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, 1999
                          -----------------
                                       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                           87-0327982
              --------------                  -------------
      (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:
                     10% Senior Subordinated Notes Due 2008
                     ---------------------------------------
                                (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, 2000 was approximately $0.

         The number of shares of Common Stock  outstanding on March 29, 2000 was
100 shares.

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


                                     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.

On January 7, 1999, the Company  acquired all of the  outstanding  stock of Best
Masonry and Tool Supply ("Best") for approximately  $13,300,000 in cash and paid
off outstanding debt of Best totaling approximately $2,400,000.

On May 27, 1999, the Company  acquired all of the  outstanding  stock of Mineral
Specialties, Inc. ("Specialties") for approximately $1,314,000 in cash.

On June 2, 1999, the Company acquired all of the outstanding stock of Irvine Fly
Ash, Inc. ("Irvine") for approximately $6,321,000 in cash.

On October 26, 1999, the Company acquired all of the outstanding  stock of Lewis
W. Osborne,  Inc. ("Osborne") and United Terrazzo Supply Co., Inc.  ("Terrazzo")
for approximately $1,219,000 in cash.

On November 29, 1999, the Company sold all of the outstanding stock of Pneumatic
Trucking,  Inc., a wholly owned  subsidiary  of the Company,  for  approximately
$750,000 in cash.

On December 1, 1999, the Company acquired all of the outstanding  stock of Magna
Wall, Inc. ("Magna Wall") for approximately $1,542,000 in cash.

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 and Florida. While the 1998 acquisition strategy focused on geographical
diversification  of the CCP division,  the 1999 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  has also  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
were 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 1998, fly ash accounted for  approximately  58%, bottom ash accounted for
approximately 16% 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 One Coat Stucco
Best One Coat Stucco
Best Masonry Cement Type N
Best Scratch and Brown Stucco Cement
Best White Masonry Cement Type N
Best Masonry Cement Type S
Best Mortar Cement Type N
Best Finish Stucco
Hill Country Mortar Type N

Important Developments since Fiscal Year End

On March 2, 2000,  the Company  acquired  directly  and  indirectly  through ISG
Manufactured  Products,  Inc., a newly formed  wholly  owned  subsidiary  of the
Company,  100% of the  partnership  interests in Don's  Building  Supply  L.L.P.
("Don's") for a purchase  price of $6,000,000 in cash.  The Company  expects the
purchase  price to increase or decrease  within  sixty days of the closing  date
based on 1999 EBITDA,  as defined,  and working capital as of February 29, 2000.
Don's is  engaged  in the  retail and  wholesale  distribution  of  construction
materials to residential  and commercial  contractors  primarily in the State of
Texas.

New Product Development

New product development costs consist of scientific research and development and
market development expenditures. The Company spent $1,796,032 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 $370,186 for the year
ended  December  31, 1999 on market  development  activities  related to 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 years ended December 31, 1998 and 1997.

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.

ISG Cellular  Concrete 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 the coal produced is 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, 1999, 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.

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, 1999, the Company had 97 materials management  contracts,  25 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 633 employees, of which 601 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 2001. 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, 1999:

                                                                   Lease
    Location            Function            Ownership        Termination Date
    ---------          ----------          -----------      ------------------

Bay City, MI         Offices                    Leased         August 31, 2000
Kennesaw, GA         Offices                    Leased         January 31, 2004
Delle, UT            Storage Silos              Leased         November 1, 2001
Fargo, ND            Fly Ash Storage            Leased         Month to Month
Good Spring, 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
Oregon City, OR      Offices                    Leased         Month to Month
Fresno, CA           Terminal Facility          Leased         March 31, 2002
Allentown, PA        Offices                    Leased         February 28, 2001
Pomona, CA           Rail Terminal              Owned
Tukwilla, WA         Offices                    Leased         June 30, 2004
Houston, TX          Offices                    Leased         August 30, 2004
Sacramento, CA       Terminal Facility          Leased         February 22, 2003
Stafford, TX         Offices                    Leased         April 30, 2003

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.

<PAGE>
                                     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, 1999.  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  1999  and  1998  information  set  forth  below  may  not be
comparable  due to  accounting  for the  1998 and 1999  acquisitions  using  the
purchase method of accounting  and,  therefore,  only including  information for
each acquisition from the respective acquisition date.

<TABLE>
<CAPTION>

                                                                     2 1/2 Months  9 1/2 Months
                                              Year Ended  Year Ended    Ended        Ended         Years Ended
                                             December 31, December 31, December 31, October 13,    December 31,
                                                1999        1998        1997         1997       1996        1995
                                               ------     -------      ------       ------     ------      -------
Statement of Income Data:

<S>                                        <C>          <C>         <C>          <C>         <C>         <C>
Revenue                                    $  156,205   $ 117,293   $ 12,643     $ 51,295    $ 62,841    $ 64,986
Cost of products and services sold,
    excl. depr.                               108,664      80,116      9,365       40,701      52,268      51,489
Depreciation and amortization                  13,091       9,141        908        5,279       2,285       2,265
Selling, general and administrative
    expenses                                   18,962      14,145      1,256        3,633       5,667       9,692
New Product Development Costs                   2,166           -          -            -           -           -
Income from Operations                         13,321      13,891      1,114        1,682       2,621       1,540
Interest Expense                               13,392       9,338        628        4,160       4,853       4,081
Net income (loss) before income taxes             285       4,808        517       (2,478)     (2,232)     (2,541)
Net income (loss)                                (362)      2,259        265       (3,090)     (1,870)     (2,096)

Balance Sheet Data:
Working capital (deficiency)                    8,972       6,786    (21,648)     (43,594)    (45,804)    (42,268)
Total assets                                   220,463    191,732     73,270       58,396      62,950      61,779
Total debt                                     133,500    110,000          -            -           -           -
Shareholder's equity                           27,162      27,524     25,265        3,623       6,713       8,033

Other Data:
Cash flows from operating activities           10,204       8,210      1,843          521         603      (1,115)
Cash flows from investing activities          (33,369)    (86,623)       (19)        (681)     (3,869)     (4,586)
Cash flows from financing activities           23,165      75,344      1,189          957       2,844      (4,113)
EBITDA (1)                                     26,768      23,287      2,054        6,961       4,906       3,805
EBITDA margin                                   17.1%       19.9%      16.2%        13.6%        7.8%        5.9%
Capital expenditures                            8,791       8,574         19          681       4,357       4,589
Ratio of earnings to fixed charges (2)          1.02x       1.42x      1.49x        0.56x       0.68x       0.58x
Deficit of earnings to fixed charges                -           -          -       (2,478)     (2,232)     (2,541)

</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 which 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").

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, 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:  an  increase  in
amortization expense of goodwill related to the 1999 Acquisitions, a full year's
amortization  expense for 1998  Acquisitions,  and 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>

Fiscal Year 1998  Compared  to 2 1/2 Months  Ended  December  31, 1997 and 9 1/2
Months Ended October 13, 1997

For  purposes  of  discussing  the  results of  operations,  fiscal year 1998 is
compared to the period from the JTM  Acquisition  date to December  31, 1997 and
the period from January 1, 1997 to the JTM Acquisition  date, which reflects the
results of the predecessor company.

Revenues.  Revenues  were $117.3  million,  $12.6  million and $51.3 million in
fiscal year 1998,  the 2 1/2 months ended December 31, 1997 and the 9 1/2 months
ended October 13, 1997,  respectively,  resulting in average monthly revenues of
$9.8  million,  $5.0 million and $5.4 million for the  respective  periods.  The
increase in the average  monthly  revenues in 1998 is due  primarily to the 1998
Acquisitions.

Cost of Products Sold, Excluding Depreciation.  Cost of products sold, excluding
depreciation,  was $51.9 million,  $4.9 million and $20.7 million in fiscal year
1998,  the 2 1/2 months  ended  December  31,  1997 and the 9 1/2  months  ended
October 13, 1997,  respectively,  resulting in cost of products sold,  excluding
depreciation,  as a percentage of product revenues of 62.5%, 68.9% and 80.8% for
the respective  periods.  The improvement in margins is due to two factors:  (1)
change in product mix from lower margin product sold to the former parent in the
pre-acquisition period as opposed to higher margin product sold to third parties
in the post-acquisition period, and (2) price increases.

Cost of Services Sold, Excluding Depreciation.  Cost of services sold, excluding
depreciation  was $28.2  million,  $4.5 million and $20.0 million in fiscal year
1998,  the 2 1/2 months  ended  December  31,  1997 and the 9 1/2  months  ended
October 13,  1997,  respectively,  resulting in a  relatively  constant  cost of
services sold,  excluding  depreciation,  as a percentage of service revenues of
82.4%, 80.6% and 77.9% for the respective periods.

Depreciation and  Amortization.  Depreciation and amortization was $9.1 million,
$0.9  million  and $5.3  million  in fiscal  year 1998,  the 2 1/2 months  ended
December  31, 1997 and the 9 1/2 months ended  October 13,  1997,  respectively,
resulting in average monthly depreciation and amortization of $0.8 million, $0.4
million and $0.6 million,  for the  respective  periods.  The 9 1/2 months ended
October 13, 1997  includes a $3.3 million  goodwill  write-off by the  Company's
former parent in connection with the JTM Acquisition.  Excluding this write-off,
average monthly  depreciation  and  amortization for this period would have been
$0.2 million.  The increase in average monthly depreciation and amortization for
the 2 1/2 months ended December 31, 1997 over the 9 1/2 months ended October 13,
1997,  before the goodwill  write-off  discussed  above, is due primarily to the
amortization of goodwill, contracts, patents and assembled workforce, which were
recorded  at fair value  upon the JTM  Acquisition,  as well as the  accelerated
amortization  rate of goodwill by the Company after its  acquisition by ISG. The
increase in average monthly  depreciation  and amortization for fiscal year 1998
over  the 2 1/2  months  ended  December  31,  1997  is  due  primarily  to  the
amortization of goodwill, contracts and assembled workforce, which were recorded
at fair value upon the 1998 Acquisitions.

Selling,   General   and   Administrative   Expenses.   Selling,   general   and
administrative  expenses  ("SG&A")  were $14.1  million,  $1.3  million and $3.6
million in fiscal year 1998,  the 2 1/2 months ended December 31, 1997 and the 9
1/2 months  ended  October 13,  1997,  respectively.  For the 9 1/2 months ended
October 13, 1997, management fees were allocated to the Company by Laidlaw based
upon the  Company's  share of  Laidlaw's  consolidated  revenue.  The  allocated
charges may not be indicative of the expenses the Company would have incurred if
Laidlaw had not provided the services.  The increase in SG&A in fiscal year 1998
is due primarily to three factors:  (1) costs associated with the reorganization
of the Company (i.e.,  consulting,  travel,  employee relocation) after the 1998
Acquisitions;  (2) increased sales and marketing efforts; and (3) an increase in
management incentive compensation.

Interest  Expense.  Interest  expense was $9.3  million,  $0.6  million and $4.2
million in fiscal year 1998,  the 2 1/2 months ended December 31, 1997 and the 9
1/2 months ended October 13, 1997,  respectively,  resulting in average  monthly
interest  expense  of $0.8  million,  $0.2  million  and  $0.4  million  for the
respective periods.  The decrease in the average monthly interest expense in the
2 1/2 months  ended  December  31, 1997 as  compared  to the 9 1/2 months  ended
October 13, 1997 is due  primarily  to a decrease in the  Company's  outstanding
indebtedness resulting from the elimination of the intercompany  indebtedness to
Laidlaw upon the JTM  Acquisition.  The increase in the average monthly interest
expense  in  fiscal  year  1998  is due  primarily  to the  issuance  of  Senior
Subordinated Notes in April 1998.

Income Tax Expense.  Income tax expense was $2.5 million , $0.3 million and $0.6
million in fiscal year 1998,  the 2 1/2 months ended December 31, 1997 and the 9
1/2 months ended  October 13,  1997,  respectively,  resulting in effective  tax
rates of 53.0%, 48.8% and (24.7%).  The negative effective tax rate in the 9 1/2
months ended October 13, 1997 is due primarily to the large  goodwill  write-off
discussed  above which was not deductible for tax purposes.  The increase in the
effective tax rate from the 2 1/2 months ended  December 31, 1997 to fiscal year
1998 is due primarily to the increase in non-deductible amortization of goodwill
recorded upon the 1998 Acquisitions.

Net  Income  (Loss).  As a result of the  factors  discussed  above,  net income
increased  to $2.3  million  and $0.3  million in fiscal year 1998 and the 2 1/2
months ended December 31, 1997, respectively,  as compared to a net loss of $3.0
million in the 9 1/2 months ended October 13, 1997.

Liquidity and Capital Resources

The Company  financed the JTM  Acquisition,  the 1998  Acquisitions and the 1999
Acquisitions  through the proceeds  from the  issuance of $100.0  million of 10%
Senior  Subordinated  Notes  due  2008  and  borrowings  on its  Secured  Credit
Facility.  Operating  and  capital  expenditures  have been  financed  primarily
through  cash flows from  operations  and  borrowings  under the Secured  Credit
Facility.

At December  31,  1999,  the Company had no cash or cash  equivalents  and $16.5
million  available under the Secured Credit Facility.  In addition,  the Company
had working capital of approximately  $9.0 million,  an increase of $2.2 million
from  December  31,  1998 due to an increase in Trade  Accounts  Receivable  and
Inventories  offset in part by an  increase  in  Accounts  Payable.  Most of the
changes in Accounts Receivable, Inventory and Accounts Payable are reflective of
the 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  1999,  capital  expenditures
amounted  to  approximately  $8.8  million.  Capital  expenditures  made  in the
ordinary  course of  business  will be funded by cash flow from  operations  and
borrowings under the Secured Credit Facility.

The  Company  anticipates  that its  principal  use of cash will be for  working
capital requirements, debt service requirements and capital expenditures.  Based
upon current and anticipated levels of operations, the Company believes that its
cash flow from  operations,  together with amounts  available  under the Secured
Credit  Facility,  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.

The Year 2000 Issue

In general,  the Year 2000 issue  relates to computers  and other  systems being
unable to  distinguish  between  the years  1900 and 2000  because  they use two
digits,  rather than four, to define the applicable  year.  Systems that fail to
properly  recognize such information were expected to generate erroneous data or
cause a system to fail  possibly  resulting in a disruption of  operations.  The
Company's  products do not incorporate such date coding so the Company's efforts
to address  the Year 2000 issue fell into the  following  three  areas:  (i) the
Company's  information  technology  ("IT")  systems;  (ii) the Company's  non-IT
systems (i.e.,  machinery,  equipment and devices which utilize technology which
is  "built  in"  such  as  embedded  microcontrollers);  and  (iii)  third-party
customers.

The Company worked to successfully resolve the potential impact of the Year 2000
issue on the  processing of  date-sensitive  data by the Company's  computerized
information  systems.  Specifically,  the Company  installed new  accounting and
financial  software  and during 1999 that  performed  as expected  with no known
glitches.  The Company also acquired and installed Year 2000 compliant  software
upgrades in all scales used in its  operations.  The  Company is  analyzing  all
other IT and non-IT systems to determine if any other  modifications or upgrades
are necessary.  The amount charged to expense during the year ended December 31,
1999, as well as the amounts anticipated to be charged to expense related to the
Year  2000  computer  modifications,  have not been and are not  expected  to be
material to the  Company's  financial  position,  results of  operations or cash
flows.

The Company also evaluated and took steps to resolve Year 2000 compliance issues
that may have been created by customers,  suppliers  and financial  institutions
with whom the Company does business. Because many of the Company's suppliers are
heavily regulated utilities with mandated year 2000 compliance,  the Company did
not expect these suppliers to experience problems.

The  foregoing  statements  are based  upon  management's  current  assumptions.
However,  there can be no guarantee  that these  assumptions  have addressed all
relevant uncertainties.

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 second  fiscal  quarter  ending after  December 15, 1999.
This  SAB  clarifies  proper  methods  of  revenue   recognition  given  certain
circumstances surrounding sales transactions.  The Company continues to evaluate
the impact of SAB 101, but believes it is in compliance  with the  provisions of
the SAB and  accordingly,  does not expect SAB 101 to have a material  effect on
its financial statements.

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 $133,500,000  at December 31, 1999. The Company  currently has
an average maturity of eight years for long-term debt,  $100,000,000 of which is
at a fixed rate of 10% and  $33,500,000 of which is at a rate averaging 8.1% for
the year ended December 31, 1999 as compared to 8.5% for the year ended December
31, 1998.

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 would not
impact the Company's earnings or cash flows as the interest rate on the majority
of the long-term debt is fixed. 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, 1999 are
attached hereto at pages F-1 through F-31.

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...... 48 Chairman of the Board and Chief Executive Officer
Raul A. Deju......... 54 President and Chief Operating Officer
J.I. Everest, II..... 43 Chief Financial Officer, Treasurer, and
                         Assistant Secretary
Clinton W. Pike...... 47 Executive Vice President
Brett A. Hickman..... 38 Senior Vice President,  General Counsel and Secretary
Joseph M. Silvestri.. 38 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.

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.

<PAGE>
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 (4)                                              1999       $260,000      $34,667              $5,000
      Chairman, Chief Executive Officer                                1998        193,747      130,000               5,150
                                                                       1997         24,231            0                   0

      Raul A. Deju (4)                                                 1999        250,016       33,333               5,000
      President and Chief Operating Officer                            1998        182,869      121,338               5,150
                                                                       1997         23,710            0                   0

      J.I. Everest, II (4)                                             1999        204,561       26,667               5,000
      Chief Financial Officer, Treasurer and                           1998        145,934      108,337               8,092
      Assistant Secretary                                              1997         28,647            0                   0

      Clinton W. Pike                                                  1999        166,862       65,000               5,000
      Executive Vice President                                         1998        160,461      191,700             106,886
                                                                       1997        149,255      119,492               4,374

      Brett Hickman                                                    1999        150,010       20,000               5,000
      Senior Vice President, General Counsel and                       1998         75,003      104,000               4,500
      Secretary
</TABLE>

(1)      Positions indicated were as of December 31, 1999.

(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.

(4)      Mr.  Creamer,  Mr. Deju and Mr. Everest have been employed with the
         Company  since October 14, 1997,  and the 1997 salary  reflects the two
         and a half months they worked for the Company in 1997.


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, 2000,  (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)..........................................        -
             All directors and executive officers as a group
             (6 persons) (2)(3)(5)........................................     250,980        50.8         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  adult son and three minor
     children.
(3)  Messrs.  Creamer and Everest  beneficially  own shares in ISG through RACT,
     Inc., a Utah corporation  ("RACT"),  which directly owns shares in ISG. The
     business  address of RACT 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)  Mr. Pike, pursuant to his employment contract, has been granted an economic
     interest in one percent of all outstanding shares of the Company's stock as
     of the date of his employment agreement.


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>
                                       F-1

                          INDEX TO FINANCIAL STATEMENTS

ISG Resources, Inc. and Subsidiaries
Audited Consolidated  Financial  Statements as of December 31, 1999 and 1998 and
     for the Years Ended  December 31, 1999 and 1998 and the Period From October
     14, 1997 to December 31, 1997:
  Report of Independent Auditors.............................    F-2
  Consolidated Balance Sheets................................    F-3
  Consolidated Statements of Operations......................    F-5
  Consolidated Statements of Shareholder's Equity............    F-6
  Consolidated Statements of Cash Flows......................    F-7
  Notes to Consolidated Financial Statements.................    F-8

JTM Industries, Inc. and Subsidiary (Predecessor to ISG Resources, Inc.)
Audited Consolidated Financial Statements for the Period From January 1, 1997 to
     October 13, 1997:
  Report of Independent Accountants..........................    F-22
  Consolidated Statement of Loss and Accumulated Deficit.....    F-23
  Consolidated Statement of Cash Flows.......................    F-24
  Notes to Consolidated Financial Statements.................    F-25


<PAGE>

                                       F-2

                         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,  1999  and  1998  and the  related
consolidated  statements of operations,  shareholder's equity and cash flows for
the years ended  December 31, 1999 and 1998 and the period from October 14, 1997
to December 31, 1997. 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, 1999 and 1998,  and the  consolidated
results of their  operations  and their cash flows for the years ended  December
31, 1999 and 1998 and the period from  October 14, 1997 to December  31, 1997 in
conformity with accounting principles generally accepted in the United States.


Ernst & Young LLP

Salt Lake City, Utah
March 3, 2000


<PAGE>

                                       F-3
                      ISG Resources, Inc. and Subsidiaries
                           Consolidated Balance Sheets

                                                         December 31
                                                       1999          1998
  Assets
  Current assets:
     Accounts receivable:
      Trade, net of allowance for doubtful
         accounts of $329,000 in 1999 and
         $170,000 in 1998                       $  21,167,616   $ 14,975,729
      Retainage receivable                            176,000        660,609
      Other                                           502,058        296,966
     Deferred tax asset                               316,161        251,355
     Inventories                                    4,055,425        387,258
     Other current assets                             829,661        645,969
  Total current assets                             27,046,921     17,217,886

  Property, plant and equipment:
     Land and improvements                          4,371,197      1,736,384
     Buildings and improvements                     6,839,777      3,610,621
     Vehicles and other operating equipment        27,189,160     20,090,872
     Furniture, fixtures and office equipment       1,161,456        494,753
                                                   39,561,590     25,932,630
     Accumulated depreciation                      (7,893,374)    (3,562,086)
                                                   31,668,216     22,370,544
     Construction in progress                       1,915,972      5,768,564
                                                   33,584,188     28,139,108

  Other assets:
     Intangible assets, net                       153,952,547    140,835,640
     Debt issuance costs, net                       4,826,010      5,192,893
     Other assets                                   1,052,845        346,209
  Total assets                                  $ 220,462,511   $191,731,736
  ----------------------------------------------================================





<PAGE>

                                       F-4

                                                          December 31

                                                   1999                  1998
                                           -------------------------------------
Liabilities and shareholder's equity
Current liabilities:

    Accounts payable                         $ 10,409,583            $ 4,066,487
    Accrued expenses:
      Payroll                                   1,288,732              1,801,657
      Interest                                  2,190,471              2,106,054
      Other                                     1,828,537              1,534,971
    Income taxes payable                        1,705,678                422,963
    Other current liabilities                     652,119                500,000
                                           -----------------       -------------
 Total current liabilities                     18,075,120             10,432,132

 Long-term debt                               133,500,000            110,000,000
 Deferred tax liabilities                      39,158,249             41,286,434
 Payable to Industrial Services Group             643,983                  -
 Other liabilities                              1,923,355              2,488,954

 Commitments and contingencies

 Shareholder's equity:
    Common stock, no par in 1999 and
      par value of $1 per share in 1998;
      100 shares authorized, issued and
      outstanding                              25,000,050                    100
    Additional paid-in capital                      -                 24,999,950
    Retained earnings                           2,161,754              2,524,166
                                           -------------------------------------
 Total shareholder's equity                    27,161,804             27,524,216

                                           -------------------------------------
 Total liabilities and shareholder's equity $ 220,462,511           $191,731,736
                                           =====================================


See accompanying notes.


<PAGE>

                                       F-5

                      ISG Resources, Inc. and Subsidiaries
                      Consolidated Statements of Operations

                                                                   Period from
                                                                  October 14 to
                                     Year ended December 31        December 31
                                      1999           1998             1997
                                 ---------------------------------------------
Revenues:
   Product revenues              $ 20,319,575    $ 83,048,721     $  7,059,063
   Service revenues                35,885,697      34,243,854        5,583,981
                                 ---------------------------------------------
                                  156,205,272     117,292,575       12,643,044
Costs and expenses:
   Cost of products sold,
     excluding depreciation        83,442,725      51,878,447        4,864,226
   Cost of services sold,
     excluding depreciation        25,221,695      28,237,385        4,500,892
   Depreciation and amortization   13,091,131       9,140,938          908,619
   Selling, general and
     administrative expenses       18,962,157      14,144,765        1,255,680
   New product development          2,166,218          -                -
                                 ---------------------------------------------
                                  142,883,926     103,401,535       11,529,417
                                 ---------------------------------------------
                                   13,321,346      13,891,040        1,113,627
Interest income                        44,100         183,113           31,286
Interest expense                  (13,391,944)     (9,338,059)        (627,704)
Miscellaneous income, net             311,675          72,386                -
                                 ---------------------------------------------
Income before income tax expense      285,177       4,808,480          517,209
Income tax expense                    647,589       2,549,026          252,497
                                 ---------------------------------------------

Net income (loss)                $   (362,412)   $  2,259,454     $    264,712
                                 =============================================



See accompanying notes.


<PAGE>

                                       F-6

                      ISG Resources, Inc. and Subsidiaries
                 Consolidated Statements of Shareholder's Equity

                                            Additional                Total
                                 Common      Paid-In    Retained   Shareholder's
                                 Stock       Capital    Earnings      Equity
                             --------------------------------------------------
Balance at October 14, 1997         $100    $23,811,429   $       -  23,811,529
   Cash contribution                   -      1,188,521           -   1,188,521
   Net income                          -              -     264,712     264,712
                             --------------------------------------------------
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
                             ==================================================



See accompanying notes.


<PAGE>
<TABLE>
<CAPTION>
                                       F-7
                      ISG Resources, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows

                                                                     Period from
                                                                   October 14 to
                                             Year ended December 31  December 31
                                                   1999       1998      1997
                                             ----------------------------------

Operating activities
<S>                                           <C>         <C>          <C>
Net income (loss)                             $  (362,412)$ 2,259,454  $264,712
Adjustments to reconcile net income (loss) to
   net cash provided by operating activities:
     Depreciation and amortization             13,091,131   9,140,938   908,619
     Amortization of debt issuance costs          702,032     463,585         -
     Deferred income taxes                     (2,229,539) (1,697,407) (276,245)
     Loss on sale of assets                        24,168      46,513         -
     Gain on sale of subsidiary                  (333,749)          -         -
     Changes in operating assets and
      liabilities:
         Receivables                           (2,755,382) (1,479,648)  691,534
         Inventories                           (1,733,832)    231,658         -
         Other current and non-current assets    (879,189)    (91,603)  (22,569)
         Accounts payable                       4,485,877    (606,834)(1,035,993)
         Income taxes payable                   1,257,583    (245,447)  528,742
         Accrued expenses                        (929,504)    759,326   755,913
         Other current and non-current
           liabilities                           (132,821)   (570,491)   28,387
                                             ----------------------------------
Net cash provided by operating activities      10,204,363   8,210,044 1,843,100

Investing activities
Purchase of businesses, net of cash acquired  (24,866,989)(77,753,012)        -
Proceeds from sale of subsidiary                  750,000           -         -
Additions to intangible assets                   (877,349)   (691,847)        -
Purchases of property, plant and equipment     (8,790,870) (8,574,086)  (19,491)
Proceeds from sales of property, plant
   and equipment                                  415,994     396,399         -
                                             -----------------------------------
Net cash used in investing activities         (33,369,214)(86,622,546)  (19,491)

Financing activities
Proceeds from long-term debt                  127,000,000 154,000,000         -
Payments on long-term debt                   (103,500,000)(73,000,000)        -
Debt issuance costs                              (335,149) (5,656,478)        -
Cash contributions                                      -          -  1,188,521
                                             ----------------------------------
Net cash provided by financing activities      23,164,851  75,343,522 1,188,521
                                             ----------------------------------

Net (decrease) increase in cash and
   cash equivalents                                     -  (3,068,980)3,012,130
Cash and cash equivalents at
   beginning of period                                  -   3,068,980    56,850
                                             -----------------------------------
Cash and cash equivalents at
   end of period                             $          - $        - $3,068,980
                                             ===================================

Cash paid for interest                       $ 12,605,495 $ 7,396,124   $     -
                                             ===================================
Cash paid for income taxes                   $    902,123 $ 3,989,414   $     -
                                             ===================================
See accompanying notes.
</TABLE>


<PAGE>

                                      F-8

                      ISG Resources, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements

                                December 31, 1999

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.

On January 7, 1999, the Company  acquired all of the  outstanding  stock of Best
Masonry and Tool Supply ("Best") for approximately  $13,300,000 in cash and paid
off outstanding debt of Best totaling approximately $2,400,000.

On May 27, 1999, the Company  acquired all of the  outstanding  stock of Mineral
Specialties, Inc. ("Specialties") for approximately $1,314,000 in cash.

On June 2, 1999, the Company acquired all of the outstanding stock of Irvine Fly
Ash, Inc. ("Irvine") for approximately $6,321,000 in cash.

On October 26, 1999, the Company acquired all of the outstanding  stock of Lewis
W. Osborne,  Inc. ("Osborne") and United Terrazzo Supply Co., Inc.  ("Terrazzo")
for approximately $1,219,000 in cash.

On December 1, 1999, the Company acquired all of the outstanding  stock of Magna
Wall, Inc. ("Magna Wall") for approximately $1,542,000 in cash.

Each of the above  acquisitions  was accounted for under the purchase  method of
accounting and,  accordingly the results of operations of each  acquisition 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.  All  recorded  goodwill  is  being  amortized  on a
straight-line basis over 20 to 25 years.


<PAGE>
                                      F-9

                      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, 1998. 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
                                    1999                1998
                             ------------------- -------------------
          Revenues           $ 164,840,000       $ 155,313,000
          Net loss           $    (409,878)      $  (1,652,000)

On November 29, 1999, the Company sold all of the outstanding stock of Pneumatic
Trucking,  Inc., a wholly owned  subsidiary  of the Company,  for  approximately
$750,000 in cash.  The Company  recognized a gain of  approximately  $334,000 on
this  sale  which  is  included  in  miscellaneous  income  in the  consolidated
statement of operations.

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 in Texas, California, Georgia and Florida.

Principles of Consolidation

These  financial  statements  reflect the  consolidated  financial  position and
results of operations of ISG Resources,  Inc. 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.

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.


<PAGE>

                                      F-10

                     ISG Resources, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

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

Revenue Recognition (continued)

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  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.

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 $1,796,032 for the year ended
December  31, 1999 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 $370,186
for the year ended December 31, 1999 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 or the period from October
14, 1997 to December 31, 1997.


<PAGE>
                                      F-11

                      ISG Resources, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

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

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:

                                     1999                   1998
                              --------------------- ---------------------
    Raw materials                 $     234,073         $           -
    Finished goods                    3,821,352               387,258
                              --------------------- ---------------------
                                     $4,055,425         $     387,258
                              ===================== =====================

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.  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  $4,996,000,  $3,281,000 and $454,000 for
the years ended  December 31, 1999 and 1998 and the period from October 14, 1997
to December 31, 1997, respectively.

Intangible Assets

Intangible  assets  consist of goodwill,  contracts,  patents and licenses,  and
assembled  workforce.   Amortization   expense  was  approximately   $8,095,000,
$5,860,000  and $455,000 for the years ended  December 31, 1999 and 1998 and the
period from October 14, 1997 to December 31, 1997, 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

<PAGE>

                                      F-12

                      ISG Resources, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

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

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.  Amortization expense was approximately $702,000,  $464,000
and $0 for the  years  ended  December  31,  1999 and 1998 and the  period  from
October 14, 1997 to December 31, 1997, respectively.

Income Taxes

Deferred tax assets and liabilities are provided for the future tax consequences
attributable to temporary differences between the carrying amounts of assets and
liabilities for financial statement and income tax purposes.

Fair Value of Financial Instruments

Financial  instruments  included in various  categories  within the accompanying
balance sheet consist of the following at December 31:

                                      1999                      1998
                            ----------------------------------------------------
                            Carrying        Fair        Carrying       Fair
                              Value         Value         Value        Value

                            --------------------------------------- ------------

Short-term assets           $ 21,845,674 $ 21,845,674 $ 15,933,304  $ 15,933,304
Short-term liabilities        16,369,442   16,369,442   10,009,169    10,009,169
Long-term debt:
   Senior subordinated notes 100,000,000   85,000,000  100,000,000    99,000,000
   Secured credit facility    33,500,000   33,500,000   10,000,000    10,000,000
Other liabilities              1,613,393    1,255,000    2,103,856     1,531,000

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.


<PAGE>

                                      F-13

                      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

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 compared to net book value. The Company also
evaluates   amortization  periods  of  assets,   including  goodwill  and  other
intangible  assets,  to determine  if events or  circumstances  warrant  revised
estimates of useful  lives.  Management  believes no material  impairment in the
value of long-lived assets exists at December 31, 1999.

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.

3.    Intangible Assets

Intangible assets consist of the following at December 31:

                                                 1999               1998
                                          ------------------- ------------------
         Goodwill                             $  64,313,512   $      44,018,454
         Contracts                               98,522,146          97,960,644
         Patents and licenses                     2,787,431           2,471,584
         Assembled work force                     2,700,233           2,700,233
                                          ------------------- ------------------
                                                168,323,322         147,150,915
         Less accumulated amortization          (14,370,775)         (6,315,275)
                                          ------------------- ------------------
                                               $153,952,547        $140,835,640
                                          =================== ==================

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.


<PAGE>

                                      F-14

                      ISG Resources, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

4.   Long-term Debt (continued)

Secured Credit Facility (continued)

At the Company's  option,  the revolving  secured loans may be maintained as (a)
Eurodollar  Loans (as defined)  which will bear  interest at a rate equal to the
quotient  obtained  by  dividing  LIBOR (as  defined)  by one minus the  reserve
requirement for such  Eurodollar  Loan, plus a margin of 250 basis points or (b)
Base Rate  Loans (as  defined)  which  will have an  interest  rate equal to the
higher of (i) the Bank of  America  prime rate and (ii) the  federal  funds rate
plus 0.5%, plus a margin of 125 basis points.  The Company will also pay certain
fees with respect to any unused portion of the Secured Credit Facility.

The Secured Credit  Facility has a term of five and one-half years from the date
of initial funding, is guaranteed by ISG and existing and future subsidiaries of
the Company (the  "Guarantors"),  and is secured by a first  priority  perfected
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.

The Secured Credit Facility  requires the Company to maintain a maximum leverage
ratio, a minimum interest coverage ratio and minimum  consolidated net worth and
certain other financial and  nonfinancial  covenants,  all as defined within the
agreement. The Company was in compliance with all such covenants at December 31,
1999.

On April 30, 1999, the Secured Credit Facility was increased to $50,000,000 from
$35,000,000. At December 31, 1999, $33,500,000 was outstanding, with $16,500,000
unused and available, under the Secured Credit Facility.

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.


<PAGE>

                                      F-15

                      ISG Resources, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

4.  Long-term Debt (continued)

Senior Subordinated Notes (continued)

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  which  was  declared  effective  by  the
Securities and Exchange Commission on September 4, 1998.

The aggregate  maturities of all long-term debt for the five years subsequent to
December 31, 1999 are as follows:  $0 in 2000-2002,  $33,500,000  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 and  $44,000 for the period
from October 14, 1997 to December 31, 1997.

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
$458,000 and  $265,000 for the year ended  December 31, 1999 and the period from
April 1, 1998 to December 31, 1998, respectively.


<PAGE>

                                      F-16

                      ISG Resources, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

6.   Income Taxes

Income tax expense (benefit) consists of the following:

                                                             Period from
                                                            October 14 to
                           Year ended December 31            December 31
                          1999               1998                1997
                   ----------------------------------------------------------
Current:
     U.S. Federal   $   2,150,860         $3,542,755       $     459,626
     State                726,268            703,678              69,116
                   ----------------------------------------------------------
                        2,877,128          4,246,433             528,742
Deferred:
     U.S. Federal      (1,847,270)        (1,416,129)           (240,135)
     State               (382,269)          (281,278)            (36,110)
                   ----------------------------------------------------------
                       (2,229,539)        (1,697,407)           (276,245)
Total:
     U.S. Federal         303,590          2,126,626             219,491
     State                343,999            422,400              33,006
                   ----------------------------------------------------------
                         $647,589         $2,549,026       $     252,497
                   ==========================================================

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

                                                                    Period from
                                                                   October 14 to
                                       Year ended December 31       December 31
                                        1999               1998         1997
                                     -------------------------------------------
    35% of income before income tax  $  99,812    $     1,682,968   $    181,023

    Add:
       Non-deductible goodwill         901,551            527,208         42,702
       Other, net                     (353,774)           338,850         28,772
                                     -------------------------------------------
                                     $ 647,589    $     2,549,026   $    252,497
                                     ===========================================


<PAGE>

                                      F-17

                      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:

                                                1999                1998
                                          --------------------------------------
 Deferred Tax Assets:
    Bad debt reserves                     $       128,602    $         66,572
    Accruals not currently deductible for
        tax purposes                              362,217             307,883
                                          --------------------------------------
 Total gross deferred tax assets                  490,819             374,455

 Deferred Tax Liabilities:
   Fixed asset basis differences                2,980,762           3,040,703
   Intangible asset basis differences          36,274,790          38,363,602
   Other                                           77,355               5,229
                                          --------------------------------------
 Total gross deferred tax liabilities          39,332,907          41,409,534
                                          --------------------------------------
 Net deferred tax liabilities             $   (38,842,088)       $(41,035,079)
                                          ======================================

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, 1999:

2000                                                           $ 5,006,179
2001                                                             4,446,385
2002                                                             3,418,469
2003                                                             2,413,442
2004                                                             1,203,922
Thereafter                                                         595,361
                                                          -------------------
Total minimum lease payments                               $    17,083,758
                                                          ===================

Total rental  expense was  approximately  $7,595,000 for the year ended December
31, 1999, $6,113,000 for the year ended December 31, 1998 and $1,259,000 for the
period from October 14, 1997 to December 31, 1997.


<PAGE>

                                      F-18

                      ISG Resources, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

7.  Commitments and Contingencies (continued)

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

                        ------------------------------------

2000                         $ 363,000         $ 6,387,000
2001                           371,000           6,911,000
2002                           120,000           7,173,000
2003                           120,000           3,042,000
2004                           120,000           1,842,000
Thereafter                           -          10,174,000
                        ------------------------------------
                        $    1,094,000   $      35,529,000
                        ====================================

Minimum  sales  and  purchases   under   contracts  with  minimum   requirements
approximated $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 and $249,000 and  $318,000,  respectively,  for the period from October
14, 1997 to December 31, 1997.

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.

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 as long as the license
agreement is effective.  The payments are for future  royalties on net sales and
sub-license  or royalty  revenue  received  related to this  license and will be
expensed in the period the related revenue is recognized.


<PAGE>

                                      F-19

                      ISG Resources, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

7. Commitments and Contingencies (continued)

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  begin to  expire  in 2000  with  annual  extensions  to be
exercised  by  mutual  consent  of  both  parties.   Without  considering  these
extensions,   these  employment   agreements   provide  for  total  annual  base
compensation of approximately  $2,256,000 in 2000,  $1,301,000 in 2001, $771,000
in 2002 and $134,000 in 2003.

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  $1,530,000 in the aggregate for the current
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,  $112,000  and  $324,000  has been  accrued as of
December 31, 1999 and 1998, 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 four legal entities,  Best, Osborne,
Terrazzo  and Magna Wall.  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


<PAGE>

                                      F-20

                      ISG Resources, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

8.  Reportable Segments (continued)

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 are generally
accounted for at cost and are eliminated in consolidation.

The building  materials division includes financial data for Best from January 1
through  December 31, 1999,  Osborne and Terrazzo for the period from October 26
to  December  31, 1999 and Magna Wall for the month of  December  1999.  Amounts
included in the "Other" column include  financial  information for the Company's
corporate, R&D 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, 1999, is as
follows:


                                       Building                    Consolidated
                             CCP       Materials      Other           Total
                       ------------ -------------- ------------- ---------------
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


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.

9.  Related Party Transactions

The Company's parent,  ISG, files a consolidated income tax return including the
Company and all of its subsidiaries. As the Company records all tax payments and
receipts,  a payable to ISG for  $643,983 has been  recorded to reflect  amounts
owed  to ISG  relating  to  ISG's  interest  deductions  included  in  the  1998
consolidated tax return filed in 1999.


<PAGE>

                                      F-21

10.  Subsequent Event

On March 2, 2000,  the Company  acquired  directly  and  indirectly  through ISG
Manufactured  Products,  Inc., a newly formed  wholly  owned  subsidiary  of the
Company,  100% of the  partnership  interests in Don's  Building  Supply  L.L.P.
("Don's") for a purchase  price of $6,000,000 in cash.  The Company  expects the
purchase  price to increase or decrease  within  sixty days of the closing  date
based on 1999 EBITDA,  as defined,  and working capital as of February 29, 2000.
Don's is  engaged  in the  retail and  wholesale  distribution  of  construction
materials to residential and commercial contractors.


<PAGE>

                                      F-22

                        Report of Independent Accountants
                        ---------------------------------

     To the Board of Directors and
     Shareholders of JTM Industries, Inc:

     In our opinion, the consolidated statements of loss and accumulated deficit
     and cash flows for the period  from  January  1, 1997 to October  13,  1997
     (appearing on pages F-23 through F-31 in this Form 10-K) present fairly, in
     all  material  respects,  the results of  operations  and cash flows of JTM
     Industries,  Inc. and its subsidiary for the period from January 1, 1997 to
     October  13,  1997,  in  conformity  with  generally  accepted   accounting
     principles.  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 audit.  We conducted our audit of these
     statements in accordance with generally accepted auditing standards,  which
     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,   assessing  the
     accounting  principles used and  significant  estimates made by management,
     and evaluating the overall  financial  statement  presentation.  We believe
     that our audit provides a reasonable basis for the opinion expressed above.
     We  have  not  audited  the  consolidated   financial   statements  of  JTM
     Industries, Inc. for any period subsequent to October 13, 1997.

     PRICEWATERHOUSECOOPERS LLP
     February 16, 1998
     Charlotte, North Carolina


<PAGE>

                                      F-23

                              JTM INDUSTRIES, INC.
             CONSOLIDATED STATEMENT OF LOSS AND ACCUMULATED DEFICIT
                                ($000's omitted)

                                                                 Period from
                                                                 January 1 to
                                                                 October 13,
                                                                    1997
                                                            -------------------
Revenues:
Product revenues...........................................    $        25,613
Service revenues...........................................             25,682
                                                            -------------------
                                                                        51,295

Cost of product revenues, excluding depreciation...........             20,702
Cost of service revenues, excluding depreciation...........             19,999
Depreciation and amortization..............................              5,279
Selling, general and administrative expenses................             3,633
                                                            -------------------
Income from operations.....................................              1,682
Intercompany interest expense..............................              4,160
Interest expense............................................                 -
                                                            -------------------
                                                                        (2,478)
Income tax expense.........................................               (612)
                                                            -------------------
Net loss...................................................             (3,090)
Accumulated deficit - beginning of period..................             (3,966)
                                                            -------------------
Accumulated deficit - end of period.......................     $        (7,056)
                                                            ===================


   The accompanying notes are an integral part of these financial statements.


<PAGE>

                                      F-24

                              JTM INDUSTRIES, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                ($000's omitted)

                                                                  Period from
                                                                  January 1 to
                                                                  October 13,
                                                                      1997
                                                              ------------------
Net Cash Provided By (Used In):
Operating activities......................................... $           521
Investing activities.........................................            (681)
                                                              ------------------
Net cash used by operating and investing activities..........            (160)
Non-cash activities..........................................            (797)
                                                              ------------------
                                                                         (957)
Intercompany notes payable - beginning of period.............         (48,450)
                                                              ------------------
Intercompany notes payable - end of period................... $       (49,407)
                                                              ==================
Operating activities:
Net loss..................................................... $        (3,090)
Items not affecting cash:
  Loss on disposal of fixed assets...........................             305
  Depreciation and amortization..............................           5,279
  Deferred income taxes......................................             150
Cash provided by (used in) financing working capital:
  Trade and other accounts receivable........................          (1,898)
  Other current assets.......................................              87
  Accounts payable and accrued liabilities...................            (312)
                                                              ------------------
Net cash provided by operating activities.................... $           521
                                                              ==================
Investing activities:
Purchase of fixed assets..................................... $          (681)
Proceeds from sale of fixed and other assets.................               -
                                                              ------------------
Net cash used in investing activities........................ $          (681)
                                                              ==================

Supplemental cash flow information:
  Noncash transaction:
     Transfers of fixed assets from parent................... $           107
     Accounts payable related to fixed assets................               -
  Cash paid (received) for:
     Interest................................................ $         4,160
     Income taxes to (from) parent........................... $           462

   The accompanying notes are an integral part of these financial statements.

<PAGE>

                                      F-25

                              JTM INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                ($000's Omitted)

1. Basis of Presentation of Financial Statements

         These financial statements reflect the consolidated  financial position
and results of  operations  of JTM  Industries,  Inc.  and its  subsidiary,  KBK
Enterprises,  Inc. ("the  Company") which until October 13, 1997 was an indirect
wholly  owned  subsidiary  of Laidlaw  Inc. The Company is involved in materials
management  services to coal combustion  by-products (CCPs) producing  utilities
and marketing products derived from CCPs, principally in the United States.

         Interest  expense   associated  with  intercompany   financing  by  the
Company's  former parent,  Laidlaw,  Inc.  ("Laidlaw"),  has been charged to the
Company based on prime rate plus 2% on the average outstanding balance.

         The  Company is  included  in the  consolidated  tax return of Laidlaw.
Income  taxes  have  been  calculated  using  applicable  income  tax rates on a
separate return basis.

2. Summary of Significant Accounting Policies

a) Basis of Presentation

         The consolidated financial statements of the Company have been prepared
in accordance with accounting principles generally accepted in the United States
and all figures are  represented  in U.S.  dollars,  as the Company's  operating
assets are located in the United States.

         The  preparation of financial  statements in accordance  with generally
accepted  accounting  principles  requires  the  Company to make  estimates  and
assumptions  that affect reported  amounts of income and expenses and disclosure
of contingencies. Future events could alter such estimates in the near term.

b) Consolidation

         The  consolidated  financial  statements  include  the  accounts of JTM
Industries,  Inc.  and  KBK  Enterprises,  Inc.,  its  subsidiary  company.  All
significant intercompany transactions are eliminated.



<PAGE>

                                      F-26

                              JTM INDUSTRIES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                ($000's Omitted)

2. Summary of Significant Accounting Policies (Continued)

c) Fixed assets

         Fixed assets are recorded at cost.  Depreciation  and  amortization  of
other property and equipment is provided  substantially on a straight-line basis
over their estimated useful lives which are as follows:

                Buildings.......................     20 to 40 years
                Vehicles and other..............      3 to 15 years

         The  company  periodically  reviews  the  carrying  values of its fixed
assets  to  determine  whether  such  values  are  recoverable.   Any  resulting
write-downs are charged against income.  Depreciation  expense amounts to $1,191
for the period from January 1, 1997 to October 13, 1997.

d) Other assets

         Goodwill is amortized on a  straight-line  basis over forty years.  The
amount of any  impairment  is charged  against  income.  During the period  from
January 1, 1997 to October 13, 1997, in connection  with the planned sale of the
Company,  Laidlaw  wrote  down the assets of the  Company  to fair  value  which
resulted in a charge against goodwill of $3,300.

e) Income taxes

         Deferred  income  taxes  are  provided  for all  significant  temporary
differences  arising  from  recognizing  certain  expenses  and certain  closure
accruals in different periods for income tax and financial reporting purposes.

f) Revenue

         Material   revenues  are  earned  by  marketing   products  created  by
coal-fired  power  generation and related  industrial  materials to consumers of
building  materials and construction  related products.  Generally,  material is
obtained from coal-fired electric utilities and is immediately  delivered to the
customer,  eliminating the need to inventory products.  Therefore,  no inventory
exists at October 13, 1997.  Material  revenues are recognized when the material
is delivered to the customer.


<PAGE>

                                      F-27

                              JTM INDUSTRIES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                ($000's Omitted)

2. Summary of Significant Accounting Policies (Continued)

f) Revenue (continued)

         Service  revenues  are earned under  long-term  contracts to dispose of
residual  materials  created by coal-fired  power  generation.  Typical contract
terms are from five to fifteen years. Service revenues 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.

         Costs  of  product  revenues  primarily  include  amounts  paid  to the
utilities  to  purchase  the  product  and  transportation  charges  related  to
delivering  the  product to the  customer.  Cost of service  revenues  primarily
include  landfill fees and  transportation  charges  related to  delivering  the
product to the landfill. Overhead charges incurred by a facility which generates
both product and service  revenues are allocated to cost of product revenues and
cost of  service  revenues  based on the  percentage  of each type of revenue to
total  revenues.  Cost of  product  revenues  and cost of service  revenues  are
recognized concurrent with the recognition of the related revenue.

g) Concentration 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 Sates. The Company performs ongoing credit  evaluations of
its  customers,  but does not require  collateral to support  customer  accounts
receivable.  The Company establishes an allowance for doubtful accounts based on
the credit risk applicable to particular customers, historical trends, and other
relevant information.

3. Benefit Plans

         Eligible  employees of the Company may  participate in a 401(k) savings
plan  sponsored  by  Laidlaw.  The 401(k)  plan  requires  the  Company to match
employee  contributions  as defined,  up to 3% of the  employees'  compensation.
Expenses related to the 401(k) plan were  approximately $294 for the period from
January 1, 1997 to October 13, 1997.


<PAGE>

                                      F-28

                              JTM INDUSTRIES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                ($000's Omitted)

4. Lease Commitments

         Rental expense  incurred under operating  leases amounted to $4,334 for
the period from January 1, 1997 to October 13, 1997.

         Rentals payable under operating leases for premises and equipment as of
October 13, 1997 are as follows:

1998...........................................................  $       4,518
1999...........................................................          3,264
2000...........................................................          1,553
2001...........................................................          1,440
2002...........................................................            753
Thereafter.....................................................          1,600
                                                                ---------------
                                                                 $      13,128
                                                                ===============

5. Legal proceedings

         The Company has various  outstanding  legal  matters  arising  from the
normal course of business.  Although the final outcome  cannot be predicted with
certainty, the Company believes the ultimate disposition of the matters will not
have a material impact on the Company's financial position.

6. Related party transactions

         Included in the financial  statements  are related  party  transactions
between  the  Company and  Laidlaw.  These  related  party  transactions  are as
follows:

                                     Period from
                                    January 1 to
                                     October 13,
                                        1997
                              ----------------------
Management fees................... $        491
Administrative fees............... $        249
Intercompany sales................ $      2,814
Allocated insurance expense....... $        515
Interest expense.................. $      4,160

<PAGE>

                                      F-29

                              JTM INDUSTRIES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                ($000's Omitted)

6. Related party transactions (Continued)

         Management and  administrative  fees have been allocated to the Company
based upon the Company's share of Laidlaw's consolidated revenue. Management and
administrative  fees are charged by Laidlaw to each of its  operating  groups in
order to recover its general and administrative  costs. The services provided by
Laidlaw include treasury,  taxation and insurance. The allocated charges may not
be indicative of the expenses the Company would have incurred if Laidlaw had not
provided the services.

         On May 9,  1997,  all of the  outstanding  shares of the  Company  were
transferred from LESI to Laidlaw  Transportation,  Inc., a direct,  wholly owned
subsidiary of Laidlaw.

         In  preparation  for  the  disposal  of the  Company,  certain  closure
liabilities  amounting to $1,650 were transferred to Laidlaw, net of the related
deferred tax asset of $578.  Additionally,  a long-term receivable in the amount
of $1,008,  net of an allowance of $963, was transferred to Laidlaw.  A deferred
tax asset of $337 related to the allowance was also transferred to Laidlaw.

7. Income taxes

         The  components  of income tax expense  for the period from  January 1,
1997 to October 13, 1997 are as follows:

Current federal provision (benefit).............. $                421
Current state provision..........................                   41
Deferred federal provision.......................                  150
                                                  ---------------------
Total income tax provision (benefit)............. $                612
                                                  =====================

<PAGE>

                                      F-30

                              JTM INDUSTRIES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                ($000's Omitted)

7. Income taxes (continued)

         Deferred income taxes arise from temporary  differences between the tax
basis of assets and  liabilities  and their  reported  amounts in the  financial
statements.  Components  of deferred tax  liabilities  and assets at October 13,
1997 are as follows:

Deferred tax assets:
  Allowance for bad debts.......................... $               142
  Closure reserve..................................                  97
  Other accrued liabilities........................                  91
Deferred tax liabilities:
  Fixed assets.....................................                 (1)
                                                    --------------------
Net deferred tax assets............................ $              329
                                                    ====================

         The difference between the federal statutory tax rate and the effective
tax rate on continuing operations for the period from January 1, 1997 to October
13, 1997 are as follows:

Federal statutory tax rate..............................          35.0%
Goodwill amortization not deductible for tax purposes...         (57.7%)
State income taxes......................................          (1.1%)
Other items - net.......................................          (0.9%)
                                                        ----------------
Effective tax rate......................................         (24.7%)
                                                        ================

8. Accrued closure costs

         The Company,  in the normal course of its  business,  expends funds for
remediation of certain property.  The Company does not expect these expenditures
to have a materially  adverse  effect on its  financial  condition or results of
operations,  since its business is based upon compliance with environmental laws
and  regulations  and its services are priced  accordingly.  The method by which
these costs are accrued involves  estimating the total site  restoration  costs,
determining  the total volume of materials the site will hold,  and accruing the
site  restoration  costs  concurrently  with the filling of the site.  The total
anticipated site restoration costs are approximately $1,900.

9. Subsequent Event

         On October 14, 1997,  Laidlaw,  Inc. sold all of the outstanding shares
of the Company for  $5,817,000 in cash, a  $29,000,000  senior bridge note and a
$17,500,000 9% Junior Subordinated Promissory Note due 2005.

<PAGE>

   Exhibits

     **2.1   Plan of Merger for January 1, 1999 Merger.
     **2.2   Plan of Merger for July 31, 1999 Merger.
     *3.1    Articles of Incorporation of JTM Industries, Inc.
     *3.1a   Articles of Amendment of Articles of Incorporation of JTM
             Industries, Inc.
     *3.2    By Laws of JTM Industries, Inc.
     *3.3    Articles of Incorporation of KBK Enterprises, Inc.
     *3.4    By Laws of KBK Enterprises, Inc.
     *3.5    Articles of Incorporation of Pozzolanic Resources, Inc.
     *3.6    By Laws of Pozzolanic Resources, Inc.
     *3.7    Articles of Incorporation of Power Plant Aggregates of Iowa, Inc.
     *3.8    By Laws of Power Plant Aggregates of Iowa, Inc.
     *3.9    Articles of Incorporation of Michigan Ash Sales Company,
             d.b.a. U.S. Ash Company.
     *3.10   By Laws of Michigan Ash Sales Company, d.b.a. U.S. Ash Company.
     *3.11   Articles of Incorporation of Flo Fil Co., Inc.
     *3.12   By Laws of Flo Fil Co., Inc.
     *3.13   Articles of Incorporation of U.S. Stabilization, Inc.
     *3.14   By Laws of U.S. Stabilization, Inc.
     *3.15   Articles of Incorporation of Fly Ash Products, Inc.
     *3.16   By Laws of Fly Ash Products, Inc.
    **3.17   Articles of Incorporation of ISG Resources, Inc.
    **3.18   Bylaws of ISG Resources, Inc.
    **3.19   Articles of Merger for ISG Resources, Inc. (1/1/99 Merger)
    **3.20   Articles of Merger filed in Texas. (1/1/99 Merger)
    **3.21   Articles of Merger filed in Pennsylvania. (1/1/99 Merger)
    **3.22   Articles of Merger for Pozzolanic Resources, Inc. (1/1/99 Merger)
    **3.23   Articles of Merger for St. Helens Investments, Inc. (1/1/99 Merger)
    **3.24   Articles of Merger for Pozzolanic Northwest, Inc. (1/1/99 Merger)
    **3.25   Articles of Merger for Pozzolanic Northwest Bulk Carriers, Inc.
             (1/1/99 Merger)
    **3.26   Articles of Merger filed in Iowa. (1/1/99 Merger)
    **3.27   Articles of Merger filed in Michigan. (1/1/99 Merger)
    **3.28   Articles of Merger filed in Arkansas. (1/1/99 Merger)
    **3.29   Articles of Merger for ISG Resources, Inc. (1/1/99 Merger)
    **3.30   Articles of Merger filed in Montana. (7/1/99 Merger)
    **3.31   Articles of Merger filed in Ohio. (7/1/99 Merger)
     *4.1    Indenture, dated as of April 22, 1998, by and among JTM Industries,
             Inc., the Subsidiary Guarantors and U.S. Bank National Association,
             as Trustee.
     *5.1    Opinion and consent of Morgan, Lewis & Bockius LLP as to the
             legality of the securities being registered.
     *10.1   Purchase Agreement dated as of April 17, 1998 by and among JTM
             Industries, Inc., the Subsidiary Guarantors and NationsBanc
             Montgomery Securities LLC and CIBC Oppenheimer Corp.
     *10.2   Registration Rights Agreement dated as of April 22, 1998, by and
             among JTM Industries, Inc., the Subsidiary Guarantors and
             NationsBanc Montgomery Securities LLC and CIBC Oppenheimer Corp.
     *10.3   Purchase Agreement dated as of February 27, 1998 by and among JTM
             Industries, Inc., Pozzolanic Resources, Inc. and Gerald Peabody,
             Penelope Peabody and Kokan Company Limited.
     *10.4   Stock Purchase Agreement from Power Plant Aggregates of Iowa, Inc.
     *10.5   Purchase Agreement dated as of March 1998 between JTM Industries,
             Inc. and Jack Wirt.
     *10.6   Purchase Agreement dated as of March 27, 1998, between JTM
             Industries, Inc., Donald A. Thomas, Phyllis S. Thomas and Donald W.
             Birge.
     *10.7   Secured Credit Facility dated March 4, 1998 among JTM Industries,
             Inc. and a syndicate of banks with NationsBank, N.A., as
             administrative agent, and Canadian Imperial Bank of Commerce, as
             documentation agent.
     *10.8   First Amendment dated as of May 29, 1998 to the Credit Agreement
             dated March 4, 1998 among JTM Industries, Inc. and a syndicate of
             banks with NationsBank, N.A. as administrative agent, and Canadian
             Imperial Bank of Commerce, as documentation agent.
    **10.9   Stock Purchase Agreement dated January 1999, among ISG Resources,
             Inc., James M. Isaac and Tommy C. Isaac.
    **10.10  Purchase Agreement dated October 26, 1999, between ISG Resources,
             Inc. and Mary Ellen Dentis, Trustee.
    **10.11  Purchase Agreement dated November 1999, among ISG Resources, Inc.
             and Bill E. Nichols, John W. Nichols and Debbie Dickie
    **10.12  Stock Purchase Agreement between William Leslie & ISG Resources,
             Inc.
    **10.13  Partnership Regulations for Don's Building Supply, LLP.
    **10.14  Employment Agreement between JTM Industries, Inc. (predecessor to
             ISG Resources, Inc.) and Clinton W. Pike, Sr.
  **10.14(a) Amendment to Mr. Pike's Employment Agreement.
  **10.14(b) Second Amendment to Mr. Pike's Employment Agreement.
    **10.15  Employment Agreement between ISG Resources, Inc. and R Steve
             Creamer.
    **10.16  Employment Agreement between ISG Resources, Inc. and Raul A. Deju.
    **10.17  Employment Agreement between ISG Resources, Inc. and Jean I.
             Everest, II.
    **10.18  Employment Agreement between ISG Resources, Inc. and Brett A.
             Hickman.
    **10.19  Stock Purchase Agreement dated October 1999 between ISG Resources,
             Inc. and WEBE Enterprises, Ltd.
    **10.20  Stock Purchase Agreement dated June 2, 1999 between Koch Carbon,
             Inc. and ISG Resources, Inc.
    **12.1   Statement re Computation of Ratio of Earnings to Fixed Charges.
     *21.1   Subsidiaries of ISG Resources, Inc.
    **21.2   Subsidiaries of the Registrant (As of March 30, 2000)
      *24    Powers of Attorney.
     *25.1   Statement of Eligibility of U.S. Bank National Association, as
             Trustee, on Form T-1.
    **27.1   Financial Data Schedule.
     *99.1   Form of Letter of Transmittal  respecting the exchange of the 10%
             Senior  Subordinated  Notes due 2008  which have been registered
             under the United States Securities Act of 1933 for 10% Senior
             Subordinated Notes due 2008.
     *99.2   Form of Notice of Guaranteed Delivery.

    -----------
    *    Previously Filed.
    **   Filed herewith.


(b)      Reports on Form 8-K.

         None.

<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, 2000       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 30,2000
------------------
R Steve Creamer

/s/ Raul A Deju           President and Chief Operating Officer    March 30,2000
---------------
Raul A. Deju

/s/ J.I. Everest, II      Chief Financial Officer, Treasurer and   March 30,2000
---------------------     Assistant Secretary
J.I. Everest, II

/s/ Joseph M. Silvestri   Director                                March 30, 2000
-----------------------
Joseph M. Silvestri