SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K

            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934 [Fee required]

For the Fiscal Year Ended _____December 31, 2000________________

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934 [No fee required]

For   the   transition    period   from ___N/A___  to ___N/A____

Commission File Number

                               ISG RESOURCES, INC.
            ------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

                 Utah                                   87-0619697
     ------------------------------             -----------------------------
       (State or other jurisdiction of                 (I.R.S. Employer
       incorporation or organization)                  Identification No.)

136 East South Temple, Suite 1300, Salt Lake City, Utah            84111
--------------------------------------------------------------------------------
(Address of principal executive offices)                         (Zip Code)

Registrant's telephone number, including area code:             (801) 236-9700
                                                   ----------------------------

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

           Title of each class       Name of each exchange on which registered
           -------------------       -----------------------------------------
                  None                     None

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

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No__

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

         The aggregate  market value of the voting stock held by  non-affiliates
of the registrant on March 29, 2001 was approximately $0.

         The number of shares of Common Stock  outstanding on March 29, 2001 was
100 shares.

         Documents Incorporated by Reference:  See Item 14(a) List of Exhibits

<PAGE>

                                     PART I

Item 1.       Business

General Development of Business

ISG  Resources,  Inc., a Utah  corporation  (the  "Company"),  is a wholly owned
subsidiary  of  Industrial  Services  Group,  Inc.  ("ISG").  ISG was  formed in
September 1997 and acquired the stock of JTM Industries, Inc. ("JTM") on October
14,  1997.  In 1998,  JTM  acquired  the  stock of  Pozzolanic  Resources,  Inc.
("Pozzolanic"), Power Plant Aggregates of Iowa, Inc. ("PPA"), Michigan Ash Sales
Company, d.b.a. U. S. Ash Company,  together with two affiliated companies, U.S.
Stabilization,  Inc. and Flo Fil Company, Inc., (collectively,  "U.S. Ash"), and
Fly Ash Products,  Inc. ("Fly Ash  Products").  Effective  January 1, 1999, JTM,
Pozzolanic,  PPA, U.S. Ash, Fly Ash Products and their wholly owned subsidiaries
merged with and into the Company (the  "Merger").  Pneumatic  Trucking,  Inc., a
wholly owned  subsidiary of Michigan Ash Sales Company,  was not merged into the
Company.  Consequently,  Pneumatic  became  a  wholly  owned  subsidiary  of the
Company.

In 1999, the Company  acquired the stock of Best Masonry & Tool Supply ("Best"),
Mineral  Specialties,  Inc.  ("Specialties"),  Irvine Fly Ash, Inc.  ("Irvine"),
Lewis  W.  Osborne,   Inc.   ("Osborne"),   United  Terrazzo  Supply  Co.,  Inc.
("Terrazzo"),  and  Magna  Wall,  Inc.  ("Magna  Wall")  and  sold  all  of  the
outstanding stock of Pneumatic.

In 2000,  ISG  Canada  Limited,  Inc.  ("ISG  Canada")  was  formed and became a
wholly-owned  foreign  subsidiary  of  the  Company,  with  fly  ash  operations
beginning in the second half of 2000.

On March 2, 2000,  the Company  acquired  directly  and  indirectly  through ISG
Manufactured   Products,   Inc.,  and  ISG  Partner,  Inc.,  (two  newly  formed
wholly-owned  subsidiaries of the Company),  all of the partnership  interest of
Don's Building Supply L.L.P.  ("Don's") for approximately  $5.9 million in cash.
Don's is  engaged  in the  retail and  wholesale  distribution  of  construction
materials to residential  and commercial  contractors  primarily in the State of
Texas.

On May 31, 2000, the Company  completed the acquisition of all outstanding stock
of Palestine  Concrete Tile Company,  Inc. and certain  associated real property
(collectively,   "Palestine")   for   approximately   $18.5   million  in  cash.
Additionally,   the  Company  paid  off   outstanding   debt  of  Palestine  for
approximately $1.0 million.  Palestine is a Texas corporation  primarily engaged
in the manufacture and distribution of concrete block.

On September 15, 2000, the Company acquired certain fixed and intangible  assets
from Hanson Aggregates West, Inc.  ("Hanson").  Hanson is a subsidiary of Hanson
PLC, a leading international building materials company with operations in North
America and Europe.  The Company  negotiated a purchase price of $2.1 million in
cash for equipment and other fixed assets, as well as contracts with three Texas
and  Louisiana  power plants.  ISG will utilize the assets  purchased to provide
materials  management services under the utility contracts acquired in the asset
acquisition.

The cost of acquired  companies is allocated first to identifiable  assets based
on estimated fair values. Costs allocated to identifiable intangible assets such
as  contracts,  patents,  assembled  workforce,  and goodwill are amortized on a
straight-line  basis  over  the  remaining  useful  lives  of  the  assets.  The
amortization  period is determined  principally by the  underlying  terms of the
contracts  and  patents  acquired  and  the  underlying  characteristics  of the
assembled  workforce  acquired.  The excess of the purchase  price over the fair
value of identifiable assets acquired,  net of liabilities  assumed, is recorded
as goodwill and amortized on a  straight-line  basis over the  estimated  useful
life.  The  estimated  useful  life  for  goodwill  is  determined  based on the
individual  characteristics  of the acquired entity and ranges from 20 years for
the Company's building materials  acquisitions to 25 years for the Company's fly
ash  acquisitions.  The values recorded for licenses  represent the license fees
paid that allow the Company the right to utilize the  licensed  technologies  in
the Company's products and applications.

The Company's core business is based on long-term materials management contracts
with power producing  utilities and industrial  clients.  Typical contract terms
for CCP management contracts are from five to fifteen years, with many contracts
being  renewed upon  expiration.  The  Company's  business  strategy has been to
pursue key acquisitions with the primary intent of acquiring  specific materials
management contracts controlled by the entity acquired as well as complement the
Company's planned  geographic  expansion.  Therefore,  the contracts recorded as
intangible  assets are essential to the continuing  success of the Company.  The
Company  devotes  significant  resources  to  maintaining  and  expanding  these
long-term  contractual  relationships.  In  addition,  the Company is focused on
serving its client base by enhancing the Company's  existing  product  offerings
with the benefits of its research and development  programs,  by cross-marketing
patented products in new geographical  markets, and by continuing to develop new
applications for CCPs and related industrial materials.

The Company  regularly  evaluates  the carrying  amounts of  long-lived  assets,
including  goodwill  and  other  intangible  assets,  as  well  as  the  related
amortization  periods,  to determine whether  adjustments to these amounts or to
the useful  lives are required  based on current  circumstances  or events.  The
evaluation,  which involves significant management judgment, is based on various
analyses including cash flow and profitability  projections.  To the extent such
projections  indicate that future  undiscounted cash flows are not sufficient to
recover the  carrying  amounts of the related  long-lived  assets,  the carrying
amount of the underlying  assets will be reduced,  with the reduction charged to
expense,  so  that  the  carrying  amount  is  equal  to fair  value,  primarily
determined based on future discounted cash flows. No impairment of the Company's
intangible assets has been indicated to date.


Description of Business

The Company operates two principal  business  segments:  coal combustion product
(CCP) management and building  materials  manufacturing  and  distribution.  See
Footnote 8 in the consolidated  financial  statements and notes thereto included
elsewhere herein for segment reporting information.

The CCP division  purchases,  removes and sells fly ash and other by-products of
coal   combustion  to  producers   and  consumers  of  building   materials  and
construction related products throughout the United States. Based upon available
information,  the Company believes it is now the largest manager and marketer of
CCPs in  North  America.  The  Company  enters  into  long-term  CCP  management
contracts,  primarily  with  coal-fired  electric  generating  utilities.  These
utilities are required to manage, or contract to manage, CCPs in accordance with
state and federal environmental  regulations.  In addition, the Company provides
similar materials management services for other industrial clients.

The building materials division  manufactures and distributes building materials
to  residential  and  commercial  contractors,  primarily in Texas,  California,
Georgia,  Florida and Louisiana.  While the 1998 acquisition strategy focused on
geographical  diversification of the CCP division, the 1999 and 2000 acquisition
strategy  focused  on  vertical  integration  into  selected  building  products
manufacturers  (especially in key geographical  areas) that utilize  significant
amounts of CCPs as raw materials in their products. This strategy has secured an
outlet for a portion of previously unutilized CCPs while promoting the increased
use of CCPs as components of building products in the future. Unlike most of its
competitors,  the Company has dedicated significant resources to the acquisition
and  development of new  technologies  for the use of CCPs in building  products
applications.

Principal Products and their Markets by Division

CCP Division

The Company  uses CCPs and other  industrial  materials  to make  products  that
primarily  replace  manufactured or mined  materials,  such as portland  cement,
lime,  agricultural  gypsum, fired lightweight  aggregate,  granite aggregate or
limestone.  The  Company's  focus  on  CCPs  and  related  industrial  materials
development  created a variety  of  applications,  such as  fillers  in  asphalt
shingles and related  products,  that extend beyond the traditional uses of CCPs
and related  industrial  materials.  For purposes of this report,  the Company's
CCP-related  products are broken down into traditional  products and value-added
products.  Traditional  products  are those  products  that the  Company and its
competitors within the industry historically produce with the CCPs.  Value-added
products are newer products that have been developed to utilize CCPs and related
materials,  which in the past were deemed  waste  products  and usually  sent to
landfills.

The primary  CCPs  managed by the Company are fly ash and bottom ash. Fly ash is
the  fine  residue  and  bottom  ash is the  fraction  composed  of the  heavier
particles that result from the combustion of coal. Utilities firing boilers with
coal first  pulverize the coal and then blow the pulverized  coal into a burning
chamber  where it  immediately  ignites to heat the boiler  tubes.  The  heavier
bottom ash falls to the bottom of the burning  chamber while the lighter fly ash
remains  suspended in the exhaust gases.  Before leaving the exhaust stack,  the
fly ash particles are generally  removed by an electrostatic  precipitator,  bag
house or other method. The bottom ash is hydraulically  conveyed to a collection
area, while the fly ash is pneumatically conveyed to a storage silo.

Fly ash is a pozzolan  that,  in the  presence of water,  will  combine  with an
activator  (lime,  portland  cement  or kiln  dust)  to  produce  a  cement-like
material.   It  is  this  characteristic  that  allows  fly  ash  to  act  as  a
cost-competitive  substitute  for other  more  expensive  cementitious  building
materials.  Concrete manufacturers can typically use fly ash as a substitute for
15% to 40% of their cement requirements, depending on the quality of the fly ash
and the  proposed  end-use  application  for the  concrete.  In  addition to its
cost-benefit,  fly ash provides  greater  structural  strength and durability in
certain  construction  applications,  such as road  construction.  Bottom ash is
utilized  as an  aggregate  in  concrete  block  construction  and for road base
construction.

According  to  the  American  Coal  Ash   Association   (the  "ACAA"),   of  the
approximately  107 million tons of CCPs that were generated in the United States
during 1999, fly ash accounted for  approximately  59%, bottom ash accounted for
approximately 15% and flue gas  desulphurization  waste ("scrubber  sludge") and
boiler slag accounted for approximately 26%.

Traditional  Products and  Applications  Traditional CCP products are industrial
materials  that  generally  require  minimal  processing or additives to fulfill
their intended  applications.  The Company typically  provides these products to
its customers  directly from its clients' sites. The Company has been successful
in selling  significant  portions of the CCPs and other industrial  materials it
manages to traditional markets (e.g., the use of fly ash as pozzolan in portland
cement concrete and the use of bottom ash as a lightweight aggregate).

The following is a brief description of the CCP division's traditional products:

Fly ash is used as (i) a  pozzolan  to  partially  replace  portland  cement  in
ready-mix concrete and concrete products (e.g., concrete pipe); (ii) an additive
to portland cement to produce I-P cement and blended cements;  (iii) an additive
in downhole  cementing of oil wells; and (iv) a primary  constituent in flowable
grout used to fill voids under concrete slabs and underground tank voids.

Bottom ash is used as (i) raw feed stock for the  manufacture of portland cement
clinker;  (ii) a lightweight  aggregate for concrete and concrete block; (iii) a
filler in the  manufacture  of clay brick;  and (iv) an  aggregate  in asphaltic
concrete. It can also be mixed with salt as an additive for ice and snow control
or used as backfill for pipe bedding and dry bed material.

Fluidized bed ash is used (i) for stabilization in mud drying; (ii) as a reagent
to solidify liquid wastes in petrochemical and related areas; and (iii) for soil
stabilization to create more solid foundations for vertical construction.

Scrubber  sludge is used as cement  stabilized  road  base  material  and can be
processed to be used in wallboard manufacture.

Boiler slag is used for a variety of  applications,  including  roofing shingles
and cement.

Cement  and  lime  kiln  dust  and  related  industrial  minerals  are  used  as
cementitious  binders for  chemical  fixation/solidification  of  hazardous  and
non-hazardous wastes, soil stabilization and chemical processes.

Value-added  Products and  Applications  To diversify its product  offerings and
ensure that it productively uses the CCPs, the Company also develops and markets
value-added  products made from CCPs and related  industrial  materials,  and it
continues  to expand the  breadth of markets  for these  products.  Through  its
research and development program and certain licenses, the Company has broadened
the end use market for CCPs and  related  industrial  materials  by  introducing
several proprietary products made from previously  non-marketable materials. The
Company sells and distributes its products to cement plants,  ready-mix concrete
plants, road contractors, carpet manufacturers,  roofing shingle producers, soil
stabilization  firms,  utility companies and waste management firms.  Several of
its proprietary  products have been utilized by government  agencies such as the
Department of  Transportation,  the Federal  Aviation  Administration,  the Army
Corps of Engineers and the U.S. Bureau of Mines.

The following is a list of the Company's value added products and applications:

Powerlite(R)  is a pyrite free bottom ash which,  when processed by the Company,
produces a high quality aggregate for the concrete block industry.  Powerlite(R)
has exhibited superior flow characteristics,  often making it more economical to
use than other  aggregates.  The Company has provided  customers in the Atlanta,
Georgia  area with more than two  million  tons of  Powerlite(R)  in the past 15
years.

SAM(TM)  (Stabilized  Aggregate  Material)  is  manufactured  by the  Company by
combining several  industrial  materials  received from clients and transforming
them into a well-graded  replacement for natural aggregate.  SAM(TM) can be used
in many other applications, such as road base, sub-base, parking areas, drainage
media and rip-rap.

Pozzalime(TM)/Envira-Cement(R) are the Company's lime-based pozzolanic materials
that  contain  significant  moisture-reduction  properties.   Pozzalime(TM)  and
Envira-Cement(R)  have been  successfully  utilized in  road-base  construction,
road-sub-base  construction,  chemical fixation,  soil  stabilization,  moisture
reduction, mud drying, pH adjustments, acid neutralization, sewage treatment and
mine reclamation.

Gypcem(R) is the Company's processed gypsum,  registered and exclusively sold by
the Company, that has characteristics  allowing it to be used in the manufacture
of portland cement.  With  considerable  handling  capabilities,  the product is
often more economical to use than conventional  mined gypsum.  Under a long-term
contract with Dupont,  the Company designed,  constructed and currently operates
an on-site  processing  facility for the 100,000 tons of Gypcem(R) produced each
year.

Peanut Maker(R) is a gypsum landplaster  developed by the Company for use in the
agricultural  market  as a soil  enhancer.  The  Company  has  transformed  this
previously   unmarketable  material  into  Peanut  Maker(R),  a  beneficial-use,
value-added  product.  Peanut  Maker(R)  has been used on over  60,000  acres of
peanut  crops  annually  for the past 10  years.  It  continues  to be in demand
because of its high calcium content.  The disassociation rate afforded by Peanut
Maker(R)  makes  it more  effective  and  economical  than  traditional  calcium
supplements.  It has been a  recommended  source of calcium by the  Virginia and
North Carolina Extension Services since its invention.

ALSIL(R)/Orbaloid(R)  are  industrial  fillers  developed  by the  Company  from
processed  client-generated  materials  for use in filler  applications  such as
roofing shingles,  carpet and mat backing, and ceramic products. The Company has
two U.S.  patents  and one  Canadian  patent for the use of  ALSIL(R) in roofing
shingles.  The Company has  secured  multiple  contracts  with  various  shingle
manufacturers,  with one  agreement  extending  for the  life of the  customer's
manufacturing plant.

Flexbase(TM)  is a mixture  of fly ash and  scrubber  sludge  which the  Company
processes to form a road-base material.

Stabil-Fill(TM) is a lime-stabilized  fly ash that the Company has developed and
sold  for use as a fill  material  in  lieu of  natural  borrow  materials.  The
resulting  mixture  is  lightweight  and  compacts  with  standard  construction
equipment.  Applications include commercial or industrial property  development,
roadway embankment and subgrade for parking lots, airport runways,  golf courses
or driving ranges, and athletic fields.

Redi-Fill(TM)/Flo  Fil(R) are the  Company's  processed  fly ash and bottom ash,
sold for use as a structural fill and ready-mixed flowable fill.

In  addition to these value added  products,  the Company  uses its  traditional
products for non-traditional  applications.  Non-traditional applications of fly
ash include:  (i) use as mineral  filler to replace fine aggregate in bituminous
coatings  for roads  (asphalt  surface);  (ii) use as a primary  constituent  in
flowable  fill to backfill  around  in-ground  pipes and  structures;  (iii) for
stabilization of soils with high plasticity or low load bearing abilities;  (iv)
to  produce a filler  grade  material  for a variety of  products;  and (v) as a
binder with calcium sulfate to replace limestone road base materials.

Building Materials Division

The building  materials  division  operates  principally  in Texas,  California,
Georgia and Florida.  Its products  include  standard  masonry and  construction
materials and supplies, as well as packaged products,  many of which incorporate
technologies  acquired or developed by the Company.  Selected  packaged products
sold today based on the Company's owned and leased technologies include:

MagnaWall(R) One Coat Stucco
Best One Coat Stucco
Best Masonry(TM)  Cement Type N
Best Scratch and Brown Stucco Cement
Best White Masonry Cement Type N
Best Masonry(TM) Cement Type S
Best Mortar Cement Type N
Best Finish Stucco
Hill Country Mortar(TM) Type N

New Product Development

New product development costs consist of scientific research and development and
market development expenditures. The Company spent approximately $1.8 million in
each of the years ended  December 31, 2000 and December 31, 1999,  respectively,
on research and development  activities  covering basic scientific  research and
application  of  scientific  advances  to the  development  of new and  improved
products and  processes.  Expenditures  of  approximately  $0.5 million and $0.4
million  for  the  years  ended   December  31,  2000  and  December  31,  1999,
respectively,  were made for market development  activities related to promising
new  and  improved  products  and  processes   identified  during  research  and
development  activities.  The Company expenses all new product development costs
when  they  are  incurred.   The  Company  incurred  insignificant  new  product
development costs in the year ended December 31, 1998.

In an effort to maximize the  percentage  of products  marketed to end users and
minimize the amount of materials landfilled,  the Company's focused research and
development  efforts have created or caused the Company to acquire the rights to
various new technologies.  Three of the most promising of these new technologies
are as follows:

Dynastone(R) is a revolutionary  new technology to manufacture  acid and sulfate
resistant  concrete pipe.  This  technology  presents an opportunity to concrete
pipe  manufacturers  to reclaim  sales lost to plastic  pipe and to reduce  pipe
production costs.

ABC Cement(R) is a technology to produce rapid setting,  high strength  pozzolan
type  concretes  using  fly  ash.  The  product  transforms  into a  rapid  set,
high-strength concrete.

Flexcrete(R)  is a fiber  reinforced,  non-autoclaved  cellular  concrete  which
utilizes  large  quantities  of CCPs and requires low energy and capital cost to
produce.  This  technology  produces  an  aerated  concrete  panel or block with
excellent  flexural strength,  insulation and flame resistance.  It is ideal for
use in mass-produced housing applications.

Competitive Business Conditions

Coal is the largest  indigenous fossil fuel resource in the United States,  with
current U.S. annual coal production in excess of one billion tons. Approximately
80% of coal  produced is used for  electric  power  generation,  and its use has
grown by  almost  25% over the last  decade.  The  combustion  of coal  provides
cost-effective  electricity  generation,  but  results in a high  percentage  of
residual material,  which serves as the "raw material" for the CCP industry. The
industry manages these CCPs and related materials by developing  end-use markets
for certain CCPs and providing  storage and disposal  services for the remainder
of such materials.

In order to sustain its position as a leader in the CCP management industry, the
Company  relies  on  and  continues  to  implement  the  following   competitive
strengths:

Leading  Market  Position.  The  Company  believes  it is a party  to  more  CCP
management  contracts and manages more CCP tonnage than any of its  competitors.
The Company has aggressively  penetrated its service areas and has won contracts
based  on  its  "one-stop"  approach  to  CCP  and  other  industrial  materials
management services.  This approach combines the Company's marketing,  materials
handling and  technological  capabilities to lower the client's cost of managing
CCPs and other  industrial  materials in accordance  with  applicable  state and
federal regulations.

Geographic  Diversification.  The Company believes it is the only company in the
CCP management  industry with a national scope. This national scope provides the
Company with several significant  competitive benefits,  including mitigation of
the effects of cyclical regional  economies and weather  patterns.  In addition,
the Company's  national scope and storage  capabilities will create  incremental
revenue  through  the  ability to shift  products  among  regions to meet market
demand while minimizing transportation costs.

Value-Added Products and Services. The Company's new product development efforts
have  broadened  the  end-use  market for CCPs and other  recyclable  industrial
materials.  The Company has successfully  introduced new patented or trademarked
products  made from  previously  non-marketable  materials  through  proprietary
processes.   These  product  development  efforts  have  reduced  the  materials
management cost to the Company's  clients and improved the Company's revenue mix
and margins.

Strong Client  Relationships.  At December 31, 2000, the Company had contractual
relationships  with  eleven  of the  fifteen  largest  coal  powered  electrical
utilities in the United States, based on total electricity revenues. The Company
has  maintained  long-term  contracts  with certain  utilities  since 1978,  and
experienced  a renewal  or  extension  rate of  greater  than 90% since  current
management  completed the acquisition of JTM in 1997. The Company's clients rely
on its marketing,  materials  handling and technological  capabilities to extend
the useful life of their landfill  sites by creatively  managing and marketing a
broader range of CCPs than competitors.

Source and Availability of Raw Materials

The  Company's  primary  raw  materials  are CCPs.  As long as the  majority  of
electricity  generated  in  this  country  comes  from  the  use  of  coal-fired
generation,  the  Company  believes  it will  have  an  adequate  supply  of raw
materials.


Electric Utility Deregulation

The electric utility industry is in the process of deregulation. The impact that
full  deregulation  of the industry  will have on the Company is something  that
cannot be accurately  projected.  The major area of impact is to the  individual
source of CCPs that the Company uses to supply materials and products to various
markets.  Deregulation  could  result in some  sources  being put out of service
because they are not  economically  competitive.  The Company  believes  that no
significant  changes to the sources of CCPs under contract will occur.  However,
since this change to the  industry  continues  to evolve,  the Company  could be
materially adversely affected if major changes occur to specific sources.

Impact of Clean Air Act Amendments on Coal Consumption

The Federal Clean Air Act of 1970 ("Clean Air Act") and  Amendments to the Clean
Air Act ("Clean Air Act Amendments"), and corresponding state laws that regulate
the emissions of materials into the air,  affect the coal industry both directly
and  indirectly.  The coal  industry  may be directly  affected by Clean Air Act
permitting  requirements  and/or  emissions  control  requirements  relating  to
particulate  matter  (e.g.,  "fugitive  dust").  The coal  industry  may also be
impacted  by  future  regulation  of  fine  particulate   matter  measuring  2.5
micrometers   in  diameter  or  smaller.   In  July  1997,   the  United  States
Environmental  Protective  Agency ("EPA")  adopted new, more stringent  National
Ambient Air Quality Standards  ("NAAQS") for particulate  matter and ozone. As a
result,  states will be required to implement  changes to their  existing  state
implementation  plans to attain  and  maintain  compliance  with the new  NAAQS.
Because electric utilities emit nitrogen oxides,  which are precursors to ozone,
the Company's  utility customers are likely to be affected when the revisions to
the NAAQS are implemented by the states.  State and federal regulations relating
to  fugitive  dust  and  coal  combustion  emissions   regulations  relating  to
implementation  of the new  NAAQS  may  reduce  the  Company's  sources  for its
products.  The  extent  of the  potential  impact  of the new  NAAQS on the coal
industry will depend on the policies and control strategies  associated with the
state  implementation  process  under the Clean Air Act,  as well as on  pending
legislative   proposals  to  delay  or  eliminate   aspects  of  the   standard.
Nonetheless, the new NAAQS could have a material adverse effect on the Company's
financial condition and results of operations.

The Clean Air Act  indirectly  affects the Company's  operations by  extensively
regulating the air emissions of sulfur dioxides and other  compounds  emitted by
coal-fired utility power plants. Title IV of the Clean Air Act Amendments places
limits on sulfur dioxide  emissions from electric power generation  plants.  The
limits set baseline emission  standards for such facilities.  Reductions in such
emissions  will occur in two phases;  the first began in 1995  ("Phase  I"), and
applies only to certain identified facilities and the second began on January 1,
2000 ("Phase II') and will apply to most remaining  facilities,  including those
subject to the 1995  restrictions.  The affected  utilities have been and may be
able to meet these requirements by, among other ways,  switching to lower sulfur
fuels,  installing  pollution  control  devices  such  as  scrubbers,   reducing
electricity  generating  levels or  purchasing or trading  "pollution  credits."
Specific emission sources will receive these credits,  which utilities and other
industrial concerns can trade or sell to allow other units to emit higher levels
of sulfur dioxide.

The Clean Air Act Amendments  also require  utilities,  that are currently major
sources of nitrogen oxides in moderate or higher ozone  nonattainment  areas, to
install reasonably  available control technology for nitrogen oxides,  which are
precursors  of ozone.  In addition,  the EPA  currently  plans to implement  the
recently issued,  stricter ozone standards  (discussed above) by 2003. The Ozone
Transport  Assessment Group ("OTAG"),  formed to make recommendations to the EPA
for addressing ozone problems in the eastern United States,  submitted its final
recommendations  to the EPA in June 1997.  Based on the OTAG's  recommendations,
the EPA  announced a proposal  (the "SIP  call")  that would  require 22 eastern
states to make substantial  reductions in nitrogen oxide  emissions.  Under this
proposal, the EPA expects that states will achieve these reductions by requiring
power plants to make  substantial  reductions in their nitrogen oxide emissions.
Installation of reasonably  available control  technology and additional control
measures  required  under  the SIP call  will  make it more  costly  to  operate
coal-fired utility power plants and, depending on the requirements of individual
state  attainment  plans and the  development of revised new source  performance
standards,  could make coal a less attractive  fuel  alternative in the planning
and  building of utility  power  plants in the future.  Any  reduction in coal's
share of the capacity for power  generation could have a material adverse effect
on the Company's financial condition and results of operations.  The effect such
regulation or other requirements that may be imposed in the future could have on
the coal  industry  in  general  and on the  Company  cannot be  predicted  with
certainty.  No assurance can be given that the  implementation  of the Clean Air
Act Amendments or any future regulatory provisions will not materially adversely
affect the Company.

Unburned  carbon  often  remains  in fly ash in  small  amounts.  Under  certain
conditions, that carbon can interfere with concrete's ability to entrain correct
amounts of air. Concrete  producers often deal with this situation by adding air
entraining  chemicals.  However,  these  chemicals  are  expensive  and  must be
constantly monitored to guard against over or underdosing.

The Company is affected  by the Phase I and Phase II emission  standards  as the
quality of fly ash produced as a result of the utilization of lower sulfur fuels
is reduced.  As utilities  take steps to meet more stringent  emissions  control
guidelines,  residual  carbon  in fly ash  becomes  a  growing  problem  for the
Company.  The Company  cannot fully  utilize this lower  quality fly ash in some
products  and  applications.  Therefore,  the Company has  aggressively  pursued
technology and research and development  activities to develop a carbon fixation
process to treat fly ash that normally  cannot be used due to the quality of the
fly ash. The Company's carbon fixation  technology,  for which a patent has been
applied,  uses a liquid  reagent to coat  unburned  carbon  particles and hinder
their impact on the concrete mix. Carbon is not removed,  but its effects on air
entrainment are minimized, thus allowing concrete producers to use significantly
less chemicals at the job site.  The  technology  also renders some ash products
usable for the first time without  having any negative  impact on the quality of
the  finished  concrete.  The  Company  is  successfully  working  with  several
utilities utilizing this technology.

The Company has filed a  provisional  patent  application  for a  technology  to
control  ammonia in fly ash.  Ammonia is another  emerging  challenge in the ash
marketing  industry.   As  utilities  implement  more  stringent  air  pollution
controls,  many are treating boiler exhaust gases with ammonia to remove nitrous
oxides.  Some of the  unreacted  ammonia is deposited on fly ash  particles.  To
address this challenge,  the Company's new technology uses a chemical reagent to
mitigate  ammonia  effects.  When water is added to the concrete mix  containing
ammoniated  fly ash, the reagent  converts  ammonia to harmless  compounds.  The
treatment  reagent  can be added and  blended  with the dry fly ash at any point
between the fly ash collection process at the power plant and the final delivery
to  the  concrete  producer.  Reagent  dosage  rates  depend  upon  the  ammonia
concentration.  Reagents  can also be added  directly to the  concrete  mix. The
Company is currently working with two utilities to implement the technology.


Material Quality and Quantity

Coal-fired boilers have been impacted by the Clean Air Act and the Clean Air Act
Amendments,  which  established  specific  emissions  levels  concerning  sulfur
dioxide  (SO2) and  nitrous  oxides  (NO) that each  utility  must  meet.  These
emission  levels have  required  utilities  to undertake  many of the  following
changes:  change  their fuel  source(s),  add  scrubbers to capture SO2, add new
boiler burner systems to control NO, add or modify fuel pulverizers/air handling
systems to control NO,  introduce  flue gas  conditioning  materials  to control
particulate  emissions in conjunction with meeting SO2 emissions  targets and in
some very isolated cases shut down a plant.  Amendments to existing  particulate
matter  standards may require  retrofitting of baghouses to control  particulate
emissions.  All of these  changes  can impact the  quantity  and quality of CCPs
produced at a power plant and can add to the costs of  operating a power  plant.
Further,  inappropriate use of material can result in faulty end products. Since
most of the products  marketed by the Company  typically consist of a mixture of
client-supplied  materials, the Company does not exclusively control the quality
of the final end product,  but shares such control with the  manufacturer of the
ingredient  materials.  Therefore,  there is a risk of liability  regarding  the
quality of materials  and end products  marketed by the Company.  In cases where
the Company is responsible  for  end-product  quality,  such as structural  fill
(where  material  is used to fill a cavity  or  designated  area),  the  Company
depends solely on its own quality assurance programs.

Dependence on Limited Customers

The Company works with a large number of customers  and has long-term  contracts
with most such  customers.  The  Company's  core  business is based on long-term
materials  management  contracts with power producers and industrial clients. As
of December 31, 2000, the Company had 101 materials management contracts,  33 of
which generated more than $1.0 million of annual revenues each. Typical contract
terms are from five to fifteen  years.  The  Company  is focused on serving  its
current  client  base  and  plans to  aggressively  target  additional  contract
opportunities to increase both tonnage under management and revenues.

Intellectual Property

The  Company  owns and has  obtained  licenses to various  domestic  and foreign
patents  and  trademarks  related to its  products  and  processes.  While these
patents  and  trademarks  in  the  aggregate  are  important  to  the  Company's
competitive  position, no single patent or trademark is material to the Company.
The Company's license  agreements  generally have a duration that coincides with
the patents covered thereby.

Government Approval

None.

Effect of Existing or Probable Government Regulation

None.

Cost of Compliance with Environmental Laws

None.



Employees

The Company has a total of 781 employees, of which 735 are full-time employees.

Item 2.       Properties

The Company  operates  its  corporate  headquarters  in Salt Lake City,  Utah in
offices leased under a three-year  lease expiring in July 2002. The total amount
of leased space in the corporate  headquarters is 12,202 square feet. Due to the
Company's national scope of operations, it has a number of other properties used
in its operations.  The following table sets forth certain information regarding
the Company's other principal facilities as of December 31, 2000:

                                                                  Lease
 Location           Function                Ownership        Termination Date
------------        --------------          ---------        ----------------
Bay City, MI        Offices                   Leased         August 31, 2001
Kennesaw, GA        Offices                   Leased         January 31, 2004
Delta, UT           Storage Silos             Leased         November 1, 2001
Fargo, ND           Fly Ash Storage           Leased         Month to Month
Good Springs, PA    Silo Facility             Leased         Month to Month
Taylorsville, GA    Lab Facility              Owned
Doraville, GA       Terminal Facility         Leased         August 11, 2005
Leland, NC          Transfer Facility         Owned
Franklin, VA        Structural Fill           Owned
Clinton, TN         Structural Fill           Owned
Centralia, WA       Storage Facility          Owned
Ogden, UT           Storage Facility          Owned
Pacolet, SC         Terminal Facility         Owned
Fresno, CA          Terminal Facility         Leased         March 31, 2002
Stockton, CA        Terminal Facility         Leased         September 30, 2010
Pomona, CA          Rail Terminal             Owned
Tukwila, WA         Offices                   Leased         June 30, 2004
Houston, TX         Offices                   Leased         August 30, 2004
Sacramento, CA      Terminal Facility         Leased         February 22, 2003
San Antonio, TX     Lab Facility              Leased         December 31, 2001
San Antonio, TX     Production Facility       Leased         May 10, 2001
Duluth, GA          Building Material Store   Leased         Month to Month
Acworth, GA         Production Facility       Leased         Month to Month
Houston, TX         Production Facility       Leased         July 31, 2004
Dallas, TX          Production Facility       Owned
Palestine, TX       Production Facility       Owned
LaMirada, CA        Production Facility       Owned


Management believes its facilities are in good condition and that the facilities
are  adequate  for its  operating  needs  for  the  foreseeable  future  without
significant modifications or capital investment.


Item 3.  Legal Proceedings

The Company is a  defendant  in various  lawsuits  which are  incidental  to the
Company's  business.  Management,  after  consultation  with its legal  counsel,
believes that any potential liability as a result of these matters will not have
a  material  effect  upon the  Company's  results  of  operations  or  financial
position.

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

None.


                                     PART II

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

The Company's common stock is not publicly traded and is wholly owned by ISG.

Item 6.  Selected Financial Data

The following table sets forth summary consolidated financial information of the
Company for each of the five years in the period ended  December 31, 2000.  Such
information was derived from the audited  consolidated  financial statements and
notes thereto and should be read in conjunction  with  "Management's  Discussion
and  Analysis  of  Financial  Condition  and  Results  of  Operations"  and  the
consolidated financial statements and notes thereto included elsewhere herein.

The selected consolidated financial information for the periods prior to October
14,  1997 set forth below is not  comparable  to  subsequent  periods due to the
step-up  in  basis  resulting  from  the  acquisition  of JTM  by  ISG in  1997.
Additionally,  the 2000,  1999 and 1998  information  set forth below may not be
comparable due to accounting for the 1998, 1999 and 2000 acquisitions  using the
purchase method of accounting.  Therefore, only information for each acquisition
from the respective acquisition date is included.


<TABLE>
<CAPTION>

                                                                                               2 1/2     9 1/2 months
                                                                Years Ended                    Ended        Ended      Year Ended
                                                  December 31,  December 31,   December 31,  December 31,   Oct 13,    December 31,
                                                      2000         1999           1998          1997         1997           1996
                                                      ----         ----           ----          ----         ----           ----
<S>                                                <C>           <C>           <C>           <C>           <C>           <C>
Statement of Income Data:
Revenue ........................................   $ 180,902     $ 156,205     $ 117,293     $  12,643     $  51,295     $  62,841
Cost of products and services sold,
    excl. depr .................................     133,093       108,664        80,116         9,365        40,701        52,268
Depreciation and amortization ..................      14,954        13,091         9,141           908         5,279         2,285
Selling, general and administrative
expenses........................................      26,326        18,962        14,145         1,256         3,633         5,667

New product development costs ..................       2,332         2,166          --            --            --            --
Operating income ...............................       2,672        13,321        13,891         1,114         1,682         2,621
Interest expense ...............................      15,804        13,392         9,338           629         4,160         4,853
Net income (loss) before income taxes ..........     (12,749)          285         4,808           517        (2,478)       (2,232)
Net income (loss) ..............................      (9,755)         (362)        2,259           265        (3,090)       (1,870)

Balance Sheet Data:
Working capital (deficiency) ...................      24,127         8,972         6,786       (21,648)      (43,594)      (45,804)
Total assets ...................................     252,334       220,463       191,732        73,270        58,396        62,950
Total debt .....................................     165,000       133,500       110,000          --            --            --
Shareholder's equity ...........................      27,122        27,162        27,524        25,265         3,623         6,713

Other Data:
Cash flows from operating activities ...........         684        10,204         8,210         1,843           521           603
Cash flows from investing activities ...........     (35,983)      (33,369)      (86,623)          (19)         (681)       (3,869)
Cash flows from financing activities ...........      42,315        23,165        75,344         1,189           957         2,844
EBITDA (1) .....................................      18,010        26,768        23,287         2,054         6,961         4,906
EBITDA margin ..................................        10.0%         17.1%         19.9%         16.2%         13.6%          7.8%
Capital expenditures ...........................       8,186         8,791         8,574            19           681         4,357
Ratio of earnings to fixed charges (2) .........        .31x         1.02x         1.42x         1.49x         0.56x         0.68x
Deficit of earnings to fixed charges ...........     (12,749)         --            --            --          (2,478)       (2,232)

</TABLE>


(1)  EBITDA  represents   earnings  before  interest   expense,   income  taxes,
     depreciation  and  amortization.  EBITDA  should  not be  considered  as an
     alternative  to net income or any other GAAP measure of  performance  as an
     indicator  of the  Company's  performance  or to  cash  flows  provided  by
     operating,  investing or financing activities as an indicator of cash flows
     or a measure of  liquidity.  Management  believes  that  EBITDA is a useful
     adjunct to net income and other  measurements  under GAAP in evaluating the
     Company's  ability  to  service  its  debt  and  is a  conventionally  used
     financial indicator. However, due to possible inconsistencies in the method
     of calculating  EBITDA, the EBITDA measures presented may not be comparable
     to other similarly titled measures of other companies.
(2)  The ratio of earnings to fixed charges is computed by dividing  earnings by
     fixed  charges.  For this purpose,  earnings  include  pre-tax  income from
     continuing  operations plus fixed charges.  Fixed charges include interest,
     whether  expensed or  capitalized,  amortization  of debt  expense and that
     portion of rental expense that is  representative of the interest factor in
     these rentals.


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

The following  discussion and analysis  should be read in  conjunction  with the
consolidated  financial statements and notes thereto of ISG Resources,  Inc. and
its predecessor,  JTM Industries, Inc. and other financial information appearing
elsewhere herein.

General

The Company is a manager and marketer of CCPs in North America. The Company also
manufactures  and distributes  building  materials to residential and commercial
contractors.  The Company  generates  revenues from  marketing and  distributing
products to its customers and providing  materials  management,  engineering and
construction  services to its clients.  The Company was founded in 1997 upon the
acquisition of JTM by ISG (the "JTM Acquisition"). In 1998, the Company acquired
Pozzolanic,   PPA,   the  US  Ash  Group  and  Fly  Ash   Products   (the  "1998
Acquisitions").  In 1999, the Company acquired Specialties and Irvine in the CCP
division and Best,  Osborne,  Terrazzo and Magna Wall in the building  materials
division (the "1999 Acquisitions").

In 2000,  the Company  acquired  Don's and  Palestine in the building  materials
division and Hanson in the CCP division (the "2000 Acquisitions").

The Company's  strategic  objectives  include the  maintenance  and expansion of
long-term  contractual  relationships with electric  utilities,  the increase in
product sales and applications through cross-marketing and vertical integration,
and further technological advances.

Seasonality

The Company's  business is subject to seasonal  fluctuation.  The Company's need
for working capital  accelerates  moderately  during the middle of the year, and
accordingly,  total debt levels  tend to peak in the second and third  quarters,
and decline in the fourth quarter of the year.  The amount of revenue  generated
during  the  middle of the year  generally  depends  upon a number  of  factors,
including  the  level of road and other  construction  using  concrete,  weather
conditions affecting the level of construction, general economic conditions, and
other factors beyond the Company's control.

Results of Operations

Year Ended December 31, 2000 compared to Year Ended December 31, 1999

Product  Revenues.  Product  revenues  increased to $146.8  million in 2000 from
$120.3 million in 1999, an increase of $26.5 million or 22.0%.  This increase is
primarily due to two factors:  (1) the revenue  added by the 2000  Acquisitions;
and (2)  internal  growth in the CCP  division,  primarily  as a result of price
increases and value growth.

Service Revenues. Service revenues decreased to $34.1 million in 2000 from $35.9
million in 1999, a decrease of $1.8 million or 5.0%.  This decrease is primarily
due to a decrease in construction related services and other disposal services.

Cost of Products Sold, Excluding Depreciation.  Cost of products sold, excluding
depreciation,  was $108.4  million in 2000 as compared to $83.4 million in 1999,
resulting in cost of products sold, excluding  depreciation,  as a percentage of
product revenues of 73.8% and 69.3% for the respective periods.  The decrease in
product  margins as a percent of revenue is  primarily  due to lower  margins on
product  revenues  derived from the 1999 and 2000  Acquisitions  in the building
materials division and an increase in the share of revenue paid to utilities for
materials in the CCP division.

Cost of Services Sold, Excluding Depreciation.  Cost of services sold, excluding
depreciation  was $24.7  million in 2000 as compared  to $25.2  million in 1999,
resulting in cost of services sold, excluding  depreciation,  as a percentage of
service  revenues  of 72.4% and 70.2% for the  respective  periods.  The  slight
decrease in service  margins is primarily  due to an increase in disposal  costs
for sub-contracted trucking services in 2000.

Depreciation and  Amortization.  Depreciation and amortization was $15.0 million
in 2000 as compared  to $13.1  million in 1999,  an increase of $1.9  million or
14.2%. This increase is due primarily to an increase in amortization  expense of
goodwill  related  to the 2000  Acquisitions  and an  increase  in  depreciation
expense  related to new  acquisitions  of property,  plant and equipment  during
2000.

Selling,   General   and   Administrative   Expenses.   Selling,   general   and
administrative  expenses (SG&A) increased $7.4 million or 38.8% to $26.3 million
in 2000 as compared to $19.0 million in 1999.  This increase is primarily due to
five factors:  (1) a full year of SG&A in 2000 related to the 1999  Acquisitions
as compared  to 1999,  which only  included  SG&A from the  respective  dates of
acquisition  forward;  (2) the  SG&A  added  by the  2000  Acquisitions;  (3) an
increase in total  personnel  costs  associated  with the Company's  self-funded
health  insurance  plan and an  increase  in  incentive  and other  compensation
associated  with the 1999 and 2000  Acquisitions;  (4) an increase in  property,
automobile and general  liability  insurance costs  associated with the 1999 and
2000 Acquisitions; and (5) an increase in sales and marketing efforts.

Unsuccessful  Acquisition  Costs.  Costs of $1.5  million  incurred  related  to
unsuccessful  business  acquisitions  were  charged  to expense in 2000 when the
Company  determined that such  acquisitions  would not occur. No such costs were
expensed in 1999.

On February 24, 1999,  the Company  entered into an option  agreement to acquire
the stock of Tatum  Industries,  Inc.  (Tatum).  As part of that agreement,  the
Company  agreed to loan  Tatum  approximately  $50,000  per month for  operating
expenses and loan servicing.  Tatum's note to the Company accrues interest at 8%
and is payable on demand.

Additionally,  the Company leased Tatum's building and equipment and the Company
incurred  approximately $0.1 million of leasehold  improvements to the property.
On October 27, 2000, the Company  advised Tatum that the Company was terminating
the option agreement;  however,  the Company continues to lease the building and
equipment  under a  month-to-month  lease.  On November  13,  2000,  the Company
advised Tatum that the note to the Company, totaling approximately $1.1 million,
was due and payable on March 1, 2001. In December  2000,  Tatum advised ISG that
they  would not be able to repay  the note and ISG's  attempt  to  purchase  the
outstanding stock of Tatum was unsuccessful.  As a result,  the Company expensed
approximately  $1.1 million in unsuccessful  acquisition costs which is included
in the $1.5 million  discussed above. To the extent that the Company  terminates
its lease in the future, the leasehold improvements will be expensed.

New Product  Development.  New product  development  costs consist of scientific
research and development and market development expenditures.  The Company spent
$1.8  million  for  each  of  the  years  ended  December  31,  2000  and  1999,
respectively,  on research and development  activities covering basic scientific
research and  application of scientific  advances to the  development of new and
improved products and processes. The Company spent $0.5 million and $0.4 million
for the  years  ended  December  31,  2000 and  1999,  respectively,  on  market
development  activities  related to  promising  new and  improved  products  and
processes identified during research and development activities.

Interest  Expense.  Interest expense was $15.8 million and $13.4 million in 2000
and 1999,  respectively,  an increase of $2.4 million or 17.9%.  The increase is
due primarily to an increase in the Company's outstanding indebtedness resulting
from the 2000 Acquisitions and an increase in interest rates.

Income Tax  Expense/Benefit.  Income tax  benefit  was $3.0  million in 2000 and
income tax expense was $0.6 million in 1999, resulting in effective tax rates of
23.5% and 227.1%.  The decrease in the  effective  tax rate in 2000 is primarily
due to an increase in the net loss before  income  taxes  incurred  for the 2000
period.  The  difference in the effective  rate as compared to the statutory tax
rate is largely the result of non-deductible goodwill amortization.

Net Income (loss).  As a result of the factors discussed above, the net loss for
2000 was $9.8 million as compared to 1999 net loss of $.4 million.

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

Product  Revenues.  Product  revenues  increased to $120.3  million in 1999 from
$83.0 million in 1998,  an increase of $37.3 million or 44.9%.  This increase is
primarily due to three factors:  (1) a full year of revenue in 1999 for the 1998
Acquisitions  as  compared  to  1998,  which  only  included  revenue  from  the
respective  dates of  acquisition  forward;  (2) the  revenue  added by the 1999
Acquisitions; and (3) internal growth in the CCP division, primarily as a result
of price increases and value growth.

Service Revenues. Service revenues increased to $35.9 million in 1999 from $34.2
million in 1998, an increase of $1.7 million or 5.0%. This increase is primarily
due to an increase in construction related services and other disposal services.

Cost of Products Sold, Excluding Depreciation.  Cost of products sold, excluding
depreciation,  was $83.4  million in 1999 as compared to $51.9  million in 1998,
resulting in cost of products sold, excluding  depreciation,  as a percentage of
product revenues of 69.3% and 62.5% for the respective periods.  The decrease in
product  margins is primarily due to lower margins on product  revenues  derived
from the 1999 Acquisitions.

Cost of Services Sold, Excluding Depreciation.  Cost of services sold, excluding
depreciation  was $25.2  million in 1999 as compared  to $28.2  million in 1998,
resulting in cost of services sold, excluding  depreciation,  as a percentage of
service revenues of 70.2% and 82.5% for the respective periods.  The increase in
service  margins is primarily due to three factors:  (1) a change in product mix
toward higher margin  construction  services;  (2) a decrease in  sub-contracted
construction  costs  due to the  same  services  being  performed  by  personnel
employed by the Company in 1999;  and (3) a decrease in disposal  rail costs due
to improvements in rail car scheduling and efficiency.

Depreciation and  Amortization.  Depreciation and amortization was $13.1 million
in 1999 as compared  to $9.1  million in 1998,  an  increase of $4.0  million or
44.0%.  This  increase is due  primarily  to three  factors:  (1) an increase in
amortization  expense of goodwill related to the 1999  Acquisitions;  (2) a full
year's  amortization  expense for the 1998 Acquisitions;  and (3) an increase in
depreciation  expense  related  to  new  acquisitions  of  property,  plant  and
equipment during 1999.

Selling,   General   and   Administrative   Expenses.   Selling,   general   and
administrative  expenses  ("SG&A")  increased  $4.9  million  or  34.8% to $19.0
million in 1999 as compared to $14.1 million in 1998. This increase is primarily
due to four factors:  (1) a full year of SG&A in 1999 for the 1998  Acquisitions
as compared  to 1998,  which only  included  SG&A from the  respective  dates of
acquisition forward; (2) the SG&A added by the 1999 Acquisitions;  (3) severance
charges  associated  with the  Acquisitions;  and (4) an  increase  in sales and
marketing efforts.

New Product  Development.  New product  development  costs consist of scientific
research and development and market development expenditures.  The Company spent
$1.8 million for the year ended  December  31, 1999 on research and  development
activities  covering  basic  scientific  research and  application of scientific
advances to the  development  of new and improved  products and  processes.  The
Company  spent $0.4  million  for the year  ended  December  31,  1999 on market
development  activities  related to  promising  new and  improved  products  and
processes  identified  during research and development  activities.  The Company
incurred  insignificant new product development costs in the year ended December
31, 1998.

Interest  Expense.  Interest  expense was $13.4 million and $9.3 million in 1999
and 1998,  respectively,  an increase of $4.1 million or 44.1%.  The increase is
due primarily to an increase in the Company's outstanding indebtedness resulting
from the 1999 Acquisitions.

Income Tax Expense. Income tax expense was $0.6 million and $2.5 million in 1999
and 1998,  respectively,  resulting in effective  tax rates of 227.1% and 53.0%.
The increase in the effective tax rate in 1999 is primarily due to a decrease in
pre-tax  income and the  increase  in  non-deductible  amortization  of goodwill
recorded for the 1999 Acquisitions.

Net Income (Loss).  As a result of the factors discussed above, the net loss for
1999 was $0.4 million as compared to 1998 net income of $2.3 million.


<PAGE>

Liquidity and Capital Resources

The Company  financed  the 1998 and 1999  Acquisitions  through the  issuance of
$100.0 million of 10% Senior  Subordinated  Notes due 2008 and borrowings on its
Secured Credit  Facility (as  subsequently  amended and  restated).  The Company
financed the  acquisition of Palestine by obtaining a $15.0 million  increase in
the Secured Credit  Facility on May 26, 2000  (discussed  below).  Operating and
capital  expenditures  have  been  financed  primarily  through  cash  flow from
operations and borrowings under the Secured Credit Facility.

The Secured Credit  Facility has been amended a number of times.  Most recently,
on May 26, 2000, the Secured Credit  Facility was amended and restated to, among
other  things,  increase  the  borrowings  available  to the Company  from $50.0
million to $65.0 million.

This increase in the funds available to the Company was accomplished through the
addition of a Tranche B feature,  pursuant to which two of the existing lenders,
Bank of America,  N.A. and Zions First  National  Bank (the "Tranche B Lenders")
agreed  to  provide  the  additional  $15.0  million  in  funding.  No amount is
available pursuant to the Tranche B revolving loans unless all amounts under the
Tranche  A  (existing)  revolving  loans  have  been  borrowed  in full  and are
outstanding.  Under the amended and restated  Secured  Credit  Facility,  at the
option of the  Company,  both the  Tranche A  Revolving  Loans and the Tranche B
Revolving Loans may be maintained as Eurodollar Loans or Base Rate Loans.

Eurodollar  loans will bear  interest  at a per annum rate equal to the rate per
annum  (rounded  upwards,  if  necessary,  to the  nearest  1/100 of 1  percent)
determined by the  Administrative  Agent to be equal to the quotient by dividing
(a) Interbank  Offered Rate for such Eurodollar Loan for such Interest Period by
(b) 1 minus the Reserve  Requirement  for such Eurodollar Loan for such Interest
Period,  and by then adding  thereto the  applicable  LIBOR  margin  (which is a
percentage  ranging  from 1.75% to 3.5% for the  Tranche A and 1.75% to 2.5% for
the Tranche B,  depending  primarily  upon the Company's  Leverage  Ratio).  All
capitalized terms are defined in the Secured Credit Facility.

Base Rate Loans will bear  interest  at a per annum rate equal to the rate which
is the higher of (a) the  Federal  Funds rate for such day plus  one-half of one
percent  (0.5%) and (b) the Prime rate for such day and by then  adding  thereto
the applicable ABR Margin (which is a percentage ranging from 0.50% to 2.25% for
the Tranche A and 0.50% to 1.25% for the Tranche B depending  primarily upon the
Company's  Leverage  Ratio).  Any change in the Base Rate due to a change in the
Federal Funds Rate or to the Prime Rate shall be effective on the effective date
of such  change.  All  capitalized  terms are as defined in the  Secured  Credit
Facility.

The Company  will pay  certain  fees with  respect to any unused  portion of the
amended and restated Secured Credit Facility.

The amended and  restated  Secured  Credit  Facility  maintains  the term of the
original Secured Credit Facility obtained on March 4, 1998, and is guaranteed by
ISG and existing future subsidiaries of the Company (the  "Guarantors"),  and is
secured by a first priority security interest in all of the capital stock of the
Company  and all of the  capital  stock  of each of the  Guarantors,  as well as
certain present and future assets and properties of the Company and any domestic
subsidiaries.

On August 8, 2000, the amended and restated  secured credit  agreement dated May
26, 2000 was amended in order to modify certain debt covenants  contained in the
credit agreement.  Primarily,  a minimum  consolidated  Earnings Before Interest
Expense,  Income Tax Expense,  Depreciation  Expense,  and Amortization  Expense
(EBITDA)  debt  covenant was added.  The minimum  consolidated  EBITDA  covenant
requires the Company to maintain a minimum  EBITDA  amount as of the last day of
every fiscal quarter through June 30, 2003 at levels set forth in the agreement.

On March 30, 2001, the amended and restated  secured credit  agreement dated May
26,  2000 and  subsequently  amended on August 8, 2000,  was amended in order to
modify certain debt covenants contained in the credit agreement. The amended and
restated secured credit facility  continues to require the Company to not exceed
a maximum leverage ratio, to not drop below a minimum  interest  coverage ratio,
to not drop  below a minimum  consolidated  EBITDA  level,  and to  comply  with
certain other financial and non-financial covenants.

At December  31, 2000 the Company had $7.0  million in cash or cash  equivalents
and $65.0 million of the Secured Credit Facility was outstanding, with no amount
being unused and  available.  The Company had working  capital of  approximately
$24.1  million,  an increase of $15.2  million from  December 31, 1999 due to an
increase in cash,  trade  accounts  receivable,  inventories,  and an income tax
receivable,  offset in part by increases in accounts  payable,  accrued payroll,
and accrued  interest.  Most of the changes in accounts  receivable,  inventory,
accounts payable,  accrued  interest,  and accrued payroll are reflective of the
2000 Acquisitions mentioned elsewhere herein.

The Company  intends to make capital  expenditures  over the next several  years
principally to construct storage, loading and processing facilities for CCPs and
to  replace  existing  capital  equipment.  During  2000,  capital  expenditures
amounted to approximately $8.2 million.  Future capital expenditures made in the
ordinary course of business will be funded by cash flow from operations.

The  Company  anticipates  that its  principal  use of cash will be for  working
capital requirements, debt service requirements and capital expenditures.  Based
upon anticipated  levels of operations,  the Company believes that its cash flow
from  operations,  will be adequate  to meet its  anticipated  requirements  for
working capital, capital expenditures and interest payments for the next several
years. There can be no assurance,  however,  that cash flow from operations will
be sufficient  to service the Company's  debt and the Company may be required to
refinance all or a portion of its existing debt or obtain additional  financing.
These increased borrowings may result in higher interest payments.  There can be
no assurance that any such refinancing  would be possible or that any additional
financing could be obtained.  The inability to obtain additional financing could
have a material adverse effect on the Company.

New Accounting Pronouncements

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin (SAB) 101, Revenue Recognition in Financial  Statements.  The effective
date of SAB 101 is the fourth quarter of fiscal years  beginning  after December
15, 1999. This SAB clarifies proper methods of revenue recognition given certain
circumstances surrounding sales transactions. The Company adopted SAB 101 in the
fourth  quarter.  Accordingly,  SAB 101 did not have a  material  effect  on the
Company's financial statements.

In  1998,  the  Financial  Accounting  Standards  Board  issued  SFAS  No.  133,
"Accounting  for  Derivative  Instruments  and  Hedging  Activities,"  which was
subsequently  amended  by SFAS No.  137  "Accounting  for  Derivative  Financial
Instruments and Hedging  Activities - Deferral of the Effective Date of SFAS No.
133" and SFAS No. 138 "Accounting for Certain Derivative Instruments and Certain
Hedging Activities." SFAS No. 133 establishes accounting and reporting standards
requiring  that  every  derivative  instrument,   including  certain  derivative
instruments  embedded in other  contracts,  be recorded in the balance  sheet as
either an asset or  liability  measured at its fair value.  The  Statement  also
requires that changes in the  derivative's  fair value be recognized in earnings
unless specific hedge  accounting  criteria are met. SFAS No. 133, as amended by
SFAS No. 137 and SFAS No. 138, is effective for all fiscal years beginning after
June 15, 2000.  The Company has  evaluated  SFAS No. 133 and does not expect the
adoption  to have a material  impact on the  Company's  financial  condition  or
results of operations.

Forward-Looking Information

Statements  included in this  Management's  Discussion and Analysis of Financial
Condition  and  Results  of  Operations  and  other  items of this Form 10-K may
contain  forward-looking  statements.  Such forward-looking  statements are made
pursuant to the safe harbor  provisions  of the  Private  Securities  Litigation
Reform  Act of  1995.  Such  statements  may  relate,  but  not be  limited  to,
projections of revenues, income or loss, capital expenditures,  plans for growth
and future operations,  financing needs, as well as assumptions  relating to the
foregoing.  Forward-looking  statements  are  inherently  subject  to risks  and
uncertainties,  some of which cannot be predicted  or  quantified.  When used in
this "Management's Discussion and Analysis of Financial Condition and Results of
Operations",  and elsewhere in this Form 10-K the words "estimates",  "expects",
"anticipates",  "forecasts", "plans", "intends" and variations of such words and
similar  expressions  are intended to identify  forward-looking  statements that
involve risks and  uncertainties.  Future events and actual results could differ
materially  from  those  set  forth  in,   contemplated  by  or  underlying  the
forward-looking statements.

Item 7a. Qualitative and Quantitative Disclosures about Market Risk

In 1997,  the SEC issued new rules (Item 305 of Regulation  S-K) which  requires
disclosure  of  material  risks as defined by Item 305,  related to market  risk
sensitive financial  instruments.  As defined,  the Company currently has market
risk sensitive  instruments related to interest rates. As disclosed in Note 4 of
the audited  consolidated  financial  statements,  the  Company has  outstanding
long-term debt of $165.0 million at December 31, 2000. The Company currently has
an average  maturity of seven years for long-term debt,  $100.0 million of which
is at a fixed rate of 10.0% and $65.0 of which is at a rate  averaging  9.7% for
the year ended December 31, 2000 as compared to 8.1% for the year ended December
31, 1999.

The Company does not have  significant  exposure to changing  interest  rates on
long-term debt because interest rates for the majority of the debt is fixed. The
Company has not undertaken any additional  actions to cover interest rate market
risk  and is not a party to any  other  interest  rate  market  risk  management
activities.

A  hypothetical  10%  change in market  interest  rates over the next year could
impact the  Company's  earnings  or cash flows as the  interest  rate on a large
portion of the long-term debt is variable.  The Company believes a 10% change in
market  interest rates would not have a material effect on the fair value of the
Company's publicly traded long-term debt.

The Company does not purchase or hold any derivative  financial  instruments for
trading purposes.

Item 8.  Financial Statements and Supplementary Data

The  audited  financial  statements  for the year ending  December  31, 2000 are
attached hereto at pages F-1 through F-34.

Item 9.  Changes In and  Disagreements  With  Accountants  on Accounting  and
         Financial Disclosure

None.

                                    PART III

Item 10.      Directors and Executive Officers of the Registrant

The Company's  directors and executive  officers,  and their respective ages and
positions  with the Company,  are set forth below in tabular form.  Biographical
information on each person is set forth following the tabular information. There
are no family relationships  between any of the Company's directors or executive
officers.  The  Company's  board of  directors  is  currently  comprised  of two
members,  each of whom is elected for a term of one year. Executive officers are
chosen by and serve at the discretion of the board of directors.

Name                   Age             Position with Company

R Steve Creamer.......   49 Chairman of the Board and Chief Executive Officer
Raul A. Deju..........   55 President and Chief Operating Officer
J.I. Everest, II......   44 Chief Financial Officer, Treasurer, and Assistant
                            Secretary
Clinton W. Pike.......   48 Executive Vice President
Brett A. Hickman......   39 Senior Vice President, General Counsel and Secretary
Joseph M. Silvestri...   39 Director

R Steve Creamer.  Mr.  Creamer is the Chairman of the Board and Chief  Executive
Officer of the Company and ISG.  Immediately  prior to his  employment  with the
Company,  Mr.  Creamer  was CEO  (from  1992 to 1997)  and the  founder  of ECDC
Environmental L.C., the largest rail-served industrial waste management facility
in North  America.  Prior to that, Mr. Creamer served as CEO of Creamer & Noble,
an engineering firm based in St. George,  Utah. He earned a B.S. degree in Civil
and Environmental Engineering from Utah State University in 1973. Mr. Creamer is
a Professional Engineer.

Raul A. Deju.  Dr.  Deju is the  President  and Chief  Operating  Officer of the
Company and ISG.  Dr. Deju served as a Director of Rockwell  Hanford  Operations
through 1981, Senior Vice President of International Technologies,  Inc. through
1987 and Regional  President of several  subsidiaries of WMX Technologies,  Inc.
through 1995. Dr. Deju served as Chairman and CEO of DGL  International  through
1997,  and Board  Chairman  of Isadra,  Inc.  Dr.  Deju has been on the Board of
Directors  of various  national and  international  WMX  subsidiaries,  Advanced
Sciences,  Inc.  and  Isadra,  Inc.  Dr.  Deju is a member  of ISG's  Boards  of
Directors.  Dr.  Deju is an  advisor to a  committee  of the U.S.  Secretary  of
Commerce and has served on the U.S.  Environmental  Protection  Agency  Advisory
Committee.  Dr. Deju received a B.S.  degree in Mathematics  and Physics in 1966
and a Ph.D. degree in Engineering  Geology in 1969 from the New Mexico Institute
of Mining and Technology.

J.I.  Everest,  II. Mr. Everest is the Chief  Financial  Officer,  Treasurer and
Assistant  Secretary of the Company and ISG. He is responsible for all financial
functions of the Company.  Immediately prior to his employment with the Company,
he served as Vice President of Finance for ECDC  Environmental,  Inc. (from 1993
to  1997).   From  1988  to  1993,   Mr.   Everest  was  Director  of  Financial
Analysis/Treasury  of USPCI,  Inc. Mr. Everest earned an M.B.A.  degree (Finance
Concentration)  in 1994  from the  University  of Texas at  Austin  and a B.B.A.
degree from Southern Methodist University in 1979. Mr. Everest is a C.P.A.

Clinton W. Pike.  Mr.  Pike is the  Executive  Vice  President  of  Manufactured
Products.  Since he began  his  service  in 1990,  Mr.  Pike has  served as Vice
President of Business Development for the Company, establishing the Business and
Product   Development   Program,   and  spearheading   nontraditional   business
advancement and growth through  acquisitions and the development of new markets.
Prior to his service with the Company, he was Coordinator,  Fuel and Ash Quality
with Georgia Power Company,  where he directed a total CCP  management  program.
Mr.  Pike  earned a B.S.  degree  in  Biology  (Chemistry  minor)  from  Georgia
Southwestern College in 1974.

In January,  2001, Mr. Pike submitted his  resignation to the Company  effective
immediately.  Mr.  Pike  will  continue  to be  engaged  in  limited  consulting
capacities by the Company.

Brett A. Hickman. Mr. Hickman is the Senior Vice President,  General Counsel and
Secretary of the Company.  From December 1993 until  February  1998, Mr. Hickman
was General Counsel,  Western Division of Laidlaw Environmental  Services,  Inc.
Prior to that,  Mr.  Hickman was an attorney  with Davis & Lavender in Columbia,
South Carolina.  Mr. Hickman earned a B.A. degree in Political  Science from The
Citadel in 1983 and a J.D. degree from the University of South Carolina in 1986.

Joseph M. Silvestri.  Mr. Silvestri has been a director of the Company since its
acquisition by ISG. Mr.  Silvestri has been employed by Citibank Venture Capital
Ltd. (CVC) since 1990 and has served as a Vice  President  there since 1995. Mr.
Silvestri  is  a  director  of  ISG,   International  Media  Group,   Polyfibron
Technologies, Frozen Specialties, Glenoit Mills, Euramax and Triumph Group.

Compliance with Section 16(a) of the Securities Exchange Act of 1934.

Section  16(a)  of the  Securities  Exchange  Act of  1934,  and the  rules  and
regulations promulgated thereunder, require the Company's executive officers and
directors,  and  persons  who  beneficially  own  more  than  ten  percent  of a
registered  class  of the  Company's  equity  securities,  to  file  reports  of
ownership and changes in ownership with the  Securities and Exchange  Commission
and the National  Association of Securities Dealers Automated  Quotations System
and to furnish the Company with copies thereof.  None of the Company's executive
officers  and  directors  and  ten-percent  owners of ISG own any  shares in the
Company. Accordingly, no such reports have been, or need to be, filed.


Item 11. Executive Compensation

The following  table shows the  compensation  paid by the Company to its current
Chairman and Chief Executive  Officer,  and the Company's other most highly paid
executive officers.

<TABLE>
<CAPTION>

                           Summary Compensation Table

                               Annual Compensation

                                                                                                      Other Annual
Name and Principal Position(1)                          Fiscal Year     Salary (2)       Bonus      Compensation (3)
------------------------------                          -----------     ----------       -----      ----------------
<S>                                                              <C>       <C>            <C>                <C>
R Steve Creamer                                                  2000      $ 262,340      $ 65,000           $  5,000
Chairman and Chief Executive Officer                             1999        260,000        34,667              5,000
                                                                 1998        193,747       130,000              5,150

Raul A. Deju                                                     2000        250,016        62,500              5,000
President and Chief Operating Officer                            1999        250,016        33,333              5,000
                                                                 1998        182,869       121,338              5,150

J.I. Everest, II                                                 2000        204,310        50,000              5,000
Chief Financial Officer, Treasurer and                           1999        204,561        26,667              5,000
Assistant Secretary                                              1998        145,934       108,337              8,092

Clinton W. Pike                                                  2000        167,082        10,500              5,000
Executive Vice President                                         1999        166,862        65,000              5,000
                                                                 1998        160,461       191,700            106,886

Brett Hickman                                                    2000        159,010        37,500              5,000
Senior Vice President, General Counsel and                       1999        150,010        20,000              5,000
Secretary                                                        1998         75,003       104,000              4,500

William H. Gehrmann                                              2000        142,418        90,974              5,000
Vice President                                                   1999        131,805         9,574              5,000
                                                                 1998        129,065       162,407              5,000
</TABLE>


(1)      Positions  indicated were as of December 31, 2000. In January 2001, Mr.
         Pike resigned his position and is no longer employed by the Company.

(2)      Includes  amounts,  if any,  deferred by the named  individual  for the
         period in question  pursuant to Section 401(k) of the Internal  Revenue
         Code under the Company's 401(k) Savings Plan (the "401(k) Plan").

(3)      Amounts shown under Other Annual  Compensation  include amounts paid by
         the Company as matching  and/or  profit  sharing  contributions  to the
         401(k) Plan, but do not include perquisites and other personal benefits
         provided to each of the named executives,  the aggregate value of which
         did  not  exceed  the  lesser  of  $50,000  or 10% of  any  such  named
         executive's annual salary and bonus.

Item 12.      Security Ownership of Certain Beneficial Owners and Management

The Company is wholly owned by ISG. The following table sets forth the number of
shares of ISG's common  stock  beneficially  owned as of March 29, 2001,  (i) by
each person who is known by the Company to own beneficially  more than 5% of the
Company's  common stock,  (ii) by each director and director  nominee,  (iii) by
each of the  Company's  named  executive  officers,  and (iv) by all  directors,
director nominees and executive  officers,  as a group, as reported by each such
person.

<TABLE>
<CAPTION>

                                                                                Beneficial Ownership of    Beneficial Ownership of
                                                                                      Common Stock             Preferred Stock
                                                                                      ------------             ---------------
             Name and Address of Beneficial Owner                                 Number of                  Number of
             ------------------------------------                                   Shares       Percent       Shares       Percent
                                                                                    ------       -------       ------       -------

<S>                                                                                   <C>            <C>          <C>          <C>
             Citicorp Venture Capital, Ltd. (1).............................          187,425        37.9         26,813       38.3
             R Steve Creamer (2)(3).........................................          150,266        30.4         25,351       36.2
             J.I. Everest, II (3)...........................................           49,467        10.0          6,925        9.9
             CCT Partners IV, LP (4)........................................           33,075         6.7          4,732        6.8
             Raul A. Deju ..................................................           45,317         9.2          2,023        2.9
             Joseph M. Silvestri............................................              980         0.2            140        0.2
             Brett A. Hickman...............................................            4,950         1.0            700        1.0
             Clinton W. Pike (5)............................................             -
             Danny Gray (5).................................................             -
             William Gehrmann (6)...........................................              557        .002
             All directors and executive officers as a group
             (11 persons) (2)(3)(5)(6)......................................          252,341       50.81         35,139       50.2
</TABLE>

(1)      The address of Citicorp Venture Capital, Ltd. is: 399 Park Avenue, 14th
         Floor, New York, NY 10043.

(2)      Includes  112,700 shares owned by Mr.  Creamer's two adult sons and two
         minor children.

(3)      Messrs.  Creamer  and  Everest  beneficially  own shares in ISG through
         Creamer Investments, Inc., a Nevada corporation, ("Creamer"), successor
         to RACT, Inc., a Utah  corporation,  which directly owns shares in ISG.
         The business address of Creamer is: 136 East South Temple,  Suite 1300,
         Salt Lake City, Utah 84111.

(4)      The  address  of CCT  Partners  IV, LP is the same as that of  Citicorp
         Venture Capital, Ltd.

(5)      Messrs.  Pike and Gray,  pursuant to their employment  contracts,  each
         have  been  granted  an  economic   interest  in  one  percent  of  all
         outstanding  shares  of the  Company's  common  stock as of the date of
         their employment agreements. Upon their resignations,  Messrs. Pike and
         Gray retained their respective one percent  ownership.  However,  under
         the  terms  of  the  employment  agreements,   certain  components  are
         calculated as of the date of employment termination, and these economic
         interests  have  been  determined  to be of  minimal  value,  as of the
         respective  termination dates.  Another key executive,  pursuant to his
         employment  contract,  has been  granted an  economic  interest  in one
         percent of all outstanding  shares of the Company's  common stock as of
         the date of his employment agreement.  This executive is still employed
         by the Company.

(6)      Mr.  Gehrmann,  pursuant to the ISG 1999 Stock Option Plan,  has 556.75
         options exercisable within 60 days, with 1,670.25 shares exercisable in
         the  future.  Certain  other key  executives,  pursuant to the ISG 1999
         Stock Option Plan,  have 804 options  exercisable  within 60 days, with
         2,412.75 shares exercisable in the future.

Item 13.      Certain Relationships and Related Transactions

None.


                                     PART IV

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

(a)      1. Financial Statements
            See Index to Financial Statements on page F-1.

         2. Financial   Statement   Schedules
            All financial  statement  schedules have been omitted because either
            they are not  required or the  information  required to be set forth
            therein is  included in the  consolidated  financial  statements  or
            notes thereto.

         3. Exhibits

<PAGE>



Exhibit
Number      Description of Exhibit

*2.1     Amended and Restated  Secured  Credit  Facility  dated May 26, 2000 and
         Exhibits.
*2.2     First Amendment dated August 8, 2000 to the Amended and Restated Credit
         Agreement dated May 26, 2000.
**2.3    Third  Amendment and Limited Waiver dated March 30, 2001 to the Amended
         and Restated Credit Agreement dated May 26, 2000.
*3.1     Purchase  Agreement  dated March 2, 2000 by and between ISG  Resources,
         Inc. ISG Manufactured Products,  Inc. and Charlie A. Meador, Stephen D.
         Smith,  Victoria L. Smith, Deanna R. Smith, Charlie E. Meador and Blake
         A.  Meador  for the  purchase  of the  Don's  Building  Supply  limited
         liability partnership.
*3.2     Stock Purchase  Agreement dated April 30, 2000 and the Amendment to the
         Stock  Purchase  Agreement  dated  May  16,  2000  by and  between  ISG
         Resources,  Inc. and Dale & Brenda,  Ltd., Dan & Dorenda,  Ltd., Daniel
         Andrew  Smith  Family  Trust and the Dale Wayne Smith  Family Trust and
         Dale W. Smith and Danny A. Smith for the  purchase  of the  outstanding
         stock of Palestine Concrete Tile Company.
*3.3     Asset  Purchase  Agreement  dated  September 5, 2000 by and between ISG
         Resources, Inc. and Hanson Aggregates West, Inc.
**12.1   Statement re Computation of Ratio of Earnings to Fixed Charges.

----------

       *       Previously Filed.
       **      Filed herewith.

(b)  Reports on Form 8-K.
      Form 8-K/A filed November 28, 2000 regarding Hanson Asset Purchase

<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                  ISG Resources, Inc.
                                  (Registrant)

Date:  March 30, 2001      By:          /s/  R Steve Creamer
                                ---------------------------------
                                R Steve Creamer, Chairman and Chief Executive

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

     Signature                Title                               Date
     ---------                -----                               ----

 /s/ R Steve Creamer       Chairman and Chief Executive Officer   March 30, 2001
--------------------
 R Steve Creamer

 /s/ Raul A Deju           President and Chief Operating Officer  March 30, 2001
------------------------
 Raul A. Deju

 /s/ J.I. Everest, II      Chief Financial Officer, Treasurer     March 30, 2001
------------------------     and Assistant Secretary
 J.I. Everest, II

 /s/ Joseph M. Silvestri   Director                               March 30, 2001
------------------------
 Joseph M. Silvestri

<PAGE>




CONSOLIDATED FINANCIAL STATEMENTS
ISG Resources, Inc. and Subsidiaries
Years Ended December 31, 2000 and 1999 and for Each of the
Three Years in the Period Ended December 31, 2000
with Report of Independent Auditors





<PAGE>


                      ISG Resources, Inc. and Subsidiaries

                        Consolidated Financial Statements

                   Years Ended December 31, 2000 and 1999 and
       for Each of the Three Years in the Period Ended December 31, 2000:


                                    Contents

Report of Independent Auditors .............................................F-1


Audited Consolidated Financial Statements

Consolidated Balance Sheets ................................................F-2
Consolidated Statements of Operations ......................................F-4
Consolidated Statements of Comprehensive Income.............................F-5
Consolidated Statements of Shareholder's Equity.............................F-6
Consolidated Statements of Cash Flows ......................................F-7
Notes to Consolidated Financial Statements .................................F-8


Palestine Concrete Tile Company
Combined  Financial  Statements  for the Five Months  Ended May 31, 2000 and the
Years Ended December 31, 1999 and 1998:

Report of Independent Auditors ............................................F-29

Combined Financial Statements

Combined Balance Sheets ...................................................F-30
Combined Statements of Income and Retained Earnings........................F-32
Combined Statements of Cash Flows .........................................F-33
Notes to Combined Financial Statements ....................................F-34




<PAGE>



                         Report of Independent Auditors

The Board of Directors
ISG Resources, Inc. and Subsidiaries

We have audited the accompanying  consolidated  balance sheets of ISG Resources,
Inc.  and  Subsidiaries  as of  December  31,  2000  and  1999  and the  related
consolidated  statements  of  operations,  comprehensive  income,  shareholder's
equity and cash flows for each of the three years in the period  ended  December
31, 2000.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the consolidated  financial  position of ISG Resources,
Inc.  and  Subsidiaries  at  December  31, 2000 and 1999,  and the  consolidated
results of their  operations and their cash flows for each of the three years in
the period ended  December 31, 2000 in  conformity  with  accounting  principles
generally accepted in the United States.



Ernst & Young
Salt Lake City, Utah
March 5, 2001



                                      F-1
<PAGE>
<TABLE>
<CAPTION>

                      ISG Resources, Inc. and Subsidiaries

                           Consolidated Balance Sheets

                                                                            December 31
                                                                    2000                    1999
                                                          -------------------------------------------------
<S>                                                            <C>                     <C>
Assets
Current assets:
   Cash and cash equivalents                                   $       6,986,725       $              -
   Accounts receivable:
     Trade, net of allowance for doubtful accounts of
       $501,000 in 2000 and $329,000 in 1999                          24,321,302             21,167,616
     Retainage receivable                                                146,000                176,000
     Income taxes receivable                                           2,196,988                      -
     Other receivables                                                   686,684                502,058
   Deferred tax assets                                                   851,325                316,161
   Inventories                                                         6,663,633              4,055,425
   Other current assets                                                1,057,890                829,661
                                                          -------------------------------------------------
Total current assets                                                  42,910,547             27,046,921

Property, plant and equipment:
   Land and improvements                                               4,536,470              4,371,197
   Buildings and improvements                                          8,795,437              6,839,777
   Vehicles and other operating equipment                             32,299,254             27,189,160
   Furniture, fixtures and office equipment                            1,238,316              1,161,456
                                                          -------------------------------------------------
                                                                      46,869,477             39,561,590
   Accumulated depreciation                                          (12,777,609)            (7,893,374)
                                                          -------------------------------------------------
                                                                      34,091,868             31,668,216
   Construction in progress                                            3,668,688              1,915,972
                                                          -------------------------------------------------
                                                                      37,760,556             33,584,188

Other assets:
   Intangible assets, net                                            167,076,486            153,952,547
   Debt issuance costs, net                                            4,524,473              4,826,010
   Other assets                                                           62,313              1,052,845
                                                          -------------------------------------------------
Total assets                                                   $     252,334,375       $    220,462,511
                                                          =================================================
</TABLE>


                                      F-2

<PAGE>

<TABLE>
<CAPTION>
                                                                            December 31
                                                                     2000                  1999
                                                            ----------------------------------------------
<S>                                                              <C>                  <C>
Liabilities and shareholder's equity
Current liabilities:
   Accounts payable                                              $      10,704,637    $     10,409,583
   Accrued expenses:
     Payroll                                                             2,406,172           1,288,732
     Interest                                                            2,849,902           2,190,471
     Other                                                               1,826,232           1,828,537
   Income taxes payable                                                          -           1,705,678
   Other current liabilities                                               996,153             652,119
                                                            ---------------------------------------------
Total current liabilities                                               18,783,096          18,075,120

Long-term debt                                                         165,000,000         133,500,000
Deferred tax liabilities                                                37,702,524          39,158,249
Payable to industrial services group                                     2,244,022             643,983
Other liabilities                                                        1,482,848           1,923,355

Commitments and contingencies

Shareholder's equity:
   Common stock, no par value; 100 shares authorized,
     issued and outstanding                                             34,745,050          25,000,050
   Cumulative foreign currency translation adjustment                      (29,904)                  -
   Retained (deficit) earnings                                          (7,593,261)          2,161,754
                                                            ----------------------------------------------
Total shareholder's equity                                              27,121,885          27,161,804

                                                            ----------------------------------------------
Total liabilities and shareholder's equity                       $     252,334,375    $    220,462,511
                                                            ==============================================
</TABLE>

See accompanying notes.

                                      F-3

<PAGE>
<TABLE>
<CAPTION>
                      ISG Resources, Inc. and Subsidiaries

                      Consolidated Statements of Operations


                                                                       Year Ended December 31
                                                             2000                 1999               1998
                                                    -------------------------------------------------------------
<S>                                                     <C>                  <C>                 <C>
Revenues:
   Product revenues                                     $   146,818,172      $   120,319,575     $    83,048,721
   Service revenues                                          34,083,689           35,885,697          34,243,854
                                                    -------------------------------------------------------------
                                                            180,901,861          156,205,272         117,292,575
Costs and expenses:
   Cost of products sold, excluding depreciation            108,368,626           83,442,725          51,878,447
   Cost of services sold, excluding depreciation             24,723,948           25,221,695          28,237,385
   Depreciation and amortization                             14,954,431           13,091,131           9,140,938
   Unsuccessful acquisition costs                             1,525,386                    -                   -
   Selling, general and administrative expenses              26,326,402           18,962,157          14,144,765
   New product development                                    2,331,510            2,166,218                   -
                                                    -------------------------------------------------------------
                                                            178,230,303          142,883,926         103,401,535
                                                    -------------------------------------------------------------
Operating income                                              2,671,558           13,321,346          13,891,040

Interest income                                                 172,708               44,100             183,113
Interest expense                                            (15,804,378)         (13,391,944)         (9,338,059)
Miscellaneous income, net                                       211,420              311,675              72,386
                                                    -------------------------------------------------------------
Income (loss) before income tax expense (benefit)           (12,748,692)             285,177           4,808,480
Income tax expense (benefit)                                 (2,993,677)             647,589           2,549,026
                                                    -------------------------------------------------------------
Net income (loss)                                       $    (9,755,015)     $      (362,412)    $     2,259,454
                                                    =============================================================

</TABLE>

See accompanying notes.

                                      F-4

<PAGE>


<TABLE>
<CAPTION>

                      ISG Resources, Inc. and Subsidiaries

                 Consolidated Statements of Comprehensive Income


                                                                       Year ended December 31
                                                              2000                1999              1998
                                                     -----------------------------------------------------------

<S>                                                       <C>                    <C>               <C>
Net income (loss)                                         $  (9,755,015)         $  (362,412)      $  2,259,454
Other comprehensive income (loss)
   net of tax:
   Foreign currency translation adjustment                      (29,904)                   -                  -
                                                     -----------------------------------------------------------
Comprehensive income (loss)                               $  (9,784,919)         $  (362,412)      $  2,259,454
                                                     ===========================================================

</TABLE>


See accompanying notes.


                                      F-5
<PAGE>

<TABLE>
<CAPTION>
                      ISG Resources, Inc. and Subsidiaries
                 Consolidated Statements of Shareholder's Equity


                                                                                  Cumulative
                                                                                   Foreign
                                                                Additional         Currency         Retained           Total
                                                  Common         Paid-In          Translation      (Deficit)       Shareholder's
                                                   Stock          Capital          Adjustment        Earnings          Equity
                                         ------------------------------------------------------------------------------------------
<S>                                        <C>                  <C>              <C>           <C>                   <C>
Balance at December 31, 1997               $           100      $  24,999,950    $         -   $       264,712       $25,264,762
   Net income                                            -                  -              -         2,259,454         2,259,454
                                         ------------------------------------------------------------------------------------------
Balance at December 31, 1998                           100         24,999,950              -         2,524,166        27,524,216
   Change to no par value                       24,999,950        (24,999,950)             -                 -                 -
   Net loss                                              -                  -              -          (362,412)         (362,412)
                                         ------------------------------------------------------------------------------------------
Balance at December 31, 1999                    25,000,050                  -              -         2,161,754        27,161,804

   Contribution from parent                      9,745,000                  -              -                 -         9,745,000
   Foreign currency translation
     adjustment                                          -                  -        (29,904)                -           (29,904)
   Net loss                                              -                  -              -        (9,755,015)       (9,755,015)
                                         ------------------------------------------------------------------------------------------
Balance at December 31, 2000                   $34,745,050      $           -       $(29,904)      $(7,593,261)      $27,121,885
                                         ==========================================================================================
</TABLE>



See accompanying notes.


                                      F-6
<PAGE>
<TABLE>
<CAPTION>

                      ISG Resources, Inc. and Subsidiaries

                      Consolidated Statements of Cash Flows

                                                                         Year ended December 31
                                                            2000             1999             1998
                                                     ------------------------------------------------------
<S>                                                    <C>               <C>               <C>
Operating activities
Net income (loss)                                      $   (9,755,015)   $     (362,412)   $   2,259,454
Adjustments to reconcile net income (loss) to net
   cash provided by operating activities:
     Depreciation and amortization                         14,954,431        13,091,131        9,140,938
     Amortization of debt issuance costs                      831,145           702,032          463,585
     Deferred income taxes                                 (1,897,729)       (2,229,539)      (1,697,407)
     Loss on sale of assets                                    69,298            24,168           46,513
     Gain on sale of subsidiary                                     -          (333,749)               -
     Changes in operating assets and liabilities:
         Receivables                                          290,482        (2,755,382)      (1,479,648)
         Inventories                                         (732,216)       (1,733,832)         231,658
         Other current and non-current assets                 832,073          (879,189)         (91,603)
         Accounts payable                                    (427,303)        4,485,877         (606,834)
         Income taxes                                      (3,902,666)        1,257,583         (245,447)
         Accrued expenses                                   1,296,436          (929,504)         759,326
         Other current and non-current liabilities           (875,141)         (776,804)        (570,491)
                                                     ------------------------------------------------------
Net cash provided by operating activities                     683,795         9,560,380        8,210,044

Investing activities
Purchase of businesses, net of cash acquired              (27,130,514)      (24,866,989)     (77,753,012)
Proceeds from sale of subsidiary                                    -           750,000                -
Additions to intangible assets                             (1,275,703)         (877,349)        (691,847)
Purchases of property, plant and equipment                 (8,185,589)       (8,790,870)      (8,574,086)
Proceeds from sales of property, plant and equipment          609,210           415,994          396,399
                                                     ------------------------------------------------------
Net cash used in investing activities                     (35,982,596)      (33,369,214)     (86,622,546)

Financing activities
Proceeds from long-term debt                              168,500,000       127,000,000      154,000,000
Payments on long-term debt                               (137,000,000)     (103,500,000)     (73,000,000)
Debt issuance costs                                          (529,609)         (335,149)      (5,656,478)
Increase in payable to industrial services group            1,600,039           643,983                -
Cash contributions from Parent                              9,745,000                 -                -
                                                     ------------------------------------------------------
Net cash provided by financing activities                  42,315,430        23,808,834       75,343,522

Effect of exchange rate changes on cash and cash
   equivalents                                                (29,904)                -                -
                                                     ------------------------------------------------------
Net increase (decrease) in cash and cash equivalents        6,986,725                 -       (3,068,980)
Cash and cash equivalents at beginning of period                    -                 -        3,068,980
                                                     ------------------------------------------------------
Cash and cash equivalents at end of period             $    6,986,725    $            -    $           -
                                                     ======================================================

Cash paid for interest                                 $   14,293,589    $   12,605,495    $   7,396,124
                                                     ======================================================
Cash paid for income taxes                             $    1,276,277    $      902,123    $   3,989,414
                                                     ======================================================
</TABLE>
See accompanying notes.
                                      F-7
<PAGE>

                      ISG Resources, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                                December 31, 2000

1.  Basis of Presentation

ISG  Resources,  Inc., a Utah  corporation  (the  "Company"),  is a wholly owned
subsidiary  of  Industrial  Services  Group,  Inc.  ("ISG").  ISG was  formed in
September 1997 and acquired the stock of JTM Industries, Inc. ("JTM") on October
14,  1997.  In 1998,  JTM  acquired  the  stock of  Pozzolanic  Resources,  Inc.
("Pozzolanic"), Power Plant Aggregates of Iowa, Inc. ("PPA"), Michigan Ash Sales
Company, d.b.a. U. S. Ash Company,  together with two affiliated companies, U.S.
Stabilization,  Inc. and Flo Fil Company, Inc., (collectively,  "U.S. Ash"), and
Fly  Ash  Products,   Inc.  ("Fly  Ash  Products")   (collectively,   the  "1998
Acquisitions").  Effective January 1, 1999, JTM, Pozzolanic,  PPA, U.S. Ash, Fly
Ash  Products  and their  wholly  owned  subsidiaries  merged  with and into the
Company (the "Merger").  Pneumatic Trucking,  Inc., a wholly owned subsidiary of
Michigan  Ash Sales  Company,  was not merged  into the  Company.  Consequently,
Pneumatic became a wholly owned subsidiary of the Company.

In 1999, the Company  acquired the stock of Best Masonry & Tool Supply ("Best"),
Mineral  Specialties,  Inc.  ("Specialties"),  Irvine Fly Ash, Inc.  ("Irvine"),
Lewis  W.  Osborne,   Inc.   ("Osborne"),   United  Terrazzo  Supply  Co.,  Inc.
("Terrazzo"),  and  Magna  Wall,  Inc.  ("Magna  Wall")  and  sold  all  of  the
outstanding stock of Pneumatic.

In 2000,  ISG  Canada  Limited,  Inc.  ("ISG  Canada")  was  formed and became a
wholly-owned  foreign  subsidiary  of  the  Company,  with  fly  ash  operations
beginning in the second half of 2000.

On March 2, 2000,  the Company  acquired  directly  and  indirectly  through ISG
Manufactured  Products,  Inc., a newly  formed  wholly-owned  subsidiary  of the
Company,  all of the  partnership  interest  of  Don's  Building  Supply  L.L.P.
("Don's") for  approximately  $5,900,000 in cash. Don's is engaged in the retail
and  wholesale   distribution  of  construction  materials  to  residential  and
commercial contractors primarily in the State of Texas.

The purchase  price of Don's was  allocated  based on  estimated  fair values of
assets and liabilities at the date of acquisition.  Goodwill  resulting from the
difference  between the purchase price plus acquisition costs and the net assets
acquired  totaled   approximately   $4,300,000  and  is  being  amortized  on  a
straight-line basis over 20 years.

                                      F-8

<PAGE>

                      ISG Resources, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

1.  Basis of Presentation (continued)

On May 31, 2000, the Company  completed the acquisition of all outstanding stock
of Palestine  Concrete Tile Company,  Inc. and certain  associated real property
(collectively, "Palestine") for approximately $18,500,000 in cash. Additionally,
the Company paid off outstanding debt of Palestine for approximately $1,000,000.
Palestine  is a Texas  corporation  primarily  engaged  in the  manufacture  and
distribution  of  concrete  block.  The  Company  financed  the  acquisition  of
Palestine by obtaining a $15,000,000  increase in the Secured Credit Facility on
May 26, 2000 and  receiving an equity  contribution  of  $9,745,000  from ISG on
April 19, 2000.

The purchase price of Palestine was allocated  based on estimated fair values of
assets and liabilities at the date of acquisition.  Goodwill  resulting from the
difference  between the purchase price plus acquisition costs and the net assets
acquired  totaled  approximately  $15,000,000,  and  is  being  amortized  on  a
straight-line basis over 20 years.

On September 15, 2000, the Company acquired certain fixed and intangible  assets
from Hanson Aggregates West, Inc.  ("Hanson").  Hanson is a subsidiary of Hanson
PLC, a leading international building materials company with operations in North
America and Europe.  The Company  negotiated a purchase  price of  $2,100,000 in
cash for equipment and other fixed assets, as well as contracts with three Texas
and  Louisiana  power plants.  ISG will utilize the assets  purchased to provide
materials  management services under the utility contracts acquired in the asset
acquisition.

Each of the above  acquisitions  was accounted for under the purchase  method of
accounting and,  accordingly the results of operations of each acquired  company
have been included in the consolidated financial statements since the respective
date of acquisition.

The purchase prices of the above  acquisitions were allocated based on estimated
fair values of assets and  liabilities at the respective  dates of  acquisition.
Goodwill  resulting  from  the  difference  between  the  purchase  prices  plus
acquisition  costs and the net assets of the companies  acquired in 1999 totaled
approximately  $20,073,000.  Goodwill  resulting from the difference between the
purchase  prices  plus  acquisition  costs and the net  assets of the  companies
acquired in 2000 totaled  approximately  $19,297,000.  All recorded  goodwill is
being amortized on a straight-line basis over 20 to 25 years.


                                      F-9
<PAGE>

                      ISG Resources, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

1.  Basis of Presentation (continued)

The following pro forma combined financial information reflects operations as if
all of the  above  acquisitions  and  the  related  financing  transactions  had
occurred as of January 1, 1999. The pro forma combined financial  information is
presented for  illustrative  purposes only, does not purport to be indicative of
the Company's results of operations as of the date hereof and is not necessarily
indicative of what the Company's  actual  results of operations  would have been
had the  acquisitions  and the financing  transactions  been consummated on such
date.

                                            Year Ended December 31
                                           2000                 1999
                                    -------------------- -------------------
          Revenues                    $ 196,468,000        $  199,314,000
          Net income (loss)           $  (8,914,000)       $      643,000

2.  Description of Business and Summary of Significant Accounting Policies

Description of Business

The Company  operates two principal lines of business:  coal combustion  product
(CCP) management and building materials manufacturing and distribution.  The CCP
division  purchases,  removes  and sells fly ash and other  by-products  of coal
combustion  to producers and  consumers of building  materials and  construction
related products  throughout the United States.  The building materials division
manufactures and distributes masonry  construction  materials to residential and
commercial  contractors  primarily  located in Texas,  California,  Georgia  and
Florida.

Principles of Consolidation

These  financial  statements  reflect the  consolidated  financial  position and
results of  operations  of the Company and its wholly  owned  subsidiaries.  All
significant  intercompany  accounts and  transactions  have been  eliminated  in
consolidation.  Certain  reclassifications  have been  made to the prior  years'
amounts to conform to the current year presentation.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, bank deposits, and highly liquid
financial  instruments  purchased  with  original  maturities of three months or
less.

                                      F-10
<PAGE>

                      ISG Resources, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

2.  Description of Business and Summary of Significant  Accounting Policies
    (continued)

Foreign Currency Translation

The results of operations for the Company's foreign subsidiary,  ISG Canada, are
translated  into U.S dollars  using average  exchange  rates during each period;
assets and  liabilities  are translated  using exchange rates at the end of each
period.  Translation  gains and  losses are  reported  as a  component  of other
comprehensive income in the Company's  consolidated  statements of comprehensive
income.

Revenue Recognition

Revenue from the sale of products is recognized  primarily upon passage of title
to  the  customer,   which  generally   coincides  with  physical  delivery  and
acceptance.  CCP  product  revenues  generally  include  transportation  charges
associated with delivering the material.

Service revenues include revenues earned under long-term contracts to dispose of
residual materials created by coal-fired power generation and revenues earned in
conjunction with certain construction-related  projects, which are incidental to
the primary  business.  Typical  long-term  disposal  contracts are from five to
fifteen years.  Service  revenues  under the long-term  contracts are recognized
concurrent  with the  removal of the  material  and are  typically  based on the
number  of tons of  material  removed  at an  established  price  per  ton.  The
construction-related  projects  are  generally  billed  on a time and  materials
basis;  therefore,  the  revenues  and  costs  are  recognized  when the time is
incurred and the materials are used.

Cost of CCP products sold are primarily amounts paid to the utility companies to
purchase  product together with storage and  transportation  costs of delivering
the product to the customer.  Cost of services  sold includes  landfill fees and
transportation charges to deliver the product to the landfill.  Overhead charges
incurred by a facility  which  generates  both product and service  revenues are
allocated  to cost of  products  sold and  cost of  services  sold  based on the
percentage of revenue.

                                      F-11

<PAGE>

                      ISG Resources, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

2.  Description of Business and Summary of Significant Accounting Policies
    (continued)

Concentrations of Credit Risk

Concentrations  of credit  risk in  accounts  receivable  are limited due to the
large number of customers  comprising the Company's customer base throughout the
United States.  No single customer  provides 10 percent or more of the Company's
revenue.  The Company performs ongoing credit evaluations of its customers,  but
does  not  require   collateral  to  support   customer   accounts   receivable.
Historically, the Company has not had significant uncollectible accounts.

New Product Development

New product development costs consist of scientific research and development and
market development  expenditures.  Expenditures of $1,837,076 and $1,796,032 for
the years ended December 31, 2000 and December 31, 1999, respectively, were made
for research and development  activities  covering basic scientific research and
application  of  scientific  advances  to the  development  of new and  improved
products  and  processes.  Expenditures  of $494,434  and $370,186 for the years
ended  December  31, 2000 and December  31,  1999,  respectively,  were made for
market development activities related to promising new and improved products and
processes  identified  during research and development  activities.  The Company
expenses all new product  development costs when they are incurred.  The Company
incurred no new product development costs in the year ended December 31, 1998.

Inventories

The Company  accounts for inventory  balances  using the lower of cost or market
method on a first-in,  first-out basis.  Inventories consist of the following at
December 31:

                                           2000                  1999
                                   --------------------- ---------------------
                 Raw materials            $1,062,436         $     234,073
                 Finished goods            5,601,197             3,821,352
                                   --------------------- ---------------------
                                          $6,663,633            $4,055,425
                                   ===================== =====================

                                      F-12

<PAGE>

                      ISG Resources, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)


2.  Description of Business and Summary of Significant Accounting Policies
    (continued)

Property, Plant and Equipment

Property,  plant and equipment acquired in the acquisitions described above were
recorded at estimated  fair value at the dates of the  respective  acquisitions.
Property,  plant  and  equipment  acquired  subsequent  thereto,   renewals  and
betterments  are  recorded at cost.  Maintenance  and  repairs  are  expensed as
incurred.   Upon  sale  or  retirement,   the  costs  and  related   accumulated
depreciation are eliminated from property, plant and equipment and any resulting
gain or loss is included in income.  Depreciation is provided over the estimated
useful lives or lease terms, if less, using the straight-line method as follows:

        Land improvements                           1 to 20 years
        Buildings and improvements                  3 to 40 years
        Vehicles and other operating equipment      2 to 12 years
        Furniture, fixtures and office equipment    1 to 7 years

Depreciation expense was approximately $5,482,000, $4,996,000 and $3,281,000 for
the years ended December 31, 2000, 1999 and 1998, respectively.

Intangible Assets

The cost of acquired  companies is allocated first to identifiable  assets based
on estimated fair values. Costs allocated to identifiable  intangible assets are
amortized on a straight-line  basis over the remaining estimated useful lives of
the assets,  as determined  principally by the underlying terms of the contracts
and  patents  acquired  and  the  underlying  characteristics  of the  assembled
workforce  acquired.  The  excess of the  purchase  price over the fair value of
identifiable  assets  acquired,  net of  liabilities  assumed,  is  recorded  as
goodwill and amortized on a straight-line  basis over the estimated useful life.
The  estimated  useful life for goodwill is determined  based on the  individual
characteristics  of the  acquired  entity  and  ranges  from  20  years  for the
Company's building materials  acquisitions to 25 years for the Company's fly ash
acquisitions.


                                      F-13
<PAGE>

                      ISG Resources, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

2.  Description of Business and Summary of Significant Accounting Policies
    (continued)

Intangible Assets (continued)

Intangible  assets  consist of goodwill,  contracts,  patents and licenses,  and
assembled  workforce.   Amortization   expense  was  approximately   $8,994,000,
$8,095,000 and $5,860,000 for the years ended December 31, 2000,  1999 and 1998,
respectively.  Amortization  is provided over the  estimated  period of benefit,
using the straight-line method as follows:

             Goodwill                                         20 to 25 years
             Contracts                                        10 to 20 years
             Patents and licenses                             13 to 19 years
             Assembled workforce                                     8 years

Debt Issuance Costs

Debt  issuance  costs relate to costs  incurred  with the issuance of the Senior
Subordinated  Notes  and the  Secured  Credit  Facility.  These  costs are being
amortized to interest  expense over the respective lives of the debt issues on a
straight-line   basis,   which   approximates  the  effective  interest  method.
Amortization expense was approximately  $831,000,  $702,000 and $464,000 for the
years ended December 31, 2000, 1999 and 1998, respectively.

Income Taxes

Provisions  for federal and state income taxes are  calculated  based on current
tax laws.  Deferred  taxes are  provided to  recognize  the income tax effect of
amounts that are included in different reporting periods for financial statement
and tax purposes.

The  Company  files a  consolidated  income tax  return  with its  parent,  ISG.
Deductions of ISG are used to offset taxable income or increase  taxable losses,
thereby increasing net operating loss carryovers,  of the Company.  As a result,
the Company and ISG have an informal arrangement whereby the Company compensates
ISG for the tax  effect  of the use of ISG's  deductions.  This  arrangement  is
reflected in the Company's payable to ISG.


                                      F-14
<PAGE>

                      ISG Resources, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

2.  Description of Business and Summary of Significant Accounting Policies
    (continued)

Fair Value of Financial Instruments

Financial  instruments  included in various  categories  within the accompanying
balance sheets consist of the following at December 31:
<TABLE>
<CAPTION>

                                                     2000                               1999
                                          Carrying            Fair            Carrying           Fair
                                            Value            Value             Value             Value
                                       ---------------- ----------------- ----------------- ----------------

<S>                                       <C>              <C>               <C>              <C>
Short-term assets                         $ 32,140,711     $ 32,140,711      $ 21,845,674     $ 21,845,674
Short-term liabilities                      18,783,096       18,783,096        16,369,442       16,369,442
Long-term debt:
   Senior subordinated notes               100,000,000       60,000,000       100,000,000       85,000,000
   Secured credit facility                  65,000,000       65,000,000        33,500,000       33,500,000
Other liabilities                            1,241,769          979,310         1,613,393        1,255,000
</TABLE>

The carrying value of short-term  assets and liabilities  approximate fair value
due to the  short-term  nature of the  instruments.  The  carrying  value of the
secured credit facility approximates the fair value due to the variable interest
rate features of the instrument. The fair value of the senior subordinated notes
is based on quoted market prices.  The fair value of other  liabilities is based
on  the  present  value  of  future  cash  flows  discounted  at  the  Company's
incremental borrowing rate.

Long-lived Assets

The Company  regularly  evaluates  the carrying  amounts of  long-lived  assets,
including  goodwill  and  other  intangible  assets,  as  well  as  the  related
amortization  periods,  to determine whether  adjustments to these amounts or to
the useful  lives are required  based on current  circumstances  or events.  The
evaluation,  which involves significant management judgment, is based on various
analyses including cash flow and profitability  projections.  To the extent such
projections  indicate that future  undiscounted cash flows are not sufficient to
recover the  carrying  amounts of the related  long-lived  assets,  the carrying
amount of the underlying  assets will be reduced,  with the reduction charged to
expense,  so  that  the  carrying  amount  is  equal  to fair  value,  primarily
determined based on future discounted cash flows. No impairment of the Company's
intangible assets has been indicated to date.

                                      F-15
<PAGE>

                      ISG Resources, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

2.  Description of Business and Summary of Significant Accounting Policies
    (continued)

Long-lived Assets (continued)

In January  2000,  the Company  capitalized  to  property,  plant and  equipment
certain costs associated with the construction of a carbon ash burnout unit. The
unit  was to be used  for  the  separation  of  carbon  from  fly ash and in the
continuing  research and  development  efforts related to the improvement of the
carbon separation technology.

During the third and fourth  quarters of 2000, the Company  determined  that the
technology   being  tested  by  the  carbon  ash  burnout  unit  was  no  longer
commercially  viable.  Furthermore,  the  Company  decided to pursue a different
technology to eliminate the effects of high carbon  content.  Consequently,  the
Company  determined that the carbon ash burnout unit would no longer be utilized
for its intended  purpose.  Thus,  in accordance  with the Financial  Accounting
Standards Board Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of" (SFAS 121), the Company  concluded  that an impairment  loss existed and the
net book value of the asset was removed from property, plant and equipment.

An impairment loss of  approximately  $478,000 is recognized in operating income
and is included in the aggregate total for  depreciation and amortization in the
Company's  audited  consolidated  statements  of  operations  for the year ended
December 31, 2000.

Use of Estimates

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

New Accounting Pronouncements

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin (SAB) 101, Revenue Recognition in Financial  Statements.  The effective
date of SAB 101 is the fourth quarter of fiscal years  beginning  after December
15, 1999. This SAB clarifies proper methods of revenue recognition given certain
circumstances

                                      F-16
<PAGE>

                      ISG Resources, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

2.  Description of Business and Summary of Significant Accounting Policies
    (continued)

New Accounting Pronouncements (continued)

surrounding sales transactions.  The Company has evaluated the impact of SAB 101
and  believes  it  is  in  compliance  with  the  provisions  of  the  SAB,  and
accordingly,  the  adoption  of SAB 101 in the  fourth  quarter  did not  have a
material effect on the Company's financial statements.


In  1998,  the  Financial  Accounting  Standards  Board  issued  SFAS  No.  133,
"Accounting  for  Derivative  Instruments  and  Hedging  Activities,"  which was
subsequently  amended  by SFAS No.  137  "Accounting  for  Derivative  Financial
Instruments and Hedging  Activities - Deferral of the Effective Date of SFAS No.
133" and SFAS No. 138 "Accounting for Certain Derivative Instruments and Certain
Hedging Activities." SFAS No. 133 establishes accounting and reporting standards
requiring  that  every  derivative  instrument,   including  certain  derivative
instruments  embedded in other  contracts,  be recorded in the balance  sheet as
either an asset or  liability  measured at its fair value.  The  statement  also
requires that changes in the  derivative's  fair value be recognized in earnings
unless specific hedge  accounting  criteria are met. SFAS No. 133, as amended by
SFAS No. 137 and SFAS No. 138, is effective for all fiscal years beginning after
June 15, 2000.  The Company does not expect the adoption of SFAS No. 133 to have
a material impact on the Company's financial condition or results of operations.

3.  Intangible Assets

Intangible assets consist of the following at December 31:

                                             2000                 1999
                                     --------------------- --------------------
      Goodwill                        $      83,610,925     $     64,313,512
      Contracts                             100,227,490           98,522,146
      Patents and licenses                    3,787,431            2,787,431
      Assembled work force                    2,815,233            2,700,233
                                     --------------------- --------------------
                                            190,441,079          168,323,322
      Less accumulated amortization         (23,364,593)         (14,370,775)
                                     --------------------- --------------------
                                           $167,076,486         $153,952,547
                                     ===================== ====================

                                      F-17

<PAGE>

                      ISG Resources, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

4.  Long-term Debt

Secured Credit Facility

On March 4, 1998, the Company  obtained a Secured Credit Facility  provided by a
syndicate of banks.  The Secured Credit  Facility  enables the Company to obtain
revolving  secured  loans  from  time  to  time  to  finance  certain  permitted
acquisitions,  to pay fees and  expenses  incurred in  connection  with  certain
acquisitions,  to repay  existing  indebtedness,  and for  working  capital  and
general corporate purposes.  The Company financed the 1998 and 1999 Acquisitions
through the issuance of $100,000,000 of 10% Senior  Subordinated  Notes due 2008
(discussed below) and borrowings on its Secured Credit Facility (as subsequently
amended and  restated).  The Company  financed the  acquisition  of Palestine by
obtaining a $15,000,000  increase in the Secured Credit Facility on May 26, 2000
(discussed  below).  Operating  and  capital  expenditures  have  been  financed
primarily  through cash flow from  operations and  borrowings  under the Secured
Credit Facility.

On May 26, 2000, the Secured Credit  Facility was amended and restated to, among
other things,  increase the borrowings available to the Company from $50,000,000
to $65,000,000.

This increase in the funds available to the Company was accomplished through the
addition of a Tranche B feature,  pursuant to which two of the existing lenders,
Bank of America,  N.A. and Zions First  National Bank (the "Tranche B Lenders"),
agreed to provide the additional  $15,000,000 in funding. No amount is available
pursuant to the Tranche B revolving loans unless all amounts under the Tranche A
(existing) revolving loans have been borrowed in full and are outstanding. Under
the amended and restated Secured Credit Facility,  at the option of the Company,
both the  Tranche A Revolving  Loans and the  Tranche B  Revolving  Loans may be
maintained as Eurodollar Loans or Base Rate Loans.

Eurodollar  loans will bear  interest  at a per annum rate equal to the rate per
annum  (rounded  upwards,  if  necessary,  to the  nearest  1/100 of 1  percent)
determined by the  Administrative  Agent to be equal to the quotient by dividing
(a) Interbank  Offered Rate for such Eurodollar Loan for such Interest Period by
(b) 1 minus the Reserve  Requirement  for such Eurodollar Loan for such Interest
Period,  and by then adding  thereto the  applicable  LIBOR  margin  (which is a
percentage  ranging from 1.75% to 3.50% for the Tranche A and 1.75% to 2.50% for
the Tranche B,  depending  primarily  upon the Company's  Leverage  Ratio).  All
capitalized terms are defined in the Secured Credit Facility.

                                      F-18
<PAGE>

                      ISG Resources, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

4.  Long Term Debt (continued)

Secured Credit Facility (continued)

Base Rate Loans will bear  interest  at a per annum rate equal to the rate which
is the higher of (a) the  Federal  Funds rate for such day plus  one-half of one
percent  (0.5%) and (b) the Prime rate for such day and by then  adding  thereto
the applicable ABR Margin (which is a percentage ranging from 0.50% to 2.25% for
the Tranche A and .50% to 1.25% for the Tranche B, depending  primarily upon the
Company's  Leverage  Ratio).  Any change in the Base Rate due to a change in the
Federal Funds Rate or to the Prime Rate shall be effective on the effective date
of such  change.  All  capitalized  terms are as defined in the  Secured  Credit
Facility.

The Company will also pay certain fees with respect to any unused portion of the
amended and restated Secured Credit Facility.

The amended and  restated  Secured  Credit  Facility  maintains  the term of the
original  Secured  Credit  Facility  obtained on March 4, 1998, is guaranteed by
ISG,   existing,   and  future   domestic   subsidiaries  of  the  Company  (the
"Guarantors"),  and is secured by a first priority  security  interest in all of
the capital  stock of the  Company  and all of the capital  stock of each of the
Guarantors,  as well as certain  present and future assets and properties of the
Company and any domestic subsidiaries.

On August 8, 2000, the amended and restated  secured credit  agreement dated May
26, 2000 was amended in order to modify certain debt covenants  contained in the
credit agreement.  Primarily,  a minimum  consolidated  Earnings Before Interest
Expense,  Income Tax Expense,  Depreciation  Expense,  and Amortization  Expense
(EBITDA)  debt  covenant was added.  The minimum  consolidated  EBITDA  covenant
requires  the  Company to  maintain  a minimum  EBITDA  amount for every  fiscal
quarter through June 30, 2003 at levels set forth in the agreement.

On March 30, 2001, the amended and restated  secured credit  agreement dated May
26,  2000 and  subsequently  amended on August 8, 2000,  was amended in order to
modify certain debt covenants contained in the credit agreement. The amended and
restated secured credit facility  continues to require the Company to not exceed
a maximum leverage ratio, to not drop below a minimum  interest  coverage ratio,
to not drop  below a minimum  consolidated  EBITDA  level,  and to  comply  with
certain other financial and non-financial  covenants,  as defined in the amended
agreement.

                                      F-19
<PAGE>

                      ISG Resources, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

4.  Long Term Debt (continued)

Secured Credit Facility (continued)

At  December  31,  2000,   $65,000,000  of  the  Secured  Credit   Facility  was
outstanding, with no amount being unused and available.

Senior Subordinated Notes

On April 22, 1998,  the Company  completed a private  placement of  $100,000,000
aggregate  principal  amount  of 10%  Senior  Subordinated  Notes  due 2008 (the
"Senior Subordinated  Notes") to finance the 1998 Acquisitions.  Interest on the
Senior Subordinated Notes is payable semi-annually on April 15 and October 15 of
each year. The Senior  Subordinated  Notes will mature on April 15, 2008 and are
guaranteed fully and  unconditionally and on a joint and several basis by all of
the Company's  existing and future  restricted  subsidiaries,  as defined in the
indenture.

The Senior  Subordinated  Notes are  redeemable  at the option of the Company at
various times throughout the term of the Senior Subordinated Notes at redemption
prices specified in the indenture.

Upon the  occurrence  of a change of  control or an asset sale as defined in the
indenture, the Company is required to make an offer to repurchase all or part of
the Senior Subordinated Notes at prices specified in the indenture.

The payment of principal,  interest,  and  liquidated  damages as defined in the
indenture,  if any, on the Senior Subordinated Notes is subordinated in right of
payment  to the prior  payment  of all  senior  indebtedness  as  defined in the
indenture,  whether  outstanding  on the  date of the  indenture  or  thereafter
incurred.  The indenture for the Company's  Senior  Subordinated  Notes contains
various limitations on the incurrence of additional  indebtedness,  the issuance
of preferred stock,  consolidations or mergers,  sales of assets, and restricted
payments,  including dividends,  for the Company and restricted  subsidiaries as
defined in the indenture.

In connection with the private placement of the Senior  Subordinated  Notes, the
Company entered into the  Registration  Rights  Agreement  pursuant to which the
Company was required to file an exchange offer  registration  statement with the
Securities and Exchange Commission that was declared effective by the Securities
and Exchange Commission on September 4, 1998.

                                      F-20
<PAGE>

                      ISG Resources, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

4.  Long Term Debt (continued)

Senior Subordinated Notes (continued)

The aggregate  maturities of all long-term debt for the five years subsequent to
December 31, 2000 are as follows:  $0 in 2001-2002,  $65,000,000  in 2003, $0 in
2004 and $100,000,000 thereafter.

5.  Employee Benefit Plan

Prior  to  April  1,  1998,  eligible  employees  of the  Company  were  able to
participate in a 401(k) savings plan (the "JTM Plan")  sponsored by an affiliate
of the former  owner of JTM.  Under the terms of the JTM plan,  the  Company was
required to match employee contributions, as defined, up to 3% of the employees'
compensation.  Expenses related to the JTM plan were  approximately  $59,000 for
the period from January 1, 1998 to March 31, 1998.

Subsequent to April 1, 1998,  eligible  employees of the Company may participate
in a 401(k)  savings  plan  (the  "ISG  Plan")  sponsored  by ISG.  The ISG Plan
requires the Company to match employee  contributions,  as defined,  up to 6% of
the employees' compensation. Expenses related to the ISG Plan were approximately
$488,000  and  $458,000  for  the  years  ended  December  31,  2000  and  1999,
respectively,  and  $265,000  for the period from April 1, 1998 to December  31,
1998.




                                      F-21

<PAGE>

                      ISG Resources, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

6.  Income Taxes

Income tax expense (benefit) consists of the following:

                                        Year ended December 31
                          2000                 1999                1998
                   -------------------------------------------------------------
Current:
   U.S. federal      $     (961,266)       $    2,150,860    $    3,542,755
   State                   (134,682)              726,268           703,678
                   -------------------------------------------------------------
                         (1,095,948)            2,877,128         4,246,433
Deferred:
   U.S. federal          (1,853,840)           (1,847,270)       (1,416,129)
   State                    (43,889)             (382,269)         (281,278)
                   -------------------------------------------------------------
                         (1,897,729)           (2,229,539)       (1,697,407)
Total:
   U.S. federal          (2,815,106)              303,590         2,126,626
   State                   (178,571)              343,999           422,400
                   -------------------------------------------------------------
                        $(2,993,677)       $      647,589    $    2,549,026
                   =============================================================

Reconciliation of income tax expense (benefit) at the U.S. statutory rate to the
Company's tax expense (benefit) is as follows:

                                             Year ended December 31
                                      2000             1999           1998
                                  ----------------------------------------------
     35% of income (loss) before
        income tax                  $(4,461,308)    $     99,812    $1,628,968

     Add:
        Non-deductible goodwill       1,170,888          901,551       527,208
        Other, net                      296,743         (353,774)      338,850
                                  ----------------------------------------------
                                    $(2,993,677)    $    647,589    $2,549,026
                                  ==============================================

                                      F-22

<PAGE>

                      ISG Resources, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

6.  Income Taxes (continued)

The major  components of the deferred tax assets and  liabilities as of December
31 are as follows:

                                                    2000               1999
                                             -----------------------------------
Deferred tax assets:
   Bad debt reserves                          $     193,873     $      128,602
   Accruals not currently deductible for
     tax purposes                                   696,570            362,217
                                             -----------------------------------
Total gross deferred tax assets                     890,443            490,819

Deferred tax liabilities:
  Fixed asset basis differences                   2,862,317          2,980,762
  Intangible asset basis differences             34,878,740         36,274,790
  Other                                                 585             77,355
                                             -----------------------------------
Total gross deferred tax liabilities             37,741,642         39,332,907
                                             -----------------------------------
Net deferred tax liabilities                  $ (36,851,199)    $  (38,842,088)
                                             ===================================

7.  Commitments and Contingencies

Lease Obligations

Certain  facilities  and  equipment  are leased under  non-cancelable  operating
leases,  which  generally have renewal terms,  expiring in various years through
2006.

Future  minimum  payments  under leases with  initial  terms of one year or more
consisted of the following at December 31, 2000:

2001                                               $     7,001,914
2002                                                     5,979,274
2003                                                     4,753,516
2004                                                     2,480,389
2005                                                       990,869
Thereafter                                                 418,635
                                                  -------------------
Total minimum lease payments                           $21,624,597
                                                  ===================

                                      F-23

<PAGE>

                      ISG Resources, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

7.  Commitments and Contingencies

Lease Obligations (continued)

Total rental  expense was  approximately  $8,067,000 for the year ended December
31, 2000, $7,595,000 for the year ended December 31, 1999 and $6,113,000 for the
year ended December 31, 1998.

Sale and Purchase Commitments

The Company's  contracts with its customers and suppliers require the Company to
make minimum sales and purchases over ensuing years, approximated as follows:

                                  Minimum             Minimum
                                   Sales             Purchases
                             ---------------------------------------

      2001                         $250,800        $    8,548,000
      2002                                -             9,147,000
      2003                                -             9,590,000
      2004                                -             8,599,000
      2005                                -             3,022,000
      Thereafter                          -            16,152,000
                             ---------------------------------------
                                   $250,800           $55,058,000
                             =======================================

Minimum  sales  and  purchases   under   contracts  with  minimum   requirements
approximated $364,000 and $6,637,000,  respectively, for the year ended December
31, 2000, and $806,000 and $5,930,000, respectively, for the year ended December
31, 1999 and $800,000 and $4,523,000,  respectively, for the year ended December
31, 1998.

Royalty Commitments

In connection  with a 1998  acquisition,  the Company agreed to pay a minimum of
$500,000 per year  commencing in 1999 and continuing  through 2003 for royalties
related  to the sale of certain  Class C fly ash.  The  current  portion of this
liability is recorded in other current  liabilities and the long-term portion is
recorded in other long-term liabilities in the accompanying balance sheets.


                                      F-24
<PAGE>

                      ISG Resources, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

7.  Commitments and Contingencies (continued)

Royalty Commitments (continued)

In 1999, the Company entered into a license agreement for certain technology for
which the Company agreed to pay a minimum of $200,000 in 2001, $300,000 in 2002,
$400,000 in 2003 and $500,000 per year  thereafter for royalties on net sales as
long as the license  agreement  is  effective.  The Company  estimates  that the
license agreement will be effective through 2012.

In 2000, the Company entered into a license agreement for certain technology for
which the Company agreed to pay a minimum of $40,000 in 2000,  $220,000 in 2001,
$327,000  in  2002,  $500,000  in 2003 and  $500,000  per  year  thereafter  for
royalties  on net  sales as long as the  license  agreement  is  effective.  The
Company  estimates that the license  agreement will be, at a minimum,  effective
through 2003. The license  agreement  states that if the Company  terminates the
license  agreement  prior to December 31,  2003,  the Company will still have an
obligation  to pay the  licensor  the  minimum  royalty  each month  through and
including December 2003, as if the agreement had never been terminated.

Legal Proceedings

There are various legal  proceedings  against the Company  arising in the normal
course of business.  While it is not currently  possible to predict or determine
the  outcome of these  proceedings,  it is the  opinion of  management  that the
outcome  will not have a material  adverse  effect on the  Company's  results of
operations, financial position or liquidity.

Employment Agreements

The Company has employment  agreements with certain of its employees.  The terms
of these  agreements  began to  expire  in 2000  with  annual  extensions  to be
exercised by mutual consent of both parties. Considering these extensions, these
employment   agreements   provide  for  total   annual  base   compensation   of
approximately $1,752,000 in 2001, $1,511,000 in 2002, and $134,000 in 2003.

                                      F-25

<PAGE>

                      ISG Resources, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

7.  Commitments and Contingencies (continued)

Medical Insurance

Effective April 1, 1998, the Company established a self-funded medical insurance
plan for its employees with stop-loss  coverage for amounts in excess of $40,000
per  individual  and  approximately  $2,792,000 in the aggregate for the current
plan period ended December 30, 2000 and $1,530,000 in the aggregate for the plan
period ended December 31, 1999.  The Company has  contracted  with a third-party
administrator to assist in the payment and  administration of claims.  Insurance
claims are recognized as expenses when incurred,  including an estimate of costs
incurred  but not  reported  at the balance  sheet  dates.  In the  accompanying
balance  sheets,  $508,000 and $112,000 has been accrued as of December 31, 2000
and 1999, respectively, related to this liability.

8.  Reportable Segments

As discussed in note 2, the Company operates in two reportable segments: the CCP
division  and  the  building  materials  division.  The  CCP  division  consists
primarily of three operating units that manage and market CCPs in North America.
The building materials division consists of six legal entities,  Best,  Osborne,
Terrazzo, Magna Wall, Don's and Palestine. The Company's two reportable segments
are managed separately based on fundamental differences in their operations.

The Company evaluates performance based on profit or loss from operations before
depreciation,  amortization,  income taxes and interest  expense  (EBITDA).  The
Company  derives  a  majority  of its  revenues  from CCP  sales  and the  chief
operating  decision  makers  rely on  EBITDA to assess  the  performance  of the
segments and make  decisions  about  resources to be allocated to the  segments.
Accordingly,  EBITDA is  included in the  information  reported  below.  Certain
expenses are  maintained at the  Company's  corporate  headquarters  and are not
allocated to the segments.  Such expenses  primarily  include interest  expense,
corporate overhead costs, certain  non-recurring gains and losses and intangible
asset  amortization.  Inter-segment  sales,  which  historically  have  not been
material,   are  generally   accounted  for  at  cost  and  are   eliminated  in
consolidation.


                                      F-26
<PAGE>

                      ISG Resources, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

8.  Reportable Segments (continued)

The  building  materials  division  includes  financial  data for the six  legal
entities from their respective  dates of acquisition  through December 31, 2000.
Thus, the building materials division segment  information is not comparable for
the 1999 and 2000 periods. Best financial data is included from January 1, 1999,
Osborne and Terrazzo  from October 26, 1999,  Magna Wall from  December 1, 1999,
Don's from March 1, 2000 to December 31, 2000 and Palestine from June 1, 2000 to
December 31, 2000.

Amounts  included in the "Other" column include  financial  information  for the
Company's corporate, research and development, and other administrative business
units.

The Company did not report segment  information prior to the year ended December
31, 1999, as it operated in only one significant business segment prior to 1999.
Information about reportable segments, and reconciliation of such information to
the  consolidated  totals as of and for the year ended  December 31, 2000, is as
follows:
<TABLE>
<CAPTION>

                                                       Building                           Consolidated
                                        CCP            Materials          Other              Total
                                  ----------------- ---------------- ----------------- -------------------
<S>                                <C>                 <C>               <C>              <C>
Revenue                            $ 137,369,245       $ 43,110,256      $   422,360      $ 180,901,861
EBITDA                                27,953,848          3,747,227      (13,690,958)        18,010,117
Total assets                          51,349,490         47,693,023      153,291,862        252,334,375
Expenditures for PP&E                  5,123,317          2,133,579          928,693          8,185,589
</TABLE>

Information about reportable segments, and reconciliation of such information to
the  consolidated  totals as of and for the year ended  December 31, 1999, is as
follows:
<TABLE>
<CAPTION>

                                                       Building                           Consolidated
                                        CCP            Materials          Other              Total
                                  ----------------- ---------------- ----------------- -------------------
<S>                                 <C>              <C>                <C>               <C>
Revenue                             $ 134,631,711    $ 20,821,159       $    752,402      $ 156,205,272
EBITDA                                 32,096,154       2,811,482         (8,139,384)        26,768,252
Total assets                           49,929,505       6,683,098        163,849,908        220,462,511
Expenditures for PP&E                   7,520,689         350,610            919,571          8,790,870
</TABLE>

The accounting  policies of the segments are the same as those  described in the
summary  of  significant  accounting  policies.  Segment  assets  reflect  those
specifically  attributable  to the  individual  segments  and  include  accounts
receivable,  inventory and property,  plant and equipment.  All other assets are
included in the "Other" column.

                                      F-27

<PAGE>

                      ISG Resources, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

9.  Related Party Transactions

The Company's parent,  ISG, files a consolidated income tax return including the
Company  and all of its  subsidiaries  as  discussed  in Note 2. As the  Company
records all tax payments and receipts,  a payable to ISG for $2,244,022 has been
recorded as of  December  31, 2000 to reflect  amounts  owed to ISG  relating to
ISG's interest  deductions  included in the 1997, 1998 and 1999 consolidated tax
returns,  and an  estimate  of what will be  included  in the 2000  consolidated
income  tax  returns.  The tax  information  included  in Note 6 above  has been
prepared as if the Company filed a separate tax return.

10.  Unsuccessful Acquisition Costs

Costs of $1.5 million  incurred  related to unsuccessful  business  acquisitions
were  charged  to  expense  in  2000  when  the  Company  determined  that  such
acquisitions would not occur. No such costs were expensed in 1999.

On February 24, 1999,  the Company  entered into an option  agreement to acquire
the stock of Tatum  Industries,  Inc.  (Tatum).  As part of that agreement,  the
Company  agreed to loan  Tatum  approximately  $50,000  per month for  operating
expenses and loan servicing.  Tatum's note to the Company accrues interest at 8%
and is payable on demand. Additionally,  the Company leased Tatum's building and
equipment  and the Company  incurred  approximately  $0.1  million of  leasehold
improvements  to the property.  On October 27, 2000,  the Company  advised Tatum
that the Company was  terminating  the option  agreement;  however,  the Company
continues to lease the building and equipment under a  month-to-month  lease. On
November  13,  2000,  the Company  advised  Tatum that the note to the  Company,
totaling  approximately $1.1 million,  will be due and payable on March 1, 2001.
In  December  2000,  Tatum  advised ISG that they would not be able to repay the
note  and  ISG's  attempt  to  purchase  the  outstanding  stock  of  Tatum  was
unsuccessful.  As a result,  the Company expensed  approximately $1.1 million in
unsuccessful  acquisition costs, which is included in the $1.5 million discussed
above.  To the extent that the Company  terminates its lease in the future,  the
leasehold improvements will be expensed.


                                      F-28
<PAGE>


                         Report of Independent Auditors

The Board of Directors and Shareholders
Palestine Concrete Tile Company

We have audited the accompanying  combined balance sheets of Palestine  Concrete
Tile  Company  (the  Company) as of May 31, 2000 and  December  31, 1999 and the
related combined  statements of income and retained  earnings and cash flows for
the five months ended May 31, 2000 and each of the two years in the period ended
December 31, 1999.  These  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the combined  financial  position of Palestine Concrete
Tile Company at May 31, 2000 and December 31, 1999, and the combined  results of
its  operations  and its cash flows for the five  months  ended May 31, 2000 and
each of the two years in the period ended  December 31, 1999 in conformity  with
accounting principles generally accepted in the United States.


Ernst & Young
July 11, 2000


                                      F-29
<PAGE>

                         Palestine Concrete Tile Company

                             Combined Balance Sheets

<TABLE>
<CAPTION>

                                                               May 31,         December 31,
                                                                 2000              1999
                                                          -------------------------------------
<S>                                                          <C>               <C>
Assets
Current assets:
   Cash and cash equivalents                                 $     260,268     $     307,937
   Accounts receivable (net of allowance for doubtful
     accounts of $75,000 in 2000 and $94,000 in 1999)            2,800,752         2,522,353
   Inventories                                                   1,367,135         1,038,970
   Prepaid expenses                                                 51,000            84,815
   Deferred income tax                                              93,160           107,001
                                                          -------------------------------------
Total current assets                                             4,572,315         4,061,076

Property, plant and equipment:
  Land, buildings and leasehold improvements                       601,749           594,347
  Plant equipment                                                3,420,739         3,272,586
  Vehicles                                                       1,309,059         1,309,059
  Office furniture and fixtures                                     75,574            73,301
                                                          -------------------------------------
                                                                 5,407,121         5,249,293
  Accumulated depreciation                                       3,935,615         3,735,776
                                                          -------------------------------------
                                                                 1,471,506         1,513,517




                                                          -------------------------------------
Total assets                                                    $6,043,821        $5,574,593
                                                          =====================================
</TABLE>


                                      F-30
<PAGE>

<TABLE>
<CAPTION>

                                                              May 31,        December 31,
                                                               2000              1999
                                                          -----------------------------------
<S>                                                         <C>              <C>
Liabilities and shareholders' equity
Current liabilities:
   Trade accounts payable                                   $     407,138    $     387,472
   Accrued compensation                                           133,231          429,452
   Accrued expenses                                               223,017          162,000
   Income tax payable                                             869,269          453,034
   Payable to related parties                                   1,548,771          725,851
   Current portion of capital lease payable                        47,272           65,409
   Current portion of notes payable to related parties                  -          252,600
   Current portion of note payable                                 29,253           28,393
                                                          -----------------------------------
Total current liabilities                                       3,257,951        2,504,211

Notes payable to related parties, less current maturities               -          859,532
Note payable, less current maturities                             113,656          126,113
Capital lease payable, less current maturities                          -            9,117

Commitments

Shareholders' equity:
   Common stock:
     Palestine Concrete Tile Company,  $10 par value;
       10,000 shares authorized; 1,000 shares issued
       and outstanding                                             10,000           10,000
   Retained earnings                                            2,662,214        2,065,620
                                                          -----------------------------------
Total shareholders' equity                                      2,672,214        2,075,620
                                                          -----------------------------------
Total liabilities and shareholders' equity                     $6,043,821       $5,574,593
                                                          ===================================
</TABLE>


See accompanying notes.

                                      F-31
<PAGE>
<TABLE>
<CAPTION>

                         Palestine Concrete Tile Company

               Combined Statements of Income and Retained Earnings


                                              Five Months Ended
                                                   May 31,             Year Ended December 31,
                                                     2000              1999              1998
                                             --------------------------------------------------------

<S>                                             <C>                 <C>              <C>
Revenues                                        $   8,283,875       $  19,372,383    $  16,296,464

Costs and expenses:
  Cost of goods sold                                6,206,799          15,127,688       13,915,705
  Management fees                                           -           1,200,000           50,000
  Selling, general and administrative                 916,019           2,270,438        2,027,645
                                             --------------------------------------------------------
                                                    1,161,057             774,257          303,114

Interest income                                         3,910               7,487            4,321
Interest expense                                      (31,095)            (93,827)         (93,751)
Other income                                            1,889              36,477           14,681
                                             --------------------------------------------------------
Income before income taxes                          1,135,761             724,394          228,365

Income taxes:
  Current                                             375,326             293,217          114,366
  Deferred                                             13,841             (29,690)         (28,941)
                                             --------------------------------------------------------
                                                      389,167             263,527           85,425
                                             --------------------------------------------------------
Net income                                            746,594             460,867          142,940

Retained earnings at beginning of period            2,065,620           1,964,753        2,301,813
Distributions                                        (150,000)           (360,000)        (480,000)
                                             --------------------------------------------------------
Retained earnings at end of period              $   2,662,214       $   2,065,620    $   1,964,753
                                             ========================================================

</TABLE>


See accompanying notes.

                                      F-32
<PAGE>
<TABLE>
<CAPTION>

                         Palestine Concrete Tile Company

                        Combined Statements of Cash Flows

                                                            Five Months Ended
                                                                 May 31,           Year Ended December 31
                                                                  2000              1999             1998
                                                           -----------------------------------------------------
<S>                                                          <C>                <C>               <C>
Operating activities
Net income                                                   $     746,594      $     460,867     $   142,940
Adjustments to reconcile net income to net
   cash provided by (used in) operating activities:
     Depreciation                                                  202,839            555,425         599,540
     Gain on disposal of assets                                          -            (32,078)         (6,551)
     Deferred income taxes                                          13,841            (29,690)        (28,941)
     Changes in operating assets and liabilities:
       Accounts receivable                                        (278,399)          (179,869)       (224,196)
       Inventories                                                (328,165)          (162,852)        (95,543)
       Prepaid expenses and other assets                            33,815            (21,503)         11,182
       Income tax payable                                          416,235            271,939         (72,259)
       Trade accounts payable and other accruals                  (215,538)           239,522        (318,670)
       Payable to related parties                                 (185,872)           196,925        (309,843)
                                                           -----------------------------------------------------
Net cash provided by (used in) operating activities                405,350          1,298,686        (302,341)

Investing activities
Purchases of property, plant and equipment                        (160,828)          (384,741)       (250,408)
 Proceeds from disposal of property, plant and equipment                 -             58,115               -
                                                           -----------------------------------------------------
Net cash used in investing activities                             (160,828)          (326,626)       (250,408)

Financing activities
Distributions                                                     (150,000)          (360,000)       (480,000)
Payments on note payable                                           (11,597)            (6,810)              -
Receipt of (payments on) notes payable to related parties         (103,340)          (237,868)        350,000
Payments on capital leases                                         (27,254)           (59,896)        (54,190)
                                                           -----------------------------------------------------
Net cash used in financing activities                             (292,191)          (664,574)       (184,190)
                                                           -----------------------------------------------------
Net increase (decrease) in cash and cash equivalents               (47,669)           307,486        (736,939)

Cash and cash equivalents at beginning of period                   307,937                451         737,390
                                                           -----------------------------------------------------
Cash and cash equivalents at end of period                   $     260,268      $     307,937     $       451
                                                           =====================================================
Supplemental disclosures of cash flow information
Cash paid for income taxes                                   $      26,000      $      21,278     $   186,625
Equipment purchased with a note payable                                  -            161,316               -
Note paid by a related party                                     1,008,792                 -                -
</TABLE>

See accompanying notes.

                                      F-33
<PAGE>

                         Palestine Concrete Tile Company

                     Notes to Combined Financial Statements

                                  May 31, 2000


1.  Description of the Business and Significant Accounting Policies

Palestine  Concrete Tile Company (the Company) is a Texas  corporation  involved
primarily in the business of manufacturing and selling concrete block. Customers
of the Company consist of  construction-related  companies  located primarily in
the state of Texas.

On April 30, 2000, with an amendment dated May 16, 2000, an agreement was signed
to sell all the  outstanding  stock of the Company to an unrelated  third party,
ISG Resources, Inc. (ISG), effective May 31, 2000. Additionally,  this agreement
calls for the sale of the land and the buildings  utilized by the Company in the
conduct of its  business.  Such  property is owned by a separate  trust with the
Company paying rent to the trust for use of the property.

The  accompanying  combined  financial  statements  include the  accounts of the
Company  and the land and  buildings  sold by the  trust  under the terms of the
agreement,   since  these  constitute  the  entire  business   operations  sold.
Depreciation  on the  buildings has been provided as if owned by the Company for
purposes  of  presentation.  Rent  paid by the  Company  to the  trust  has been
eliminated in combination.

Revenue Recognition

Revenues  are  recognized  when goods are  shipped to  customers  or provided to
customers at the Company's facilities.

Cash and Cash Equivalents

Cash  equivalents are highly liquid  investments with maturities of three months
or less when purchased.

Inventories

Inventories  are  primarily  valued  at the  lower  of cost or  market.  Cost is
determined  by  the  first-in,  first-out  (FIFO)  method.  Inventories  consist
primarily of concrete block and other concrete  products,  raw materials used to
manufacture the blocks and concrete product,  and other  construction  supplies.
Inventory  of  manufactured  finished  goods is  valued at the  average  cost of
production.

                                      F-34
<PAGE>

                         Palestine Concrete Tile Company

               Notes to Combined Financial Statements (continued)


1.  Description of the Business and Significant Accounting Policies (continued)

Property, Plant and Equipment

Property,  plant  and  equipment  are  recorded  at  cost.  Major  renewals  and
improvements  are  capitalized,  while  maintenance  and repairs are expensed as
incurred.  Depreciation is computed using accelerated and straight-line  methods
at rates  adequate to recover  costs over the assets'  useful  lives.  Estimated
useful lives are generally 3 to 7 years for vehicles,  machinery and  equipment,
and furniture and fixtures, and 15 to 39 years for buildings and improvements.

As required by  Statement  of  Financial  Accounting  Standards  (SFAS) No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed  Of,"  management  evaluates  the carrying  value of all  long-lived
assets to determine  recoverability  when  indicators of impairment are present,
based generally on an analysis of undiscounted cash flows.  Management  believes
no material impairment in the value of long-lived assets exists at May 31, 2000.

Income Taxes

The Company  accounts for income  taxes,  using the  provisions of SFAS No. 109,
"Accounting  for Income  Taxes."  Deferred  income taxes result  primarily  from
temporary  differences  between the financial  statement  bases and tax bases of
assets and liabilities using enacted tax rates.

Use of Estimates

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

2.  Long-Term Debt

At May 31, 2000 and December 31, 1999,  the Company has a note payable to a bank
collateralized  by  certain  equipment,  with a net book  value of  $77,670  and
$107,544, respectively, and cash accounts held by the bank. The interest rate on
this note is 6.90%.  Principal  payments  for this note for the next five  years
ended May 31 are as  follows:  2000 - $29,253;  2001 - $31,366;  2002 - $33,634;
2003 - $36,058; and 2004 - $12,598.

                                      F-35
<PAGE>

                         Palestine Concrete Tile Company

               Notes to Combined Financial Statements (continued)

3.  Inventories

Inventories are composed of the following:

                                            May 31,          December 31,
                                              2000               1999
                                      ---------------------------------------
                   Raw materials         $     245,229       $     184,230
                   Finished goods            1,121,906             854,740
                                      ---------------------------------------
                                            $1,367,135          $1,038,970
                                      =======================================

4.  Income Taxes

Reconciliation of income tax expense at the U.S. statutory rate to the Company's
tax expense is as follows:

                                 Five Months Ended
                                      May 31,         Year Ended December 31,
                                        2000          1999           1998
                                 -----------------------------------------------
34% of income before income tax        $386,158        $246,294      $77,644
Permanent differences                     3,009          17,233        7,781
                                 -----------------------------------------------
                                       $389,167        $263,527      $85,425
                                 ===============================================

The major components of the deferred tax assets are as follows:

                                                      May 31,     December 31,
                                                       2000           1999
                                                     ---------------------------
Deferred tax assets:
   Allowance for doubtful accounts                       $25,500   $    31,960
   Accruals not currently deductible for tax purposes     67,660        75,041
                                                     ---------------------------
                                                         $93,160      $107,001
                                                     ===========================

5.  Leases

The Company has entered into certain  operating lease  agreements for equipment.
All such leases are cancelable with proper written notice, generally 60 days.

                                      F-36

<PAGE>

                         Palestine Concrete Tile Company

               Notes to Combined Financial Statements (continued)

5.  Leases (continued)

The Company has also  entered  into an operating  lease  agreement  with a third
party for certain real estate.  Subsequent to October 15, 2000,  the Company may
terminate this agreement with proper written notice,  which is required one year
before  termination.  The  commitment  under this agreement for the remainder of
2000 is $17,500  and $25,000  through  October  2001.  Rent  expense  under this
agreement  was $12,500  for the five  months  ended May 31, 2000 and $30,000 and
$15,000 for the years ended December 31, 1999 and 1998, respectively.

The Company has entered into certain  capital lease  agreements  for  equipment.
Future minimum lease payments through May 2001 required under the capital leases
total $49,291, of which $2,019 represents interest.

Property and equipment  include the  following  amounts  recorded  under capital
leases:

                                            May 31,          December 31,
                                              2000               1999
                                       ----------------------------------------

           Equipment                      $    279,148      $    279,148
           Accumulated depreciation           (257,678)         (245,068)
                                       ----------------------------------------
                                          $     21,470      $     34,080
                                       ========================================

6.  Related-Party Transactions

The Company purchases raw materials from two related parties. For the five month
period ended May 31, 2000 and the years ended  December  31, 1999 and 1998,  raw
materials  totaling   approximately   $2,548,000,   $6,055,000  and  $5,706,000,
respectively,  were  purchased  from these parties who in turn  purchased  these
materials from one supplier. At May 31, 2000 and December 31, 1999, $540,000 and
$423,000,  respectively,  were owed to these parties for these raw materials and
are included in payables to related parties on the accompanying combined balance
sheets.

The Company pays  management  fees to these parties.  Amounts charged to expense
for the years ended  December 31, 1999 and 1998 totaled  $1,200,000 and $50,000,
respectively. At December 31, 1999, $300,000 was owed to these parties for these
management  fees  and  are  included  in  payables  to  related  parties  on the
accompanying  combined balance sheets.  There were no amounts charged to expense
for the five months ended May 31, 2000.

                                      F-37
<PAGE>

                         Palestine Concrete Tile Company

               Notes to Combined Financial Statements (continued)

6.  Related-Party Transactions (continued)

Periodically,  the  Company  borrows  money from these  parties.  Amounts  owed,
included in notes payable to related parties on the accompanying balance sheets,
were  $1,112,132  at December 31,  1999.  Interest  expense,  accruing at 6.25%,
recorded  for the five month  period  ended May 31, 2000 and for the years ended
December 31, 1999 and 1998 totaled $27,891,  $80,245 and $77,236,  respectively.
Interest  payable at December  31, 1999  totaled  $3,000 and is included  within
payables to related parties on the accompanying combined balance sheets.

In May 2000,  in  conjunction  with the purchase of the Company and on behalf of
the  Company,  ISG paid the  remaining  amounts  due to  these  related  parties
totaling  $1,008,792.  Therefore,  as of May 31,  2000,  this  amount,  which is
payable on demand,  was due to ISG and is included in payable to related parties
on the accompanying combined balance sheets.

Due to the  relationship  among the parties to these  transactions,  the amounts
paid by the  Company may not have been the same if similar  activities  had been
undertaken with unrelated parties.

7.  Concentration of Risk

The Company generally maintains its cash balances at two financial  institutions
in Texas.  Accounts at these  institutions  are  insured by the Federal  Deposit
Insurance Corporation for up to $100,000. At May 31, 2000 and December 31, 1999,
the   Company's   uninsured   cash  balances   totaled   $98,000  and  $204,000,
respectively.  At May 31, 2000 and December  31,  1999,  the Company had a money
market account for which a minimum balance of $50,000 was required.

Generally,  the Company does not require collateral or other security to support
trade accounts  receivable.  The Company's five largest customers  accounted for
approximately 24% of revenues for the five months ended May 31, 2000 and 20% for
the years ended  December 31, 1999 and 1998.  Historically,  the Company has not
had significant uncollectable accounts.

                                      F-38