter of fiscal 1997.  This  improvement in costs and
profit is the result of an effort to improve the efficiency and profitability of
the  operating  companies.  Selling,  general and  administrative  expenses were
$798,942 for the current quarter  compared to $554,266 for the second quarter of
fiscal  l997.  This  increase in G & A expenses  were largely due to the expense
incurred by ETS Liner,  Inc. in moving to a new  location in Florida and expense
involved with the expansion of the "pipe bursting" division of their business.

     Miscellaneous  income for the second  quarter  of fiscal  1998 was  $50,968
compared  to $5,770 for the second  quarter of fiscal 1997  representing  earned
interest from savings on deposit and sale of miscellaneous  equipment and scrap.
Interest expense for the quarter was $221,339 compared to $80,034 for the second
quarter of fiscal l997  representing the interest  expense on notes,  leases and
loans, and interest and amortization  associated with the convertible debentures
financing.


<PAGE>

     For the continuing operations,  the second quarter of fiscal 1998 had a net
loss of $30,425  and net income of $330,140  for the six month  period of fiscal
1998  compared  with the  second  quarter  of fiscal  1997 with a net  income of
$253,340  and net  income of  $379,343  for the six months of fiscal  1997.  The
discontinued  operations of the analytical  laboratory had a loss for the second
quarter of fiscal  1998 of  $316,941  compared to a loss of $83,882 for the same
quarter  of fiscal  1997,  and a loss of  $609,692  for the six month  period of
fiscal 1998 compared to $108,764 for fiscal 1997.


Liquidity And Capital Resources As Of The End Of The Second Quarter of Fiscal
Year 1998

     During the second  quarter of fiscal  1998,  299,948  shares of ETSI common
stock were issued in connection  with the conversion of  convertible  debentures
with an  equity  book  value  of  $104,795.  These  debentures  were  issued  in
connection with a Regulation S Convertible  Debentures  Purchase Agreement dated
as of February  28,  1997.  Stock was also issued to a vendor for 58,717  shares
with a equity book value of $36,405 in exchange for goods and services.

     ETSI  maintains  a note  with  Thomas  Marmon,  a  member  of the  Board of
Directors,  which replaced the bank's line of credit during the third quarter of
fiscal 1997 in the amount of $2,500,000.  The current  advance under the note is
in the  amount of  $2,000,000.  The note  calls for fixed  monthly  interest  of
$25,000 over a two-year term,  subject to call by the holder upon 60 days notice
and is secured by the assets of the Company and it subsidiaries. The Company may
repay the note at any time without penalty.

     Management  currently  believes  that for the third  quarter the  pollution
control  company  will  have a  strong  level of  activity  despite  the  normal
significant seasonal turn-down while the construction division is expected to be
slower due to the winter weather.

     At November 30, 1997, net cash provided by operating activities of $245,518
included  the  net  income  of  $330,140,   depreciation  expense  of  $301,190,
amortization  of  convertible  debentures  discount  of  $336,429,  decrease  in
accounts receivable of $309,361 and other assets of $257,262.  These were offset
by increase in accounts  payable of  366,067,  increases  in cost and  estimated
earnings  in  excess  of  billings  on   uncompleted   contracts  for  $309,361,
inventories of $231,662,  other accrued expenses of $229,380 and amortization of
deferred gain on sale/leaseback of $155,155.

     Net cash of $658,859  used in  investing  activities  was for  purchases of
capital equipment. Major components of net cash provided by financing activities
amounting to $1,204,009 included the proceeds of $442,232 received for long-term
debt for capital equipment  purchased,  increases in notes payable to affiliates
of  $295,000  and  proceeds  of  $1,200,000  received  from  stockholders,  less
principal  payments  made on long-term  debt of $262,011 and the  repurchase  of
common stock in the amount of $387,500 pursuant to an asset purchase agreement.

<PAGE>





     The net  cash  and cash  equivalents  at  November  30,  1997 was  $885,402
compared to $164,237 at November 30, 1996.

     New orders  received  for the three  months  ended  November  30, 1997 were
$2,871,684  compared to the new orders received of $8,039,212 for the same three
month period a year ago. Commercial construction bidding seems to be very strong
in the third quarter which will result in a strong  fourth  quarter.  Backlog at
November 30, 1997 was  $12,201,196  compared to $7,685,243 at November 30, 19965
for a 58% increase. ETSI held open task orders from various clients, principally
government  agencies.  If all of the work under these open orders is authorized,
the Company  estimates that its backlog would increase by $903,264 to a total of
$13,104,460 compared to $8,766,614 for the same period a year ago.

     Most of ETSI's  contracts  are of  short-term  duration  and are  completed
within a few months of the order or award.  Certain contracts such as those from
utilities are annual and are completed in stages against task orders. Government
agencies  often issue open orders for which  subsequent  task orders are issued.
There are no  conditions  precedent  to the issuance of task orders and they are
issued pursuant to the specific orders of the client for the service. Experience
shows that substantially all open orders ultimately result in task orders and at
times have exceeded the amount of the open order. There can be no assurance that
existing  contracts or future orders  containing open orders will result in task
orders  covering  the  entire  contractual  amounts.  ETSI is not  aware  of any
significant unrecognized cost to complete any open contract.


                          (PART II - OTHER INFORMATION)



Item 1.     Legal Proceedings.
                  None

Item 2.     Changes in Securities

     During the second  quarter of fiscal  1998,  299,948  shares of ETSI common
stock were issued in connection  with the conversion of  convertible  debentures
with an  equity  book  value  of  $104,795.  These  debentures  were  issued  in
connection with a Regulation S Convertible  Debentures  Purchase Agreement dated
as of February  28,  1997.  Stock was also issued to a vendor for 58,717  shares
with a equity book value of $36,405 in exchange for goods and services.

Item 3.      Defaults upon Senior Securities.
                  None

Item 4.      Submission of Matters to a Vote of Security-Holders.
                  None



<PAGE>




Item 5.      Other Information.

     The Company's common stock has traded on the AMEX-ECM since July 1992. As a
result of  significant  losses in fiscal  year  1996,  the  Company  fell out of
compliance   with   certain   AMEX-ECM   eligibility   requirements,   including
profitability,  net asset  value and stock price and  therefore,  the Company is
under review by AMEX. The Company has worked  diligently to improve these areas.
As a result,  profitability  in fiscal  year 1997  improved  and net asset value
increased.  While the Company is pleased with its  progress to date,  additional
progress is needed to bring the Company into full  compliance  with the AMEX-ECM
continued eligibility requirements.

Item 6.     Exhibits and Reports on Form 8-K

     Exhibit 27 - Financial Data Schedule

    (a) Reports on Form 8-k
        (i) Report on Form 8-k dated  November 18, 1997,  relating to expression
        of interest in merger

        (ii) Report on Form 8-k dated October 31, 1997, relating to the sale
        of substantially all of the assets of ETS Analytical Services, Inc. To
        Q Enterprises

Item 7.     Financial Statements, Pro Forma Financial Information and Exhibits

    (c) Exhibits

        Exhibits 2 - Asset Purchase Agreement by and among ETS Analytical
                     Services, Inc. and Q Enterprises, Inc. dated October
                     31, 1997.





<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.


                                     ETS INTERNATIONAL, INC   .
                                             Registrant


DATE January 14, 1998                BY: s/John D. McKenna
    -----------------                ---------------------
                                           John D. McKenna
                                           President And
                                           Principal Executive Officer



DATE January 14, 1998                BY: s/John C. Mycock
    -----------------                --------------------
                                           John C. Mycock
                                           Secretary/Treasurer and
                                           Principal Financial Officer